UK high-speed rail project could cost $137 bln - FT

LONDON, Jan 20 (Reuters) - A proposed British high-speed
rail project running between London and northern England could
cost up to 106 billion pounds ($137 billion), 25% more than
recently predicted, an official review seen by the Financial
Times says.

The report said there was a "considerable risk" that the
High Speed 2 (HS2) project's price could jump from the 81-88
billion pounds budget that was set by the government as recently
as September.

The Financial Times said the review also recommended that
work on the second phase of the project, stretching from central
England to northern towns such as Manchester, should be paused
to determine whether a mix of conventional and high speed lines
could be used instead.

The review could make difficult reading for Prime Minister
Boris Johnson's government which won a sweeping mandate in
December with the help of many northern towns that had rarely
voted for his Conservative party in the past.

Envisaged as the backbone of Britain's national transport
network, the 345 miles of new high-speed track is designed to
slash journey times with the type of rail service that is
already enjoyed by other major countries.

However it has faced criticism over the cost with opponents
saying it would be cheaper and faster to spend money on boosting
existing services on conventional lines.

Johnson has vowed to increase investment in major
infrastructure outside of the capital and last week his
government stepped in to help rescue the regional airline Flybe.

The Financial Times said the HS2 review, led by a former
chairman of HS2 Doug Oakervee, recommended that the first part
of the project between London and Birmingham should "on balance"
go ahead.

"Further work" is needed to assess the impact on regional
growth and it is hard to say what economic benefits will result
from building it, it said.

Transport minister Grant Shapps told Sky News he had
received the report and the government would make a final
decision in a matter of weeks.
($1 = 0.7713 pounds)
(Reporting by Kate Holton; editing by Michael Holden)