HS2: Treasury warns new rail line could cost £73bn
Officials have privately voiced concerns over the spiralling budget of the High Speed rail link
TREASURY officials are privately warning that the cost of the controversial High Speed Two rail line could hit £73bn.
However, Chancellor George Osborne remains committed to the 225mph link from London to the north of England, saying the project is an "engine for growth".
Britain's biggest infrastructure project has an official projected cost of £42.6bn, but critics now warn the effects of inflation and VAT over the project's 20-year lifespan will see the figure soar by more than £30bn. The scheme’s budget has already risen significantly: earlier this year it was increased by £8bn from £34.5bn.
Senior Treasury officials told the Financial Times they are concerned the scheme will drain investment from projects which would boost growth more, such as less glamorous local road schemes.
Officials said that if Labour forms a government after the next election it would be forced to rethink the project. Shadow Chancellor Ed Balls recently said the party would not "write a blank cheque" for the rail link and in July Lord Mandelson warned the project could prove "an expensive mistake".
"There is definitely a feeling of paranoia in the air at the moment," said one HS2 official. "Nobody knows what Labour would do if it got in. And there’s a sense that if the costs go up again then it’s game over, definitely."
However, a Treasury spokesman said the scheme would definitely go ahead: "The High Speed Two programme is the most important investment in public infrastructure in a generation. HS2 has the full support of the whole government, including the Treasury." ·