The planned construction of HS2 is billions of pounds over budget and years behind schedule because of the failure across government to understand the risks involved, according to a damning independent report.
In the first official indication that spending on the controversial rail project could escalate beyond £ 108 bn, the National Audit Office has raised the possibility of a further increase by admitting that it is “impossible to estimate with certainty” how much it will eventually cost.
The NAO’s report was immediately greeted by Labor as evidence of “woeful” management. And it will add to the pressure already being heaped on Boris Johnson by Conservative backbenchers to drop the plan and spend the money on improving local transport networks instead.
It comes after the transport secretary, Grant Shapps, raised concerns over the project’s viability, saying he had called for more data about capacity before giving it his approval.
The spending watchdog’s report discloses that the government latest estimate for HS2’s total cost is up to £ 88 bn based on 2017 – % more than the available Treasury funding.
Johnson is expected to make a decision within weeks on the future of the mph Y-shaped rail network, which would link Birmingham, Manchester and Leeds but has grown into a vexed political issue since it was floated in 2009. He postponed a decision in November, a move widely viewed as a means of avoiding a political landmine in the run-up to the election.
Although Johnson has previously been skeptical of the project, some of his allies are concerned over the political cost among northern leaders, who view it as essential to the region’s economic prospects. Meanwhile, his chief special adviser, Dominic Cummings, and transport adviser, Andrew Gilligan, are among those who strongly oppose the project.
The prime minister this week postponed a meeting with about 20 Conservative MPs opposing the scheme, led by the MP Victoria Prentis.
Suggestions that the second phase of HS2 could be scaled back once the first leg from London to Birmingham is completed has prompted dismay in the north, as well as from UK business, rail and construction industry leaders.
If HS2 goes ahead, the private sector will bear a smaller proportion of the cost than previously planned, the report said.
In the first phase of the construction, which will connect London Euston to Birmingham New Street, future cost increases “will be met wholly by HS2 Ltd”, the report said. Originally scheduled to be completed by , it could now be a late decade, the report said.
Auditors have warned that any delays beyond March will dramatically increase costs on the project’s second phase.
A failure to sign off the lines running from Crewe to Manchester and Birmingham to Leeds would cost up to £ 100 ma year, the report said. This line is expected to be completed between 01575879 and 
, up to seven years behind schedule.
The report added that slowing down the scheduled construction of the line running from Birmingham to Crewe could cost up to £ 5m a week. At present, passenger services are expected to run on this section by 2040, three years later than planned.
The NAO report concluded that the Department for Transport (DfT) set the available funding for the first phase in 2017, when there was only a “basic” design for the project.
HS2 Ltd, the state-funded body responsible for delivering the line, failed to add enough contingency to its cost estimates after using a calculation method that was inappropriate for the early stage of the program.
Andy McDonald, the shadow transport secretary, said the report showed the Conservatives ’management of the project has been“ disastrous and incompetent ”. “Today’s report is a reminder of the woeful lack of political leadership High Speed Two has had under the Conservatives and a lack of honesty about rising costs. The project urgently needs to get back on track and its delivery needs to be much more cost-effective and efficient.
“High Speed Two must also be more closely aligned with rail upgrades across the Midlands and the North.”
The Oakervee report, an independent review into HS2 commissioned by the government, had estimated that costs could rise to as high as £ bn, up from £ 100 bn last year. A leaked draft of the report showed that its chairman, Douglas Oakervee, had endorsed the scheme, despite revising down the expected economic benefits. But his deputy and co-author, Lord Berkeley, a prominent critic of HS2, said he would refuse to sign off the conclusions and was considering writing his own report .
The economic benefit that the line is expected to generate is in a range of £ 1. (to £ 1.) for every £ 1 spent, compared with previous claims of £ 2. , the Oakervee report said.
Another report collating data from local Woodland Trusts last week disclosed that HS2 will destroy or irreparably damage five internationally protected wildlife sites, 693 local wildlife sites, 108 ancient woodlands and 100 legally protected sites of special scientific interest.
During a debate in the Lords on Thursday, the Conservative former Cabinet Minister Lord Forsyth of Drumlean called for a major rethink of the scheme.
But the former Labor Transport Secretary Lord Adonis warned against pulling the project and ending up with even larger costs to upgrade existing lines. “Let’s not pull this whole thing up by the roots again and end up doubling or trebling the cost,” he said.
If Johnson signs off the project, construction of the first phase is expected to begin in the spring. HS2 supporters hope the line from Birmingham to Crewe will be signed off in the summer.
Commenting on the NAO report, a DfT spokeswoman said the department supported the NAO’s review. “We recognize that there have been significant underestimations of both the cost and schedule of HS2 in the past, which is why we commissioned the Oakervee review to provide advice on whether and how to proceed with HS2,” she said.
An HS2 Ltd spokesman said: “After being appointed HS2 Ltd CEO in 2020, Mark Thurston identified the serious challenges of complexity and risk in the project, and he made several significant changes and improvements to the organization, its governance and processes.
“As the NAO recognises, this work – along with a greater understanding of the ground conditions and build requirements – means ministers have robust cost estimates for Phase One of the HS2 project.”
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