No light at end of the tunnel: HS2 delay leading to higher costs as London Euston link nearing £5bn
Delays linking up HS2 and Euston will mean extra costs and potentially even higher spending, the National Audit Office has warned ministers.
A near 50-page report, looking specifically at the Euston element of the much delayed high-speed line, concluded that a “reset” in 2020 had “not succeeded”.
It comes after Transport Secretary was criticised earlier this month after announcing that the construction of the Birmingham to Crewe leg of HS2 will be delayed by two years, with the Government also “prioritising” the initial services between Old Oak Common in west London’s suburbs and Birmingham Curzon Street.
Presented as a cost-saving measures amid high inflation, the changes are set to see services not stopping in Euston in central London for years to come, with passengers expected instead travel for half an hour on the Elizabeth Line.
But the National Audit Office warned while the postponement may allow the Department of Transport to move the Euston end of the project to a “more stable footing”, “the deferral of spending to manage inflationary pressures will lead to additional costs and potentially to higher spend overall for the project that will need to be managed closely”.
It said that latest estimate by HS2 Ltd set the cost for the 10-year platform design at Euston at £4.8 billion, over £2 billion over-budget.
“A successful reset will need DfT and HS2 Ltd to have a clear understanding of the costs, risks and benefits of their chosen design for the HS2 station within the wider Euston programme, supported by a realistic budget, clear and effective governance and integration arrangements, and long-term certainty on the scope of the project,” the report warned.
The NAO said that it has not yet been show that “the conditions are in place to secure value for money”.
The report found that by the end of December 2022, HS2 Ltd had spent more than £2 billion on the HS2 Euston station and its approaches, covering design, land and preparation works.
Gareth Davies, the head of the NAO 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.”
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.”
She said that the report shows “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.”
A Department for Transport 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.”
On Sunday, Levelling Up Secretary Michael Gove refused to guarantee that HS2 will terminate at Euston.
Asked on Channel 4’s The Andrew Neil Show whether he could guarantee the train route would end in central London, the senior Conservative said: “There is a debate about whether or not it should be Old Oak Common (a west London suburb) or Euston.”
Pressed on whether HS2 would go to Euston, the Cabinet minister replied: “I don’t know what the final decision will be about where the terminus will be.”
Press Association – Dominic McGrath