Rishi Sunak's decision to cancel HS2 between Birmingham and Manchester will lead to reduced capacity on passenger trains to the North West and could cut economic growth, the government spending watchdog has found.
Mr Sunak controversially cancelled the high-speed line north of Birmingham at the Conservative Party Conference in Manchester last October, describing the troubled project as part of a "false consensus".
Since then, HS2 trains have been scheduled to shift from high-speed track to the existing line north of Birmingham, but a report by the National Audit Office has found that capacity will reduce by up to 17% on the west coast line as a result.
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The NAO says that to manage demand, the Department for Transport may have to consider discouraging passengers from using the train, presumably by increasing prices - a move that would run counter to the reason for building new rail capacity in the first place.
The NAO says ministers could consider "incentivising people to travel at different times or to not travel by rail. This may constrain economic growth in the region over the long term and increase environmental costs".
Adding capacity by using longer trains will require new infrastructure, including new lines and longer platforms at stations including Crewe, which the NAO judges would be "expensive, disruptive… and create disruption on a busy route".
The watchdog's report also finds that scrapping the new line between Birmingham and Manchester could cost as much as £100m on remediation works, and £592m has already been spent on buying land and around 1,000 properties on the northern leg that will take years to divest.
Sky News revealed earlier this month that more than £232m had been paid out in compensation to people and businesses based along phase two of the original route - more than 40% of the total payments of more than £550m for the whole project.
The report also reveals that the new Curzon Street station in Birmingham will have four redundant platforms because only three of the seven originally planned will now be used.
HS2 says that configuring the design and construction will be more expensive than sticking to the existing plan.
The southern end of the line also remains uncertain, with plans for the Euston Station terminus still without "scope, funding or governance".
HS2 will terminate at a new station at Old Oak Common in northwest London, unless and until plans to expand Euston can be agreed.
Mr Sunak had intended for a private sector development company to fund the work but HS2 still has not set a date for trains to run to central London.
Transport Secretary Louise Haigh said: "We are reviewing this report's findings, alongside the position we have inherited on HS2 and wider transport infrastructure and will set out next steps in due course."
Northern Powerhouse, which criticised the decision to scrap both HS2 northern legs, said Mr Sunak's plan lacked funding for the upgrades required to the existing west coast line or east-west services.
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Henri Murison, chief executive of the Northern Powerhouse Partnership, said: "I have every confidence that the new transport secretary understands the mistakes made by the former prime minister and his administration in promising commitments to the North that were unfunded due to ill thought through decisions.
"I have every confidence she will put this right; as former mayor Andy Street and his colleague Andy Burnham also recognised was necessary when they asked the private sector to look at these issues last year."
A spokesperson for HS2 Ltd said: "This is a project of unprecedented scale and complexity and the cancellation of phase 2 has increased our cost challenges.
"We are now making sweeping reforms to control costs better and deliver the next stage of the programme - passing peak construction between London and the West Midlands and starting the transition to a working railway."
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Tap hereA Conservative Party spokesperson said: "As the NAO report makes clear, when we left office there were a number of options under consideration to maximise the benefit of HS2. The new government will decide which of those options to take forward.
"Of far greater concern is Labour's refusal to commit to £30bn of vital transport investment across the North and Midlands. This is going to boost connectivity and economic growth across the region and scrapping it wasn't included in their manifesto."
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