California High-Speed Rail Loses Its Federal Grants as Britain's HS2 Resets at Up to £102.7 Billion

On 16 July 2025 the Federal Railroad Administration terminated about $4 billion in grants to California’s high-speed rail project. The Transportation Department put its projected total cost at $135 billion, with about $15 billion spent over 16 years. California is now laying track in the Central Valley with no federal money at all.

Britain’s HS2 tells the same story at a different scale. On 19 May 2026 Britain’s Transport Secretary, Heidi Alexander, gave Parliament the new price of HS2. The line from London to Birmingham will cost between £87.7 billion and £102.7 billion. In 2019 prices, the estimate is now £70.9 to £82.2 billion, against £35 to £45 billion before. The first trains, between Old Oak Common in west London and Birmingham Curzon Street, are expected between May 2036 and October 2039. The full route into Euston follows between 2040 and 2043.

This is for a railway that was once meant to run to Manchester and Leeds and open in 2026.

Two of the most ambitious rail projects in the democratic world have ended up in the same place: far over budget, years late, and shrunk to their first section.

What went wrong with HS2

Alexander had already told Parliament in June 2025 that there was no route to opening by 2033, and called it a contender for one of the most expensive railways in the world. A review by James Stewart into how big transport projects are run was published the same day. Its 89 recommendations were all accepted.

The reset gives the reasons. About two-thirds of the increase comes from scope, estimating and delivery, which means work that was missing from the original plans or priced too low. About a third is inflation. £44.2 billion had been spent by the end of March 2026. The 2025 Spending Review set aside £25.3 billion for the four years from 2026-27.

One saving is symbolic. The top speed drops to 320 km/h, adding three minutes to London to Birmingham and saving between £1 billion and £2.5 billion. HS2’s chief executive Mark Wild, appointed in December 2024, has an internal target of £93.2 billion and first trains in late 2037. The reset itself won’t be finished until the first half of 2027.

California loses Washington

California’s problems are on a different scale. On 16 July 2025 the Federal Railroad Administration terminated about $4 billion of grants, citing a compliance review with nine findings, a funding gap of at least $7 billion and no realistic path to service by 2033. The Transportation Department put the projected total cost at $135 billion, with about $15 billion spent over 16 years. California sued, then dropped the case in February 2026.

The state is carrying on with its own money. Legislation signed in September 2025 extended California’s cap-and-trade carbon market to 2045 and guaranteed the project $1 billion a year from it. The authority’s 2026 business plan puts the cost of the 171-mile Merced to Bakersfield section at about $35 billion, with about 80 miles of guideway built. Track laying is due to start by the end of 2026, and passenger service is targeted for 2032 or 2033. The full San Francisco to Los Angeles line is now estimated at about $231 billion.

The common thread

Both projects were sold as complete networks and are being built as fragments. Both began building while big parts of the design were still moving, so the scope shifted under the budget. Both ran into the cost problems that make American and British rail far more expensive than Spain or Italy: weak in-house engineering, heavy reliance on consultants and slow approvals.

The difference is in who pays. HS2 is a central government project, and the Treasury keeps funding it because cancelling the London–Birmingham section would waste what’s already spent. California’s line has lost its federal partner and now depends on a state carbon market whose revenues move with the price of permits.

Spain built its high-speed network cheaply with standard designs, a strong public engineering agency and a national plan that held for decades. Britain and California each lacked at least one of those. Both are now learning what that costs, one reset at a time.