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Costain鈥檚 chief executive has brushed off the impact of the government鈥檚 decision to cancel the 拢2bn Stonehenge tunnel project and said the firm is 鈥渇ocused on delivering the programme that we鈥檝e got鈥�.

The contractor won a 拢60m job as delivery assurance partner on the scheme in a joint venture with Mott MacDonald in 2022 but the 3.3km tunnel was mothballed by Labour last month.

Alex Vaughan said the impact of the cancellation on Costain had been 鈥渟mall and manageable鈥� in light of the 拢4.3bn order book the firm announced this morning in its half year results.

鈥淚f you look at the portfolio of customers and work that we鈥檝e got, it鈥檚 very small,鈥� he said. 鈥淲e鈥檙e focused on delivering the programme that we鈥檝e got and securing the work in other markets鈥�.

>> See also: Costain announces 拢10m share buyback after increasing profit in half-year results

The highly controversial scheme was originally approved by the government in 2020 but has faced several legal challenges by campaigners, with the latest bid launched last month just two weeks before Labour鈥檚 decision to scrap the project.

Vaughan, who has headed up Costain since 2019, admitted the tunnel was a 鈥渧ery challenging project from a stakeholder point of view鈥� but praised the government for making 鈥渉ard decisions鈥�.

鈥淚f you look at the big picture, I think it鈥檚 a positive that we鈥檝e got a government that鈥檚 making the hard decisions to prioritise 鈥榬ight what infrastructure are we going to deliver and what are we not going to deliver?鈥欌��

Labour is drawing up a 10-year plan for infrastructure which Vaughan hopes will provide the industry with certainty and put it in a 鈥済ood place moving forward鈥�.

But the contractor has been hit by the cancellation of parts of HS2 over the past two years including the pause on the central London tunnels running between Old Oak Common and Euston which the firm is due to build in a joint venture with Skanska and Strabag.

Vaughan admitted he did not know when the Euston tunnels would be given the go ahead but said 鈥渨hen they let us know, we鈥檒l get on with it鈥�.

鈥淭he important thing is you鈥檝e got to make the decision. What we want is clarity and certainty. So the fact that the decisions might be hard, it鈥檚 like any decision that any business makes, you need to make a decision, and then people can get on with it.鈥�

Vaughan said Costain鈥檚 biggest growth market over the next few years would be the water sector following a series of frameworks the firm has been appointed to and more than 拢500m of work in the sector it has been awarded since the end of June.

The firm鈥檚 revenue in its natural resources division increased by 10% to 拢195m in the first half of the year with its operating profit for water, defence and nuclear energy up from 拢7.5m to 拢8.4m.

The largest part of its forward order is four ongoing tunnel schemes for HS2 along with a new job on the M60 for National Highways and a hydrogen contract with BP.

Costain saw its revenue slip slightly to 拢639m in the six months to the end of June compared to 拢664m in the same period in 2023 but announced a 拢10m share buyback after reporting increased pre-tax profit of 拢17m, up from 拢8.5m.