HS2 Euston station must be reset yet again after initial cost estimates were found to be “completely unrealistic”.
The Department for Transport (DfT) and HS2 Ltd need to go back to the drawing board to identify the real cost of pausing construction at the London terminus for two years – and the full impact of that decision on the project’s supply chain, it has been urged.
In a scathing report published by the House of Commons Public Accounts Committee, MPs state the initial £2.6 billion estimate for the project was way off the nearly £5 billion price tag it is nearing today – and that despite being eight years into planning, the DfT still has ‘no idea what it is trying to achieve’ or what the end cost will be from halting construction.
The Department and HS2 Ltd must work to properly cost delivery of HS2 Euston station, its impact on the supply chain, and its regeneration benefits, and then present a realistic and affordable design that “provides value for money”, the committee insisted.
“It is clear now that the £2.6 billion budget HS2 Ltd set for the project was completely unrealistic, even before the impacts of inflation are considered. The Department will now need to reset the project for a second time in order to find a design that is realistic, affordable and provides value for money,” wrote the Committee.
In March, the DfT paused new construction work on the London terminus for two years, hoping during that time to reduce spending and to come up with a cost-effective, deliverable design.
However, it still doesn’t know how much the pause is adding to the project – and cannot know until the first two designs have been factored into its next attempt, the report states.
And while the DfT “hopes and expects” the costs associated with the pause will be offset by a fresh design, that effort could be undermined in the interim by supply chain disruptions, contractual changes, demobilising and remobilising staff, and project and site management costs incurred over a longer period.
Further, HS2 Ltd said it expects to spend more than £200 million at Euston to wind up the works and make the site secure.
The development follows the UK Government’s announcement in March to slow down construction of the Birmingham to Crewe section of the high-speed rail line to address soaring inflation and costs.
Recent estimates for HS2 put the total cost between £70 billion and £100 billion.
“Despite being eight years into planning the High Speed 2 station at Euston, the [DfT] still does not know what it is trying to achieve with the station and what sort of regeneration it will support,” wrote the Committee.
“The Department does not know what the additional costs and impacts will be from its decision to pause construction at the station for two years. Working alongside HS2 Ltd, it now has a big task to identify what these costs and impacts are, including the impact on the supply chain and on local residents.
“It is essential for the Department to collect this information both to help it and HS2 Ltd manage the additional costs effectively and also to better inform any decisions in the future on whether to pause major projects.”
The Committee added: “Disappointingly, HS2 Euston station is yet another example of the Department making the same mistakes and failing to learn lessons from its management of other major rail programmes.”
A DfT spokesperson said: “We remain committed to delivering HS2 from Euston to Manchester in the most cost-effective way for taxpayers, which is why earlier this year we made the decision to rephase the construction of Euston to help balance the nation’s books and work on an affordable design for the station.
“The National Audit Office recently acknowledged this will provide time to put the station design on a more stable footing and we continue to work at pace to ensure the transformational benefits of HS2 are delivered to passengers by better connecting our biggest cities, supporting thousands of jobs and helping grow the economy.
“We note the recommendations made in the Committee’s report and will respond to them in due course.”
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