National Audit Office: Northern Powerhouse Rail success dependent on better cross-government working and stronger ties to economic strategy

• Successive governments have considered plans for upgrading the rail network in the north of England since 2014 – millions of people stand to benefit. 
• DfT has made some progress in setting up Northern Powerhouse Rail for success – but more needs to be done to ensure effective cross-government collaboration and closer alignment with the government's economic growth strategy. 
• The NAO recommends that the government establishes how it will work with key strategic partners; reviews the programme's benefits against their expected cost; and assesses how it is applying lessons learned from other programmes.

The government's flagship rail upgrade programme for the north of England must more closely align with national and local growth plans and involve better collaboration between central and local authorities to fully realise the benefits, according to a new National Audit Office (NAO) report.¹

The government announced its plans for Northern Powerhouse Rail in January 2026 with the aim of improving east-west rail connections across the north of England.

This will be achieved in three phases through a combination of new track and upgraded tracks and stations to provide more frequent trains and shorter journey times between Liverpool and Manchester to the west of the Pennines, and Leeds, York and other cities to the east.² It may ultimately benefit millions of people.

The Department for Transport (DfT) has been working on plans for Northern Powerhouse Rail for over a decade, during which time it has had to make key decisions on the overall scope of the programme following the cancellation of the HS2 connection to Manchester in October 2023.^3,4

DfT has identified important lessons from HS2 and other major rail programmes, including having in place strong governance processes, the right skills and capabilities, and effective contract and financial management.⁵

It has also taken steps to manage how Northern Powerhouse Rail fits with other rail upgrade programmes in the north of England, most significantly the Transpennine Route Upgrade.⁶    

Despite progress in these areas, the government has more work to do to show how it plans to deliver the wider economic benefits for the north of England enabled by Northern Powerhouse Rail.

Until the government's January 2026 announcement as part of its wider Northern Growth Strategy, regional stakeholders in the north indicated that poor engagement and a lack of clarity from central government had hampered their ability to progress local plans.⁷

The government has not yet set up appropriate governance arrangements between the national and local level or between the different central government departments responsible for delivering the programme's benefits.

DfT must also determine who will be responsible for building the new rail lines, how the creation of Great British Railways as part of wider rail reforms will affect the programme,⁸ and how it can best maximise the benefits from the programme given the £45 billion funding cap.⁹

To manage Northern Powerhouse Rail effectively and secure value for money, the NAO recommends that, at this early stage of the programme, DfT:

• fully aligns its strategic case for the programme with the government's developing Northern Growth Strategy
• establishes how it will work with key strategic partners in decision-making and funding as part of programme governance, ensuring that roles and responsibilities are clear and understood
• reviews the benefits it can deliver from each phase of the programme against their expected cost
• regularly assesses how effectively it is implementing relevant lessons learned from other programmes

Gareth Davies, head of the NAO, said:

“Improving rail service and infrastructure in the north of England is a vital enabler of economic growth and productivity.

“DfT has taken steps to set up Northern Powerhouse Rail for success, including identifying key lessons from other programmes. But further work is needed to ensure it aligns with national and local growth plans.”

ENDS
Notes to editors

1. The first phase is expected to consist of line and station upgrades between Bradford, Leeds, Sheffield and York; the second a predominantly new line between Liverpool and Manchester; and the third will be further upgrades across the Pennines, building on the Transpennine Route Upgrade programme. The first phase is expected to complete in the 2030s and the final two phases in the 2040s. See Figure 8 of the report for further information.
2. DfT had planned to use the HS2 connection to Manchester as part of its route for Northern Powerhouse Rail. However, following the cancellation of HS2 Phase 2, the government transferred the estimated cost of building that section into the Northern Powerhouse Rail programme. The government also further expanded the scope of the programme to include Sheffield, Hull and Bradford. Together, these changes increased DfT's estimated cost of the programme by £13.4 billion to £30.6 billion (2019 prices). Along with the HS2 cancellation impacting on the level of potential benefit, this reduced DfT's expected benefit-cost-ratio of the programme from 0.8 to 0.4, indicating poorer value for money.
3. For more information on the cancellation of Phase 2 of the HS2 programme, see the NAO's July 2024 report: https://www.nao.org.uk/reports/hs2-update-following-cancellation-of-phase-2/
4. Figure 9 in the report outlines the 11 lessons DfT has identified from its delivery of previous major rail programmes, and 24 actions for embedding these lessons into Northern Powerhouse Rail as at February 2026.
5. The Transpennine Route Upgrade programme is upgrading the line between Manchester and York, via Huddersfield and Leeds. Phase 3 of Northern Powerhouse Rail will build on the infrastructure delivered through the Transpennine Route Upgrade. For example, the upgrade of Huddersfield station under the Transpennine Route Upgrade programme may require an additional platform to support the Northern Powerhouse Rail scope. In November 2021, DfT expanded the scope and funding to the Transpennine Route Upgrade programme to include elements that Northern Powerhouse Rail would use. This includes the construction of additional tracks and passing sections for freight trains.
6. Mayoral combined authorities along the planned Northern Powerhouse Rail route are key strategic partners for delivering growth in the region. They told the NAO that they felt engagement with DfT had not always been effective since the changes announced in late 2023, namely the cancellation of HS2 Phase 2 and the subsequent changes to the scope of Northern Powerhouse Rail (see footnote 3). For example, they indicated that they had not been engaged on developing plans or able to see detailed analysis of a kind that had previously been shared. DfT has acknowledged the challenge of engaging local stakeholders during 2025 before the government had confirmed its decisions about the scope of programme in January 2026.
7. Network Rail is currently responsible for delivering Phase 1 of Northern Powerhouse Rail. However, this will change as DfT will incorporate Network Rail's functions within Great British Railways as it reforms the wider rail system. This may impact how DfT delivers Phase 1. DfT will also need to decide as part of further planning who will undertake the construction of Phase 2, with options including the creation of a new delivery body, and the delivery of Phase 3. Until then, HS2 Ltd is responsible for developing the scope and obtaining consents for Phase 2, including taking the hybrid bill through parliament for the route into Manchester.
8. DfT and HM Treasury told the NAO that the £45 billion funding cap was informed by factors including early estimated cost ranges based on potential scope options and assessment of long-term affordability. To stay within the cap, DfT will likely need to make trade-off decisions on what benefits it can achieve across the route against how much different scope options might cost. For example, it will need to decide whether to build the new Manchester Piccadilly station underground for greater development opportunities above it, but at a higher cost compared to one at surface level. In these cases, DfT expects that local authorities could provide funding for additional works as part of the programme to help maximise growth opportunities.