The price of taking the High Speed 2 rail link into London’s Euston and building a new station on the site has risen to more than £7.5bn, according to confidential government documents that throw new light on the spiralling costs of the project.
In early 2023, the National Audit Office nearly doubled its estimate of costs to £4.8bn for the new HS2 station at Euston alone — excluding other elements of the project including the tunnels and the redevelopment of the existing station.
But a paper written by the Department for Transport later in 2023, marked “official — sensitive: commercial” spells out the full cost of the HS2 Euston project for the first time.
The DfT’s paper puts a £6bn price tag on the new HS2 station and tunnels. Another NAO report from earlier this year suggests a further £1.5bn is needed to rebuild the existing Euston station next door, taking the total cost to £7.5bn.
DfT’s estimates for the cost of the entire Euston project are based on 2019 prices — the amount is now closer to £9.4bn after accounting for inflation, according to Financial Times’ calculations.
The question of how to pay for Euston is a political challenge for the government. It is struggling to keep costs down on the overall HS2 project linking London and Birmingham, which is estimated at £67bn but is set to be revised upwards in the coming months.
Tony Travers, public policy expert at the London School of Economics, said the Euston project’s costs had become impossible to control since work started in 2017.
He said: “It is extraordinary — and not in a good way — that the project could knock down people’s homes and undermine local businesses, taking over the surrounding environment in the process, and almost a decade later still not have a clear plan or budget for such a crucially-located site in one of the world’s wealthiest cities.”
Former Conservative prime minister Rishi Sunak announced in October 2023 he was cancelling the northern leg of HS2 from Birmingham to Manchester, on cost grounds.
At the same time he gave the go-ahead to the Euston redevelopment, announcing a new public-private partnership that he hoped could save taxpayers £6.5bn on the Euston scheme.
The DfT documents appear to contradict that claim, suggesting such a partnership would produce “much more modest savings” of between £1.4bn and £2bn.
The Sunak government’s claim that £6.5bn could be raised from the private sector “was pretty wild, it was hard to find anyone who believed that at the time”, said one government figure.
Travers said: “Even significant property development at Euston . . . would produce — in the context of HS2’s final cost — only a small amount of money.”
Sunak also claimed at the time that 10,000 homes could be built on the site but the DfT documents say Lendlease, the government’s partner for the development above and around the station, is planning for a lower number of 2,000 to 3,000 flats.
In theory 8,000 flats could be built but only if the entire site was used for residential property — making it less commercially viable, according to the documents.
One ally of Sunak said it had been the DfT that put forward the estimates of £6.5bn savings and 10,000 homes. “Proper process was followed and the numbers given were provided by the departments,” he said.
The documents say that striking a new public-private arrangement on the site would require the existing contract with Lendlease to be renegotiated.
Andrea Ruckstuhl, group executive at Lendlease, said the developer was planning “to bring forward new buildings and public spaces at Euston through a planning application and partnerships with investors”.
Euston is overcrowded and struggles to cope with 33mn passengers a year, compared to the 20mn it was meant to handle when it was last redesigned in 1968. The projected influx of passengers from HS2 will add to pressure on the station.
More than £2bn has been spent on the Euston project, according to a National Audit Office report in 2022.
The DfT said it would not comment on leaked documents but did not deny the figures.
“Taking HS2 to Euston is a key part of realising HS2’s contribution to national economic growth, which is why this government confirmed funding for tunnelling from Old Oak Common to Euston in the Budget,” it said. “We are working at pace to explore a range of options for Euston, including funding, and we will set out further details in due course.”
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