Recommendations & Conclusions
27 items
2
Conclusion
Sixty-Third Report - HS2 Euston
Accepted
The £2.6 billion budget set in 2020 proved to be completely unrealistic for what the Department wanted to deliver. In April 2020, as part of the overall Phase One budget of £44.6 billion set by the Department, HS2 Ltd set a £2.6 billion budget for Euston. This budget was below …
Government response. The government agreed, stating the Euston Reset Programme will establish a realistic budget range, assess the updated station design for affordability, and provide a new delivery-into-service date before restarting construction work.
HM Treasury
3
Conclusion
Sixty-Third Report - HS2 Euston
Rejected
The Department does not yet know the costs and impacts of pausing construction. Neither the Department nor HS2 Ltd know the likely costs of pausing construction work for the next two years. They had been developing funding scenarios for the HS2 programme since the 2022 Autumn Statement but, with the …
Government response. The government disagreed with producing an interim report in three months due to affordability pressures, stating it will provide spend to date and contractual obligation details once available, but further details will follow after the Euston Reset Programme.
HM Treasury
4
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
The Department and HM Treasury have not reached a clear understanding about how they would manage high levels of inflation on the HS2 programme, including accessing Government-held contingency. In the 2022 Autumn Statement, HM Treasury confirmed that departments needed to absorb the higher costs from inflation within existing cash budgets. …
Government response. The government agreed, outlining specific principles for accessing government-held contingency on HS2, including requirements for HS2 Ltd to use existing funds first and exceptions for Secretary of State Retained Risk events, and committed to reporting back in six months.
HM Treasury
5
Conclusion
Sixty-Third Report - HS2 Euston
Rejected
The Department’s reports to Parliament on the HS2 Programme did not reflect the significant level of uncertainty in its estimated cost of Euston station. From October 2020 through to its six-monthly update in October 2022, the Department HS2 Euston 7 has reported to Parliament that the cost pressure at Euston …
Government response. The government disagreed with the recommendation to include clear explanations of cost estimate maturity and risks in six-monthly updates, stating that while committed to transparency, Benefit-Cost Ratios will not be included in these reports.
HM Treasury
1
Conclusion
Sixty-Third Report - HS2 Euston
Deferred
Why the existing report was late and contained so little information
Government response. The government deflected from explaining why the past report was late and lacked information, instead detailing the future Euston Reset Programme's ambition to confirm an affordable and deliverable scheme by April 2025.
HM Treasury
6
Conclusion
Sixty-Third Report - HS2 Euston
Accepted
The Department has not yet learned lessons from managing major rail programmes. In previous examination of other rail programmes like Thameslink and the Great Western Railway modernisation we have reported very similar problems to the ones we are now seeing again with Euston. The Department and HS2 Ltd say that …
Government response. The government agreed, outlining actions to embed lessons from past rail projects, including working with the IPA, promoting a learning culture, identifying cost drivers in the Euston Reset Programme, and sharing insights for future projects like Birmingham Curzon Street and …
HM Treasury
7
Conclusion
Sixty-Third Report - HS2 Euston
Accepted
We asked the Department to give us an indication of what a reduced design for Euston station might look like. The Department told us that it would need to examine two options before it could come to the right solution: the minimum station option that would support passenger services and …
Government response. The government agrees and has commenced the Euston Reset Programme, aiming to develop an affordable Euston campus that maximizes benefits within available funding by April 2025, which reflects the committee's observation of the Department's planned options examination.
HM Treasury
8
Conclusion
Sixty-Third Report - HS2 Euston
Accepted
The Department told us that it wanted to look at all elements of the design to see where the opportunities are to deliver something that prioritises passenger benefits and wider benefits of the scheme, but also reduces costs.14 It plans to use the pause in construction to determine the minimum …
Government response. The government agrees and has commenced the Euston Reset Programme, aiming to develop an affordable Euston campus that maximizes benefits within available funding by April 2025, which reflects the committee's observation of the Department's plans.
HM Treasury
9
Conclusion
Sixty-Third Report - HS2 Euston
Deferred
In April 2020, as part of the overall Phase One budget of £44.6 billion set by the Department, HS2 Ltd planned to design and build the HS2 Euston station for £2.6 billion. This budget was lower than its £3 billion assessment of what the station would actually cost to build.16 …
Government response. The government agrees with the observation and has launched the Euston Reset Programme, aiming to ensure an affordable HS2 station design and establish a realistic budget range and new delivery date in due course, with a target implementation date of …
HM Treasury
10
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
HS2 Ltd told us that there was pressure to drive the overall HS2 cost to what was deemed to be an affordable point. It viewed the £2.6 billion as a budget to work towards and undertook a lot of work on affordability and efficiencies to try and reduce costs. It …
Government response. The government accepts the recommendation for an affordable Euston station design, committing to the Euston Reset Programme which will set a realistic budget, assess design maturity, and provide a new delivery-into-service date by Summer 2025.
