Cost of HS2 station at Euston hits £4.8bn as scathing report blasts failure to tie down stalled job’s budget

The cost of the mothballed HS2 station at Euston has hit £4.8bn – a rise of £2.2bn on its original budget.

The scheme was supposed to cost £2.6bn but is now 85% above that figure with close to £550m spent on the project up to the end of last year alone. A further £1.5bn has been spent on land purchases and preparatory works at the site.

In a sign of how much costs had got out of control, a National Audit Office report said HS2 had set its £2.6bn budget in April 2020 but just two months later was admitting the cost could go out to £4.6bn.

“This was because of the complexities of the project and the time to complete a two-stage build,” it added.

“Both HS2 Ltd and the Department for Transport consider that, in hindsight, HS2 Ltd should have agreed a greater risk provision with DfT to cover the uncertainty around Euston station as part of setting the budget.”

And the report said that cost-saving proposals to build a less expensive 10 platform station, instead of the original 11, was now costing £400m more than the previous design.

>>See also: ‘Just get on and build the thing.’ John Armitt goes in to bat for HS2

The £4.8bn figure is £800m higher than the £4bn previously thought and is revealed in a damning report out today from the spending watchdog which says the government should use its recent announcement to halt work on the scheme for two years to come up with an affordable and value for money scheme.

In the report, the NAO takes to task the performance of both the DfT and HS2 for failing to nail down a cost and sticking to it.

NAO head Gareth Davies said: “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.”

And Meg Hillier, the chair of the public accounts committee, 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.

“The Department for Transport and HS2 Ltd have wasted enough time and money. They must get Euston right next time or risk squandering what benefits remain.”

But the NAO said the costs of the scheme could escalate even further after the job was stopped by transport secretary Mark Harper earlier this month.

It warned: “The changes DfT has announced to the HS2 programme provide the time that may allow it and HS2 Ltd to move the Euston project forward on a more stable footing. However, the deferral of spending to manage inflationary pressures will lead to additional costs and potentially to higher spend overall for the project that will need to be managed closely.

“A successful reset will need DfT and HS2 Ltd to have a clear understanding of the costs, risks and benefits of their chosen design for the HS2 station within the wider Euston programme, supported by a realistic budget, clear and effective governance and integration arrangements, and long-term certainty on the scope of the project.”

The report also recommended the DfT “should ensure that the decisions it and HM Treasury make on the Network Rail station’s [at Euston] outline business case provide the long-term clarity required on the extent to which the two [HS2 and Network Rail] stations need to integrate”.

The cost of redeveloping the mainline station at Euston is put at somewhere between £1.3bn and £1.55bn, but has still to be decided, and the NAO said using the two year hiatus to get certainty on both stations “should reduce the risk of further change to the HS2 station design from integration with the Network Rail station”.

The HS2 station at Euston is now not expected to open until 2035 at least with the site mothballed in the coming weeks and manned by just a skeleton staff of security personnel once current preparatory work is finished.

Construction and design teams are already being demobilised with firms moving staff to other parts of the job where they can, or different schemes entirely. 

But redundancies are expected among the 1,200-plus people working on the scheme with Grimshaw starting a consultation process on job losses  and other smaller firms also expected to cut back jobs.