HS2 will run to Euston Station, the Labour government confirmed today, but it remained tight-lipped on any plans to pay for the London high-speed rail terminus with public money.
In her first budget since becoming chancellor of the exchequer, Rachel Reeves confirmed on Wednesday (30 October) that HS2 will run to Euston, and that it will receive government funding for the tunnelling between Old Oak Common and Euston.
But she stopped short of committing public funds for the station build, suggesting that it could rely on private funding. This echoed remarks by former prime minister Rishi Sunak when he took the project away from HS2 Ltd last year.
In her speech announcing the budget, Reeves said transport secretary Louise Haigh had “set out a plan for how to get a grip of HS2”.
“We are securing delivery of the project between Old Oak Common and Birmingham and we are committing the funding required to begin tunnelling work to London Euston station,” Reeves said, adding that the Euston expansion would “catalyse private investment into the local area”.
Budget documents detail how the Euston Housing Delivery Group – first proposed by Rishi Sunak’s government in March – will be established to “drive forward an ambitious housing and regeneration initiative for the local area”.
Bek Seeley, a former managing director for development in Europe at Lendlease, has been appointed as chair of the delivery group. Lendlease itself is leading the regeneration of the Euston site.
The announcement was received with positivity, with a spokesperson for the High Speed Rail Group saying Reeves’ announcement “marks a pivotal step forward”.
“We hope that an era of fragmented, short-term decision making has been ended, in favour of a move towards a cohesive vision for the future of UK rail,” they added. The lack of talk around Euston’s funding suggests it could be moving forward with private funding.
Last December, Mace chief executive Mark Reynolds sharply criticising former prime minister Sunak’s government for allowing his firm’s suggestion around funding Euston privately to go “into a black hole”.
Despite the positivity, the High Speed Rail Group spokesperson said it was “critical” that phase one is connected north of Birmingham to Crewe and beyond.
Earlier this month, there were rumours in the wider media that the government was considering using private funding to revive HS2’s phase two, to Crewe. But the Department for Transport said earlier this month that it would not be reviving the second phase.
Richard Risdon, managing director for the UK and Europe at Mott MacDonald, said the commitment to terminate HS2 in Euston “demonstrates [the government’s] understanding of the role of connectivity in delivering economic growth and opportunities”.
HS2’s Euston was far from the only transport commitment Reeves made, during her budget speech.
She committed to delivering the first two phases of East West Rail – with services between Oxford, Milton Keynes and Bletchley starting next year. In 2030, the line will reach Bedford, Reeves added.
But she said the government would launch a consultation around the next stages of the line, which was designed to run from Oxford to Cambridge.
Reeves further committed to delivering the TransPennine Route Upgrade between York and Manchester via Leeds and Huddersfield.
Progress on the upgrade will “lay the ground” for Northern Powerhouse Rail, budget documents say.
Labour also committed to other local transport systems, via an increase to City Region Sustainable Transport Settlements – a set of investments in the eight combined authority regions, first announced in 2021. The increased settlements, Labour added, will help fund projects including Liverpool’s Baltic Railway Station, the renewal of Sheffield’s Supertram system and the continued development of West Yorkshire Mass Transit.
On roads, Reeves promised a near 50 per cent increase in funding for local highway maintenance, worth nearly £1.6bn a year. That equates to a £500m increase on the same budget for 2024/25, she said.
The Asphalt Industry Alliance welcomed funding to improve the condition of local roads. But its chair David Giles said the measure “falls short of the long-term funding horizon the sector has been calling for”.
He added: “Our hope was that the Chancellor would have announced a multi-year ringfenced commitment allowing local authorities to plan and proactively carry out the effective maintenance needed to drive improvement in our local roads.”
The Office for Budget Responsibility (OBR) indicated in its analysis of the budget that the Department for Transport’s budget would rise by 1.2 per cent in 2024/25 before falling by 2.5 per cent in 2025/26.
The decrease is “primarily due to a declining rail passenger services subsidy,” the OBR said.
