There is a clear risk that the Department will not be able to manage the programme within its £45 billion funding cap. HM Treasury has set a £45 billion funding cap for the programme. This may help affordability, but we are unclear how HM Treasury determined the cap before the entire 3 project is designed, scoped and costed. The final phase of Northern Powerhouse Rail—needed for the full connectivity and benefits—is at risk if the Department cannot scope the programme within the cap or if early cost estimates prove unrealistic. This serious risk is heightened by High Speed Two Limited’s (HS2 Ltd’s) responsibility for producing some of the cost estimates and the Department’s poor record on rail infrastructure costs and cost estimation. Yet the Department has no convincing plan for managing spending or prioritising benefits to remain within the cap. It also lacks a comprehensive approach to supporting local funding contributions and revenue-raising where local areas seek additional local benefits. We are concerned that areas less able to self-fund or attract private investment will be left behind and that the Department has not properly explored elements such as land value capture. recommendation a. The Department should set out how much funding it will allocate to each phase, and how it will support local government to raise additional funds. b. HM Treasury should explain in detail how it determined the £45 billion funding cap before the entire project is designed, scoped and costed. c. The Department should clearly set out how it will manage its spending within the £45 billion funding cap, including how it will control costs, prioritise benefits and decide what to descope if cost pressures emerge. d. Within six months, the Department should write to us to set out what it is doing to ensure HS2 Ltd’s plans and cost estimates for phase 2 are realistic.