Mayor Welcomes HS2 Euston Tunnel Announcement

Government relents on not providing taxpayer funding for project

An aerial view of the work site at the approach to Euston station. Picture: HS2

May 9, 2024

Sadiq Khan has welcomed reports that the Government is expected to release over £1bn of taxpayer funds to pay for the HS2 tunnel to Euston.

The London mayor’s office said that the reported cash injection would represent “progress at last” in bringing the high-speed railway into central London, despite Rishi Sunak pledging last year that private developers would cover the tunnel’s costs.

According to the Financial Times, Whitehall sources have said the Government still hopes to recoup the costs of the 4.5-mile tunnel from the private sector at a later stage, but now plans to pay the upfront price of the engineering works itself.

The Prime Minister announced in October last year that as well as cancelling HS2’s ‘Northern leg’ from Birmingham to Manchester, the Government would also save taxpayers £6.5bn on bringing the railway to Euston station, because private developers would pay for the tunnels, tracks and re-developed station in exchange for profits from developing new homes, offices and shops.

In a letter to Mr Sunak days later, Mr Khan said he was worried that it was “wishful thinking” to believe that the private sector would cover the Euston scheme’s full set of costs, given “current challenges in the British economy”.

Similar concerns were raised the following month by the National Infrastructure Commission chair Sir John Armitt, who warned in particular that developers would be unwilling to pay for the tunnel needed to connect Euston with the next HS2 station at Old Oak Common in west London.

Speaking to the Local Democracy Reporting Service in December, Transport Secretary Mark Harper dismissed these concerns, saying that the Government had “seen a lot of interest from private developers already”.

But the FT now reports that the Government is set to spend more than £1bn on the tunnel’s upfront cost.

A source told the newspaper that the Government still hopes to recoup the costs of constructing the tunnel to Euston, but they now expected this would only happen once the wider development around the station was completed. Another official said “alternative funding” mechanisms could ultimately pay for the tunnelling, which could include a retrospective levy on developers.

Approached for comment on the FT’s report, a spokeswoman for Mr Khan said: “Expecting the private sector to find the £6.5 billion needed without serious Government backing seems like pure fantasy from ministers. It would likely result in the Euston terminus being cancelled by stealth, which would be a devastating blow for passengers, the economy and the local area, which has already been blighted by works for years.

“While this announcement signals some progress at last, ministers need to urgently demonstrate that they support HS2 going to Euston – not just with empty words, but with proper financial backing. Building the line but ending it 4.5 miles short of central London would make the country a laughing stock.”

The Department for Transport’s (DfT) position is that the FT’s report is “speculation”, which it does not comment on. Contrary to the remarks from Mr Khan’s office, the Department insists that HS2 will finish its journey at Euston station, which it says will help grow the economy whilst unlocking homes, jobs and commercial opportunities in the area.

A DfT spokesman said, “The Government remains committed to delivering a privately financed Euston station as previously set out, helping to deliver value for money for taxpayers.

“It is one of the largest regeneration opportunities in central London and there is already extensive support and interest from the private sector to invest – and we will set out full details in due course.”

Noah Vickers - Local Democracy Reporter