HS2 could now cost up to £102.7bn to build with no trains set to run for at least a decade, it has been announced by transport secretary Heidi Alexander.

In an update to the House of Commons Alexander said the line will now cost between £87.7bn and £102.7bn with the first services running from London’s Old Oak Common to Birmingham’s Curzon Street Station like between May 2036 and 2039. The opening of HS2 had previously been 2033 with costs set at £35-45bn – HS2 has “already spent close to the original budget” with costs at the end of March at £44.2bn.

The full route including both Euston to the south and Handsacre Junction, will not be completed until between May 2040 December 2043.

She described the rising budget and extended timeframe as an “obscene increase in time and costs”.

HS2 chief executive, Mark Wild, has been carrying out a reset of the project, and was tasked to explore options to remove complexity that could cut billions in costs and reduce delays for the project.

In the six-monthly report to Parliament Alexander said two-thirds of the expected cost increase was from a combination of necessary works that “were missed” from the scope of the original project plan, under-estimation and inefficient delivery.  A third of the cost increase is linked to inflation.

Alexander also say trains will run at a maximum of 320 km/h (199mph), down from a previous maximum of 360 km/h (224 mph), which will save up to £2.5bn in costs and enable to route to open earlier.

Heidi Alexander said: “The number of years left to complete the programme is roughly the same as when construction started in 2020, and it is likely we will need to spend the same amount as has already been spent to date.

“It is now imperative that we proceed with the final stages of the HS2 reset so that the programme is brought under control and delivered sensibly going forward.”

She said the project is now at peak delivery – employing 31,000 people – with a series of major achievements made in recent months, including the contract for HS2’s rolling stock depot at Washwood Heath, in Birmingham, awarded to a joint venture of Taylor Woodrow Infrastructure and Aureos Rail.

“We are starting to see results from reset: HS2 is now being built faster and more efficiently, with six major construction milestones reached earlier than planned last financial year, and with early signs looking positive for this year’s milestones,” she added.

She said government could have chosen to cancel the project remediate the construction undertaken so far, but said it would have could cost as much as completing HS2, adding it “would result in no lasting benefit, abandoning ambitions for better national transport across our railway network and potentially leaving communities across our country blighted by unused infrastructure – something I am simply not prepared to do”.

Over the coming year, HS2  will be developing a new baseline for the programme to provide a clear scope of work and path to delivery. It will also form the basis for performance monitoring and reporting by the department to ensure that the project is robustly managed once the reset is complete.

Major steps are being taken to restructure the organisation to control and deliver HS2 more effectively, including:

• Reshaping the corporate centre, reducing headcount by cutting 300 corporate roles and rebalancing the organisation to better support delivery teams
• Redirecting resources to boost frontline delivery capacity by 40%, with 168 additional roles focused on cost management, oversight and decision-making
• Bringing in skilled and experienced professionals across commercial, technical, assurance, controls, and finance functions to fill critical capability gaps

Industry has welcome steps to bring the HS2 project back under tight control.

The Association for Consultancy and Engineering (ACE) said it was a “responsible step” to put the programme on a more credible and deliverable footing. 

Milda Manomaityte, CEO of ACE, said: “This reset marks a decisive step in restoring confidence in the project’s costings and delivery timelines, providing long overdue clarity and certainty. Under the leadership of Mark Wild and Mike Brown this reset reflects well-established engineering best practice and lessons learned from previous major infrastructure projects where clear sequencing, realistic planning and disciplined delivery are essential to controlling risk and cost.  

“By establishing a credible and trusted programme, it gives the public a plan they can trust, supports skilled jobs across the supply chain, and helps unlock long-term economic growth. Above all, it safeguards a clear focus on delivering the rail capacity critical to the UK’s future infrastructure ambitions, firmly positioning HS2 on a stronger, more sustainable route to completion from Birmingham to Euston.” 

Sam Gould, director of policy and external affairs at the Institution of Civil Engineers, HS2's reset should mark a “turning point” for the project.

“The key lesson is that major infrastructure projects must begin with a clear, agreed set of outcomes. Robust development and accurate costing are not optional - they are essential to maintaining confidence and controlling costs.

“The establishment of the National Infrastructure and Service Transformation Authority (NISTA) is an important step forward in planning and delivering major infrastructure projects. To fully realise its potential, NISTA should streamline how success is measured and create a unit of senior infrastructure leaders who can support public sector delivery.

“With a reset now in motion and the project's priorities made clear, it's important that these lessons apply not just to HS2, but to the UK’s infrastructure pipeline as a whole.”