HS2 Reports £2bn Loss Following Government Decision to Downgrade Rail Project

HS2 Ltd has disclosed over £2 billion in costs associated with Prime Minister Rishi Sunak's decision to downgrade the high-speed rail project. In its annual report, the company revealed it has written off £1.1 billion in expenses related to the scrapped "phase two," which was intended to connect Birmingham to Manchester. Additionally, HS2 reported £1 billion in accounting charges due to the project's reduced scope, which is expected to diminish future income. The decision to cut the second leg of HS2 and scale back plans for London Euston station was announced by Sunak during the Conservative party conference in Manchester last October. The government claimed that these changes would save £36 billion, with plans to reinvest in other rail initiatives, including Network North, aimed at enhancing connectivity between northern cities. Originally envisioned as a Y-shaped line linking London with Manchester and Yorkshire, HS2 has faced significant reductions in its plans. The cancellation of the Birmingham to Manchester link has sparked outrage in regions that anticipated benefits from the project. While Labour has expressed dissatisfaction with the decision, party leader Keir Starmer stated in January that reversing the government's choice is "not possible." The Department for Transport is now tasked with exploring options to manage rail demand more effectively. HS2's report indicated that the policy shift has resulted in a "constructive loss" of £2.17 billion for the fiscal year 2023-24, excluding costs related to land and property acquisitions. If funding challenges persist, HS2 may permanently halt operations at Old Oak Common in London’s western suburbs.