Scaled-back HS2 will jeopardise local investment, warns Tory Mayor

HS2: The north tunnel portal at Long Itchington Wood in Warwickshire
Cost of the HS2 could breach £100bn - Chris Gorman / Big Ladder

Rishi Sunak’s plan to scrap the northern leg of HS2 will undermine hundreds of millions of pounds of investment in the West Midlands, the region’s Conservative mayor has warned.

Andy Street urged Rishi Sunak to reconsider his opposition to the high-speed rail link, amid reports the Prime Minister is poised to scrap the Birmingham to Manchester section.

The Tory mayor, who was previously boss of the John Lewis Partnership, told the Telegraph: “A lot of people have made big investment decisions – literally hundreds of millions, if not billions, of pounds – on the promise of this [HS2] coming.

“I think it’s a very poor signal to say to businesses, ‘We’ve changed our mind and what you assumed in your investment decision is no longer right’.”

The intervention came days after the new American owners of Birmingham City Football Club warned that scaling back HS2 would damage Britain’s credibility with foreign investors.

Four Labour mayors in the North, as well as London Mayor Sadiq Khan, have also jointly signed a letter pleading with Mr Sunak to preserve the troubled scheme.

Mark Reynolds, the boss of HS2 contractor Mace Group, separately warned that flip-flopping by the Government was making both his company and others reluctant to take on big UK projects in future.

He told BBC Radio 4’s Today Programme: “We’re certainly cautious. The new nuclear programme is a primary example, we’ve been gearing up to work on that.

“What you do, you find other alternative work both in the UK and elsewhere.”

It piles further pressure on the Prime Minister to give the project a stay of execution, with a decision now thought to have been delayed until after the Tory Party conference in Manchester.

Mr Sunak is said to be “alarmed” by Whitehall estimates suggesting the price tag for HS2 – already cut back in places – could now breach £100bn, having originally been approved with a cost of around £30bn.

He is thought to favour axing the second phase to Manchester and potentially terminating the line early in the West London suburb of Old Oak Common, rather than running all the way to Euston as had originally been planned.

However, the cuts face vocal opposition from senior figures in Mr Sunak’s own party, including former prime ministers David Cameron and Boris Johnson, who have warned the changes will make the rump scheme a white elephant.

Mr Street said huge amounts of inward investment in the West Midlands was predicated on the scheme being built all the way to Manchester.

He said: “It’s been part of the story about investing in the West Midlands – we will be at the centre of that network. And look at what that’s led to, in terms of record inward investment numbers here.”

£1 in every £10 of foreign investment went to the West Midlands last year, according to official government figures, and the region topped a league table of regional overseas investment, with 181 projects.

Massive investment has flowed into Birmingham in the past decade, much of it on the assumption the city will be a fulcrum of the new HS2 network.

A brand new station, Birmingham Curzon Street, will sit at the heart of a 141-hectare regeneration area that the West Midlands Combined Authority, led by Mr Street, and the Government are investing £724m into it.

The combined authority has also bet on HS2 as a major pillar of future growth and jobs. They have previously suggested the full Y-shaped scheme would add £4bn to the local economy.

That 2021 estimate, which assumes workers will be able to more easily commute to Birmingham from further afield, was made before Boris Johnson’s government scrapped the proposed leg to Leeds.

Infrastructure upgrade

Scaling back the HS2 plans at such an advanced stage would damage confidence in the Government’s ability to keep key infrastructure promises, Mr Street said.

He said: “We have to demonstrate to the world that we can deliver critical infrastructure effectively.”

Mr Street argued HS2 would provide a vital replacement for existing, but poor quality, intercity train services between London, Birmingham and Manchester.

He said: “The biggest challenge to us is the linkage between the Midlands and the North, because we’re pretty well-connected with London already.

“This was always about trying to get a train between London, Manchester and Birmingham, because it’s not just that the current experience is slow – it’s also overcrowded, expensive and people don’t want to use it, so they choose to drive instead. It’s not an environmental solution.

“I know it’s over-budget, we’ve got to deal with that. But the principle of it, you should absolutely hold to.”

Andy Burnham, the Labour mayor of Greater Manchester, has separately accused the Government of treating northern taxpayers like “second-class citizens” and threatened legal action if the northern leg is axed.

Northern mayors say that scrapping the HS2 northern section will gut a key section of railway needed for the proposed “Northern Powerhouse Rail” line between Liverpool and Leeds.

Business groups and universities have also warned against scaling back the scheme, with the Northern Powerhouse Partnership saying it would damage “Britain’s reputation as a place to do business”.

Nikki Paterson, the CBI business lobby group’s regional director for the Midlands, told local media: “All the research tells us that poor transport connectivity is a major drag on productivity and ultimately on growth.”

However, Lord Hague, the former Tory Party leader, backed Mr Sunak on Tuesday, calling HS2 “a national disgrace”.

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