The controversial HS2 project needs a major rethink, a new report from the House of Lords has urged.

The spiralling cost of the project “appear to be out of control” and the Department of Transport’s appraisal of HS2 has “fundamental flaws” – these are the main conclusions of their new report, Rethinking High Speed 2.

The report was published on Thursday as a follow-up to their March 2015 report – and they claim the government is “no nearer to providing satisfactory answers”.

Lord Forsyth of Drumlean, chairman of the Economic Affairs Committee, said: “The costs of HS2 do not appear to be under control. It is surprising therefore that the government has not carried out a proper assessment of proposals to reduce the cost of HS2—such as lowering the speed of the railway or terminating in west London rather than Euston—which the committee recommended in 2015. A new appraisal of the project is required.

“If costs overrun on the first phase of the project, there could be insufficient funding for the rest of the new railway. The northern sections of High Speed 2 must not be sacrificed to make up for overspending on the railway’s southern sections.”

The former chairman of HS2, Sir Terry Morgan, told the committee that “nobody knows” what the final costs of the project will be – and the committee says it is concerned that the project will run out of money and the northern sections will not be built.

The report has been backed by the Taxpayers’ Alliance and campaign groups like Stop HS2.

It comes just weeks after Bucks County Council urged the government to halt HS2 works in the county after councillors unanimously backed a motion to call for a stop to the project.

At the time, Cllr Charlie Clare said the works are bringing “irreversible damage to our environment and will leave the county scarred for generations”.

“HS2 plan to rip out our rural heritage, despite not having shown the community or the government what they plan to build in their place. Nor have they shown the Treasury how much it will cost,” he added.

In response to the new report, Penny Gaines, Stop HS2 chairman, said: “We are really concerned with the environmental damage being done at the moment by HS2 and their contractors.

“In the guise of preparation works, they are trying to cut down trees and dig up the countryside, even though they will not have permission to build anything for months. We call on the government to halt this environmental disaster straight away."

Joe Rukin, Stop HS2 campaign manager added: “Everything we have always said about HS2 is coming true as it is now absolutely clear it cannot be delivered on time, it cannot be delivered on budget and it cannot be delivered to the promised specifications. All HS2 delivers are fat contracts and a massive land grab for the people who have been lobbying for it, at a massive cost to the natural environment.”

HS2 Ltd said it will consider their recommendations as the project progresses.

A spokesman said: “HS2 will generate around £92 billion in benefits to the UK economy, with local economic plans forecasting the creation of 500,000 jobs and nearly 90,000 new homes. Work is underway at over 250 locations and the scheme already supports more than 7,000 jobs directly and across our supply chain.

“We are determined to deliver a railway that is value for money for the taxpayer, and a project that will reshape the economic geography of the country. We have strengthened our controls and are actively applying lessons learnt from recent infrastructure projects to ensure we have the most cost-effective approach."