HS2 Euston: Private funding proposals have fallen into a ‘black hole,’ warns boss of key contractor
The government is ignoring proposals on how to privately fund the embattled HS2 project’s Euston section, the chief executive of a key contractor has warned.
“It’s gone into a black hole,” Mark Reynolds, the boss of construction firm Mace Group, told City PM in an interview.
“When the Chancellor phones us up and says, can we have your help? Can you come up with a private sector finance proposal? We have a private sector finance proposal, come and talk to us for that, but they haven’t come back and spoke to us yet.”
“Whilst we are happy government are working to get private money into the project, we’ve heard nothing from them on it yet.”
The government is banking on private developers to secure the future of HS2’s Euston terminus in Central London, following the decision to axe the northern leg of the route in October. Costs have soared to over £5bn, from an initial budget of £2.6bn, and construction at the site has been delayed indefinitely.
The Chancellor has asked construction and consultancy group Mace, along with other key players, to drum up proposals on how it can bring in private funding to guarantee work at Euston continues. If not enough money is found, HS2 will run permanently from Birmingham to Old Oak Common in the capital’s western suburbs.
Speaking on the government’s lack of communication, the boss of Mace, who are delivering the vast London station in a joint venture with the Spanish contractor Dragados, said: “It’s a frustration.”
“If you leave it for another six months, then you start running into a problem with Old Oak Common being finished, and High Speed 2, Old Oak Common to Birmingham being completed, but Euston not being completed,” he warned.
“There will be a period, for every day a decision isn’t made, say June next year, is every day that High Speed two won’t work as a full functioning London to Birmingham system.”
The extension to Euston will require digging out a tunnel from Old Oak Common and building a six-platform station next to the west coast mainline terminal.
But a string of senior officials have in recent weeks poured cold water on the idea private developers will offer support, considering the uncertainty surrounding the project.
Sir John Armitt, chair of the government’s key advisory group on infrastructure, the National Infrastructure Commission, warned in November the private sector would not fund the 4.5 mile tunnel. “At the end of the day the government will need to be ready to fund the core civil engineering for the final miles of the project,” he told the Financial Times in an interview.
At a London Assembly meeting that same month, London Mayor Sadiq Khan said there was “not a cat in hell’s chance” private investors would back the Euston project. “The idea that the private sector is going to put billions into a project, not knowing what is round the corner, what other U-turns might come, is not realistic.”
Euston has emerged as a major headache for Rishi Sunak to resolve, as the conservatives look to salvage some dignity from HS2 ahead of a looming general election.
Reynolds told City PM the delivery of Euston had been held back by poor and often “politically motivated” government decisions.
“They didn’t conduct a proper business case as far as I’m concerned, and they were given ample information to do that,” he explained, adding that voter appeal likely influenced the expensive decision to build much of High Speed two in a tunnel.
Communication at key moments, including the axing of the Northern Leg, has often been given on the day, leaving suppliers, investors and contractors in the lurch. “The key thing we need is stability, you know, certainty, be really clear about the long term pipeline… the biggest thing people won’t invest in is uncertainty.”
Will HS2 ever terminate in Central London? “Yes,” Reynolds insisted. “Fortunately, now the right conversations are being held.”
“I don’t think any decision is going to be made fast, but one thing’s for certain if they don’t make [one] in the next couple of years to press ahead with Euston, it is little point going from Birmingham to Old Oak Common.”
A Department for Transport spokesperson said: “As has always been the case, the line will finish at Euston.”
“The new plan for Euston represents a world class regeneration opportunity that offers greater value for money for taxpayers. Our approach has been successfully carried out recently – including in regenerating Battersea Power Station and King’s Cross – and there has already been significant interest from the private sector to invest.”
HS2 Ltd did not wish to comment.