Conclusion 9

However, the Department has a track record of high infrastructure costs and poor cost estimation on its major rail projects. For example, in February 2025 we reported that the £45 billion budget for High Speed Two (HS2) Phase 1 was no longer viable given the cost estimates at the time, which were as high as £66 billion (all in 2019 prices).16 We asked the Department why it had appointed HS2 Ltd to develop plans for the predominantly new line from Liverpool to Manchester, given its track record of poor cost estimation. The Department explained that HS2 Ltd already held much of the expertise on that part of the line and the hybrid Bill process. It told us it had created a “ringfenced unit” within the company to deliver the Northern Powerhouse Rail work, with its own managing director and separate sub- committee to ensure oversight whilst minimising distractions from the HS2 Phase 1 reset.17