Inside Andy Burnham’s plan to bring back HS2 ...Middle East

Andy Burnham’s plan to resurrect the northern leg of HS2 has proven popular with local leaders and could mean having regional taxpayers share the cost with the Treasury, The i Paper understands.

Speaking ahead of Thursday’s Makerfield by-election, Burnham told The i Paper he believes it remains necessary to build a new railway line between Birmingham and Manchester.

Former prime minister Rishi Sunak scrapped HS2’s northern leg in 2023 during the Conservative Party conference in Manchester.

Sir Keir Starmer’s Government has declined to reverse the move and under Labour’s current plan, no new line north of Birmingham would begin until at least the 2040s, after projects in Liverpool, Manchester and Yorkshire are completed.

Burnham, who intends to stand for Labour leadership if elected as Makerfield’s MP, has consistently stated that rail improvements are needed much quicker, citing warnings from experts that the congested West Coast Main Line will soon be operating well beyond its capacity.

Here’s what Burnham’s HS2 could look like and how it could be funded.

Slower, cheaper line partly funded by local taxpayers

It is understood Burnham remains in favour of a slower, cheaper railway line that could be partly funded by local taxpayers.

It comes as HS2 Ltd CEO Mark Wild recently revealed that phase one of HS2, between London and Birmingham, could cost more than £100bn.

The i Paper understands there is consensus across the political spectrum and within the rail industry that a continuation of HS2 as it’s currently being built – for more than £400m per mile – cannot be repeated.

“No one in the North is asking for HS2 to be back on the table in the same form,” a Labour insider said.

“The change is whether it has to wait until the 2040s or whether we could start next week.”

A 2024 report, commissioned by a consortium of private businesses and backed by Burnham and West Midlands Mayor Richard Parker, said a new rail link between Birmingham and Manchester could be built for as little as 60 per cent of the cost of HS2.

This would be achieved by lowering the speed from HS2’s original aim of 224mph (360kph) to 185mph (300kph), using cheaper ballasted track instead of slab track, and with existing infrastructure.

Burnham would already have some of the land and legislation in place to start this plan. HS2 Ltd is continuing to “safeguard” around 1,000 properties between Birmingham and Manchester purchased to build HS2, and part of the legislation put in place to build HS2 between Manchester airport and Manchester Piccadilly Station are set to be repurposed for Northern Powerhouse Rail (NPR) improvements running east to west.

Compulsory purchase powers which were approved to buy up land and property between Birmingham and Manchester for HS2 expired in February. However, a Whitehall source said this is an obstacle that can be overcome, if needed.

‘Treasury has lacked creativity here’

The Whitehall source said a feasibility study into options for local funding contributions is crucial for the project to move forward.

“The short answer is, get on with a feasibility study and start the modelling [for local funding] now – so it can be unlocked. The issue has been lack of direction from the centre,” the Whitehall source said.

“The Treasury has lacked creativity here and the DfT [Department for Transport] has been trying to trying to stabilise HS2 as a whole.

“As long as it’s Birmingham to Old Oak Common it has a very weak BCR [benefit-cost ratio]. Without a connection to Manchester, it doesn’t have true value for money.”

Then-transport secretary Louise Haigh was supportive of the plan laid out in the 2024 report, the Whitehall source added. Haigh, who’s playing a crucial role in Burnham’s Makerfield campaign, is expected to be given a Cabinet role if Burnham becomes prime minister.

Funding could come from share of local income tax

Burnham has pointed to the £19bn Crossrail project in London – of which around 60 per cent was funded by local taxes – as an example of how a HS2 replacement could work.

“There’s a cleverer way of funding this,” he told The i Paper.

To help pay for Crossrail, London introduced an extra 2p “business rates supplement” (BRS), initially applied to premises with a rateable value of £70,000 in 2023, now risen to £92,000 as of April 2026.

In total the BRS is expected to raise more than £8bn.

Sources suggested a BRS is unlikely to raise the same level of funds outside London.

