HS2 will be delayed for a further two years and major road construction projects will be put on hold, ministers have confirmed, after soaring inflation has added billions to the cost of transport infrastructure projects.
Ministers have urged them to remain committed to the UK’s high-speed rail network project, but budgetary constraints cast further doubt on the prospects for the full implementation of the rail project.
Parts of the HS2 line between Birmingham, Crewe and Manchester will be ‘reworked’ by two years, meaning the line to Crewe may not open until 2036 and to Manchester as late as 2043.
Trains may now not run all the way to and from central London until years later than planned as the government “needs time to secure an affordable and deliverable station design” at Euston.
One of the biggest road projects will also be thrown into the long grass as transport budgets face drastic cuts in real terms from 2025. The flagship Lower Thames crossing, a £7bn tunnel and road project linking Essex and Kent, will be postponed for at least two years into the next five-year phase of National Highways road construction.
In a written statement to MPs, Transport Secretary Mark Harper said other transport investment projects would also have to fail as a result of “tough decisions”.
Active travel budgets, including urban cycling schemes, will also be reduced to a total of around £100m over the next two years, down from £850m in the last three years.
In HS2, Harper said: “We’ve seen significant inflationary pressure and increased project costs, so we will shift construction by two years to deliver high-speed services to Crewe and the north-west as soon as possible after settling for construction delays.”
Harper said the government remains committed to ensuring HS2 trains eventually reach Euston in central London, but was “prioritizing initial HS2 services between London’s Old Oak Common and Birmingham Curzon Street to deliver passenger benefits as soon as possible”.
Sources close to the project have suggested that completion of the line to London Euston could now be pushed further back into the 1940s, with the full capacity of the London Loop only required when the line to Manchester is open.
According to the recently announced timetable, London-Manchester trains were to start running between 2035 and 2041.
Union politicians and business groups expressed dismay and called the delay false economics.
Louise Haigh, shadow transport secretary, said: “Tens of thousands of jobs and billions in economic growth depend on this project. Delays pile up costs in the long run – ministers must now pinpoint exactly what their indecision will cost taxpayers and the north.”
The high-speed rail group, representing rail industry suppliers, said it was “concerned” by the news, which it said would “only add to the overall cost of the project. The cheapest way to deliver HS2 is fast.”
John Dickie, CEO of BusinessLDN, said: “Delaying construction of HS2 to save money is false economics. Failure to invest now is likely to increase costs in the longer term while delaying the benefits for people and businesses across England.”
Andy Bagnall, chief executive of industry lobby group Rail Partners, said: “While inflationary pressures make infrastructure projects more challenging, it is critical for the UK economy and the achievement of net zero targets that large sections of HS2 are not delayed, which will ultimately increase the Total Cost.”
At least £2bn more is believed to be needed for the first London-Birmingham section alone since the last official budget update in October, well above the amounts unforeseen in the initial funding of £44.6bn.
Harper said the government would “address affordability pressures to ensure that the overall spending profile is manageable.” The designs for Euston station have already been ripped apart once, costing more than £100 million.
The line will initially run to the new Old Oak Common station in west London, despite extensive demolition and years of preparatory work already carried out around the final Euston terminus.
HS2 Ltd and the Department for Transport (DfT) have been working on cost-saving options under two closely guarded initiatives, Project Silverlight and Operation Blue Diamond.
Much of HS2 Phase 1, from London to Birmingham, is well underway, with five of the 10 tunneling machines already underground in Warwickshire, London and Buckinghamshire. Half of the Chiltern Tunnels have been dug and significant work has been completed on the controversial Colne Valley Viaduct crossing a regional park west of London.
However, senior civil servants and ministers told the House of Commons transport committee in January that “tough decisions” would be needed that would likely hold up other rail projects – or even wider transport projects – if HS2 was given support.
The news will increase concerns about wider rail investments. Harper told northern leaders earlier this week that the government remained committed to the high-level £96bn rail plan it drew up last year. But inflation could mean that even less can be built with that money than originally envisaged.
Campaigners welcomed the news of road construction delays. Laura Blake, from the Thames Crossing Action Group, said: “Rather than delay, the government should stop this scheme and cancel it for good rather than continue to destroy people’s lives.”
The DfT budget has been frozen since 2025 in the autumn spending review, which in real terms could mean significant cuts.