Rishi Sunak is set to delay the northern phase of HS2 by up to seven years as part of a bid to scrap the project in the long term, The Independent understands.
The prime minister will this week decide the fate of the high-speed rail project, with an announcement expected before the Tory conference in Manchester next weekend.
Ministers are expected to say that work on the railway north of Birmingham will be delayed in order to move costs into a future parliament – kicking the project into the long grass.
It comes as cabinet minister Grant Shapps said the government could not write an “open-ended cheque” to support the project as costs climb and weeks after The Independent first revealed the PM and chancellor Jeremy Hunt were in talks about scrapping phase two of HS2.
This will give them breathing space before the general election after howls of outrage from the very top of the party, their own advisors and business leaders.
It is understood that ministers are set to confirm that the southern part of HS2 will terminate at Old Oak Common and not continue to Euston.
The Independent revealed last week that ministers were considering scrapping the second phase of the rail line, which has been hit by rising costs and repeatedly delayed.
The reports provoked a major backlash, with the government’s own infrastructure tsar and two former Tory prime ministers joining calls for the Mr Hunt and Mr Sunak to re-commit to the project.
On Sunday Mr Shapps said it would be “irresponsible” for the government to keep spending money on HS2 despite inflating costs.
The former transport secretary said the Treasury could not afford to write an “open-ended cheque” for the high-speed rail line from London to the north and did not have “infinite” money.
It comes following reports that nominal costs on the first phase from London to Birmingham could increase by another £8bn due to inflation, since the latest estimate in June 2022.
Mr Shapps, a former transport secretary who now heads the ministry of defence, said the project’s costs were continuing to rise and needing to be reassessed.
“Money is not infinite,” he said. “All of these big decisions where budgets are, particularly in the case of HS2, inexorably going higher and higher and higher, and your viewers are having to pay that bill, it is absolutely right that the government looks at it and says, hold on a minute, is this just a sort of open-ended cheque or are we going to make sure this project gets delivered to a pace and a timetable that actually works for the taxpayer?
“We take those long-term decisions seriously, but we don’t think any amount of money, no matter how big the budget gets, that you should just carry on ploughing it in,” he told the BBC. “There has to be a point where you say hold on a minute, let’s just take a break here.”
“We have seen the costs accelerate a lot,” he continued. “Of course, inflation has been part of that.
“There are various different estimates and I think that’s one of the things that the government wants to check, particularly on the costs now post the inflationary picture out of the war in Ukraine.
“But I have to say that it would be irresponsible to simply spend the money, carry on as if nothing had changed, if there has been a change in that fiscal picture.”
Speaking on Sky News Mr Shapps said Covid and the war in Ukraine meant the project should be reassessed.
“We did not know there would be coronavirus, a one in 100 year event... we didn’t know there would be a war on in Europe… so of course, if circumstances change, you have to look at the sequencing of the big infrastructure cash that you spend.
“Any government that doesn’t do that, any opposition that claims you don’t need to is not fit to govern this country.”
In fact, the government’s own figures show that rail travel passenger numbers have largely recovered close to pre-pandemic levels despite reduced timetable in many areas.
Figures released by the DfT show passenger numbers across the network were between 93 and 102 per cent of equivalent pre-pandemic levels across the whole of August.
And the government’s Integrated Rail Plan, which confirmed HS2 would go ahead, was confirmed in November 2021 while Mr Shapps was transport secretary and Mr Sunak was chancellor – after the peak of the Covid-19 pandemic.
Boris Johnson this weekend branded cost-saving measures “desperate”, urging the prime minister to deliver on the 2019 levelling-up pledge the Conservatives were elected on. He said it would “mutilate” the whole project.
“It is the height of insanity to announce all this just before a party conference in Manchester,” he said. “It is no wonder that Chinese universities teach the constant cancellation of UK infrastructure as an example of what is wrong with democracy.”
David Cameron has also privately raised significant concerns about the possibility that the high-speed rail line could be heavily altered, according to The Times.
In a letter to Mr Sunak, mayor of London Sadiq Khan warned that it would take longer to get from Birmingham to central London on HS2 than existing trains if plans to terminate at Euston station were abandoned.
“The government’s approach to HS2 risks squandering the huge economic opportunity that it presents and turning it instead into a colossal waste of public money,” the Labour mayor said in a letter to the PM.
This week Mr Hunt said the government was “looking at all the options”, adding: “We do need to find a way of delivering infrastructure projects that doesn’t cost taxpayers billions and billions of pounds.” The Treasury chief said no decisions had yet been taken.
A government spokesperson said: “The HS2 project is already well underway with spades in the ground, and our focus remains on delivering it.”