HS2 construction delayed as inflation hits budget
The government has announced it will delay development of HS2, the new high-speed rail link.
This will primarily affect Crewe, as its developing links to Birmingham and Manchester are set to be halted.
But it is believed that the Euston end of the line could also see delays.
When completed, the rail line will link London, the Midlands and the North of England.
The delay is down to lack of funds, brought about by last years record high inflation numbers.
The cost of development has also sky rocketed as material costs hit new heights last year.
In 2010, it was estimated to be £33 billion but more recent statistics put this figure at £71 billion.
This issue has affected the entire construction industry, with new orders to contractors falling, and the housing market grinding to a halt.
Naomi Knight, head of business development at TSL Contractors Ltd said her company is struggling with a new estate.
She said: “Given the inflation rate, it’s looking quite tight for us making a profit on it. By waiting for things to maybe settle a bit and inflation and interest rates to drop, then maybe things might look a bit better.
“This site of ours, it’s sitting waiting to move really.
“It’s pretty much across the board. Basically, all construction businesses seem to be in the same position.”
Mark Thurston, chief executive of HS2 Ltd agreed, telling BBC that the effect of inflation was “significant.”
He said: “We’re looking at the timing of the project, the phasing of the project, we’re looking at where we can use our supply chain to secure a lot of those things that are costing us more through inflation.”
The project has already seen cost cutting measures, with most of the leg to Leeds being axed in 2021
The government sees other matters at the forefront of their agenda, and more funds are needed to tackle them.
This of course comes during the wide wave of public sector strikes, with the funds saved by the delay of HS2 perhaps being put towards new pay deals for nurses and teachers.
The reallocated funds will certainly mean tax rises in the new budget will be less severe, with Chancellor Jeremy Hunt revealing the details next week.
Despite the setbacks, HS2 is still set to carry it’s first passengers sometime between 2029 and 2033.
