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The UK government is exploring proposals for a Birmingham to Manchester railway line as an alternative to the axed northern leg of HS2.
Ministers would launch a feasibility study for a new rail route north of Birmingham following months of lobbying by regional mayors, senior officials confirmed.
However, trains on the proposed line would not run as fast as those on the HS2 high-speed rail network, according to people familiar with the plans.
The move follows a report commissioned by mayors in northern England and the Midlands, which suggested a cheaper, lower-specification alternative to the axed HS2 line could be built, part-funded by the private sector.
The feasibility study is not expected to be announced in the Budget on October 30 but could be released in the coming weeks.
Discussions at the government’s “international investment summit” on Monday had proved helpful in “socialising” the idea among private investors, said one person familiar with the matter.
Former prime minister Rishi Sunak cancelled the Birmingham to Manchester leg of HS2 a year ago due to costs, sparking outcry among regional leaders and businesses which warned the extension was vital for economic growth.
While in opposition, the Labour party ruled out reviving the project — a position it has continued to hold since winning the general election in July.
Downing Street on Thursday denied a report aired on radio station LBC that the government would revive the northern leg of HS2 as far as Crewe.
But it said the government was committed to delivering better rail across the north and was “reviewing” its position on major infrastructure projects, and that more detailed plans would be released “in due course”.
Regional leaders have argued that a new track is needed to replace the scrapped northern leg to tackle existing capacity problems on the West Coast main line.
In July, the National Audit Office public spending watchdog warned that passengers may need to be deterred from using the route unless more rail infrastructure was built.
A proposal drawn up on behalf of the mayors of Greater Manchester and the West Midlands now appears to have found favour, in principle, within both the Department for Transport and Number 10.
The report, released in September, recommended that a two-phase line could be built at a lower cost than HS2, on a lower specification but along a similar route.
Without the line, demand on the existing route would overshoot maximum capacity “within the next decade”.
The study suggested a two-phase new line, from near Birmingham to Crewe and Crewe to near Manchester, could be part-funded by private finance, using partnership models that are used elsewhere in the world.
Richard Parker, mayor of the West Midlands, said the investment summit underlined the importance of infrastructure to Britain’s economic growth.
He said investors had noted the importance of rail capacity and the remaining leg of HS2, from London to Birmingham, in their decision-making” but were also “looking to the government to match their ambition with infrastructure”.
The costs of the remaining HS2 leg between London and Birmingham, currently under construction, were expected to rise further, according to two people close to the matter.