Ministers should ditch the £50 billion High Speed 2 plans and instead push ahead with fracking in poor parts of the north as a way of generating wealth, according to a Tory former chancellor.
Lord Lawson claims the Government's attempts to rebalance the economy are "foolish and unwise" and there is no case for the proposed rail link between London and northern cities.
The Conservative peer said it was time to "go for" the controversial shale gas extraction technique, particularly in the north west of England, and pointed to the impact it has had in transforming parts of the United States.
In an interview with The House magazine, Lord Lawson said: "I think that is foolish and unwise. The only sort of rebalancing I would like to see is the north of England share more in the economic success. But the way to do that is not by building this absurdly expensive High Speed 2, for which there is no sensible case at all.
"The way to do it is by developing shale gas resources in the north of England, particularly in the North West. We need to go for that. If you look at what's happened in the United States it has completely transformed the economies of some of the poorest parts of the United States. We could have that here."
Fracking - hydraulic fracturing - involves pumping water, chemicals and sand at high pressure underground to fracture shale rock and release the gas trapped in it. Wells can be drilled horizontally, leading to exploration under land around the site.
The Government is pushing for the development of a shale gas industry in the UK, claiming it would create jobs and growth, reduce energy prices and cut the country's reliance on gas imports.
But opponents have raised fears that the process causes earthquakes, can pollute water supplies, lead to inappropriate development in the countryside and damage house prices.
Last year a Conservative Lord Howell apologised after sparking outrage when he said fracking should take place in the "desolate" north east of England.