Recommendations & Conclusions
12 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
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
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
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
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