Taxpayers face a bill of at least £8 billion for a new 200mph railway line from London to Manchester after the Government admitted for the first time that the service would require a huge public subsidy.

Lord Adonis, the Transport Secretary, said that the economic and environmental benefits of the line would be so great that it was fair to consider making taxpayers fund more than half the cost. Those using the line would pay a proportion of the running costs but the capital cost would largely be borne by the public purse.

The Department for Transport is due to publish details of costs and the preferred route by the end of the year. Early estimates indicate that the line will cost at least £16 billion and as much as £30 billion if extended to Glasgow.

Under Lord Adonis’s plan, “High Speed Two” would become by far Britain’s most heavily subsidised long-distance rail line. Speaking to The Times, he said: “There is currently no high-speed line in the world that has been built without a very big government subsidy and it is inconceivable that we could build a North-South high-speed line without a substantial public contribution.

“I certainly wouldn’t say that the farepayer would be committed to pay the majority of the cost. But when it comes to operating costs, of course the farepayer would make a contribution.”

Lord Adonis, speaking at the launch of Britain’s first high-speed commuter service from London St Pancras to Ashford, said: “We need to be thinking about the kind of transport infrastructure we need as we come out of recession. Nearly every other large European country has found the resources to develop high-speed lines on a much wider basis than we have in Britain.”

His comments come as the RAC Foundation publishes a report claiming that the Government has ignored its own spending rules by investing more in railways than in roads. The Treasury requires the Government to prioritise transport spending to get the highest rates of return for every £1 of public money spent.

DfT figures show that road schemes deliver almost double the economic benefits of rail schemes, yet the Government is investing only £6 billion in motorways and A roads over the next five years compared with £15 billion in rail.

Professor Stephen Glaister, the foundation’s director, said: “It would be hard to justify spending more than £8 billion of public money on a new line which, like the rest of the railway, would overwhelmingly be used by richer people.

“Highway schemes provide better value for taxpayer money than railway schemes. So why are ministers at the DfT ignoring this? “When the Government’s funds are in such short supply, surely ministers are duty bound to abide by the Treasury’s own rules.”

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