Will the budget see Rachel Reeves announce public funding for HS2 to run from Old Oak Common to Euston? The generally cautious Sadiq Khan has gone as far as to say things are looking “increasingly positive” and transport secretary Louise Haigh has all but confirmed the decision.
It certainly looks like a no-brainer. Hardly anyone thought HS2 would work if it didn’t actually reach central London. And Rishi Sunak’s notion, when he pulled public funding for the Euston link and the new station terminus in October last year, that the private sector would step in to bankroll it, never looked convincing.
“Not a cat in hell’s chance,” said Khan at the time. By May of this year, the Tories had conceded the point, agreeing a billion pounds in taxpayer cash towards at least getting the link done. Labour, it seems, has taken that proposal down from the shelf in order to include it in its 2025/26 spending plans.
It’s also effectively now or never. The National Audit Office has already warned that further delay will massively increase costs in the future. With current public funding due to run out in April, failing to secure that billion going into 2025/26 could prove fatal. And no one is coughing up except the Treasury.
But assuming the budget decision is as expected, that will be just the start of an uncertain journey for a run-down, overcrowded Euston station already sorely in need of redevelopment and now dominated by the massive, abandoned and hoarded-up hole in the ground that is Sunak’s legacy. The shape of the new-look Euston, as well as how it will be paid for, remains unclear.
The first big question will be whether to abandon Sunak’s slimmed-down six-platform station plan and revert to the original 11-platform HS2 terminus or something like it, thereby “future-proofing” station capacity to allow for expanding services at some point. It’s the best option, but also the most expensive.
Next, what sort of development can be taken forward over and around the terminus? The initial masterplanning for the government envisaged some 2,000 homes and 19,000 jobs, substantially to be built on top of the station. Camden Council, the local planning authority, had a similar if slightly bigger vision: an integrated HS2, mainline and Underground station plus 2,500 homes, half of them affordable, and up to 34,000 new jobs. This would be important payback, they argued, for those displaced and disrupted by the project.
Sunak junked all that in favour of a plan apparently inspired by the regeneration of the Battersea Power Station area: a new “development corporation” which would secure private investment not for just 2,000 or even 2,500 homes but for up to 10,000, plus commercial space in a new “Euston Quarter”. The theory was that this would produce an income stream to fund both the terminus and the railway line from Old Oak Common. Even when later conceding that taxpayers would have to pay for the rail link, Sunak held out for the station itself to be privately financed.
We don’t yet know if the new government has been tempted down a similar route. If it has, it will need to heed the further warnings of the National Audit Office, which said it “could take years” to get a development corporation in place and bring in private money, with public funding likely to be needed in the interim.
Time is short here too if the Department for Transport is to secure that further funding for after 2026, with the government’s spending review, which will set three-year budgets across Whitehall, to be finalised next April. The danger is that that one billion pounds could turn out to be be just a down payment at a time when the government is announcing “tough measures” to “get a grip on spiralling HS2 costs”.
There is a lot at stake. Camden’s latest independent assessment suggests that a comprehensive regeneration of the site could contribute £41 billion to the UK economy by 2053, with a “locally led” development corporation spearheaded by the council the “best fit” for managing the project. And Khan’s business deputy, Howard Dawber, has highlighted the site’s potential for health and life sciences – a key growth area for the capital – given that it borders the science and technology-rich Knowledge Quarter.
The Mayor himself, custodian of the Underground lines in and around the station, has a clear stake in the project, as well the experience of overseeing Mayoral Development Corporations (MDCs) at Old Oak Common and Olympic Park, with his proposed Oxford Street MDC to follow.
Big decisions then, perhaps particularly for the businesses and residents in the area around the site who have already experienced years of blight and for whom there may now, almost literally, be light at the end of the tunnel, albeit with a long way to go.
In the meantime, everyone wanting to see the project finished might take heart from one of the better decisions made in the dying days of the last government – appointing Mark Wild as chief executive of the beleaguered HS2 Limited, the arms-length body in charge of building the line.
Wild got the Elizabeth line open against the odds in 2022, taking over when the scheme was seriously delayed and significantly over budget – sounds familiar? – working in tandem with then Transport for London boss Andy Byford, who in a recent interview recalled holding morning meetings with Wild “every single day” for two years in order to complete the project.
Transit veteran Byford, who also successfully managed TfL through most of the pandemic, has more recently been overseeing the development of high-speed rail for the US network Amtrak. Perhaps the best budget investment Chancellor Reeves might make would be to lure him back into partnership with Wild to get HS2 done too?
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