In one of the biggest political stories of the year, this publication first revealed Mr Sunak was in secret talks – dubbed Project Redwood – with his chancellor Jeremy Hunt to scrap the second phase of the project.
After the story broke on September 14, Downing Street repeatedly stone-walled before ministers accepted talks over the most dramatic decision in years to stop a £34bn infrastructure spend were taking place.
The story has prompted unprecedented fallout, with two former prime ministers attacking Mr Sunak amid a cascade of criticism and cabinet divides. Boris Johnson and David Cameron were joined by ex-chancellor Philip Hammond in urging the PM not to cut the high-speed rail route.
Mr Sunak and Mr Hunt are understood to have been surprised by the major backlash from business chiefs, northern mayors and senior Tories and are thought to have delayed a final decision and announcement until after next week’s party conference.
A source close to government discussions on HS2 told The Independent: “The PM and chancellor have opened up a big rift in the Tory party. There are significant figures in cabinet who are opposed [to ditching HS2]. Michael Gove and Mark Harper are very unhappy.”
The source added: “They’ve bottled any announcement for the moment. The backlash has been so big they are not ready to cancel. They are having to consider how to rephase it. [Sunak] is going to have a very challenging conference in Manchester.”
A source close to Mr Gove said they did not “recognise” the idea of a cabinet rift. Mr Harper declined to comment.
Downing Street denied there was ever a plan to announce cuts to HS2 this week, with a No 10 spokesperson saying normal spending discussions were taking place ahead of the chancellor’s autumn statement in November.
A document detailing the financial details for the crunch meeting between Mr Hunt and Mr Sunak was photographed being carried into No 10. Although £2.3bn has already been spent on preparations for phase 2, the Redwood solution suggested £34bn would be saved by abandoning any future plans.
Mr Sunak and Mr Hunt are understood to have been considering whether HS2 north of Birmingham could be delayed for up to seven years in order to move costs into a future parliament – kicking phase 2 into the long grass.
But northern Tory MPs are still hopeful parts of the project can be rescued. They have raised it with the party whips, and are pushing to speak to the PM and the chancellor in a bid to save key parts of the project and get guarantees on Northern Powerhouse Rail investment.
Some of the pro-HS2 Tories would be able to live with phase 2a from Birmingham to Crewe being delayed, as long as crucial parts of phase 2b – the Crewe to Manchester section – are accelerated. The Tory rebels want to see a high-speed section between Manchester Piccadilly and Manchester Airport.
A senior northern Tory MP close to the HS2 project told The Independent: “I don’t expect an announcement before the conference. They would be very unwise to cancel everything – there would be a major backlash.”
Writing in The Times, Mr Osborne and Lord Heseltine said governments are remembered “for what they build and create – make this mistake and yours may only be known for what it cancelled and curtailed”.
Lord Heseltine later said that ditching the northern phase of the project would leave it as a “toy town” rail line. The Tory peer added that it would “send a very clear signal that the levelling up agenda has been put on deep freeze”.
Mr Hammond said work done when he was at the Treasury showed that HS2 “had to go” to Manchester and Euston, telling the Express: “Anything else was a false economy … The project was always about capacity. We needed more rail capacity from Manchester to London.”
Andy Street, the Tory mayor of the West Midlands, said axing the northern leg would make it the “most expensive white elephant in UK history”. Mr Johnson has warned against a “mutilated HS2”, while Mr Cameron is believed to have privately raised concerns about the prospect that the high-speed rail line could be ditched.
Jason McCartney, the Tory MP for Colne Valley, told The Independent he wanted HS2 “delivered in full to Manchester and Leeds with full connectivity to Northern Powerhouse Rail”, but added: “I acknowledge it’s well over budget and it’s right that the PM takes a pragmatic view.”
Andy Burnham, the mayor of Greater Manchester, said he would write to Mr Sunak to warn him that scrapping HS2 would “rip the heart out of Northern Powerhouse Rail” and create a “north-south chasm”.
The Labour mayor insisted that if Mr Sunak wanted to ditch HS2 he should call a general election and get a mandate first.
It is understood that the government still plans to cut the southern part of HS2, terminating at Old Oak Common and not continuing to Euston, sparking fresh outrage on Monday. Experts said it would cause a “commercial and operational mess”.
Paul Johnson, director of the Institute for Fiscal Studies, said the chaos around HS2 makes him “want to weep” and warned a truncated project would be a “total waste” of money.
Dozens of leading business chiefs – including the heads of Manchester Airports Group and Virgin Money – signed a letter to the government urging HS2 to be built in full. A group of 10 vice-chancellors of universities in the West Midlands has also called on Mr Sunak to commit to high-speed rail.
Henri Murison, chief executive of the Northern Powerhouse Partnership, said: “The government has heard the voice of business and northern mayors – it’s time to listen.”
No 10 repeatedly declined to comment on speculation about the future of HS2 on Monday – but pointed out that there was precedent for delaying parts of the line due to “affordability”.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies