The Prime Minister and Chancellor are reportedly in talks to scrap phase two of HS2, following 'spiralling costs'.

Phase one of HS2 connects London with the Midlands. Phase two would connect the Midlands to Manchester and Leeds, and would include Stockport.

However, Rishi Sunak and Jeremy Hunt are reportedly in talks to shelve the project to save costs, as the government tries to balance its budget before the next election.

The Independent reports that scrapping the project could save £34bn, an estimate which comes from a cost report seen by the newspaper. However, the £2.3bn invested thus far would not be recoverable even if the project was cancelled.

It comes as the Infrastructure and Projects Authority - a government watchdog - concluded in July that phase two was 'unachievable'.

The project has suffered from delays and spiralling costs, as well as widespread criticism on the effects HS2 would have on existing services.

A spokesperson for the High Speed Rail Group said: "Once again the 30,000 men and women who are working every day to deliver HS2 will return home to find further speculation about whether they will be allowed to complete the job they have started.

"Were phase two to be cancelled it would be a disaster for the North and the Midlands. After 13 years during which the Government has promoted the project, it would also be the ultimate U-turn.

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"The government needs to kill the speculation and make its intentions clear, and it ought to commit clearly and unambiguously to delivering the project as planned. The 30,000 people delivering HS2 deserve this. Our future generations deserve this. The North and Midlands deserve this."