Scrapping HS2 in the North will derail efforts to close the UK’s economic divide, an independent review by the Northern Powerhouse has concluded.

The review – which is designed to inform the Government-commissioned Oakervee review – says cancelling the controversial project without credible and viable alternatives will hold back the push to boost the region’s competitiveness and productivity.

The North, along with the Midlands, instead “must take control” to deliver the economic benefits held by HS2 and the £39 billion Northern Powerhouse Rail (NPR) project, says the review.

It has also called for the creation of a special purpose vehicle based on the model of the Olympic Delivery Authority, called HS2 North, to ensure HS2, NPR and related rail upgrades are “combined efficiently and with maximum value”.

The findings comes after sources told ITV News that the Oakervee review will recommend that the eastern stretch between Birmingham and Leeds should be scrapped entirely and the western route to Manchester downgraded due to spiralling costs of HS2, which currently stand at around £103 billion.

The revelation was made in the same week that free market think tank the Adam Smith Institute branded HS2 “a massive white elephant” and called on investment to be made on improving sections of the existing rail network, including the West Coast Mainline.

The Institute’s way forward was dismissed out of hand by NPP, which says delivering HS2 along with NPR – which would connect major cities across the North – could be worth hundreds of billions of pounds to the region’s economy and create tens of thousands of jobs.

The NPP’s review has been based on an extensive review of economic evidence and economic analysis by Steer Economic Development, it said.

Chris Oglesby, member of the Northern Powerhouse Independent Review into HS2 and chief executive of global company Bruntwood, said: “HS2 will be transformational in equipping the North to thrive in the Fourth Industrial Revolution.

“It delivers massive economic benefits by increasing capacity and speed both between our cities and into them on both new and existing lines. This, in turn, will increase access the labour markets for high growth industries and drive productivity; as much in enabling new jobs as improving existing ones.

“Only by delivering an integrated high-speed network right across the North can a Northern Powerhouse vision be truly realised. Further delays and uncertainty are hugely damaging to North and the country as a whole.”

NPP director, Henri Murison, added: “The benefits of Northern Powerhouse Rail and HS2 together are greater than either scheme alone. The cancellation of either east and/or western leg without a proven and credible alternative could leave us with no way to secure the economic competitiveness we need, which alongside productivity gains, is a pre-requisite of rebalancing the British economy.”

Mr Murison has argued that NPR will benefit Cumbria by improving connections and capacity, even though the investment would not be made in the county.

Meanwhile, Cumbria Chamber of Commerce has pledged its support for HS2 – as long was high speed trains observe the current West Coast Mainline stop pattern in Cumbria at Oxenholme The Lake District, Penrith and Carlisle stations.

Any link to Cumbria would fall in the third phase of work, with HS2 trains using the existing West Coast Mainline north of Wigan.

However, doubts continue to grow over whether HS2 will ever reach Cumbria, with opposition growing to the project in light of its high cost and continued delays.

Douglas Oakervee is due to hand its findings to Transport Secretary Grant Shapps on Friday (October 18), which in turn will “inform the Government's decisions on next steps for the project”, the Department for Transport has said.

However, the publication of the review could be delayed should Prime Minister Boris Johnson call a general election in November – a step he may take should a meeting with European Union officials the day before fail to make enough progress on agreeing Britain’s withdrawal from the EU.