The government is set to announce the construction of sections of HS2 will be delayed to save money, Sky News understands.
The high-speed railway was initially set to link London and the West Midlands with a further phase extending to cities in the North.
However, it is thought the delay will affect the northwest section of HS2, from Birmingham to Crewe, and then from Crewe to Manchester.
Design teams working on the London section in Euston may also be affected and contractors are looking at whether they need to redeploy staff from that site.
A planned extension to Leeds was already shelved in November 2021.
Delivery of the high-speed railway has been a core pledge of the Conservative government but it has been plagued by delays and ever-increasing costs – from estimates of about £33 billion in 2010 to £55.7bn for the whole project in 2015.
By 2019, the estimated cost had soared to at least £71bn, excluding the final eastern leg from the West Midlands to the East Midlands.
Ministers are understood to be delaying construction of the northern section in the hope they can spread the cost over a longer period of time so it was more affordable annually.
Chancellor Jeremy Hunt is set to announce his spring budget next week and will have Rishi Sunak’s target in mind – to get debt to fall as a percentage of GDP within five years.
Leader of Birmingham City Council, Ian Ward, said the delay is “another betrayal of the Midlands and the North, making a mockery of the government’s empty promises to level up the UK economy”.
Conservative MP and former chief secretary to the Treasury Simon Clarke said delaying construction “would be a sensible decision”.
“Having observed HS2’s progress as chief secretary, I have serious doubts as to value for money and cost control,” he said.
Just last week, rail minister Huw Merriman told the Commons the government is “absolutely committed” to delivering HS2 but admitted “cost pressures” must be examined.
HS2 Ltd chief executive Mark Thurston said the project had suffered a “significant” impact from increased costs in building materials, fuel and energy due to high inflation.
The prime minister’s official spokesman, responding to reports the project will be delayed, said: “You will know there’s work already underway on HS2.
“Equally the rail minister has been clear we’re continuing to look at any cost pressures and ensure the project delivers value for money for taxpayers.”
HS2 is Britain’s biggest infrastructure project and has had support from governments of all stripes since it was first mooted more than a decade ago.
But last month, the government reportedly planned to make drastic changes that would almost halve the number of high-speed trains per hour and services would travel slower to save money.
The Department for Transport (DfT) said at the time it “does not comment on speculation” and said the government “remain committed to delivering the project”.
In January, Chancellor Jeremy Hunt said he did not see “any conceivable circumstance” the original plan would not be followed after reports the high-speed line could stop before reaching central London.
There were claims the last leg of HS2 into Euston could be scrapped and replaced with a new hub at Old Oak Common in the suburbs of northwest London, where it is set to stop before travelling into Euston.
The government did not deny the reports or that a two to five-year delay to the entire project – currently due to be completed between 2029 and 2033 – was being considered due to record high inflation impacting costs.