HS2 to Manchester: 'scrapping HS2 to Manchester is the ultimate Government u-turn - a disaster for the North'

No 10 suggested ministers would need to balance the interests of "passengers and taxpayers" when asked about speculation that the northern leg could be shelved amid spiralling costs and delays.

It comes after The Independent published a photograph of a leaked document appearing to show the Government has already spent £2.3 billion on stage two of the railway from Birmingham to Manchester, but that up to £35 billion could be saved by abandoning the phase.

The Prime Minister's official spokesman said "spades are already in the ground on our HS2 programme and we're focused on delivering it" but would not promise the line will run to Manchester.

"I can't comment on speculation around a leaked document. It is obviously standard process for departments to discuss the phasing of major projects like HS2... but the work is already under way," he said.

Asked if the Prime Minister is committed to the line going to Manchester, the spokesman said: "We are committed to HS2, to the project. I can't comment on the speculation that's a result of a photograph. We are as you know looking at the rephasing of the work in the best interests of passengers and taxpayers."

The Independent reported that the Prime Minister and Chancellor are in ongoing talks about how best to move forward with the project.

The planned railway is intended to link London, the Midlands and the North of England but has been plagued by delays and soaring costs.

Henri Murison, chief executive of the Northern Powerhouse Partnership, said any decision to curtail plans would cause "serious damage" to the Government's relationship with "both Northern-based businesses and inward investors" and said "it makes no sense to stop now".

"Cancelling phase 2b would also make it impossible to improve east-west connectivity across the North as promised in the Integrated Rail plan. It would remove the most critical remaining section of Northern Powerhouse Rail between Manchester Piccadilly and Manchester Airport which is vital for getting passengers from Liverpool across the Pennines," he said.

"Our country's inability to deliver infrastructure, whether it's hospitals or rail lines, is a huge problem for raising productivity long term and our global reputation. The shadow chancellor has already committed to treating day-to-day spending differently to capital spending to support long-term economic growth - the Government should do the same."

A spokesperson for the High Speed Rail Group said scrapping phase two would be a "disaster" for the North and the Midlands and the "ultimate U-turn", adding: "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."