An influential committee of MPs has said the government is unclear both on its ambitions for the HS2 Euston station and on the costs of pausing the project’s construction.
A report from the House of Commons’ Public Accounts Committee says that, despite eight years of planning, the Department for Transport (DfT) “still does not know what it is trying to achieve with the station and what sort of regeneration it will support”.
In March, the government paused construction on HS2’s new Euston station as well as HS2 phase 2a from Birmingham to Crewe. It later emerged that the expected Euston costs had nearly doubled to £4.8bn.
The committee says it is now clear the initial £2.6bn budget for Euston was “completely unrealistic” and DfT “needs to use the current construction pause to finally establish the design and expectations for the station against what it is willing to spend”.
It adds the department “needs to be much clearer to Parliament and the public that the revised budget it sets is realistic and the station design it approves is affordable and deliverable” before construction work restarts.
The DfT’s previous reports to Parliament on HS2 also “now appear to have been unrealistic in respect of cost pressures at Euston”, the report says.
It adds that the department “does not yet know the costs and impacts of pausing construction” for the next two years, saying HS2 Ltd “still needs to work with its supply chain and with the local community to determine the full extent of costs and impacts”.
HS2 Ltd intends for much of the supply chain to be redeployed to other parts of the programme. But the committee says “we are not convinced that the impact on the supply chain, particularly on the smaller businesses, will be mostly mitigated by their employment elsewhere”.
The committee is calling for an interim report from DfT in three months “on how they and HS2 Ltd are managing the costs of the pause, exactly how much has already been spent… and how much more they expect to spend to complete the project”.
This should include an update from HS2 Ltd on “the proportion of the supply chain at Euston, in particular small and medium sized enterprises, that have been re-employed elsewhere on the HS2 programme”.
The report also warns that DfT and the Treasury “have not reached a clear understanding about how they would manage high levels of inflation” on HS2, warning that the risk from this will “continue to be an issue”.
The committee says the government should report back to it in six months on how it will manage inflation’s “continued consequences”, as well as the arrangements for accessing the government-held contingency for HS2 of £4.3bn.
The government is also being urged to show to Parliament and the public that it is learning lessons from past rail projects and “not just repeating the same mistakes”.
A statement in June from rail minister Huw Merriman said that HS2 Euston was “not affordable” at its current cost. He said the government would use the next two years “to develop a more affordable scheme design that delivers for passengers, the local community and taxpayers”.
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.”
They added: “We note the recommendations made in the committee’s report and will respond to them in due course.”