Rishi Sunak has decided to scrap the HS2 rail line leg from Birmingham to Manchester, The Telegraph understands.
The Prime Minister is set to make the announcement in his keynote speech to the Tory party conference on Wednesday.
He will tell delegates gathering in Manchester – the city that will be most adversely affected by the move – that it will free up more than £10 billion to spend on other transport infrastructure projects.
The money could be spent on a high-speed east-west rail link called Northern Powerhouse Rail, as well as improvements to major roads and fresh cash for bus routes and potholes.
On Monday night, some Tory MPs welcomed the decision. Lee Anderson, the deputy Conservative Party chairman, said HS2’s costs were “spiralling out of control”.
He told GB News: “The whole country’s got to pay for this. Every single taxpayer in the UK has got to pay for this project and it’s spiralling out of control.
“Now, I’m easy with it. If it goes ahead, I’ll support it, if they scrap it, I’ll support that, either way, but we need a decision and we need it very, very soon, because, like I say, the costs each week are out of control.”
The MP for Ashfield, in Nottinghamshire, said: “I think if you gave the public a choice, especially where I live, between high-speed rail and better buses and tram services and local regional railways, they’ll go for the latter, obviously.”
However, Andy Street, the Tory mayor of the West Midlands, made a last-ditch appeal to Mr Sunak not to cancel the Birmingham to Manchester leg.
“You will be turning your back on an opportunity to level up – a once-in-a-generation opportunity,” he said. “You will indeed be damaging our international reputation as a place to invest.”
He later tweeted: “I wasn’t expecting this in Manchester, but I won’t let HS2 go without a fight. The offer to the PM is there - work with me and the private sector, grip the costs, and build Britain’s future.”
Asked whether he was disappointed about the reports, he told The Telegraph: “Of course I was”. He refused to rule out resigning over the issue, saying that it was a “hypothetical question”.
He added: “My only mission is to put items on offer to the Prime Minister and his team that will see HS2 delivered at a cost we can afford.”
Sir Jake Berry, a former Tory chairman who backs the completion of HS2 in full, told a drinks reception on Monday night: “HS2 isn’t so much a U-turn, but we’ve seen a bit of a roundabout today, haven’t we?
“I’ve worked out today what HS2 stands for — a halfway service to Manchester.”
Other Tory MPs have called on the Prime Minister to use the money saved by cancelling HS2 for tax cuts. Sir Jacob Rees-Mogg, a former business secretary, saying: “A penny saved is a penny earned and so available for tax cuts.
“Scrapping HS2 shows the serious-minded approach to government for which the Prime Minister is famed. It is the right approach to take to spending taxpayers’ money, and where it is shown to be extravagant and inefficient it must be cut.
“Any saving allows taxation to be reduced, as a reduction in expenditure leaves the public finances in a stronger state and lowers the anticipated deficit. I therefore would strongly encourage the Chancellor to pass this straight on to taxpayers, and £10 billion is more than the cost of cutting inheritance tax altogether for one year.”
But Andy Burnham, the Labour Greater Manchester mayor, said curtailing HS2 would be “profoundly depressing” and mean Northerners were being treated as “second class citizens”.
Downing Street insisted “no final decisions” over axing the northern leg of HS2 had been made, with Cabinet sign-off expected before an announcement.