The UK government is undermining its pledge to “level up” the country after it slashed the budget of the body planning a massive transport investment programme in the north, the region’s leaders have suggested.

Transport for the North (TfN), a statutory organisation, will lose 40 per cent of its core funding and a fifth of its total annual funding for the next financial year, documents it published on Wednesday showed.

As part of the cuts, the Department for Transport has shelved plans for contactless ticketing across the region and cancelled more than £100m of future funding for it.

Andy Burnham, mayor of Greater Manchester, told the FT: “This move appears to be an attempt to stifle the voice of the North and put Whitehall back in control. I will be seeking assurances that this is not the case.”

Northern mayors and council leaders expressed “concern at the impact that it would have on the ability of TfN and the North in general to effectively contribute to the ‘Levelling Up’ agenda”, according to the document prepared for a TfN board meeting on Thursday.

Levelling-up is the government’s term for narrowing the economic gap between London and the south-east and the rest of the UK. The local politicians who make up TfN’s board are pressing for urgent talks with Grant Shapps, transport secretary.

George Osborne, former chancellor, established TfN in 2015 to drive his Northern Powerhouse policy of connecting the north’s cities to improve their economic heft.

But Mr Shapps believes TfN has made little progress and last year set up a Northern Transport Acceleration Council last July instead with a smaller membership, including himself. It has met twice, while TfN meets monthly.

TfN has drawn up detailed plans for transport links across the regions including the £39bn Northern Powerhouse Rail scheme to cut journey times between its big cities.

Plans for this year included £33m to deploy contactless payment infrastructure across the Tyne and Wear Metro, Merseyside, Blackpool and other places. But these are likely to be cancelled. The development budget for NPR is frozen at £75m for 2021-22, with £8m of that given to HS2, the high-speed rail line from London to the north.

TfN’s core budget will be cut to £6m from £10m. It has in fact received only £7m this financial year, which began in April, after an emergency in-year reduction because of Covid-19. In 2017 the government promised £50m over five years for its core budget and £150m for smart ticketing, of which just £24m has been spent.

In a letter to TfN dated January 4, the transport department said it should use its £5m in reserves to cover any shortfall.

Barry White, outgoing chief executive of TfN, replied to warn that the cuts “will cause a significant scaling back of activity and lead to workforce reduction. In reality, this may mean a loss of key northern roles at a time of wider economic upheaval”.

The government has also cut £1bn from national railway infrastructure budgets and is considering delaying HS2’s eastern leg to Leeds.

It has had to spend billions supporting train operating companies, who announced on Thursday they would cut services to reflect falling demand for travel during lockdown.

The DfT said: “We are focused on delivering more modern journeys for passengers, so are now considering how to deliver a more rapid and effective rollout.

“The transport secretary has spoken with Northern leaders extensively, including in late December, to discuss their priorities. The Northern Transport Acceleration Council is now considering how a range of northern projects can be delivered more effectively.”