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Britain’s most senior civil servant, Sir Jeremy Heywood, is reviewing HS2 as fears grow that the high-speed railway cannot be built within its £55bn budget in its current form.

Heywood, the cabinet secretary and head of the civil service, has been quietly investigating HS2 in an effort to cut costly elements. He is expected to report to ministers by the summer. Campaigners opposed to the project believe this could lead to less compensation for businesses and homeowners whose properties are affected by construction.

HS2, which would speed commuters from London to Birmingham and on to Leeds and Manchester, is designed to alleviate the capacity crisis on the railways, which are struggling to cope with the highest number of passengers since the 1920s. The economic benefits of getting business travellers between major cities quickly have been estimated at more than £40bn. The boost will come in the form of new jobs, homes and businesses, according to accountancy firm EY.

But the project has been plagued by cost problems since it was first mooted under the last Labour government. There was an increase of nearly £10bn in 2013 and recently a £5bn increase to reflect inflation.

Officials and ministers are increasingly concerned that the budget could still be exceeded, even though links to the Channel Tunnel rail link (HS1) and Heathrow airport have previously been removed to cut costs. Heywood has been undertaking the review as part of work led by the government’s newly formed Infrastructure and Projects Authority.

A source close to HS2 said: “From what I understand, Sir Jeremy doesn’t give a stuff about the timetable, it’s about costs and what we can cut out to make it cheaper.”

A senior rail source said: “The review started about mid-March. There are things that can be cut, like engineering work north of Birmingham that becomes redundant when a link to Crewe is built in 2027. Heywood was concerned about the budget estimates and if they can cut any costs it will give them confidence of being within those estimates.”

Joe Rukin, campaign manager at Stop HS2, said: “We’ve already seen links to Heathrow and HS1 lopped off in a futile attempt to keep the cost of HS2 down, but it keeps spiralling out of control.

“The idea that government is looking to see what they can slice off to stop cost escalation is very disturbing to communities and environmentalists, as the very first thing to go will be the already inadequate proposed mitigations, and the only other thing they can do is reduce the already woeful access to compensation.

“But even if government did that, it would not stop the cost skyrocketing as this project is simply out of control.”

Heywood’s review has been one of the causes of a second delay to another piece of Cabinet Office work, review point one [RP1], which will evaluate whether the 1,300-person team behind the project, HS2 Ltd, is fit to manage it.

RP1 was supposed to take place in autumn but was postponed because of concerns HS2 Ltd would fail certain tests. The process was then pushed back to March, but it is understood the four-person RP1 team has still not been told when to start work.

A HS2 source claimed that delays were partly down to “a learning curve on both sides [HS2 and Cabinet Office]”, given the unique nature of the project.

Rail industry insiders also said that the parliamentary bill to give the go-ahead to the first phase of HS2 might struggle to gain royal assent by the end of the year as planned. The bill is currently in the House of Lords.

A government spokeswoman said: “As is normal for large projects, the Infrastructure and Projects Authority is conducting assurance of the HS2 programme as it proceeds into its delivery phase. It is standard practice for this to include a small cross government team.”

An HS2 spokesman said: “RP1 is a standard project gateway. There are no delays to the programme and we remain on target to progress a further round of major contract invitations this summer.”

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