Transport Secretary Philip Hammond has set out plans to build two branches to the planned new £33 billion high-speed rail network north of Birmingham.
He also used his speech to the Conservative Party conference in the city to condemn the striking Tube workers in London who are “inflicting misery on millions”, adding: “All our railways have to modernise.”
Mr Hammond said: “Britain has one of the most expensive railways in the developed world, according to the independent regulator up to 40 per cent more expensive than our main competitors.
“That is unfair on passengers and unaffordable for the taxpayer and with public subsidy running at £5.5 billion a year this has to change.
“Network Rail, the train operators, the regulator, the Government and the unions all have to change. Change the way they work together to drive up efficiency while maintaining what is now an enviable safety record.
“Delivering a sustainable future for Britain’s railways.
“And in case the Underground workers who are inflicting misery on millions of London commuters today think that they are somehow exempt from change, let me tell them straight: they are not.
“All our railways have to modernise.”
Mr Hammond declared that ministers prefer the so-called Y-option for the high-speed rail network north of Birmingham over a single S-shaped line crossing the Pennines.
It means that separate lines will provide services between Birmingham and Manchester and between Birmingham and Leeds, the latter cutting through the East Midlands.
He said: “We have committed to a high-speed rail network that will change the social and economic geography of Britain, connecting our great population centres and our international gateways, transforming the way Britain works as profoundly as the coming of the original railways did in the mid-19th century.
“We will consult in the new year on the strategic roll-out of a high-speed rail network and on our preferred route for the first leg between London and Birmingham.
“But I can announce today that the Government’s preferred option for high-speed rail north of Birmingham will be for two separate corridors - one direct to Manchester, and then connecting on to the west coast mainline, and the other via the East Midlands and South Yorkshire, with stations in both areas, before connecting to the east coast mainline north of Leeds.”
This will make “rail the mode of choice for most inter-city journeys within the UK, and for many beyond”.
The cost of the network, which will start in London, is estimated at about £33 billion, although more detailed cost analysis is to be undertaken next year, as is a consultation on the plans.
The cost includes linking up the new network with Heathrow airport and the existing high-speed rail link between London and the Channel Tunnel. Construction is expected to start in 2015.
Ministers have plumped for the Y-option because it is thought to offer the best return on the investment, estimated to be £2 for every £1 put in.
Mr Hammond referred to the UK as “this little tiny speck on the map” as he stressed the importance of improving transport links.
During a question-and-answer session, he said: “If you’re in Japan, and you are talking about making an investment in Britain - this little tiny speck on the map the other side of the globe - you think London.
“And when you find out it’s going to take you three and a half hours to get to where you’re planning to build your new factory in the North East, that’s a limiting factor for you.”