Government has lost track of its own plan for HS2 Euston, say MPs

The Department for Transport (DfT) still does not know what it is trying to achieve with the High Speed 2 (HS2) station at Euston, despite spending over eight years planning and designing it.

In March 2023, the DfT announced that it would be pausing new construction work at Euston for the next two years.

In a highly critical report noting multiple different iterations for the project, the Public Accounts Committee (PAC) calls on DfT to use the current pause in construction on the project to finally establish the design and expectations for the station against what it is willing to spend.

The DfT does not yet know the costs and impacts of the pause for the local community, with work still to be done on making the site safe and potentially useable by local residents during the pause. The PAC is also unconvinced that the impact for the DfT’s supply chain, in particular for smaller businesses involved in the works, will be mitigated by their employment elsewhere on the HS2 scheme.

The DfT’s decision to pause followed estimates of a £4.8 billion cost to build the station, compared to an original £2.6 billion budget, which was completely unrealistic. Previous updates to Parliament on cost pressures at Euston did not disclose the risks that construction costs could be significantly higher than unexpected for the station left undisclosed by the DfT. The PAC calls on the Department to provide greater transparency in its six-monthly updates to Parliament.

Questions also remain as to how the Government will manage high levels of inflation on the HS2 programme. The PAC’s inquiry heard the HS2 project is seeing 30% to 40% swings in the cost of raw material. The Treasury has made clear that departments are expected to absorb the higher costs from inflation within existing cash budgets. The DfT and Treasury have not yet reached an understanding on how to deal with this without taking decisions which would risk poor value for money on the project, including further reductions in spending.

Dame Meg Hillier MP, Chair of the Committee, said: “The HS2 Euston project is floundering. This is a multi-billion pound scheme which has already caused major disruption to the local community put on pause. The pause, ostensibly to save money, is not cost free – mothballing and possible compensation for businesses which have lost work will all need to be added to the HS2 tally. The Government must now be clear what it is trying to achieve with this new station, and how it will benefit the public.

“Our report finds that a wildly unrealistic budget for HS2 Euston was set in 2020 in the expectation that it would be revised. The Government must demonstrate that that it is not just repeating the same mistakes of unrealistic costings.

“HS2 Euston has shown us that forging ahead over-optimistically in an unclear direction is clearly not the right approach.”