The Department for Transport and HS2 Ltd are making progress in their latest reset of the programme, but must now ensure lessons have truly been learned from past failures, according to a new report from the National Audit Office.
The warning comes at a critical moment for the UK’s flagship high-speed rail project, which has been beset by escalating costs, delayed timelines, and major scope changes over recent years.
Rising Costs and Ongoing Reset Efforts
HS2 was originally designed to connect London, Birmingham, and the North of England as part of a two-phase network. However, the Phase 2 extension was cancelled in 2023, leaving the core London–Birmingham section as the primary focus.
The programme has already incurred significant expenditure. By March 2026, £46.8 billion had been spent, including works linked to the now-shelved northern extension. HS2 Ltd now projects a further £153 million will be required to complete the current “reset” programme, with completion targeted for spring 2027.
Despite these efforts, costs continue to rise. In May 2026, the DfT revised its estimate for completing HS2 to between £87.7 billion and £102.7 billion – roughly double the original 2020 forecast for Phase One alone.
The NAO attributes much of this increase to:
- Changes in project scope
- Inefficient delivery approaches
- Persistent underestimation of timelines
HS2 Ltd is working towards producing a more robust and fully assured baseline cost estimate by spring 2027.
Delays Extend Well Into the 2040s
The programme remains heavily delayed. The full railway between Euston and north of Birmingham is now unlikely to be completed until between 2040 and 2043. This represents a delay of up to 13 years compared with earlier expectations.
Earlier services are still planned, with initial operations between Old Oak Common and Birmingham expected to begin between 2036 and 2039.
In a bid to reduce risk and cost, the DfT has also scaled back design speeds. Trains will now operate at 320 km/h rather than the originally proposed 360 km/h. While this change is expected to save between £1 billion and £2.5 billion and simplify testing requirements, it may also reduce long-term benefits by approximately £1.3 billion due to longer journey times.
Euston Station Remains a Critical Challenge
One of the most complex and sensitive elements of the programme continues to be the development of the HS2 terminus at Euston.
To date, £3.8 billion has already been spent on enabling works. A further £4.1 billion in public funding is anticipated based on early-stage designs, although total costs are expected to rise once private financing contributions are finalised.
The successful delivery of Euston will be pivotal to the overall effectiveness, and public perception, of HS2.
Commercial Reset and Organisational Changes
As part of its reset strategy, HS2 Ltd is renegotiating major supply chain contracts in an attempt to improve cost efficiency and incentivise better performance. The organisation estimates that this “commercial reset” could deliver savings of around £2 billion.
Internally, HS2 Ltd is also restructuring following reviews that highlighted weaknesses in organisational design, along with gaps in delivery and contract management capabilities.
NAO: Progress Made, But Risks Remain
While acknowledging improvements, the NAO stresses that substantial risks still exist. The watchdog has called on DfT and HS2 Ltd to maintain strong discipline across cost control, scheduling and governance as the programme progresses.
Key recommendations include:
- Reviewing the reset timetable in autumn to ensure it remains achievable
- Maintaining focus on cost, schedule, and commercial management
- Revisiting governance arrangements to ensure they remain fit for purpose
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.”
Industry Implications
For professionals across the UK rail sector, particularly those involved in major infrastructure delivery, supply chain engagement, and programme management, the NAO’s findings reinforce familiar challenges: the importance of realistic baselines, strong governance, and commercial discipline.
With billions already committed and public scrutiny intensifying, HS2’s reset must now move beyond planning into demonstrable, sustained delivery performance.
Image credit: iStock
