HS2: Plans for private funding of Euston tunnel likely to fail, top adviser warns

Rishi Sunak’s plan to use private developers to fund a connecting tunnel through London to HS2’s Euston terminus is likely to fail, a top government infrastructure adviser has warned.

In an interview with the Financial Times, Sir John Armitt, chair of the National Infrastructure Commission, said: “You’ve still got to dig 4.5 miles of tunnel and that won’t be paid for by the private sector.”

His comments come amid widespread scrutiny of the government’s decision to axe the northern leg of the project last month, due to soaring costs.

Under current plans, the high speed route is set to terminate at Euston in Central London. Sunak has claimed that taxpayers will save £6.5bn on the Euston section as private groups would fund the tunnel and station in exchange for profits from developing houses and shops.

But Armitt said: “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.”

HS2 has faced years of delay, departing chief executives and a budget which is now billions ahead of initial estimates.

A budget of £32bn was allocated in 2012 but costs have now reached upwards of £71bn, with some estimates taking the total to over £100bn.

The Euston section, the final link to the centre of London, has been paused for at least two years and if private money isn’t found, the route will likely terminate at Old Oak Common in the capital’s western suburbs.

At a committee hearing last week, transport secretary Mark Harper likened the private funding model for Euston to the regeneration of Battersea Power station, which saw the Grade-11 listed landmark become one of the capital’s top retail and leisure destinations.

Harper said the government had “levered in £9bn of private capital”, extended the Northern tube line and “delivered a new underground station by the private sector”. 

But Armitt poured cold water on the comparison. He told the Financial Times that the lion’s share of private involvement at Battersea was “for real estate investment rather than the new Northern Line Connection.”

He added that should the HS2 section to Euston be axed, changes to proposals for Old Oak Common would be needed, likely piling pressure on the Elizabeth Line.

“Ultimately HS2 needs to get all the way into Euston to ensure the scheme is attractive to passengers and doesn’t place huge burdens on the Elizabeth Line,” Armitt said.

The Department for Transport (DfT)’s permanent secretary, Dame Bernadette Kelly, said last week that private developers would “ideally fund the station approaches and we are also looking for private funding to cover the whole cost of running from Old Oak Common to Euston.”

A DfT 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 Kings Cross – and there has already been significant interest from the private sector to invest.”