HS2 Euston’s projected cost nearly doubles to £4.8bn

The estimated cost of the planned HS2 station at Euston has nearly doubled since 2020, the National Audit Office (NAO) has found.

In April 2020, HS2 Ltd set a budget of £2.6bn for the station, but this has since increased to £4.8bn (both figures are in 2019 prices). The soaring cost has come despite the station plans being redesigned in a move intended to save money.

The original £2.6bn figure was based on HS2’s “early estimate”, says the NAO report. Following further reviews, the company estimated that by June 2020, the original design – which was to be built in two stages – could cost as much as £4.4bn.

The NAO report says the increase “reflected the immaturity of the early cost estimate”, with factors including the complexity of activity required and the time needed to complete a two-stage build not being fully taken into account.

Work on the original design was paused in 2020. In autumn 2021, the Department for Transport (DfT) confirmed a revised plan for the station, which will now have 10 platforms instead of 11 and be built in a single stage. However, the chosen design still exceeded the available budget by £1bn.

In September 2022, an independent technical reviewer reported to the DfT that it was unlikely the project could be delivered within budget – and this month, HS2 told the DfT that the estimated cost was now £4.8bn.

These budget pressures are being “compounded” by inflationary cost pressures across the DfT’s capital programme, the report says.

The NAO concludes that the attempt to reset the HS2 Euston programme since 2020 “has not succeeded and further action is now required to develop an affordable and viable station”.

Earlier this month the government announced it would delay the construction of HS2 Euston so it coincides with phase 2b of the mega-project – meaning the station will not open until at least 2032.

Mace chief executive Mark Reynolds said recently that this delay will force subcontractors working on the project to lay off staff. It may also lead to increased costs in the long term, the NAO has warned.

The report says the government should use the two-year pause on new construction work “to develop a design that is affordable, deliverable and value for money”.

Meg Hillier MP, chair of the Committee of Public Accounts, said: “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 shows that the redesigned station would have cost nearly double what was budgeted,” Hillier added. “The delays to fix this will be felt not only by the taxpayer, but will continue to disrupt people and businesses around Euston. DfT and HS2 Ltd have wasted enough time and money. They must get Euston right next time or risk squandering what benefits remain.”

NAO head 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.”

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