Ministers are to oversee HS2 and have launched a review after the government was unable to ascertain the scale of the ballooning overspend on the long-delayed high-speed rail line.

Louise Haigh, the UK transport secretary, said that the scale of failure in the delivery of the project was “dire” and that analysis had been unable to clarify if the cost overrun was £10bn or £20bn.

“It has long been clear that the costs of HS2 have been allowed to spiral out of control,” said Haigh. “But since becoming transport secretary I have seen up close the scale of failure in project delivery – and it’s dire.”

Haigh, who confirmed that the government would not be resurrecting the phase 2 plan to extend the line to Manchester, said that ministerial oversight was being reinstated to “ensure greater accountability”.

This will involve regular meetings with HS2, Haigh, the rail minister Lord Hendy and Darren Jones, the chief secretary to the Treasury, to “challenge delivery and remove obstacles” to deliver the project more cost-effectively.

The government is also reviewing the incentives for the main HS2 contractors – the largest private sector supplier is the British-French joint-venture Balfour Beatty Vinci (BBV) – which could lead to some contracts being renegotiated or amended.

Haigh has also launched an independent review, to be led by James Stewart, the former chair of infrastructure at KPMG, who will present recommendations to the government this winter.

While the review will investigate the oversight of a number of major transport infrastructure projects, including the effectiveness of forecasting and reporting costs and schedules, the government said it would primarily draw on the experiences of HS2 to date.

“Taxpayers have a right to expect HS2 is delivered efficiently and I won’t stand for anything less,” said Haigh. “I have promised to work fast and fix things and that’s exactly why I have announced urgent actions to get a grip on HS2’s costs and ensure taxpayers’ money is put to good use.”

Haigh has written to the chair of HS2, Sir Jonathan Thompson, stressing the need to focus on taking action to “turn things around and bring costs back under control”.

Leaked documents dated September last year reveal that civil servants in the transport department have “low confidence” in estimates on overspend “given the rapid changes and inconsistent projections” provided by HS2.

The memo concluded that there was “significant uncertainty” in the calculations, which was unlikely to be resolved until the end of this year.

The documents from 2022 to 2023, first published by the Sunday Times, show that the projected cost of the first phase of the scheme from London to the West Midlands, which is still under construction, ballooned from £30bn to almost £60bn using 2019 prices.

HS2, which has its own methodology for calculating inflation for the construction sector, gave the government an upper projection of £74bn last September.

The documents also conclude that the supplier BBV, which is responsible for almost half the track between London and Birmingham, is “too large to effectively control”.

In the documents, Thompson said it was “concerning” that his team was being asked to accept the consortium’s assurances that its methods were “sound”.

“One of my first jobs as transport secretary has been to urgently review the position I have inherited on HS2,” said Haigh. “It’s high time we make sure lessons are learned and the mistakes of HS2 are never repeated again.”

Plans to extend HS2 to Leeds and Manchester were scrapped by Boris Johnson and Rishi Sunak’s governments to save billions of pounds.

The proposed cost of the full high-speed link connecting London to Manchester and Leeds more than tripled from £32bn in 2012 to £106bn in 2020.

Earlier this week, the culture secretary, Lisa Nandy, said Haigh was “seriously looking” at extending the HS2 line to Euston station in central London.

Haigh has previously said that it makes “absolutely no sense” to have the high-speed route terminating at Old Oak Common station outside central London. She has also hinted at a cut-price “HS2-lite”, which would involve constructing a new section between Birmingham and Crewe that allows trains to travel faster than on the west coast mainline, but slower than HS2.