HS2 costs spiralling out of control, Jeremy Hunt says, in biggest hint yet Manchester leg could be ditched

Chancellor Jeremy Hunt has given the strongest indication yet that the HS2 high-speed rail link will controversially stop in Birmingham and never reach the North of England.

Mr Hunt revealed that discussions “are happening at the moment” with Prime Minister Rishi Sunak on the future of the line as he warned about costs “getting totally out of control”.

Industry sources have told i that they now expect HS2 phase two – from Birmingham to Manchester – to be cancelled, with an announcement as possible as early next week.

But senior Government sources said they were not aware that any final decision had been taken, with it likely to rest with Mr Sunak.

It comes after the Independent obtained a leaked photograph showing ministers were considering scrapping the northern leg in a bid to save £35bn, despite £2.3bn having already been ploughed into stage two of the national line.

Mr Sunak on Wednesday said he would not “speculate” on the suggestion that more cuts could be made to HS2, with the Leeds terminus scrapped in 2021 alongside a controversial downgrading of Northern Powerhouse Rail (NPR).

Mr Hunt, who is currently on the west coast of the US on Government business, also declined to be drawn on the matter during an interview with LBC’s Tonight With Andrew Marr programme on Thursday.

He said: “I’m not going to comment on discussions that are happening at the moment, because as Chancellor, you would expect me to be having discussions with the Prime Minister, when major infrastructure projects overrun in their costs.

“And that’s what we’re facing with HS2… I understand, but they [Red Wall MPs] will also be worried if we have an infrastructure project where the costs are getting totally out of control.

“And that’s why you would expect me as Chancellor to be having discussions but let me say to you now, Andrew, we haven’t made any decisions on this.

“We are looking at all the options.

“But we do need to find a way of delivering infrastructure projects that doesn’t cost taxpayers billions and billions of pounds.”

George Osborne, a predecessor of Mr Hunt in the Treasury and a proponent of the so-called Northern Powerhouse while in government, said the Government would be doing the “easy thing” if it stops HS2 at Birmingham.

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The former Tory chancellor told an episode of Political Currency, a podcast he co-hosts with former Labour minister Ed Balls, that any trimming of the line by the Prime Minister would be a “big blow” to the levelling-up agenda.

Mr Osborne said there was a “big internal row” in the party about whether the Manchester route should be junked.

“I think it’ll be hard to claim you’re going to take the kind of difficult decisions for the long term if you cancel the long-term plan to build a high speed rail line that has had the support of administrations, both Labour and Conservative, over the last 15 years and go for the easy thing of caving into the lobbies who don’t want it built,” he added.

The planned railway is intended to link London, the Midlands and the North of England but has been plagued by delays and rising costs, with calls from Tory MPs for the entire project to be scrapped.

A budget of £55.7 billion for the whole of HS2 was set in 2015.

But the target cost, excluding the eastern leg of Phase 2b from the West Midlands to the East Midlands, has ballooned to between £53 billion and £71 billion in 2019 prices.

Ministers have already moved to pause parts of the project and even axed sections in the north.

The eastern leg to Leeds was binned two years ago and it was confirmed in March that construction between Birmingham and Crewe would be delayed by two years and that services may not enter central London until the 2040s.

Transport Secretary Mark Harper announced that work at Euston would be paused for two years as costs were forecast to reach £4.8 billion compared with an initial budget of £2.6 billion.

The pause means Old Oak Common, in the capital’s western suburbs, will be the railway’s only London station when services to and from Birmingham Curzon Street begin between 2029 and 2033.

Passengers travelling into central London will need to take Elizabeth line services to continue their journey into the heart of the capital.