Minister Grant Shapps has told Transport for the North to hold off on submitting the business plan for Northern Powerhouse Rail until after the Government has published its report setting out how the scheme will link up with HS2 and other major infrastructure projects.
TfN planned to submit the strategic outline case for the multi-billion pound project to the Transport Secretary next month but may now have to do several months of extra work on the document depending on the findings of the Integrated Rail Plan (IRP).
And it is feared the IRP may set a budget that stops the most ambitious version of the scheme - which would include a stop in Bradford city centre as part of a new Leeds-Manchester line - from going ahead.
TfN and the Department for Transport are working on the project together as co-sponsors and while they have agreed on the section between Leeds, Hull and Sheffield they are still at odds over other sections including the Leeds-Manchester leg.
There is disagreement over whether to choose a £17bn route serving Bradford backed by civic and business leaders and an alternative costing £4bn less which misses out the city entirely.
And a recent report by the National Infrastructure Commission - which advises the Government on its plans for high speed rail - said it could only afford the Bradford city centre stop if it raised its overall rail infrastructure budget to £129bn.
Members of TfN's board will discuss whether to delay submitting the plan tomorrow, but have been told they cannot discuss it publicly due to a stipulation by the DfT that it be dealt with in a private section of the meeting.
DfT officials deny forcing TfN to discuss the item in private but a confidential report seen by The Yorkshire Post says Section 100 A(2) of the Local Government Act 1972 requiring the item to be discussed in private was "triggered" by the Government.
Mr Shapps' department, which has accused TfN of moving too slowly on NPR and last year set up an 'acceleration council' to speed up the delivery of major projects, says waiting to submit the business plan will ensure the project fits in better with its wider strategy.
The IRP was due to be published late last year but is now expected this Spring. In an email, the DfT's director for NPR Nick Bisson said his department would not consider the business case until the IRP is published.
The confidential TfN paper recommends agreeing to the demand to show how it can "work collaboratively with government". But it adds: "This wouldn’t reflect parity in the co-clienting relationship and could compromise our ability to articulate, with a single voice, the transport priorities in the North of England."
It comes amid fears TfN is being sidelined by Mr Shapps, who has accused it of being a 'talking shop'. The strategic transport body has already been forced to close down its smart ticketing scheme to create London-style 'pay-as-you-go' contactless transport around the North after DfT announced it was slashing its budget.
Northern leaders say delivering NPR - which would connect the cities of Leeds, Sheffield and Hull with Manchester, Liverpool and Newcastle - is vital along with HS2 to improving northern transport links and tackling regional inequalities.
The most ambitious version of NPR is estimated to cost £42bn while the cheapest viable route involving an upgrade to the planned Transpennine route serving Huddersfield instead of a new line to Bradford would cost £27bn.
One source familiar with the matter said TfN was being "gagged" by DfT and warned that the IRP could be used to "drive down the potential of the project".
They told The Yorkshire Post: "The DfT want the short-term and cheapest options, while the local leaders are pushing for the long-lasting transformative ones." They added that the Government was "levelling down the ambitions of the North, while setting up northern leaders to take the rap".
Henri Murison, director of the Northern Powerhouse Partnership, said: “If the Government are truly committed to levelling up and the economic rebalancing of this country, delivering Northern Powerhouse Rail and HS2 in full are critical to that ambition.
"Cutting back on either or both would be a betrayal of businesses and communities in Yorkshire and right across the North.
“Three days after becoming Prime Minister, Boris Johnson pledged a new line between Leeds and Manchester. Now it appears that the Department of Transport are pushing upgrades to existing lines instead. This will not deliver the transformational benefits the North so badly needs.
“Businesses in Leeds, Sheffield and Bradford are deeply concerned about the scaling back of the rail projects that have the potential to revolutionise the economies of all of those cities, as well as better connect the North. They, and the whole of the North, will not accept being made to settle for second best.”
A DfT spokesman said: “Northern Powerhouse Rail is a key part of the Government’s agenda to level-up the North and our Integrated Rail Plan (IRP) will soon outline how the programme will boost connectivity across the region and provide faster more frequent services for passengers.
“We want to get this vital project underway as soon as possible and we have therefore asked TfN to submit their business case after the IRP to ensure the rapid alignment of plans and swifter progress.”