The Prime Minister said the money saved from the bloated project would be spent on alternative rail, road and bus schemes instead.
He said the decision to ditch the Birmingham-Manchester leg was due to huge costs and long delays.
In his speech on the final day of the Conservative Party Conference, he vowed the government “will reinvest every single penny” saved from cancelling the remainder of HS2.
He said: “Every region outside of London will receive the same or more government investment than they would have done under HS2, with quicker results. Our plan will drive far more growth and opportunity here in the North than a faster train to London ever would.”
The high-speed rail project was intended to link London, the Midlands and the north of England.
The first part, between west London and Birmingham, is already being constructed. Mr Sunak confirmed that it will be completed.
But the scheme as a whole has already faced delays, cost increases and cuts – including the planned eastern leg between Birmingham and Leeds which was axed in late 2021.
In March, the government said the line between Birmingham and Crewe and then onto Manchester would be delayed for at least two years
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Transport Secretary Mark Harper, said the £36billion will now be spent on projects “people want to see”.
In his first speech to party conference as prime minister, Mr Sunak said that changes to travel seen after the coronavirus pandemic meant that the economic case for HS2 “has been massively weakened”. The last official estimate on HS2 costs, excluding the cancelled eastern section, added up to about £71billion.
But this was in 2019 prices so it does not account for the rise in costs for materials and wages since then.
The PM said east-west links were “far more important” than those linking up the north and south of England. He said his plans would see “hundreds” of alternative projects funded, such as building the Midlands rail hub, connecting 50 stations, upgrading the A1, the A2, the A5 and the M6 and building a Leeds tram system.
Mr Sunak said the money would help fund the Shipley bypass, the Blyth relief road and 70 other road schemes, electrifying train lines in North Wales and resurfacing roads across the country.
He also said he would protect £12billion dedicated to linking up trains between Manchester and Liver-pool, although not with high-speed rail.
Philip Davies, the Conservative MP for Shipley, said: “Every-body knew that HS2 had become an embarrassing white elephant and that the never-ending sums dedicated to it could be much better spent on transport infrastructure projects across the North, but no political leader would dare say it. Rishi Sunak is the Prime Minister who was prepared to say these things and then deal with them.
“That is the kind of decisive leadership that the public craves.”
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Conservative MP Richard Holden said the investment will “really deliver quickly for communities rather than ploughing ever-increasing sums of money into a project which would just connect city centres up and isn’t even going to be rolling until 2042”.
Antony Higginbotham, the MP for Burnley, said: “The decision he took on HS2 is bold, but the right one. My constituents are more interested in whether they can get to Manchester Airport from Burnley without changing trains than whether someone can get from Manchester to London. It’s these bread and butter things.
“Can I get from Burnley to Manchester to go to university? Can I get from Burnley to Manchester Airport to go on holiday? Can I get from Burnley to the next town along to see my parents and grandparents and friends? That’s the thing that my constituents are interested in.”
Although the Prime Minister said it would be possible to get from Manchester to Hull in 84 minutes on a fully-electrified line under the new plans, known as “Network North”, it is not yet clear what decision has been made on the Northern Powerhouse Rail (NPR) project, which aims to improve connections between Leeds, Man-chester and Liverpool.
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Mr Sunak confirmed the HS2 scheme would still run to Euston in central London, rather than terminating at Old Oak Common.
Laurence Turner, of the GMB, said it was “essential” that the planned HS2 route was now protected “so that a future government can reverse this disastrous decision”.
Former Tory PM David Cameron, writing on X, said: “Today’s decision on HS2 is the wrong one.
“It will help to fuel the views of those who argue that we can no longer think or act for the long-term as a country; that we are heading in the wrong direction.
“HS2 was about investing for the long-term, bringing the country together, ensuring a more balanced economy and delivering the North-ern Powerhouse. We achieved historic, cross-party support, with extensive buy-in from city and local authority leaders.
“Today’s announcement throws away 15 years of cross-party consensus and will make it much harder to build consensus for any future long-term projects.”
Greater Manchester mayor Andy Burnham said there was “frustration and anger” in the region. He said: “It always seems that people where I live and where I represent can be treated as second class citizens when it comes to transport.”
And former Chancellor George Osborne said HS2 was “a great opportunity to deliver for northern voters” and cancelling phase two “would be a great tragedy”.
On Monday, West Midlands Tory mayor Andy Street said axing the Manchester leg would amount to “cancelling the future” and risk damaging the UK’s international reputation “as a place to invest”.
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