HM Treasury
11
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
Later, more detailed estimates showed that the costs were likely to be significantly higher, with the 11-platform design forecast to cost as much as £4.4 billion in June 2020, and the revised 10-platform design estimated to cost £4.8 billion in March 2023.21 The Department told us that it needs to …
Government response. The government accepts the recommendation for an affordable Euston station design, committing to the Euston Reset Programme which will set a realistic budget, assess design maturity, and provide a new delivery-into-service date by Summer 2025.
HM Treasury
12
Recommendation
Sixty-Third Report - HS2 Euston
Rejected
In March 2023, following an announcement by the Secretary of State for Transport, the Department paused new construction work on the HS2 Euston station for the next two years to reduce spend over that period and to give it time to develop an affordable and deliverable design.24 The Department and …
Government response. The government rejects the implicit recommendation, stating it considered costs but paused construction due to affordability pressures. It commits to providing the Committee with spend-to-date, contractual settlement costs, and supply chain re-employment details after the Euston Reset Programme.
HM Treasury
13
Recommendation
Sixty-Third Report - HS2 Euston
Rejected
We asked the Department if Ministers had looked at the impact on businesses when they made the decision to pause construction. The Department told us that the decisions Ministers were trying to make were about trying to protect the supply chain as far as they could and that this was …
Government response. The government rejects the implicit recommendation, stating it considered costs but paused construction due to affordability pressures. It commits to providing the Committee with spend-to-date, contractual settlement costs, and supply chain re-employment details after the Euston Reset Programme.
HM Treasury
14
Conclusion
Sixty-Third Report - HS2 Euston
Rejected
We asked HS2 Ltd whether it was receiving notifications from contractors of their intentions to make contractual claims due to the pause. HS2 Ltd told us that this was not the case and that it is in discussion with contractors about how it can slow down or defer works, and …
Government response. The government disagrees with the implied recommendation, stating that despite considering the costs of pausing, it was not affordable to continue due to budget pressures. It is working with HS2 Ltd to manage pause costs and will provide the Committee …
HM Treasury
15
Recommendation
Sixty-Third Report - HS2 Euston
Deferred
We heard concerns from the London Borough of Camden and Drummond Street Traders, who already face many years of disruption, and impact of the pause in construction on local residents and businesses and be absolutely transparent when it is possible to do so on what the revised timetable involves.35 We …
Government response. The government agrees with the recommendation to address concerns and be transparent, and has commenced the Euston Reset Programme to develop an affordable and deliverable Euston campus by April 2025, deferring transparency on the revised timetable until after this programme.
HM Treasury
16
Conclusion
Sixty-Third Report - HS2 Euston
Deferred
The Department is having to manage significant inflationary cost pressures across its spending on major infrastructure projects, particularly from higher costs of construction materials.37 For example when we examined progress on the HS2 programme in May 2022, HS2 Ltd told us that it was seeing ‘30% to 40% swings in …
Government response. The government agrees with the observation and states that while departments must absorb inflation, they are discussing with HM Treasury how to manage future HS2 cost pressures to protect value for money, and will report back in six months.
HM Treasury
17
Conclusion
Sixty-Third Report - HS2 Euston
Deferred
The Department told us that, although budgets are now set, it continues to have discussions with HM Treasury about how it manages inflation on programmes like HS2 in order to deal with any issues that may arise later in the year. The Department also acknowledged the value for money implications …
Government response. The government agrees with the observation and states that while departments must absorb inflation, they are discussing with HM Treasury how to manage future HS2 cost pressures to protect value for money, and will report back in six months.
HM Treasury
18
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
One potential source of additional funding to help manage higher costs from inflation and also higher costs at Euston is the government-held £4.3 billion contingency. This was set by the Department in 2020 as part of the £44.6 billion budget for the whole of Phase One.42 The Department told us …
Government response. The government accepts the recommendation to clarify contingency use, outlining existing principles for accessing the £4.3 billion government-held contingency via the Development Agreement, and commits to providing a six-month update to the Committee.
