Parliament’s spending watchdog has called for a rethink on plans for a new HS2 station at Euston after the cost of a revised 10-platform design came out at £400m more than an earlier 11-platform station.
In a new report, the National Audit Office (NAO) said the Government should use the two-year pause on new construction work for the new station to develop a design that is affordable, deliverable and value for money.
Fieldwork for the report was completed ahead of the announcement this month by ministers that work on HS2 Euston and Phase 2a (Birmingham to Crewe) were to be deferred due to inflationary pressures.
HS2 Ltd also reported this month that the latest cost estimate for the 10-platform design is £4.8bn, which is £2.2bn more than its budget.
In November 2020, the Department for Transport (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.
The NAO said that following announcement of a two-year pause, the DfT ‘will now need to consider how best to control the budget while developing an affordable and deliverable design’.
It said the delay in new construction will see spending deferred in the short term but lead to additional costs and potentially an overall increase in costs in the long term due to costs associated with stopping and re-starting work, contractual changes, and managing the project for longer.
Gareth Davies, 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 announcement 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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