UK PM Sunak offers billions for new links after scrapping HS2 northern leg

MANCHESTER (Reuters) – British Prime Minister Rishi Sunak cancelled the northern leg of the costly HS2 high-speed rail project on Wednesday and pledged to invest billions of pounds in local rail and road links instead, saying it was more suitable for a post-pandemic world.

The move to cut in half Britain’s biggest infrastructure project was criticised by business groups and trade unions, who warned it would hit the country’s productivity, cause job losses, and put more lorries on the roads.

Following weeks of speculation, Sunak told his party’s annual conference – in the northern city of Manchester – that the high-speed line would now finish in Birmingham in central England and not Manchester, after costs doubled and business travel patterns changed after the pandemic.

Instead he added: “We will reinvest every single penny, 36 billion pounds, in hundreds of new transport projects in the north and the midlands, across the country.”

HS2 was designed to connect the British capital with the major cities in central and northern England. But costs soared to over 106 billion pounds ($129 billion) at a 2020 estimate from the 56 billion pounds bill forecast in 2015. The eastern link to Leeds had already been scrapped.

Stephen Phipson, chief executive of manufacturing trade group Make UK, said the cancellation raised questions about Britain’s ability to complete major infrastructure projects.

“For too long we have lagged behind our competitors in the investment we make,” he said, adding that local or national spending should not be a binary choice.

NETWORK NORTH

Northern politicians and business leaders have repeatedly warned that scrapping the Manchester leg would damage the region’s growth prospects and they accused the government of prioritising investment in the more prosperous south.

Contractors on the project who were present at Sunak’s conference expressed their anger at the decision after they had already spent heavily to prepare for the construction phase.

But Sunak said his new “Network North” plan to boost connections between the region’s east and west, instead of south to London, would be more beneficial to the region’s economy.

Sunak’s office said the north of England would get around 20 billion pounds of the total 36 billion pounds, plus a further 12 billion pounds which was being set aside to speed up links between Liverpool and Manchester.

Manchester’s mayor Andy Burnham said the government had not consulted with local politicians on its decision which had torn up 15-years of work.

“What has been announced today is not a solution to the east-west bottleneck that we face on the railways in the north,” he said.

“It involves patching up existing lines and leaving us with a problem that still has not been fixed.”

Industry group, Rail Partners, said the decision was a blow for Britain’s net zero plans.

“While reinvestment in other regional rail schemes is a significant consolation, the decision to reduce investment in rail and divert funds to road schemes feels counterintuitive as we look to attract people to move away from carbon intensive modes of transport,” Rail Partners CEO Andy Bagnall said.

Sunak also said HS2 would run to London Euston, confirming its terminus at the central hub after speculation it could finish in the west of London to cut costs. That part of the line would be built more cheaply however, Sunak said.

Construction of the first part of HS2 between London and Birmingham began three years ago.

($1 = 0.8245 pounds)

 

(Reporting by UK bureau; writing by Sarah Young, Editing by Kate Holton and James Davey)