Labour casts doubt on high speed rail plans to the North

Mr Balls sparked a major surprise by warning he might withdraw support – even if the bill for HS2 remained below £50bn, including new trains.

Until yesterday, Labour – while insisting there could be no “blank cheque” for the project – had backed it, provided the cost did not exceed that ceiling.

Now Mr Balls has shattered the cross-party consensus by announcing a fresh review, after 2015, into whether HS2 remains the “best way to spend £50bn”.

It is understood that review will look at all options, including different routes or upgrades to existing lines – even though those appeared to have already been rejected by Network Rail.

During his conference speech, Mr Balls said Labour still backed “the idea of a new North-South rail link” - but not necessarily, it appeared, HS2.

He condemned the way the scheme had been “totally mismanaged” by the current Government, after the bill soared from £34bn to £42.6bn, minus the rolling stock.

And he said: “In tough times – when there is less money around and a big deficit to get down – there will be no blank cheque from me as a Labour chancellor for this project, or for any project.

“Because the question is not just whether a new high-speed line is a good idea or a bad idea, but whether it is the best way to spend £50bn for the future of our country.”

HS2 is intended to deliver 225mph trains from London to Birmingham by 2026 – and a Y-shaped network, on to Leeds and Manchester, seven years later.

Through trains will cut the Newcastle to London journey time from 2hrs 52mins to just 2hr 18mins – and the Leeds-Birmingham time to 2hr 7mins, from 2hr 52mins.

HS2 could also give many towns – including Middlesbrough, Hartlepool, Northallerton, Saltburn, Yarm and Redcar - new direct rail links to London, by freeing up space on existing lines.

Only last month, a study for the Government predicted an annual economic boost of up to £7bn for the North-East.