The UK transport minister says ministers will oversee the costs of the HS2 high-speed rail project, including potentially renegotiating the incentives for the main contractors, including Balfour Beatty's (LSE:BBY).
Costs for the first phase from London to Birmingham have reportedly almost doubled from the original £30 billion.
Transport secretary Louise Haigh announced yesterday that ministers will take a direct role in overseeing the project, as leaked documents seen by The Sunday Times found costs for the first phase had increased to as much as £59.7 billion, based on 2019 prices.
Haigh has launched an independent review into how costs have been allowed to mushroom "without sufficient explanation", with a lack of clarity over the size of the cost overrun.
The government said it is reviewing the incentives for the main HS2 contractors, potentially leading to some contracts being renegotiated or amended.
The largest contracts are held by Balfour Beatty's joint venture with France's Vinci, with others including Costain Group PLC, Keller Group PLC, Kier Group PLC, Morgan Sindall Group PLC (LSE:MGNS) and Severfield-Rowen PLC.
The government also confirmed it will not reinstate previous plans to run the high-speed line to Crewe and Manchester, which were scrapped under the previous Conservative government.
"It has long been clear that the costs of HS2 have been allowed to spiral out of control, but since becoming transport secretary I have seen up close the scale of failure in project delivery – and it’s dire," Haigh said.
HS2's incoming chief executive, Mark Wild, will be responsible for "resetting" the project and providing an action plan to deliver the remaining work as cost effectively as possible, said Haigh.
The transport minister will carry out regular meetings with the rail minister and the chief Treasy minister to "challenge delivery" and "remove obstacles to securing the full benefits of the railway more cost effectively".