Land value capture (LVC) is another mechanism Burnham supports, whereby developers profiting from the increase in land value around major public infrastructure pay an extra tax.

This might be possible around the new HS2 station in Birmingham, and at Manchester airport and Manchester Piccadilly.

But experts believe a more realistic way of local areas contributing to Burnham’s rail plan would be sharing local income tax revenue.

This would mean no new taxes. Instead, regions could keep a share of the income tax they generate rather than sending it to the Exchequer.

At her Mais lecture in March, Rachel Reeves said she had already asked Treasury officials to come up with a “roadmap for future fiscal devolution” in time for this year’s Budget, expected to be in the autumn.

“This will set out plans to give regional leaders control of a share of some national taxes which have, for too long, been allocated by central government,” she said.

‘100 per cent right’

Anthony Breach, associate director at Centre for Cities, a think-tank close to Burnham and Labour, said it should be perfectly possible for infrastructure like a railway line to be partly locally funded.

“The basic premise that places should be able to fund infrastructure from their own tax proceeds is 100 per cent right,” he told The i Paper.

“This is a huge problem in Britain’s economic policy that we don’t allow places to do this and everything comes through central government funding.”

Breach argued that giving city-regions the power to part-fund projects themselves would also increase political accountability and drive them to deliver faster and more efficiently.

“It would mean local leaders have to make decisions that make sense for economic growth and to keep costs as low as possible,” he said. “We need more places with skin in the game to grow their tax base.”

Breach said he would expect any tax-sharing arrangement to mean local authorities keep no more than 10 per cent of the revenue raised locally.

Local contributions could be ‘politically difficult’

Decisions would need to be made over which areas are contributing, how much and with what mechanisms, however.

This is a dilemma already being examined by Tom Riordan, Labour’s envoy for the Northern Growth Strategy, on whether a £5bn underground station backed by Burnham and local Labour leaders should get the green light.

It appears likely the project will be approved, and that Manchester will be asked to make a local contribution, though details are not yet agreed.

A source involved in the 2024 Burnham-backed plan for the HS2 replacement said such modelling was not carried out for local contributions for a full railway line between Birmingham and Manchester because it will be “politically difficult”.

And even if local funding is agreed, a new railway line will still need significant Treasury cash. At least £45bn has already been approved for the Northern Powerhouse Rail plan.

Supporters ‘very encouraged’ but critics unimpressed

Campaigners at Cut My Tax were scathing about Burnham’s support for the new infrastructure, saying: “Andy Burnham wants to throw taxpayers’ money around like confetti. His latest proposal is to extend the failed HS2 project to Manchester.”

“Burnham’s HS2 proposal confirms either that he is not a serious politician or that he thinks people are idiots or both,” they said.

However, Huw Merriman, former Tory rail minister and chair of the High Speed Rail Group, said it was “very encouraging” for Burnham to be advocating for the railway.

He said: “The need for the route is no less pressing today than when HS2 was first announced. A new connection between Birmingham and Manchester will add transport capacity to and from the North, while also helping to deliver the Government’s ambition of a more balanced UK economy.”

Henri Murison, chief executive of the Northern Powerhouse Partnership lobby group, said: “Greater Manchester is already the fastest growing city region in the UK. Alongside the North’s other great cities including Liverpool, Bradford and Leeds, it needs connectivity between cities to fully realise its potential for growth.

“Northern Powerhouse Rail is delivering that connectivity – and better links to Birmingham are all part of the same picture. That’s why we view the link between Manchester and Birmingham as an extension of NPR, rather than a project in its own right.

“Investment to provide new lines between Crewe and Handsacre Junction for instance should come from a mixture of private finance and funding, as well as the new fiscal devolution tools the Chancellor outlined in her Mais lecture.

“Whether in his current job or following a return to Westminster, I hope Andy will remain as steadfast an ally to those of us seeking long-term growth in the North as he has been till this point.”

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