Recommendations & Conclusions
5 items
1
Conclusion
Sixty-Third Report - HS2 Euston
Deferred
Why the existing report was late and contained so little information
Government response AI summary
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.
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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 …
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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 We asked HS2 Ltd why it accepted a budget for the station that was so much lower than its estimate of what it would actually cost. HS2 Ltd told us that its estimate was based on a very high-level concept design and that it agreed with the Department that it would have to come back and revisit the scope and costs at Euston. This was because there was lots of uncertainty around exactly what the station and all the surrounding area entailed.17 Given the complexity of the Euston project, we asked the Department about the extent to 9 C&AG’s Report, para 2.11 10 Q 1; C&AG’s Report, paras 10–11 11 Q 32 12 Q 7 13 Q 61 14 Q 47 15 Qq 22, 32, 60 16 C&AG’s Report, paras 2.2–2.3 17 Qq 26, 68 HS2 Euston 11 which they challenged the initial high-concept budget.18 The Department explained that its challenge of costs at the time was focused on the overall Phase One budget and that it had used independent advisers to challenge the reasonableness of individual elements. The advisors had not endorsed Euston station as a fully funded design and concluded that its budget was ‘a stretch target’.19
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Government response AI summary
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 Summer 2025.
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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 …
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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 asked HS2 Ltd about the extended disruption and how it is engaging with the local community. It told us that it continues to have a lot of interaction with Camden residents and the local authority and that it is starting to explore how it can open up some areas for the local community to use. For example, converting the existing taxi rank into a temporary public space. HS2 Ltd acknowledged that it has a difficult job to put the project on ice for two years and told us that it wants to give local residents a chance to help influence what the interim solution looks like so that it is as palatable as possible for local people and businesses.36 30 Q 81 31 Qq 39–40, 42–43 32 Qq 78–80 33 Qq 93–95 34 Q 98 35 HS2006, HS2007 36 Qq 82–83, 86 HS2 Euston 13 2 Managing the wider HS2 programme Managing high inflation and contingency
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Government response AI summary
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.
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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 …
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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 the cost of raw material’.38 In the 2022 Autumn Statement, HM Treasury set out that there would be no increase to departments’ cash settlements for the current Spending Review period to 2024–25 and so departments were expected to absorb the higher costs from inflation within existing cash budgets.39 As a result, the Department announced in March 2023 its decisions to pause new construction work at Euston and on Phase 2a (between Birmingham and Crewe) for the next two years, along with some of its road-building programme, to stay within its cash budgets.40
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Government response AI summary
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.
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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 …
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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 of any further reduction in spending during the year, telling us that it and HM Treasury recognise that for such programmes it is ‘almost impossible—and certainly impossible in a way that is consistent with value for money—to put the brakes on expenditure mid-year’.41
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Government response AI summary
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.
Read full response →
HM Treasury