Jeremy Hunt is keeping the option of scrapping the second phase of HS2 at his upcoming mini-Budget in a bid to find room for tax cuts.
The Independent understands that Rishi Sunak and his chancellor remain in active discussions over the scrapping of parts of the high-speed project, and that the decision could be laid out in the autumn statement.
It comes as Northern mayors warn Rishi Sunak and the chancellor that axing phase 2 of the landmark high-speed rail project will cost the Tories the general election because “voters won’t forget”.
MPs, business and transport leaders have reacted with fury after The Independent revealed the second stage of HS2 from Birmingham to Manchester could be scrapped over cost concerns.
Liverpool City region mayor Steve Rotheram and West Yorkshire mayor Tracy Brabin have joined Greater Manchester major Andy Burnham in condemnation – accusing the government “holding the north down”.
The Labour mayor Mr Rotheram told The Independent: “Far from levelling up, this government’s actions continue to hold the North down. Voters won’t forget – and they’ll be handing Rishi Sunak and his party a one-way ticket to opposition at the general election.”
“The whole point of HS2 is to improve connectivity between North and South and free up capacity on our railways,” added Mr Rotheram – who said he had “long warned” that the government would not deliver on the project.
He added: “Against all odds, their ‘high speed’ line might give us slower journeys than the creaking Victorian infrastructure we have to endure at present. At the rate the Tories are going, HS2 won’t get out of North London – nevermind to the north of England.”
No10 repeatedly refused to confirm the link would be finished in full, after The Independent revealed Mr Sunak and Mr Hunt reviewed £30bn potential “savings” that could be made by scrapping parts of it at a meeting on No 10 on Tuesday.
Ms Brabin, the Labour mayor of West Yorkshire, said: “Almost two years after the eastern leg of the project was scrapped, it seems the government is determined to deliver the fatal blow for HS2 in the north.”
She added: “We are crying out for our fair share of transport investment to help us build a better-connected region — but once again the North is just an afterthought for this government. It’s our passengers and businesses who will pay the price.”
Sunak and Hunt are under pressure from Tory MPs to deliver tax cuts— (Downing Street)
On Thursday Mr Burnham accused ministers of “making the north pay for their failure”, adding on Twitter / X: “Levelling up? My a**e.”
Former Tory chancellor George Osborne joining MPs behind HS2 in warning the government against axing the project. He said abandoning the line would be a “mistake” and “a real, real tragedy”.
A cost estimate seen by this publication shows that the government has already spent £2.3bn on stage two of the high-speed railway from Birmingham to Manchester but shelving the northern phase would save up to £34bn.
Though Mr Sunak and Mr Hunt are not thought to have come to a final decision, the chancellor could set out the plan for HS2 as soon as the mini-Budget. The chancellor is desperate to find some fiscal headroom to allow for tax cuts either in the autumn or full spring Budget.
HS2 project has been beset by delays and cost overruns— (PA Archive)
Some Conservative MPs have suggestion the government could introduce further delays to the completion of HS2 to help stagger the costs over a longer period. “Slowing it down – that would probably be a sensible move, if it prevented doing a U-turn on finishing it,” said one senior Tory close to the rail project.
Mr Sunak’s official spokesman said he could not “comment on the speculation”, but said the government was “looking at the rephasing of the work in the best interests of passengers and taxpayers”.
Costs on the trouble high-seed rail project have spiralled to around £100bn. Earlier this year the government said there would be a two-year delay to HS2 between Birmingham and Crewe and Manchester. The Crewe section won’t opening until 2036 and the Manchester leg until 2043 at the earliest.
A senior rail industry source told The Independent: “The government needs to make up its mind one way or another. Cancelling HS2 north of Birmingham is not only a waste of the money it has already spent on phase 2, but it also hugely diminishes the value of phase 1 that is now halfway towards completion.”
But some Tory MPs told The Independent that they were “hoping” Mr Sunak and Mr Hunt decided to cut the government’s losses and ditch the rest of the project. Sir Edward Leigh said he would be “delighted” if phase 2 was scrapped.
Philip Davies, MP for Shipley, said the government should “reallocate the money for infrastructure across the north”. He added: “That would be hugely popular with the public in the north who are far ahead of those people in the south who still think HS2 is a good thing.”
Olly Bartrum, a senior economist at the Institute for Government (IfG) think tanks, said delaying or ditching HS2 could allow for tax cuts before the election. Any savings that can be found in expenditure in 2028/29, the last year of a five-year financial forecast, would allow Hunt to reveal tax without breaking fiscal rules.
