New warning on soaring costs of HS2 Euston

The National Audit Office is warning that HS2 Ltd and the Department for Transport cannot complete the high speed train terminus at London Euston within the existing budget of £2.6 billion, and that the estimated cost now stands at £4.8 billion.

A new NAO report is also warning that budget pressures have been worsened by inflation, which is affecting the DfT’s capital programme. It says the department will need to manage this ‘closely’.

The size of the HS2 station at Euston was reduced from 11 platforms to 10 in November 2020, but it still exceeded the budget by £1 billion.

At the end of December 2022, HS2 Ltd had spent £0.5 billion on HS2 Euston, along with a further £1.5 billion on land purchases and preparatory works for the station and its approaches. This money was taken from the wider HS2 Phase One budget rather than the Euston budget.

The report also says that the revised HS2 Euston design addressed previous issues concerning the design and construction of the station but it did not solve the challenge of designing it within the budget.

Transport secretary Mark Harper announced earlier this month that work on HS2 north of Birmingham was being paused for two years, but the NAO says DfT and HS2 Ltd will also pause the work at HS2 Euston for two years as well, while they look again at how to achieve an affordable design that provides value for money. As a result of this pause there will be additional costs and overall expenditure could increase.

The report concludes that the DfT’s and HS2 Ltd’s attempt to ‘reset the programme’ since 2020 has not succeeded, and that ‘further action is now required to develop an affordable and viable station’.

The head of the NAO Gareth Davies said: ‘Government is once again having to revise plans for Euston HS2. Clearly, the 2020 reset of the station design has not succeeded. DfT and HS2 Ltd have not been able to develop an affordable scope that is integrated with other activity at Euston, despite their focus on costs and governance since 2020. Recent high inflation has added to the challenge.

‘The March 2023 announcement by the transport secretary pausing new construction work should now give DfT and HS2 Ltd the necessary time to put the HS2 Euston project on a more realistic and stable footing. However, the deferral of spending to manage inflationary pressures will lead to additional costs and potentially a more expensive project overall, and that will need to be managed closely.’

Meg Hillier, who chairs the Commons Public Accounts Committee added: ‘Attempts to reset the High Speed 2 Euston station have failed. It is still unaffordable and no further forward than it was three years ago.

‘Today’s NAO report show that the redesigned station would have cost nearly double what was budgeted. The delays to fix this will be felt not only by the taxpayer, but will continue to disrupt people and businesses around Euston.

‘Department for Transport and High Speed Two Ltd have wasted enough time and money. They must get Euston right next time or risk squandering what benefits remain.’

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