HS2 Euston needs full design reset as costs set to double

A new National Audit Office report into the station warns that forecast project costs have continued to balloon despite attempts to simplify the project.

The original £2.6bn station budget is now reckoned to have soared to £4.8bn, even with the cost-cutting decision to trim back platforms from 11 to 10.

Spending to date on advanced works has already hit £548m.

NAO experts warn that the Government’s latest two-year pause in new construction can only inflate long-term costs further.

This is due to costs associated with demobilising and then remobilising teams, contractual changes, and managing the project for longer.

It has called on the Government to use the two-year pause to go back to the drawing board and develop a design that is affordable, deliverable and value for money.

The NAO’s report recommends the DfT works with stakeholders: Euston Partnership, HS2 Ltd, Network Rail, Lendlease and local partners to reassess the expectations for the HS2 Euston project, its budget, and the public benefits.

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.”

Meg Hillier MP, Chair of the Committee of Public Accounts. 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 shows that the redesigned station would have cost nearly double what was budgeted.

“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.”

Euston Station cost reality check

• 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.
• The following month the Oakervee Review 2 raised concerns about the design of the HS2 Euston station and concluded that the existing design was unsatisfactory.
• In April 2020, HS2 Ltd set the station budget at £2.6bn, but by June 2020 it estimated that it could cost as much as £4.4bn.
• In November 2020, the DfT instructed HS2 Ltd to pause construction on the 11-platform design to begin work on a new 10-platform plan.
• These new plans are now £0.4bn more expensive than the previous 11-platform design.
• In Autumn 2021 the Department also directed HS2 Ltd to integrate more closely with Network Rail’s redevelopment of the existing rail station and confirmed the extent of the surrounding commercial and residential developments.
• Much of the previous design work was then scrapped, at a cost of £106m to the taxpayer, despite DfT’s efforts to minimise this.
• To help with this integration, and in response to the Oakervee recommendations, in December 2021 the DfT formally established the Euston Partnership to bring together the different bodies involved with projects on the Euston site, including delivery of HS2 Euston station.
• Following the Transport Secretary’s announcement to delay works in March 2023, the DfT will now need to consider how best to control the budget.
• By the end of December 2022 HS2 Ltd had spent more than £2bn on the HS2 Euston station and its approaches, including design, land, and preparatory works.
• The land purchases and preparatory works cost £1.5bn and were funded from the wider HS2 budget.