HS2 Euston

Public Accounts Committee Closed Inquiry
Opened: 15 Feb 2023 Closed: 24 Sep 2023 Parliament page
The Committee will question Dame Bernadette Kelly, Permanent Secretary at the Department for Transport and Mark Thurston, Chief Executive of HS2 Ltd on progress with the design and development of a new HS2 station at Euston. Questions will include how the risks to value for money are being managed, integration … Read more
13 Recommendations
14 Conclusions
1 Report
1 Oral session
1 Letter
1 Event
Activity timeline 5 events
24 Sep
2023
Report published
7 Jul
2023
Report published
15 May
2023
Correspondence
24 Apr
2023
Oral evidence
24 Apr
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
24 Apr 2023
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HS2 Euston
Alan Over · Department for Transport Dame Bernadette Kelly DCB · Department for Transport Mark Thurston · HS2 Ltd
Title HC No. Published Items Response
Sixty-Third Report - HS2 Euston HC 1004 7 Jul 2023 27 Responded
Recommendations & Conclusions
27 results
2 Conclusion Accepted
Sixty-Third Report - HS2 Euston
Ensure realistic and affordable Euston station budget and design before restarting construction.
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 … Read more
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
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3 Conclusion Rejected
Sixty-Third Report - HS2 Euston
Produce interim report on Euston pause costs and supply chain impact within three months.
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 … Read more
Government Response
The government disagreed with producing an interim report in three months due to affordability pressures, stating it will provide spend to date and contractual obligation details once available, but further details will follow after the Euston Reset Programme.
HM Treasury
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4 Recommendation Accepted
Sixty-Third Report - HS2 Euston
Establish plan with Treasury for managing inflation and HS2 programme contingency.
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 … Read more
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
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5 Conclusion Rejected
Sixty-Third Report - HS2 Euston
Provide clear explanations of HS2 Euston cost estimate maturity and risks in six-monthly updates
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 … Read more
Government Response
The government disagreed with the recommendation to include clear explanations of cost estimate maturity and risks in six-monthly updates, stating that while committed to transparency, Benefit-Cost Ratios will not be included in these reports.
HM Treasury
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1 Conclusion Deferred
Sixty-Third Report - HS2 Euston
Existing HS2 Euston report was late and lacked sufficient cost information
Why the existing report was late and contained so little information
Government Response
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.
HM Treasury
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6 Conclusion Accepted
Sixty-Third Report - HS2 Euston
Demonstrate embedded lessons from past rail projects and specific measures addressing Euston cost overruns
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 … Read more
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 Manchester Piccadilly.
HM Treasury
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7 Conclusion Accepted
Sixty-Third Report - HS2 Euston
Department exploring minimum and value-maximisation design options for HS2 Euston station
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: … Read more
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
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8 Conclusion Accepted
Sixty-Third Report - HS2 Euston
Pause in HS2 Euston construction used to develop affordable, passenger-focused design
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 … Read more
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
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9 Conclusion Deferred
Sixty-Third Report - HS2 Euston
Initial HS2 Euston station budget was a 'stretch target' and significantly underestimated costs
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 … Read more
Government Response
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.
HM Treasury
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10 Recommendation Accepted
Sixty-Third Report - HS2 Euston
HS2 Ltd identified significant efficiencies to meet affordable overall project costs
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 … Read more
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
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11 Recommendation Accepted
Sixty-Third Report - HS2 Euston
HS2 Euston cost estimates increased to £4.8 billion, requiring substantial reductions for affordability
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 … Read more
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
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12 Recommendation Rejected
Sixty-Third Report - HS2 Euston
Costs of pausing HS2 Euston construction remain unknown, with significant winding-up expenses expected
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
Government Response
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.
HM Treasury
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13 Recommendation Rejected
Sixty-Third Report - HS2 Euston
Impact of HS2 Euston construction pause on the supply chain remains undetermined
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
Government Response
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.
HM Treasury
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14 Conclusion Rejected
Sixty-Third Report - HS2 Euston
HS2 Ltd actively managing contract pauses but not receiving formal claims from contractors.
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 … Read more
Government Response
The government disagrees with the implied recommendation, stating that despite considering the costs of pausing, it was not affordable to continue due to budget pressures. It is working with HS2 Ltd to manage pause costs and will provide the Committee with details of spend and contractual obligations later.
HM Treasury
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15 Recommendation Deferred
Sixty-Third Report - HS2 Euston
Local communities impacted by HS2 pause, seeking transparency and input on interim solutions.
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 … Read more
Government Response
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.
