Delayed Transpennine rail upgrade reviewed again ahead of Budget

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The long-delayed electrification of the Manchester-Leeds rail line is being reviewed again ahead of October’s Budget, raising concerns in the rail industry about potential cuts to transport projects.

The upgrade to the Transpennine route, which is now under way but had stalled for years due to successive government attempts to control costs, is being studied to see if it can release in-year savings, according to three people familiar with the matter. 

Two said the project had been asked to find £100mn in savings ahead of the Budget on October 30. 

The process forms part of a “zero-based capital review” of projects being undertaken within the Department for Transport, which requires every project to justify its cost, after chancellor Rachel Reeves asked ministries to find billions of pounds in savings. 

That has in turn raised concerns in the rail industry and among mayors about which projects could be at risk. 

The upgrade to the Transpennine route holds particular significance in the north of England as a lack of investment in its Victorian infrastructure has led to notoriously unreliable and overcrowded services.

In 2011, then-chancellor George Osborne promised to electrify the 70-mile line, which connects Manchester, Huddersfield, Leeds and York, with work supposed to start in 2014.

Four years later the project was paused, with infrastructure body Network Rail blamed for rocketing costs, before being reinstated.  

After the 2017 general election it was repeatedly redesigned and rescoped, resulting in £190mn of wasted public money, according to a report by the National Audit Office public spending watchdog in 2022. 

The NAO pointed to repeated tinkering “to meet differing ministerial priorities and budget constraints”, despite the “fundamental need” for the project remaining unchanged. 

Work finally began at the end of that year. It is currently expected to be completed between 2036 and 2041, more than a decade behind its original schedule. 

But as Whitehall gears up for Reeves’s first Budget, three people familiar with the process said that the project was again being looked at for potential cost savings. 

One said the impetus was to slow down spending in order to hit short-term budgetary targets within the Treasury, even if that meant the project could cost more in the long run. 

A second said the project east of Leeds had been asked to find £50mn in savings while that to the west was tasked with finding the same amount. 

A government source confirmed the project was being “looked at ahead of the Budget”.

The Department for Transport said it did not comment on speculation.

However, a senior rail figure said that in practice, savings on such a substantial project — now costed at up to £11.5bn — amounted to a minor moving of milestones rather than anything with significant impact on delivery. 

A spokesman for the project said they did not recognise the suggested savings figure, adding that 60 per cent of the project is now under way.

Nevertheless railway infrastructure executives are also concerned that other projects could be in line for cuts, including East West Rail, a scheme that will re-establish a rail link between Cambridge and Oxford, and electrification upgrades. “There is a whole mood of doom in the industry,” one said.

Some mayoral bodies are also concerned that cash provided for local projects by then Prime Minister Rishi Sunak last year, in lieu of HS2’s cancelled northern leg, is also at risk. 

Since taking power Labour has repeatedly insisted that difficult spending decisions will be required in order to close what it claims is a £22bn “black hole” it inherited from the Conservative government.