Cost of Grimshaw’s pared-back Euston HS2 plans hits £4.8bn, NAO reveals

According to the National Audit Office (NAO), the recent decision by transport secretary Mark Harper to save costs by delaying Phase 2a of the route between Birmingham and Crewe and to stand down Grimshaw on its Euston terminus design work would ‘lead to additional costs and potentially an overall increase in costs in the long term’.

The government’s financial watchdog also suggested the need to create ‘an affordable and viable station’ would likely lead to yet another design, effectively the third iteration since 2020.

A report published today (27 March) by the NAO, shows that HS2 Ltd had set an ‘early estimate’ £2.6 billion budget in April 2020 for a proposed 11-platform station.

But, by June 2020, reviews revealed that this design – which was to be built in two stages – could cost as much as £4.4 billion. The NAO report said this increase ‘reflected the immaturity of the early cost estimate’, which had not taken into account factors including the complexity of activity required and the time needed to complete a two-stage build.

Work on this original design was halted in a 2020 ‘reset’. In November that year, the Department for Transport (DfT) confirmed a revised plan for a 10-platform station, which would be built in a supposedly cost-saving single stage. However, this design still exceeded the available budget by £1 billion.

Even after HS2 Ltd and the design team had later identified 600 areas of savings, the estimated cost was still £3.3 billion as at April 2021.

The NAO has now said that the DfT’s latest estimated cost was £4.8 billion and that the budgetary pressures were being compounded by inflationary cost pressures across the  department’s capital programme.

The NAO report said the government should use the two-year pause on new construction work ‘to develop a design that is affordable, deliverable and value for money’.

Meg Hillier, chair of the Committee of Public Accounts, said: ‘Attempts to reset the High Speed 2 Euston Station have failed. It is still unaffordable and no further forward than it was three years ago.

‘Today’s NAO report show that the redesigned station would have cost nearly double what was budgeted. The delays to fix this will be felt not only by the taxpayer, but will continue to disrupt people and businesses around Euston.’

The DfT and High Speed 2 Ltd have wasted enough time and money

Hillier added: ‘The Department for Transport and High Speed 2 Ltd have wasted enough time and money. They must get Euston right next time or risk squandering what benefits remain.’

The NAO reported explained that the two-year pause in new construction, which would see spending deferred in the short term, would lead to additional costs and potentially an overall increase in costs in the long term. This was due to costs associated with stopping and restarting work, contractual changes and managing the project for longer.

In a ministerial statement released earlier this month, Harper said he had decided to delay elements of the high-speed rail link due to ‘significant inflationary pressure and increased project costs’.

As a result, the AJ understands Grimshaw was told to temporarily stand down its entire design team on the Euston job and that any redesigned station would not open until at least 2032. The practice has since confirmed it has started a redundancy consultation process with the staff working on the project.

The HS2 London Euston Station design is led by a consortium made up of Arup with Grimshaw, WSP, Haptic and LDA Design.

Arup had more than 200 people employed full-time on the job. The engineering giant said it was also weighing up what the delays meant for the company.

An Arup spokesperson said: ‘We are working through the potential impact of the pause to the Euston station design scheme. Our immediate priority is to redeploy colleagues where we can to other projects across the firm.’

A DfT spokesperson said the government remained committed to ‘delivering HS2 from Euston to Manchester’ but ‘in a way that delivers the best value for money to the taxpayer’.

They said: ‘That’s why we recently announced we will rephase the Euston section of the project to manage inflationary pressures and work on an affordable design for the station.

‘We will carefully consider the recommendations set out by the National Audit Office and will formally respond in due course.’

An HS2 spokesperson added that the station was ‘one of the most complex parts of the HS2 route to build’.

They told the AJ: ‘[We] are committed to working with DfT and partners to consider the recommendations of the NAO report, and to ensure we get an affordable station that is right for the local community and passengers.’