HS2 Ltd and the Department for Transport (DfT) are making progress in resetting the delayed rail programme, but risks remain, the National Audit Office (NAO) has warned.
In a new report, the NAO said the department and HS2 Ltd were taking a “considered approach” to the reset but must ensure the programme is placed on a stable footing to avoid repeating past failures.
HS2 aims to deliver high-speed rail between London and Birmingham. A planned extension further north, known as Phase 2, was cancelled in 2023. The programme has already been reset twice, in 2020 and again in 2025, with the latest reset expected to be completed by spring 2027 at a cost of £153m.
According to the report, the total cost of HS2 has increased significantly since 2020. In May 2026, the department updated its estimate for completing the programme to between £87.7bn and £102.7bn – around double the 2020 estimate for Phase One, the Euston-to-Birmingham route. To March 2026, a combined £46.8bn had already been spent on HS2, including Phase 2 works.
The NAO said the main drivers behind the cost increases were scope changes, inefficient delivery and an underestimation of the time required to complete the works. Despite this, the department has assessed that finishing the programme still represents value for money compared with cancelling it outright.
The report also highlighted significant delays. Full completion of the line between Euston and north of Birmingham is not expected until 2040-43, although services between Old Oak Common in west London and Birmingham could begin earlier, between 2036 and 2039. This represents a delay of between three and 13 years to the full opening of the railway.
In an effort to manage costs and reduce risk, the department has cut planned train speeds from 360km/h to 320km/h, in line with other European high-speed services. The NAO said this could save between £1bn and £2.5bn by reducing testing requirements, but warned that longer journey times could result in a £1.3bn long-term loss of benefits, potentially offsetting the savings.
Euston station remains a critical – and costly – part of the project. According to the report, £3.8bn has been spent on works there to date, with a further £4.1bn of public funding anticipated for the HS2 station and tunnelling from Old Oak Common, based on early designs. The NAO noted that total costs are likely to rise further once private finance for the station is confirmed.
HS2 Ltd is also renegotiating supply chain contracts as part of the commercial reset, aiming to save around £2bn by incentivising cost-effective delivery and avoiding costs associated with delays. Internal reviews reportedly found the organisation was poorly structured to deliver the revised scope of the programme and lacked sufficient delivery and contract management skills, prompting an organisational overhaul.
The NAO has recommended that the department and HS2 Ltd review the reset timetable in autumn 2026 to assess whether it remains achievable, maintain focus on cost, schedule and commercial management as the programme progresses, and revisit governance arrangements to ensure they remain fit for purpose as the next stages of work begin.
Gareth Davies, head of the NAO, said: “After facing historic difficulties, including significant cost increases and delays to delivery, HS2 Ltd and DfT are taking a considered approach so far in their latest reset to the HS2 programme.
“However, these previous issues highlight the importance of DfT and HS2 Ltd getting it right this time to ensure the future success of the programme. Establishing a fully robust estimate of cost and schedule, completing commercial negotiations and getting the right capabilities in place is necessary before they can complete the reset.”
Image credit: Vink Fan/Shutterstock
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