When the scheme was restructured by John Prescott, the Deputy Prime Minister, in 1998, the Government said that the taxpayer contribution would be £2 billion and resulting transport and economic benefits would be worth £3 billion. 

But the report says that public sector costs will rise by at least £370 million and possibly as much as £1.2 billion. This is because the Government guaranteed to pay track charges for a number of trains that is already much higher than passenger demand is likely to require. 

The report says there were no grounds for assuming "regeneration benefits" of £500 million and concluded that the financial value of journey-time savings for passengers had been overstated by a further £550 million. 

On current traffic trends, the public sector's benefit-cost "gain" would be zero rather than the £1 billion ministers had suggested three years ago. Without a substantial rise in passenger demand, "the economic justification for the link collapses," the report adds.