HM Treasury
19
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
In response to our May 2020 recommendation on the lack of transparency on the HS2 programme, the Department began providing six-monthly reports to Parliament on progress, including on costs.44 The Department published its first update in October 2020 and, on Euston, reported that design work was indicating a ‘cost pressure’ …
Government response. The government agrees, noting it transparently disclosed the significant £4.8 billion revised cost estimate to Parliament via the National Audit Office when it became available, and reaffirms its commitment to upholding transparency in the HS2 programme.
HM Treasury
20
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
The Department has continued to report that the cost pressure at Euston was £0.4 billion throughout its six-monthly updates, including in the October 2022 update, which was the latest at the time we took evidence.46 Since October 2021, with the Department’s decision to change the design of the station to …
Government response. The government agrees, noting it transparently disclosed the significant £4.8 billion revised cost estimate to Parliament via the National Audit Office when it became available, and reaffirms its commitment to upholding transparency in the HS2 programme.
HM Treasury
21
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
However, HS2 Ltd’s latest cost estimate of £4.8 billion is significantly higher than previously reported, at £2.2 billion over the budget.49 The Department told us that it did not know of the £4.8 billion estimate until HS2 Ltd reported it to them during February and March 2023.50 Prior to that, …
Government response. The government agrees, noting it transparently disclosed the significant £4.8 billion revised cost estimate to Parliament via the National Audit Office when it became available, and reaffirms its commitment to upholding transparency in the HS2 programme.
HM Treasury
22
Recommendation
Sixty-Third Report - HS2 Euston
Accepted
HS2 Ltd explained that it had not expected to have an estimate of costs that it was confident in until the end of 2022 following work by the construction partner on a detailed, ‘bottom-up’ costing of the design.55 This followed the two-stage procurement process that HS2 Ltd told us it …
Government response. The government agrees, noting it transparently disclosed the significant £4.8 billion revised cost estimate to Parliament via the National Audit Office when it became available, and reaffirms its commitment to upholding transparency in the HS2 programme.
HM Treasury
23
Recommendation
Sixty-Third Report - HS2 Euston
Rejected
Prior to our evidence session, the Department had published its latest six-monthly update to Parliament in October 2022. It did not publish an update six months later in March 2023. Following our evidence session on 24 April 2023, the Department published its next six-monthly update on the HS2 programme on …
Government response. The government rejects the recommendation, citing external factors for past delays but committing to timely future reports within 6 months. However, it specifically states that Benefit-Cost Ratios will not be included in these six-monthly reports, and updating the price base …
HM Treasury
24
Conclusion
Sixty-Third Report - HS2 Euston
Acknowledged
The Department’s failures around budgeting, cost estimation and integration on the Euston project are not new. We have reported on these as part of our examination of other major rail programmes over the years. For example, on the Thameslink Programme, this committee found in 2018 that Network Rail did not …
Government response. The government acknowledged the committee's observation about past failures, stating it fosters a strong culture of learning lessons from major rail programmes and is applying them across HS2, including specific initiatives and sharing insights with less mature projects.
HM Treasury
25
Recommendation
Sixty-Third Report - HS2 Euston
Acknowledged
We concluded in our 2021 progress update on Crossrail that the Department had still not demonstrated that it is embedding lessons learned into its major programmes.62 When we asked the Department again about learning lessons, the Department and HS2 Ltd told us that they are learning from Crossrail, such as …
Government response. The government agrees with the recommendation to embed lessons learned, stating it has a strong culture of learning from major rail programmes, works with the IPA, and applies lessons across HS2 phases through various initiatives, aiming for implementation by Summer …
HM Treasury
26
Conclusion
Sixty-Third Report - HS2 Euston
Acknowledged
In terms of what it has learned from Euston, the Department told us that there are lessons on cost estimation, the treatment of contingency and managing integration on large and complex stations. These are all issues we have seen before on other major programmes, including those overseen by the Department. …
Government response. The government acknowledged the committee's observation regarding lessons learned from Euston, stating it fosters a culture of learning and will apply these lessons, particularly sharing insights with projects like Manchester Piccadilly and Birmingham Curzon Street.
HM Treasury
27
Conclusion
Sixty-Third Report - HS2 Euston
Acknowledged
In comparison the Department and HS2 Ltd noted that other HS2 stations may be less complex or already more advanced in their progress than Euston, such as Curzon Street in Birmingham, where HS2 Ltd told us that the civil works is 40% complete. In the case of the more advanced …
Government response. The government acknowledged the committee's observation about drawing lessons from more advanced stations, stating it actively shares learning from mature projects like Birmingham Curzon Street with less mature ones such as Euston and Manchester Piccadilly.
HM Treasury