HM Treasury
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16 Conclusion Deferred
Sixty-Third Report - HS2 Euston
Significant inflationary pressures led Department to pause HS2 and road building projects.
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 … Read more
Government Response
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.
HM Treasury
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17 Conclusion Deferred
Sixty-Third Report - HS2 Euston
Department discusses HS2 inflation management with Treasury, recognising mid-year cuts' poor value.
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 … Read more
Government Response
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.
HM Treasury
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18 Recommendation Accepted
Sixty-Third Report - HS2 Euston
Unclear purpose and drawdown mechanisms for HS2 Phase One's £4.3 billion contingency fund.
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 … Read more
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
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19 Recommendation Accepted
Sixty-Third Report - HS2 Euston
Department's HS2 reports commenced, identifying an early £0.4 billion Euston cost pressure.
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 … Read more
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
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20 Recommendation Accepted
Sixty-Third Report - HS2 Euston
Euston cost pressure consistently reported as £0.4 billion despite expected reductions from design changes.
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 … Read more
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
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21 Recommendation Accepted
Sixty-Third Report - HS2 Euston
HS2 Euston's actual cost estimate of £4.8 billion greatly exceeded previously reported figures.
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 … Read more
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
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22 Recommendation Accepted
Sixty-Third Report - HS2 Euston
HS2 Ltd's two-stage procurement process delays confident cost estimates for complex projects.
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 … Read more
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
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23 Recommendation Rejected
Sixty-Third Report - HS2 Euston
Department delayed HS2 six-monthly report, providing limited new information to Parliament.
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
Government Response
The government rejects the recommendation, citing external factors for past delays but committing to timely future reports within 6 months. However, it specifically states that Benefit-Cost Ratios will not be included in these six-monthly reports, and updating the price base is subject to future agreement.
HM Treasury
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24 Conclusion Acknowledged
Sixty-Third Report - HS2 Euston
Recurring departmental failures in budgeting, cost estimation, and integration across major rail programmes
The Department’s failures around budgeting, cost estimation and integration on the Euston project are not new. We have reported on these as part of our examination of other major rail programmes over the years. For example, on the Thameslink Programme, … Read more
Government Response
The government acknowledged the committee's observation about past failures, stating it fosters a strong culture of learning lessons from major rail programmes and is applying them across HS2, including specific initiatives and sharing insights with less mature projects.
HM Treasury
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25 Recommendation Acknowledged
Sixty-Third Report - HS2 Euston
Department has not demonstrably embedded lessons learned into major rail programmes
We concluded in our 2021 progress update on Crossrail that the Department had still not demonstrated that it is embedding lessons learned into its major programmes.62 When we asked the Department again about learning lessons, the Department and HS2 Ltd … Read more
Government Response
The government agrees with the recommendation to embed lessons learned, stating it has a strong culture of learning from major rail programmes, works with the IPA, and applies lessons across HS2 phases through various initiatives, aiming for implementation by Summer 2025.
HM Treasury
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26 Conclusion Acknowledged
Sixty-Third Report - HS2 Euston
Department identifies recurring lessons from Euston for future complex station developments
In terms of what it has learned from Euston, the Department told us that there are lessons on cost estimation, the treatment of contingency and managing integration on large and complex stations. These are all issues we have seen before … Read more
Government Response
The government acknowledged the committee's observation regarding lessons learned from Euston, stating it fosters a culture of learning and will apply these lessons, particularly sharing insights with projects like Manchester Piccadilly and Birmingham Curzon Street.
HM Treasury
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27 Conclusion Acknowledged
Sixty-Third Report - HS2 Euston
Advanced HS2 stations provide valuable data for later phases and integrated development
In comparison the Department and HS2 Ltd noted that other HS2 stations may be less complex or already more advanced in their progress than Euston, such as Curzon Street in Birmingham, where HS2 Ltd told us that the civil works … Read more
Government Response
The government acknowledged the committee's observation about drawing lessons from more advanced stations, stating it actively shares learning from mature projects like Birmingham Curzon Street with less mature ones such as Euston and Manchester Piccadilly.
HM Treasury
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Government Response AI assessment · 27 of 13 classified
Accepted 12
Acknowledged 4
Deferred 5
Rejected 6
Total 13 recs + 14 conclusions
Correspondence 1 letter
15 May 2023 Correspondence from Dame Bernadette Kelly DCB, Permanent Secretary, Department for Transport, re Public Accounts Committee Hearing on HS2 Euston – Monday April 24th, 2023, dated 3 May 2023
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