Sixty-Third Report - HS2 Euston

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 … Read more 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 Show less

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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 … Read more 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 an important part of the advice that was being given to Ministers as they considered options.30 HS2 Ltd told us that it had been working with the Department to develop various funding scenarios and best options for the HS2 programme since November last year but, with the decisions now made, it needs to determine the full extent of the impact of the pause on the contractors and subcontractors working at the Euston site.31 It intends to work with its existing suppliers to redeploy as many resources as it can to other parts of the HS2 programme but it was unable to confirm what proportion of the supply chain that would cover.32 Show less

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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 … Read more 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 19 June 2023.58 Our sister committee, the Transport Committee, held a session with the Department two days later, where it asked why the update had been delayed. The Department explained that a large part of the delay was due to the local election purdah period and that it would seek to return to the original timetable for future updates. The Transport Committee was also concerned about the lack of new information that would be expected in the update, for example updated costs using a more recent price base and an updated benefit-cost ratio. The Department told the Committee that work was ongoing and, if that was not completed in time to report as part of the next six-monthly update, it committed to find other means to provide the Committee with an update on the costs and benefits.59 Learning lessons Show less

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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 …

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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 …

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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 …

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