Committee publication · Report · 1 July 2026 · HC 97

8th Report - Northern Powerhouse Rail

Government response deadline: 1 September 2026

Summary

The Public Accounts Committee examines the Department for Transport's delivery of Northern Powerhouse Rail, a £45 billion multi-decade programme to improve connectivity between northern English cities. The committee welcomes the government's renewed ambition but finds significant risks: the programme remains at an early stage with uncertain scope after 12 years of planning, cost overruns are likely given the Department's track record on rail projects, governance arrangements between central departments and with local authorities are insufficiently robust, and it is unclear how the programme will integrate with existing transport infrastructure and capacity constraints.

Key findings

The Department has not demonstrated how it will manage the programme within the £45 billion funding cap, lacks a credible cost-control plan, and cannot explain how HM Treasury set the cap before full project scoping and design. HS2 Ltd's involvement in cost estimation is particularly concerning given its poor record on HS2 Phase 1.
No formal governance exists between the Department and other central government departments (Treasury, MHCLG) despite the programme requiring cross-cutting coordination to deliver intended economic benefits. Northern Powerhouse Rail meets five of six mega-project characteristics but is not being treated as one.
Local government arrangements, though reportedly working well in early phases, rely heavily on the untested Northern Growth Envoy role to mediate difficult trade-off decisions between mayoral authorities, particularly over scoping and funding allocation that may leave less-wealthy areas behind.
A critical capacity gap exists: the West Coast Main Line is expected to reach full capacity by the late 2030s, but phase 2 of Northern Powerhouse Rail is not planned for completion until the mid-2040s. The Department offered no detailed mitigation plan.
The Government Internal Audit Agency found that programme teams across the Department inconsistently apply identified lessons from HS2, Crossrail and other major projects. Recent planning reforms aimed at reducing environmental costs (e.g. bat tunnels on HS2) are not yet live, leaving biodiversity cost risks unresolved.

Recommendations

The Department must ensure the Northern Powerhouse Rail business case clearly aligns to Northern Growth Strategy priorities and set out how Parliament will be updated throughout the programme.
The Department should allocate funding by phase, set out how it will support local government to raise additional funds, and explain how it will manage spending within the £45 billion cap including controlling costs, prioritising benefits, and descoping if cost pressures emerge.
HM Treasury should explain in detail how it determined the £45 billion funding cap before the entire project was designed, scoped and costed.
Within six months, the Department should confirm whether Northern Powerhouse Rail is a mega-project, explain how governance arrangements are appropriate for the programme's scale and complexity, and write with findings on how HS2 Ltd's cost estimates for phase 2 will be kept realistic.
The Department should set out principles for working with local government and confirm timelines for updating arrangements as the programme moves toward difficult trade-off decisions.
The Department should clarify how it will develop integrated local transport networks across the route, how it will meet West Coast Main Line capacity requirements, and within six months set out how it is embedding lessons from other rail programmes consistently across all teams.

Tone

Critical

Topics

rail-infrastructurepublic-financemajor-projects-governancedevolution-local-governmenttransport-planning

Key actors

Department for Transport, HM Treasury, Ministry of Housing, Communities and Local Government, High Speed Two Limited (HS2 Ltd), Network Rail, Tom Riordan (Northern Growth Envoy), Jo Shanmugalingam (DfT Permanent Secretary), Transport for the North

Notable line

“Department for Transport (the Department) has learned all the lessons from past failures. The programme also remains at an early stage despite more than 12 years of planning.”

Key Quotes

“There is a clear risk that the Department cannot deliver the full programme and benefits within its £45 billion funding cap.”
— Committee of Public Accounts · Summary assessment of cost control risks

“The Department is accountable for the costs of this programme but relies on others, particularly the different mayoral authorities, to deliver the wider economic benefits. We are concerned it does not have the right arrangements in place to manage this.”
— Committee of Public Accounts · On governance and accountability for economic outcomes

“… it absolutely relies on the partnership [ … ] with MHCLG”
— Department for Transport · On interdependencies with other government departments

“"ultimately, decisions are made in the Treasury […] about the relative allocation to transport [ … ] and therefore these sorts of enhancement programmes".”
— Department for Transport · On decision-making authority over programme scope and enhancement

“"it is really hard to agree stuff across the north of England" and that "there are really difficult decisions still to come".”
— Tom Riordan (Northern Growth Envoy) · On challenges managing consensus across mayoral authorities

“Much appears to be resting on the Northern Growth Envoy's ability to mediate between local areas and central government, but this is a new and untested role.”
— Committee of Public Accounts · On governance risks in local authority coordination

“… there was still "major design work" to be done on each phase of the programme, with key outputs (including frequency, journey times and capacity) and the alignment of some new railway sections not yet determined.”
— Department for Transport · On scope uncertainty after 12 years of planning

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