Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Rejected
Costs of pausing HS2 Euston construction remain unknown, with significant winding-up expenses expected
Recommendation
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 HS2 Ltd do not yet know the cost of pausing construction. When asked about how much that would be, both the Department and HS2 Ltd referred to the £2 billion spend to date at Euston and the surrounding area on preparing and enabling the site for construction as “no-regrets work” that it would expect to be relevant to any future design.25 The Department told us that it will not know what the pause at Euston will cost until it finds out how much of the first two designs it can use in its next attempt at getting an affordable design.26 The Department stressed that it hopes and expects that the costs associated with the pause will be offset by finding a more affordable design.27 However, as the NAO has reported, there will be more costs from its supply chain stopping and re-starting work, for example from demobilising and remobilising staff, contractual changes, and project and site management costs being incurred for a longer period.28 HS2 Ltd told us that it expects to spend more than £200 million at Euston to wind up the works and make the site secure.29 18 Qq 30, 32 19 Qq 28, 30–31 20 Qq 8, 57 21 Q 31; C&AG’s Report, para 8 22 Q 23 23 Qq 37, 45, 59 24 C&AG’s Report, page 4 25 Qq 23, 38 26 Qq 44–45 27 Q 38 28 C&AG’s Report, para 2.24 29 Q 39 12 HS2 Euston
Government Response Summary
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.
Government Response
Rejected
HM Government
Rejected
3.1 The government disagrees with the Committee’s recommendation. 3.2 The department did consider the projected costs of pausing the work but was not in a position to continue even had it wished to give the scale of the affordability pressure. It is working with HS2 Ltd to ensure that the costs of the pause are being managed effectively. HS2 Ltd is demobilising construction activities at Euston in a controlled manner. It is noted that, whilst most work on the station site has stopped, some activities are continuing to complete certain ‘no regrets’ assets that were underway, such as the construction of the replacement London Underground traction substation. 3.3 The department will write to the Committee to set out the spend to date on the HS2 station (including spend on adjusting Network Rail infrastructure to enable construction of the HS2 station) once this information is available from HS2 Ltd and its suppliers, along with details of the costs of settling contractual obligations and the extent to which the supply chain has been re-employed elsewhere on the HS2 project. Details of further spend to complete the station, including further design work, will necessarily follow after completion of the Euston Reset Programme when the design of the station to be implemented has been confirmed.