U.K. High-Speed Rail Seen Costing as Much as 80 Billion Pounds

Photographer: Simon Dawson/Bloomberg

"The British economy is on the mend -- but there is still a long way to go and I know things are still tough for families," Chancellor of the Exchequer George Osborne said yesterday. Close

"The British economy is on the mend -- but there is still a long way to go and I know... Read More

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Photographer: Simon Dawson/Bloomberg

"The British economy is on the mend -- but there is still a long way to go and I know things are still tough for families," Chancellor of the Exchequer George Osborne said yesterday.

The planned high-speed rail line connecting London and northern England may cost as much as 80 billion pounds ($125 billion), more than projected by the government, according to the Institute of Economic Affairs.

Lobbying from local officials for new links to the line, known as HS2, and changes to the route due to opposition from residents will probably add about 30 billion pounds to the project’s total cost, the institute will say in a report to be published tomorrow. The government now estimates expenses at 42.6 billion pounds, according to the report.

HS2 relies on a “flawed” business case and there are better options for improving U.K. railroads, according to the website of the HS2 Action Alliance, a nonprofit organization working with community groups to oppose the project. Alistair Darling, a former Labour head of the U.K. Treasury, has said he is an “HS2 skeptic.”

“It’s time the government abandoned its plans to proceed with HS2,” said Richard Wellings, a director at the London-based institute. “The evidence is now overwhelming that this will be unbelievably costly to the taxpayer while delivering incredibly poor value for money.”

Wellings also wrote the report, “High-Speed Gravy Train: Special Interests, Transport Policy and Government Spending.”

Construction is scheduled to start in 2017, with the line from London to Birmingham due to open in 2026 and traffic starting on extensions to Manchester and Leeds by 2033. New trains will cost an additional 7.5 billion pounds. The government said in October it would offer more compensation to homeowners living on the route who are affected by the project.

Chancellor of the Exchequer George Osborne reaffirmed the government’s commitment to HS2 in his spending review on June 26. Legislators in the House of Commons backed the project on the same day.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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