The Independent understands that the route north of Birmingham will be shelved for seven years in a bid to ditch the project in the long term – a move that has sparked fury among northern mayors and business bosses.
A source close to government discussions said Mr Sunak was most likely to make the announcement in his speech on Wednesday, though it could now be brought forward to Tuesday.
The Independent understands that the decision to leave open the possibility that HS2 could be revived by the end of the decade was only made after this publication’s initial exclusive provoked a furious backlash and spooked No 10.
The move completely overshadowed the second day of the party’s conference in Manchester, with chancellor Jeremy Hunt not getting the attention he would have maybe hoped.
It comes as:
Tory mayor Andy Street blasted Mr Sunak, saying he was “turning his back” on levelling up
The Treasury refused to confirm the move, saying it was a decision for the prime minister
Labour accused Mr Sunak of turning his conference into a “shambles”
Mr Sunak plotted to assemble his ministers for an emergency cabinet on Wednesday
Liz Truss was mobbed by scores of Tory MPs backing her call for more tax cuts and deregulation
Andy Street, the Tory mayor of the West Midlands, pleaded with Mr Sunak not to ditch the northern leg of HS2. The influential figure said it would mean “cancelling the future” and warned that Britain’s credibility in the eyes of global investors was “now at stake”.
In a fiery message to the PM outside the conference hall, he added: “We must not give up. We must stay the course ... You will be turning your back on an opportunity to level up, a once-in-a-generation opportunity. You will indeed be damaging our international reputation as a place to invest.”
Henri Murison, the chief executive of the Northern Powerhouse Partnership, added that it was “madness” to leave the UK’s flagship infrastructure project unfinished, and said the decision could “finish” the Tories’ levelling-up promises.
The prime minister is expected to call his ministers together on Tuesday, but cabinet ministers told The Independent that, as yet, nothing is in their diary.
A source told The Independent that there would be some “reallocation” of HS2 money to the east-west rail programme known as Northern Powerhouse Rail in a bid to keep angry Tory MPs and business chiefs onside.
Mr Sunak is also expected to announce that the Birmingham to London leg of the network will end at Old Oak Common in west London rather than terminating at Euston.
The Independent first revealed the secret talks – codenamed Project Redwood – on 14 September. A cost estimate showed that shelving phase 2 of HS2 would save up to £34bn, though £2.3bn has already been lost to the northern leg. No 10 repeatedly stonewalled when approached about our story, before ministers admitted that talks were taking place.
Senior officials involved in the delivery of HS2 said they were still pushing to save the legislation needed to keep building the high-speed rail network in future, in the hope that a Labour government could revive the northern leg if the party wins power in 2024.
'The PM has inherited a difficult situation with HS2. But gripping this situation means re-examining it.'
West Midlands Mayor @andy4wm thinks that more can be done to ensure that the second leg of the HS2 is built.https://t.co/FnODkhEYS3
📺 Sky 501, Virgin 602, Freeview 233 pic.twitter.com/Cy9cV2Ce8W
— Sky News (@SkyNews) October 2, 2023
A hybrid bill authorises the digging of the HS2 tunnel between Manchester and Crewe. Northern MPs and business chiefs are also pushing for as much money as possible to boost east-west rail links.
The Labour mayor of Greater Manchester, Andy Burnham, said it looked like the Tories’ conference this year, which is being held in Manchester, “will be remembered as the conference when they pulled the plug on us”, adding: “What gives them the right to treat people here ... as second-class citizens?”
Mr Burnham said he could accept changes to the “phasing” of the project, but that HS2 must not be cancelled.
“If the decision is to prioritise that northern section and wider east-west links, we could live with that – on condition, though, that they don’t scrap HS2,” he told a hastily arranged press conference on the fringes of Tory conference.
“There’s a lot at stake here. Our reputation is at stake as a country,” Mr Burnham later told an industry reception hosted by the High Speed Rail Group.
“If that plug is pulled, in effect, it’s a statement that the north of England economy is going to be smaller in the 21st century than it might otherwise have been. It’s a message to [people] here that they are second-class citizens.”
Patrick McLoughlin, a longtime former Tory transport secretary under David Cameron and now the chair of Transport for the North, told the same event: “This [decision] should not be made in isolation without talking to elected mayors. We’ve got a system of devolution, of elected metro mayors. We shouldn’t be suddenly finding out this is under consideration by the prime minister and the chancellor.”
Red-wall Tory MPs in the Northern Research Group have signalled their willingness to accept a long delay to the northern leg of HS2 – so long as Mr Hunt and Mr Sunak commit to Northern Powerhouse Rail.
The idea of axeing HS2’s northern route has been opposed by three former prime ministers – Boris Johnson, Theresa May and David Cameron – as well as former chancellors George Osborne and Philip Hammond. Mr Johnson said it would be “utter madness”.
Andy Bagnall, the chief executive of Rail Partners – the umbrella body for the big rail companies – said that scrapping the Manchester leg would “send a shockwave through the rail industry, its supply chain and all those with a stake in the project, including the northern communities it would have served”.
Jurgen Maier, the former Siemens boss, said the government was “letting future generations down”. He told The Independent: “Complex infrastructure projects always hit some problems. Smart people get round the table to solve them – they don’t run away and cancel.”
Labour’s Louise Haigh, the shadow transport secretary, attacked Mr Sunak’s “shambolic” conference and said the “fiasco” showed that the Conservatives are “too divided and too distracted” to rule. She added: “Rishi Sunak’s relaunch is now coming off the rails.”
The Lib Dems’ transport spokesperson, Wera Hobhouse, said that the prime minister using a conference in Manchester to cancel the Manchester HS2 leg “would make Liz Truss look like a political genius”. She added: “We have a PM who flies around the country by helicopter, then wants to scrap high-speed rail links for the rest of us.”
Labour’s London mayor, Sadiq Khan, said cutting back HS2 would be a “catastrophic failure”. And Bev Craig, the Labour leader of Manchester City Council, said: “My phone is going wild with businesses who are very anxious.” She warned that major regeneration projects in Manchester could now be at risk.
Earlier on Monday, Mr Hunt gave the clearest signal yet that he would axe the northern leg as he attacked some of the high-speed rail project’s “totally unacceptable” costs.
A Downing Street spokesperson said “no final decisions” had been taken on phase 2 of HS2, but did not deny that an announcement could come at this week’s party conference.