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A parliamentary watchdog committee has expressed doubts about the government鈥檚 ability to build its planned Euston terminus for HS2 using private money.

The public accounts committee (PAC), made up of backbench MPs, published a major review of the delivery of the HS2 project today, which criricised the Department for Transport and its delivery body for presiding over 鈥渁 casebook example of how not to run a major project鈥�.

Repeated cost increases and delays over recent years have resulted in the scope of the high-speed rail project being slashed, with northern legs cut and the Euston terminus thrown into uncertainty.

The new Labour government confirmed in the autumn Budget that the rail scheme would end in central London, but insisted, like its predecessor, that the scheme at Euston must be substantively funded by private finance. 

The PAC鈥檚 report said it was 鈥渦nclear how achievable鈥� this goal would be, given the approximate 拢6bn cost of the project.

鈥淲e are sceptical that the private sector will provide this level of contribution,鈥� the report said.

According to the department鈥檚 testimony during the committee鈥檚 inquiry, funding for Euston would be a mix of four components: private financing of the HS2 station; development receipts from commercial development; tax increment finance or contributions from local government; and some residual public funding.

鈥淭he department said that, once decisions are taken on the delivery model and spatial allocation, and the detailed design of the station has begun, there will be a better understanding of the potential commercial return and likely level of private investment,鈥� the report said.

The department expects to progress with the delivery model and the establishment of a delivery company for the Euston project over the next year. 

It has also committed to creating a development corporation, focused on the wider regeneration of the area, and is currently considering two models for this. One would be mayoral-led and the other led by Camden council.

>> Read more: Government鈥檚 top infrastructure advisor 鈥榥ever been convinced鈥� by HS2 governance structure

>> Read more: HS2 contracts under review as government rules out resurrection of second phase

The report had harsh words for the management of the HS2 scheme as a whole, and expressed reservations about the way it was still being handled.

It said that the department and HS2鈥檚 鈥渃ontinued disagreement鈥� on how much it will cost to complete phase 1 鈥渟tarkly illustrated鈥� their failure to work together.

In November 2023, the department estimated the scheme鈥檚 cost at between 拢45bn and 拢54bn, while HS2 Ltd鈥檚 estimate in June 2024 was between 拢54bn and 拢66bn. 

Both of these estimates are in 2019 prices, meaning the figure could be closer to 拢80bn.

Neither DfT nor HS2 Ltd currently have the skills or capabilities to make a success of the programme

Public accounts committee

The PAC said the failure of the programme was 鈥渘ow a reputational risk to the UK鈥� and urged the government to explain before the summer what value taxpayers can expect from the huge public investment in the project.

Its report found that 鈥渘either DfT nor HS2 Ltd currently have the skills or capabilities to make a success of the programme鈥� and the committee was 鈥渘ot convinced that DfT has sufficiently considered how it can bring fresh thinking to its own leadership of HS2鈥�.

Geoffrey Clifton-Brown, chair of the committee, said HS2 was now 鈥渁 cautionary tale that should be studied by future governments鈥�.

鈥淚t is ultimately the Department for Transport that has failed to manage this enormous project and manage HS2 properly,鈥� he said. 

[New chief executive Mark Wild] is taking decisive action to get the project back on track at the lowest feasible cost

HS2 Ltd spokesperson

鈥淭his is likely to have wasted billions of pounds of taxpayers鈥� money in delays and overspends. The department, as well as resetting the project, must now reset itself to manage this project to a workable conclusion in line with the eventually agreed budget and timescale. 

鈥淭o do this, they will need to employ people with the correct range of skill-sets to critically supervise and oversee this huge project. This is the only way to salvage its severely tarnished reputation. We expect to see a real improvement when we next examine this matter.鈥�

A spokesperson for HS2 Ltd said: 鈥�Mark Wild, our new chief executive, agrees with the committee鈥檚 conclusion that there has been failure in the management of HS2鈥檚 cost and schedule. He is taking decisive action to get the project back on track at the lowest feasible cost.

鈥淗is fundamental reset is critical to ensure the successful delivery of HS2鈥檚 goals 鈥� driving economic growth and connecting our biggest cities with fast and reliable journeys.鈥�

A DfT spokesperson said: 鈥淭he continuously climbing costs of HS2 are completely unacceptable. That is why the government acted swiftly to get the project back under control by bringing new leadership to HS2 Ltd, directing the company to begin work on resetting culture, schedule and costs, and reinstating robust ministerial oversight.

鈥淗S2 Ltd is working with its supply chain to reset the programme and deliver the railway safely and at the lowest reasonable cost.鈥