London mayor says Sunak plan for HS2 Euston leg ‘verging on fantasy’

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London mayor Sadiq Khan has condemned as “verging on fantasy” the UK government’s plans to get private developers to pay for the final stretch of the HS2 high-speed rail line from west London to its planned terminus at Euston in the centre of the capital.

Earlier this month, prime minister Rishi Sunak axed the northern leg of HS2 between Birmingham and Manchester but committed to building the full southern leg into London. He said that axing the northern part of the scheme would save £36bn.

Sunak added that taxpayers would save a further £6.5bn because private developers would pay for the final 4.5-mile stretch into the centre of London and the rebuilding of Euston through a Canary Wharf-style development around the terminus.

Khan’s office said on Friday that relying so heavily on private sector funding seemed like “wishful thinking” and “would probably result in the Euston terminus being cancelled by stealth” with HS2 terminating at the new station under construction at Old Oak Common.

“We welcome the government’s commitment to deliver the Old Oak Common-to-Euston link — but their proposed approach is verging on fantasy and raises more questions than it answers,” said the spokesperson for London’s Labour mayor, who is also chair of Transport for London.

The relationship between Khan and the ruling Conservatives has often been hostile, clashing on issues such as funding for TfL and most recently his expansion of the city’s clean air zone, which imposes charges on owners of older vehicles.

Khan’s office said clarity was urgently needed on financing the final stretch of tunnelling work to begin “to avoid further costs”. The mayor also called for assurances from ministers that they would step in to ensure the Euston leg would be built if private sector funding could not raise all the finance.

The call for clarity on the project’s funding was echoed by lobbying group BusinessLDN, which said the government could reduce costs by using the same contractors that are working on the HS2 tunnels to the west of Old Oak Common to continue to Euston. 

There have been a few examples of private developers helping to finance rail projects in the UK — most recently the extension of the Northern line to Battersea power station in south London.

But Alexander Jan, former chief economist at engineering group Arup and an adviser on rail and property development, said it was an “absurd proposition” for the government to suggest private developers could pay for the entire cost of the final leg of HS2 into Euston. 

Alistair Watson, head of planning at law firm Taylor Wessing, agreed. There were “two chances of a developer or a consortium taking on that kind of scale — slim and none”, he said.

Jan pointed out that TfL had received about £1bn in private finance for the Northern line Tube extension but HS2 would need at least £4bn for the development of the Euston site and tunnels. “You would need to build 26mn square feet — the equivalent of 21 Canary Wharf towers — plus 80,000 homes — to come up with that sort of money.”  

At present, the area plan for Euston envisages 3mn sq ft of development and 3,500 homes, but many would need to be “affordable” in line with planning laws so “you would be lucky to get £500mn out of that”, Jan added.

TfL planners are concerned that terminating HS2 at Old Oak Common would need a redesign of the new station to cope with the extra passengers. They have also warned it could lead to overcrowding on the recently opened Elizabeth Line, which will have an interchange at Old Oak Common.

The government said: “As has always been planned, the line will finish at Euston. This is a world-class regeneration opportunity and there is already extensive support and interest from the private sector to invest.”

Officials were reviewing the impact of Sunak’s announcement on existing plans and contracts for the link between Old Oak Common and Euston, said a person briefed on the matter.