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Completing the first and now only phase of HS2 will cost between 拢45bn and 拢54bn, according to the rail minister.

In his latest six-monthly update to parliament, Huw Merriman outlined the cost pressures that led the government to abandon later phases of the scheme and explained why the Department for Transport (DfT) priced the completed route between London and Birmingham below the latest estimate provided by the company charged with delivering the scheme.

HS2 Ltd currently forecasts Phase 1 to cost between 拢49bn and 拢57bn in 2019 prices. At the time of the last update to parliament, it had estimated the completed scheme to cost no more than 拢45bn.

The government-backed company advised that cost increases had resulted from 鈥渁 wide range of compounding issues including design performance, delivery productivity, consenting delays and a difficult operating environment with covid-19 and the Ukraine War affecting the supply chain鈥�.

It reported a particularly severe increase in the cost of the main work civils element, with the latest projection showing costs inflating from 拢21.8bn to 拢23.4bn (2019).

More than 30,000 people are currently working on the project, the highest number in the job鈥檚 history.

But Merriman said HS2 Ltd鈥檚 estimated cost at completion had been drawn up before the company was notified of the decisions to cancel Phase 2 and to reduce the scope and adopt a development-led approach at Euston, which were announced by the prime minister last month at the Conservative Party conference.

>> Read more: Key takeaways from the Conservative Party conference 

The rail minister said the government鈥檚 own estimate had been made 鈥渙n the basis of the same data used by HS2 Ltd, but using different assumptions on how much remaining cost risk remains addressable鈥�.

Some of the savings anticipated by the government will likely come from its change in approach at Euston, which saw the number of planned platforms pared back from 10 to six.

The government also decided HS2 Ltd would no longer be responsible for Euston, with a new development company set to be charged with delivering the new station as part of a larger privately-led development.

In his statement, Merriman said government ministers had undertaken 鈥渟ubstantial engagement with Euston stakeholders鈥� including a meeting with the Euston Partnership Board, which brings together HS2 Ltd, Network Rail, Lendlease, Transport for London, the Greater London Authority, Camden Council and the West Coast Partnership.

Merriman also noted the concerns raised by local residents in the 25th report by the HS2 independent construction commissioner. 

In his latest quarterly report, published last week, Sir Mark Worthington said there were concerns about the 鈥渦ncertainties created by the pause in works鈥� around the central London site, which had been exacerbated by a lack of clarity around what was happening following the government鈥檚 decision to re-phase works by two years.

Worthington said locals were 鈥渇rustrated and angry at the lack of project clarity and the impact that this might have on their properties and lives鈥�.

鈥淚n response to the pause in construction activity at Euston we have commenced work on so-called 鈥榤eanwhile uses鈥� to determine what can be done to reduce the impact of the pause on the local community,鈥� he said. 

>> Read more: Everything must go: The HS2 land fire sale and what it means for the future of rail 

The minister also confirmed that the government was looking at whether it could use legislation intended to underpin HS2 Phase 2b to speed up delivery of Northern Powerhouse Rail (NPR).

The government committed 拢12bn to NPR at the same time it announced the cancellation of later phases of HS2.

But with the former having been designed to share a section of track with the latter, there were concerns about the safeguarding of land on this stretch, which were partly assuaged when legislation for HS2 Phase 2b was included in the government鈥檚 agenda for the year.

Merriman said the government would 鈥渢ake the time to consider next steps鈥� for Phase 2b legislation and 鈥渨hether there is a way to repurpose that to deliver NPR鈥�.