More Realistic HS2 Euston Design Urged After Cost Doubles

THE GOVERNMENT is being urged to redesign the HS2 Euston station for a third time to make it more affordable and deliverable, since its current, second, design costs doubled.

According to a new National Audit Office (NAO) report, the current design has doubled in cost since 2020 to £4.8 billion – £2.2 billion more than budgeted. As an already re-designed plan it has wasted £106 million in scrapped design fees alone.

Now, the over-budget, late and scaled back design should be scrapped once again says the NAO, using the delay on HS2 work to come up with a more ‘realistic’ design.

Earlier this month it was announced that work on HS2 Euston and Phase 2a (Birmingham to Crewe) was paused due to inflationary pressures.

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. 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.”

In January 2020 the NAO reported that there was uncertainty over the HS2 station design and the work at Euston was more complex than first thought. The following month the Oakervee Review said the design of the HS2 Euston station was unsatisfactory.

In April 2020 HS2 Ltd set a budget of £2.6 billion for the HS2 Euston station, but by June 2020 it estimated that it could cost as much as £4.4 billion.

Revised Design More Expensive

In November 2020, the DfT instructed HS2 Ltd to pause construction on the 11-platform design to begin work on a second 10-platform plan.

These new plans are now £0.4 billion more expensive than the previous 11-platform design.

In Autumn 2021 HS2 Ltd was instructed by the DfT to integrate more closely with Network Rail’s redevelopment of the existing rail station and surrounding commercial and residential developments. Much of the previous station design work was then scrapped, at a cost of £106 million to the taxpayer.

Two Year Pause Costs More

Following the Transport Secretary’s announcement in March 2023 of the two-year pause in new construction, spending deferred in the short-term will lead to additional costs and potentially an overall increase in the long-term, the NAO says. 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 £2 billion on the HS2 Euston station and its approaches, including design, land, and preparatory works. Inflation, originally forecast to fall by HS2 Ltd, has in fact increased prices by 18% over the past 3 years.

The NAO’s report recommends the DfT works with the Euston Partnership, HS2 Ltd, Network Rail, developer Lendlease and local partners to reassess the expectations for the HS2 Euston project, its budget, and the public benefits. It also suggests setting out clear aims and measures as part of the programme reset and applying the lessons it has learned to HS2 Manchester stations and other parts of the programme.

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.”

The NAO sets out more information about programme resets in its March 2023 report: Lessons Learned: Resetting Major Programmes.

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