Four problems that could end Burnham’s HS2 plans ...Middle East

Andy Burnham is widely expected to bring back HS2 to the North in some form having replaced Sir Keir Starmer as Prime Minister.

The former mayor of Greater Manchester has frequently spoken of his dissatisfaction with current rail infrastructure plans in the North of England.

The Labour Party has already committed at least £45bn towards Northern Powerhouse Rail (NPR) – a plan that will focus on improvements to infrastructure going to east-to-west across the North.

It includes a pledge for a new rail line between Birmingham and Manchester, although this project is unlikely to start any time before the 2040s.

During his campaign to become the MP for Makerfield, Burnham indicated in an interview with The i Paper that he would like to move faster and that he believes alternative funding models could make it possible.

Now Burnham has made it to Number 10, The i Paper looks at what that might mean in reality and the obstacles standing in his way.

Can the Treasury afford it?

Burnham has been keen to reassure the public – and perhaps more importantly the financial markets – that he will stick within Labour’s existing ‘fiscal rules’, meaning that day-to-day public spending must be covered by revenues and that overall debt is falling as a share of the economy.

This gives him little room to make any new capital spending commitments on transport infrastructure.

However, the Department for Transport does have the £45bn commitment for NPR, which covers some key elements of the previous HS2 plan, including a stretch between Manchester Airport and Manchester Piccadilly.

The i Paper understands Burnham also favours the idea that a slower, scaled-down version of HS2 can be delivered at a lower cost to taxpayers and with the help of the private sector.

In 2024, Burnham gave his backing to a plan put forward by a consortium of businesses led by the engineering firm Arup for a rail line between Birmingham and Manchester they said 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.

The consortium argued that a significant amount of the funding required could be raised through private contributions or through new local revenue raising mechanisms.

But whatever the arrangement, this would still amount to a ‘public-private partnership’ requiring at least some capital investment from the Treasury.

Burnham would either have to persuade the Treasury to commit to more debt, or perhaps find a way to change accounting rules to keep the project off the balance sheet.

Campaigners at Cut My Tax have been scathing about Burnham’s support for reviving HS2, saying: “Andy Burnham wants to throw taxpayers’ money around like confetti. Burnham’s HS2 proposal confirms either that he is not a serious politician or that he thinks people are idiots or both.”

Can local taxes really provide enough funding?

The 2024 idea was never taken forward by Starmer’s government and it is understood hopes of a feasibility study to look at how much local funding could contribute never materialised.

If such a study were to be resurrected, a key question will be how much can be realistically raised.

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.

However, sources with knowledge of the alternative HS2 plan have told The i Paper a BRS is unlikely to raise the same level of revenue 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 the HS2 alternative would have far fewer stations than Crossrail to target for development.

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.

Would local funding become ‘politically difficult’?

Even if private capital and local funding can raise enough money for Burnham’s rail plan, the finer details of exactly how it would work could become a problem.

In Greater London, it was far easier for the Government and London mayors to argue that businesses should contribute towards Crossrail because it was benefitting the city as a whole.

But which areas should contribute to a rail line between Birmingham and Manchester and how much?

Insiders have suggested in one scenario it could mean all taxpayers in the West Midlands and Greater Manchester making a contribution, but what about those in Crewe if a station is included there as local leaders will be demanding?

This is a dilemma already being examined by Tom Riordan, Labour’s envoy for the Northern Growth Strategy, on whether a £5bn underground station at Manchester Piccadilly 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 admitted that such modelling will be “politically difficult”.

Should HS2 Ltd be involved?

As has been well-publicised, Phase One of HS2 between London and Birmingham is now expected to cost over £100bn after repeated delays and escalating costs.

There has been fierce criticism of HS2 Ltd, the arms-length business set up by the Government to build the railway.

Chief executive Mark Wild, brought in by Labour in December 2024, has been candid in his assessment that the organisation was not up to scratch and lacked the expertise to deliver the project.

But despite this reputational damage, The i Paper revealed in January that HS2 Ltd has been quietly appointed to begin the early work on Labour’s £45bn NPR plan.

A team of 32 staff are working on planning consents, engineering and environmental analysis, and management of around 1,000 properties which are still being “safeguarded” on the former HS2 route between Birmingham and Manchester.

There has been an effort to distance this team from HS2, to the extent they are being referred to as the “Rail Development Directorate” by the Department for Transport.

However, the prospect of HS2 Ltd being involved in another costly rail project has been jumped on by critics.

Callum McGoldrick, investigations manager at the TaxPayers’ Alliance, said: “Handing HS2 Ltd the keys to Northern Powerhouse Rail is like asking the captain of the Titanic to steer the rescue boat.”

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