Watchdog urges ‘realistic’ budget for HS2’s Euston Station revamp to lower costs

Earlier this month, the Department for Transport (DfT) delayed the project due to inflationary pressures coupled with the UK’s struggling finances.

The changes will see services not stopping in Euston for years to come, with passengers expected instead to travel for half an hour on the Elizabeth Line instead.

The latest cost estimate for the 10-platform design at Euston is £4.8bn, £2.2bn more than its original budget. The NAO report recommends that the DfT looks again at the project with regards to its budget and public benefits.

“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,” said Gareth Davies, head of the NAO.

“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.”

In January 2020, the NAO reported that the work at Euston was more complex than originally anticipated and that there was uncertainty over the HS2 station design. While the original budget was set at £2.6bn in April 2020 this was swiftly revised to £4.4bn just months after the initial announcement.

Following the delay to the project, the DfT will now need to consider “how best to control the budget while developing an affordable and deliverable design,” the NAO said.

The two-year pause in new construction will see spending deferred in the short-term but is ultimately expected to increase the overall cost of the project. This is due to costs associated with stopping and re-starting work, contractual changes, and managing the project for longer.

By the end of December 2022, HS2 Ltd had spent more than £2bn on the Euston project, including design, land, and preparatory works. Land purchases and preparatory works alone cost £1.5bn, funded from the wider HS2 budget.

Labour’s Dame Meg Hillier, chairwoman 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.”

A DfT spokesperson said: “We remain committed to delivering HS2 from Euston to Manchester in a way that delivers the best value for money to the taxpayer.

“That’s why we recently announced we will rephase the Euston section of the project to manage inflationary pressures and work on an affordable design for the station.

“We will carefully consider the recommendations set out by the National Audit Office and will formally respond in due course.”