HS2 Project Has '£3.3bn Funding Shortfall'
The HS2 high-speed rail project has an estimated £3.3bn funding gap, according to Whitehall's spending watchdog.
The National Audit Office (NAO) also said it was unclear how the controversial new train line would deliver economic growth.
And it warned that the timetable for the first phase of the project between London and Birmingham was "challenging".
The Government has insisted HS2, which runs through Tory heartlands and has provoked bitter opposition, will help boost the economy.
But the NAO expressed "reservations" about the business case for the project, and questioned the Department of Transport's (DfT) methodology.
The watchdog said officials had focused on shorter, more reliable journeys but that the link to strategic reasons for the project, such as rebalancing regional economies, was unclear.
It did say the second phase, extending to Manchester and Leeds, had a strong economic case but warned this was much less certain because route designs were less well-developed.
The report said there was a shortfall of £3.3bn for 2017-2021, which coincides with the peak spending years for the first phase of the project.
It said the Government "has yet to decide how to fill" the black hole, which meant there were "risks to affordability".
NAO chief Amyas Morse said it was too early to assess the project's likely value for money but questioned the "lack of clarity" in the DfT's strategy.
"It is also unclear how HS2 will transform regional economies by delivering jobs and growth," he said.
Margaret Hodge, chair of the Commons' Public Accounts Committee, condemned some of the DfT's assumptions as "ludicrous" and said their business case was "clearly not up to scratch".
"There is virtually no evidence in this business case to support claims that HS2 will deliver regional economic growth ...," she said.
"We have been told that it will deliver around 100,000 new jobs but there is no evidence that all these jobs would not have been created anyway.
"The department has also set an extremely ambitious timetable for the project, with no room for mistakes. Past experience does not fill us with confidence in this optimism.
"Unless the department gets its act together, HS2 will not deliver all intended benefits for travellers and the regions, and it will not deliver value for the taxpayer."
Transport Secretary Patrick McLoughlin rejected the NAO's core conclusion, claiming it relies on out-of-date analysis.
"The case for HS2 is clear. Without it the key rail routes connecting London, the Midlands and northern England will be overwhelmed," he said.
"HS2 will provide the capacity needed in a way that will generate hundreds of thousands of jobs and billions of pounds worth of economic benefits."
Labour shadow transport secretary Maria Eagle called the report a "worrying wake-up call" for the Government.
Stop HS2 campaign manager Joe Rukin said: "The NAO say everything the Stop HS2 campaign has been saying for three years. The Government and MPs haven't wanted to listen to us, but they surely have a duty to listen to the NAO."
Work on phase one of HS2, from London to Birmingham, is set to start in 2016/17 with services beginning in 2026.
Phase two, taking the line north in a Y-shape to Manchester via Crewe and to Leeds via Derby and Sheffield is set to be completed around 2032/33.