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Osborne stands by High Speed 2 despite fears about costs

Chancellor George Osborne this week reaffirmed the government’s commitment to High Speed 2 (HS2) despite growing fears about rising costs.

Osborne said he had set a £42bn budget with a £14bn contingency fund and that the London 2012 Olympics showed that the UK was capable of delivering big projects to budget.

Last week the Institute of Directors (IoD) urged the government to abandon the project, branding it “a grand folly.”

Its intervention came as a survey of 1,233 of its members showed that only 27% felt the high speed rail project represented good value for money and 70% said the scheme would have no impact on the productivity of their businesses.

The survey found that 80% of IoD members felt that investment in existing intercity rail services should be a priority, with
63% believing the money should be spent on other transport projects.

But, Osborne told the BBC’s “Andrew Marr Show” on Sunday that the rail project would heal the North/South divide.

“I’m passionate about this project, because time and again we have this debate in our country about how we’re going to bring the gap between the North and South together, about how we’re going to make sure that our growth is not just based on the city of London,” he said.

“HS2 is about changing the economic geography of this country, making sure the North and the Midlands benefit from the recovery as well,” he said.
Asked whether he had a ceiling on costs he said: ‘We have set the budget for £42bn for the construction costs.

“That includes, by the way, a big contingency.”

The current budget is £42.6bn for the infrastructure and £7.5bn for rolling stock.

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