Revealed: your HS2 tax bill

hs2
hs2

Scrapping the northern leg of HS2 could save the typical UK taxpayer £800, new analysis by Telegraph Money and a government adviser on the flagship rail project suggests.

High earners face an even greater saving – £4,000 for someone paid £80,000 a year – if the Government axes the Birmingham to Manchester section of the line.

Rishi Sunak is understood to be considering scrapping or delaying the northern section of the line to cut back on the spiralling cost of the project despite pressure from within his own party to press ahead with the full high-speed rail line.

The individual cost to taxpayers has been revealed by Telegraph Money’s new calculator, which uses official estimates of the costs already racked up by the flagship rail project and forecasts from a leading transport expert of its final bill once construction is complete.

A typical taxpayer – someone earning £32,000 a year – has already paid £420 towards HS2, based on their share of the £29bn spent so far, mostly on the London to Birmingham leg.

Escalating HS2 costs

But this typical tax bill would balloon to more than £2,600 if the project continues on to Manchester and the East Midlands, amid fears the total bill for HS2 has now overrun to more than £180bn.

hs2
hs2

That figure has been estimated by Michael Byng, the chartered quantity surveyor who created the method used by Network Rail to cost projects and who has previously provided HS2 estimates to the Department for Transport.

He now estimates that, in today’s prices, the London to Birmingham leg alone will cost £99bn – compared to the Government’s most recent upper estimate of £45bn in 2019 prices.

Mr Byng also estimates the Birmingham to Manchester leg will cost £55bn and the Birmingham to East Midlands leg – originally intended to go all the way to Leeds before the Government announced it would be scaled back – will eventually cost £28.2bn, bringing the overall HS2 bill to £182bn.

For someone earning £80,000, that translates to an eventual tax bill of £13,000 by the time the project is completed in the 2040s.

Someone on that salary has already contributed more than £2,100 in tax on HS2 since construction began in 2017. For the £32,000-a-year earner, if the Birmingham to Manchester route were scrapped, that would amount to a saving of £790, the calculator estimates.

Mr Byng has arrived at his estimates by adjusting the figures given in the Oakervee Review into HS2 in 2020 by recent cost inflation in the construction sector.

His estimates suggest that the first phase of HS2, London to Birmingham, which is already significantly under way, has the highest tax burden, amounting to a bill of £1,440 for the typical taxpayer and £7,200 for a high earner.

By contrast the line from Birmingham to Manchester will cost the typical taxpayer £790 and a high earner £3,950, while the line to East Midlands Parkway will cost the typical taxpayer £420 and a high earner £2,000.

Telegraph Money’s calculations use income tax to approximate personal HS2 tax bills. Your share of the cost of HS2 is based on your contribution to the UK’s total income tax receipts in the 2023-24 tax year.

The calculator also assumes you will continue paying this share of the nation’s tax throughout the lifecycle of HS2, which is not expected to be complete until at least the 2040s.

In reality, funding for HS2 will come from a wide variety of sources of public cash, meaning the calculator’s results are for illustration purposes only.

The idea of scrapping the northern leg has met fierce resistance from within Mr Sunak’s own party, with a decision now thought to have been delayed until after the Tory Party conference in Manchester next week.

Former prime ministers David Cameron and Boris Johnson said the changes will make the scheme a white elephant.

West Midlands mayor Andy Street has warned that much of the huge influx of investment in Birmingham over the last decade had been made on the assumption that HS2 would go ahead as planned.

Sadiq Khan and Andy Burnham were among five Labour mayors who issued a joint plea to the Prime Minister not to scrap the Birmingham to Manchester line.

But Mr Sunak is said to be “alarmed” by Whitehall warnings that the price tag for the high-speed railway may have soared past £100bn.

A Department for Transport spokesman said“The HS2 project is already well under way with spades in the ground, and our focus remains on delivering it.”

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