Rishi Sunak is said to be interested in axing part of the HS2 link in central London so that it ends six miles north of Euston.
The Independent announced this week that the Prime Minister and his Chancellor Jeremy Hunt have discussed scrapping parts of the high-speed rail project to save money.
MPs, northern mayors and business and transport leaders reacted furiously after this publication reported that the second stage of HS2 from Birmingham to Manchester could be scrapped due to costs.
Mr Sunak is also pushing for the route in the capital to be ended early, meaning trains would have to stop at Old Oak Common six miles from Euston The times.
Although discussions are still active, a senior government source told the newspaper that the Prime Minister is already “determined” to scrap both the Euston route and the Manchester link.
“Unless he can be persuaded to change course, the matter is a done deal,” they said, adding: “Ending the line at Old Oak Common is pretty much the definition of a railway to nowhere.”
Abolishing the Euston link would save at least £4.8 billion – the estimated cost of upgrading central London station so it can connect to the high-speed line and handle HS2 trains.
HS2 services should be available in Euston when the project reaches Manchester in 2040. However, axing the section would mean passengers would have to get off at Old Oak Common – near Harlesden in north-west London – and take the Elizabeth Line into central London.
Mr Hunt confirmed this in an interview with the Financial Times that he discussed with Mr Sunak how to tackle HS2 cost overruns – and refused to promise Manchester the project would be completed.
“On any major infrastructure project, let alone the largest infrastructure project in the country, you would expect us to have conversations about dealing with cost overruns,” Mr Hunt said.
Asked whether HS2 would be fully built, the Chancellor said: “I won’t get into the details.”
A cost estimate taken from this publication shows that the government has already spent £2.3 billion on the second stage of the high-speed line from Birmingham to Manchester, but abandoning the northern phase would save up to £34 billion.
Although Mr Sunak and Mr Hunt – who met earlier this week to discuss costs – are not understood to have come to a final decision, the Chancellor could set out the plan for HS2 as early as the mini-Budget.
The Chancellor is desperately looking for some fiscal space to allow for tax cuts in either the autumn or full spring budget.
Former finance minister Jim O’Neill said the prospect of the northern phase being scrapped after 13 years of work showed the UK’s approach to infrastructure was “a disaster”.
The former Tory minister told The Independent: “It’s very, very disappointing and the country’s long-term investment decisions are a disaster.” Lord O’Neill added: “The debate and framework for these long-term investment decisions in the UK is terrible.”
Liverpool City Region Mayor Steve Rotheram and West Yorkshire Mayor Tracy Brabin have joined Greater Manchester Mayor Andy Burnham in speaking out against the idea of scrapping Phase 2 – accusing the Government of “the to hold down the north.”
The Labor mayor, Mr Rotheram, said The Independent: “Far from levelling, this government’s actions continue to keep the North under pressure.” Voters won’t forget – and they will give Rishi Sunak and his party a one-way ticket into opposition at the general election. “
The Prime Minister’s official spokesman told reporters that “the groundwork for our HS2 program is already in the ground and we are focused on delivering it”, but he would not promise that the line would go to Manchester.