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Rishi Sunak is facing a renewed backlash from Conservative and Labour politicians and business leaders after the government refused to rule out scrapping Britain’s beleaguered High-Speed Rail 2 project beyond Birmingham.

Speculation about the northern section of HS2 from Birmingham to Manchester began earlier this month after the government declined to commit to building it following a meeting between the prime minister and chancellor Jeremy Hunt to identify further potential savings.

The Financial Times last week reported that the pair were discussing plans under which both the northern section of the rail project and its final stretch from Old Oak Common in west London to Euston station in the centre of the capital could be dumped in a bid to cut spiralling costs.

According to FT calculations, HS2’s £70bn price tag is set to be revised upwards to account for inflation within months to a figure closer to £91bn.

Asked if the government planned to scrap the northern leg, defence secretary Grant Shapps told Sky News on Sunday that ministers had to “respond to the circumstances”.

“We did not know there would be [a] coronavirus pandemic,” said Shapps, who was transport secretary between 2019 and 2022. “You must look at the sequencing of the big infrastructure cash that you spend. Any government that does not do that, any opposition who claims you do not need to, is not fit to govern this country.”

But former prime minister Boris Johnson told The Times newspaper that the reported decision to scrap the scheme’s northern leg was “total Treasury-driven nonsense” and that it made “no sense at all to deliver a mutilated HS2”.

“It is the height of insanity to announce all this just before a party conference in Manchester. It is no wonder that Chinese universities teach the constant cancellation of UK infrastructure as an example of what is wrong with democracy,” he added.

Andy Street, Tory mayor of the West Midlands, said scrapping the main line of the project would create the “most expensive white elephant in UK history” and “be a disaster for the country”.

Meanwhile, Andy Burnham, Labour mayor of Greater Manchester, warned that Sunak was “pulling the rug from under us” while local government was trying to “level up” the region.

“Why are we always treated as second-class citizens when it comes to transport?” he said on Sky News on Sunday. “If they leave a situation where . . . the southern half of the country is connected by modern high-speed lines and the north of England is left with Victorian infrastructure, that is a recipe for the north-south divide to become a north-south chasm over the rest of this century,” he added.

Business leaders, including big FTSE 100 companies, have also raised concerns with the government about the proposed change.

A person familiar with one company’s stance said the uncertainty over HS2 — together with Sunak’s watering down of net zero policies last week — showed a lack of “clarity and consistency” for investors looking at UK projects. 

“Our concern lies in the broader signals it sends about the attractiveness of the UK as a place to develop infrastructure projects,” the person said.

In a letter this weekend, lobby groups BusinessLDN and Northern Powerhouse Partnership warned Sunak that indecision over HS2 was “damaging Britain’s reputation as a place to do business”. “Delays and change sow confusion and add cost,” they added.

Labour has also cast doubts over whether it would commit to building the Birmingham to Manchester leg if it won the general election expected next year.

Asked by the BBC about his party’s position, Darren Jones, shadow chief secretary to the Treasury, said Labour “would love to see HS2 built” but added: “We’re not going to make decisions about national infrastructure projects that involve tens of billions of pounds without all of the information being available.”