The British government has confirmed what informed observers have suspected for years: HS2, the high-speed railway connecting London to Birmingham, will now cost between £87.7 billion and £102.7 billion in 2025 prices — roughly double the estimate given as recently as 2019. Train services, originally promised for 2026 (the year is now here), have been pushed to 2036 at the earliest, and full Euston connectivity will not arrive until 2040–2043. The top speed has been trimmed from 360km/h to 320km/h to save roughly £2.5 billion. A total of £44.2 billion has already been spent. Transport Secretary Heidi Alexander told parliament this week: “Instead of signalling the country’s ambition, HS2 became a signal of the country’s decline.” She added, pointedly: “If it seems like an obscene increase in time and costs, it is because it is. If it seems like I’m angry, it is because I am.”
The received wisdom
The progressive and mainstream-technocratic case for HS2 retains real merit. Britain has one of the most congested inter-city rail networks in Europe; the West Coast Main Line routinely runs at or beyond capacity. A high-speed spine between London, the Midlands, and the North was meant to unlock productivity gains that economists estimated could be transformative for regions left behind by four decades of London-centric growth. Advocates are correct that the project’s troubles trace heavily to two Conservative governments — David Cameron’s, which commissioned the thing with inadequate governance structures, and Rishi Sunak’s, which cancelled the northern legs in 2023 without any serious alternative plan. Labour is, in some sense, cleaning up a Tory mess, and Heidi Alexander is not wrong to be furious. The argument that cancellation would cost nearly as much as completion — without generating any benefit — is also probably true, and represents a genuine infrastructure trap that the country has stumbled into through its own serial bad decisions.
The mainstream case is essentially: this is what happens when a country is not serious about major public investment. Other countries build high-speed rail. Britain announces it, dithers, trims, delays, and ends up spending twice as much for half the result.
A different read
All of that is fair. And yet the mainstream framing contains an important evasion: it treats HS2’s failure as an accident of poor governance rather than a structural feature of how Britain commissions mega-infrastructure. It is not. HS2 is the rule, not the exception.
The original London-to-Birmingham budget in 2013 was £42.6 billion in 2011 prices. It has now roughly doubled in real terms, even after the northern legs — which accounted for a large share of the original project’s logic — were cancelled. The project’s own chairman warned in 2019 that costs were already running £30 billion over; nobody stopped the machinery. Two-thirds of the cost increase, the government now acknowledges, came from underestimated costs, inefficient delivery, and missed scope — not inflation. This is a governance failure, not a market failure or a force-of-nature outcome.
The deeper problem is that Britain’s infrastructure-commissioning model creates perverse incentives at every stage. Optimism bias in initial estimates is well-documented and well-known, yet tolerated — because projects that are costed honestly rarely get approved, and project sponsors know it. Once begun, sunk-cost logic makes cancellation politically agonising. The result is a one-way ratchet: estimates rise, delivery dates slip, scope shrinks, but the project grinds on because stopping costs nearly as much as continuing.
This dynamic is not unique to Britain. The American Interstate Highway System, built under Eisenhower, came in broadly on time and budget for a reason: it had a dedicated funding mechanism (the Highway Trust Fund), a clear federal champion, and a mandate that cut through the procurement labyrinth. Britain’s equivalent for rail is a Byzantine tangle of design-build contractors, Network Rail, HS2 Ltd, and rotating political sponsors — with accountability diffused enough that no one person or body is ever clearly responsible for the cost explosion.
Andy Meaney, who contributed to the Oakervee review of HS2, was refreshingly candid: the decision to reduce speed from 360km/h to 320km/h should have been made years ago but wasn’t, because decision-making had fundamentally failed across more than 16 years. This is not a story of villains. It is a story of a bureaucratic ecosystem that rewards project initiation over project management, and where no one in the chain has a strong incentive to deliver bad news promptly.
The genuinely conservative lesson — as distinct from the reflexively anti-spending one — is not “don’t build infrastructure.” It is: build in accountability from the start. Fixed-price contracts where feasible. Independent cost-verification. Governance structures where someone’s career ends if costs double. Britain has none of these in any effective form for mega-projects. Until it does, HS2 will not be the last HS2.
The Faisal Islam point — that a full HS2 line could still be built despite the fiasco — is worth acknowledging: productivity at HS2 Ltd has “significantly improved” over the last 12 months, and major tunnel-boring milestones are being hit ahead of schedule. The project is not irretrievably broken. But it needed a reset years earlier than it got one, and the taxpayer is paying for that delay.
What to watch
- The 2026–2036 delivery window: HS2 Ltd CEO Mark Wild has set an internal target of £92.2 billion by 2037. If costs breach £100 billion before Birmingham services begin, expect renewed calls for a second cancellation — this time politically uncontainable.
- Old Oak Common as a trial: The interim interchange at Old Oak Common — the first HS2 station to open — will be a bellwether for whether improved project management is real or performative.
- Reform Party exploitation: Reform UK has already signalled opposition to further HS2 funding. Watch whether this becomes a defining issue in the upcoming Makerfield by-election and in pre-election positioning more broadly.
- Shapps and the shadow Tories: The Shadow Transport Minister has called for a detailed savings plan. How the Conservatives position themselves — as the party that created this mess or as the party with the credibility to fix it — will be an interesting test of their political self-awareness.
— J