Recommendation 2

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 HS2 Ltd’s early estimated cost for the station of £3 billion. Later, more detailed estimates showed that the costs were likely to be significantly higher, with the 11-platform design forecast to cost £4.4 billion in June 2020 and the revised 10-platform design £4.8 billion in March 2023. This is despite work by HS2 Ltd between 2020 and 2022 to identify ways to reduce the expected costs. HS2 Ltd tells us that it set the budget in 2020 on the expectation it would be revised given the uncertainty around the station design and its provisional estimate. The Department also acknowledges that its challenge of costs at the time was focused on the overall Phase One budget rather than individual elements, such as Euston. The NAO reports that additional spending of £548 million has taken place up to the end of December 2022 (in cash terms) of which £106 million was nugatory spend due to the decision to alter the design from 11 platforms to 10. Recommendation 2: 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 with timescales for construction before it restarts construction work at Euston.