Rishi Sunak runs the gauntlet with plan to axe northern leg of HS2

Rishi Sunak will on Wednesday seek to convince Britain that he is the “change candidate” at the next general election, but the prime minister’s plan to shred the country’s flagship transport scheme is a big risk.

According to ministers, Sunak decided to scrap the HS2 high speed rail line north of Birmingham last month, arguing that more than £30bn could be released for other transport projects in the Midlands and north.

“If we are associated with the status quo at the next election, we are going to lose,” said one Conservative strategist. With the party typically trailing Labour by about 15 points in the polls, Sunak is ready to take risks.

His plan to announce the cancellation of the HS2 northern leg in his speech at the Conservative party conference in Manchester — the very city that lay at the terminus of the route — has dismayed some Tory officials.

The curtailment of the HS2 rail project, intended to connect the capital with England’s second- and third-largest cities, has drawn criticism from northern business leaders and left Sunak open to claims he is turning his back on the “levelling up” agenda.

“It’s complete madness,” said one Tory official. Ministers privately lament that their own conference speeches have been overshadowed by days of coverage of Sunak’s plans to eviscerate HS2.

The prime minister has refused to “prematurely” announce his decision. Meanwhile, four former prime ministers — Gordon Brown, David Cameron, Theresa May and Boris Johnson — have urged him to complete the route.

“It’s just stubbornness,” said one ministerial aide. The row prompted Andy Street, Conservative mayor of the West Midlands, to hold an impromptu briefing outside Manchester’s Midland Hotel in which he accused Sunak of “cancelling the future”.

However, Sunak said on Tuesday: “I will take the time, go over it properly and make sure we take the right long-term decisions for the country.” He would eschew “easy headlines” and do the right thing, he said.

Sunak’s calculation, according to his allies, is that voters prefer his focus on less glamorous transport projects — regional rail schemes, buses and pothole filling — than prestige high-speed train links.

Some polling suggests Sunak is on to something. Research by the public affairs consultancy Bradshaw Advisory with YouGov found that four in 10 voters opposed plans to build HS2 between London, Birmingham and Manchester, with three in 10 supporting the idea.

However, the survey found that if HS2 did go ahead, half of voters wanted the line to be built to Manchester, with only three in 10 saying it should be cut off in Birmingham.

Although the Northern Powerhouse, a coalition of business whose board members include HS2 contractors Siemens and Mace, has been pressing for the leg from Birmingham to Manchester to be kept, many industry experts are less convinced. 

Stephen Glaister, professor of transport and infrastructure at Imperial College London, said the government needs to “show solid evidence of good value for all that money”.

Work on the second phase of the route from Birmingham to Manchester is at an early stage. Just £2.2bn has been spent so far, according to HS2 Ltd’s update in June, some of which has gone on land, where the cost could potentially be recovered.

Although parliament has granted compulsory purchase powers from Birmingham to Crewe, it has not yet been awarded for the 28-mile stretch to Manchester, where there is still a debate about the best approach and whether to build a below- or above-ground terminus.  

Jon Hart, a construction procurement expert at law firm Pinsent Masons, said the majority of contracts north of Birmingham had likely not yet come to market, “so pulling the plug may have minimal impact”.

In addition, most contracts will have exit provisions giving the right for “no fault” early termination. “This would mean that cancellation would be unlikely to constitute a breach of contract,” he added.

For Sunak, the cost savings could free up cash for other projects including Northern Powerhouse Rail — the much needed rail improvements between Leeds and Manchester; a £5bn plan to upgrade the Midlands rail network between Nottingham, Coventry, Birmingham and Hereford; and the A46 road corridor between Stoke-on-Trent to Derby.

“What survives of HS2 should be reassessed quickly in the light of the government’s decision to go ahead with the link from Birmingham,” said Glaister.

“If the proposition is Euston to Birmingham and no more, this has to be judged as a completely different railway with a different passenger market, train frequencies and services.”

Alexander Jan, an economist and adviser to rail schemes, said the project was casting an “ever greater shadow over public expenditure”.

HS2’s burn rate means it is scheduled to consume more expenditure per year than the Highways Agency’s renewals programme for the national road network or Network Rail’s capital programme on an annualised basis, he said.

Some business leaders attending the conference said their main concern about the expected scaling-back of the project was the signal it sent to investors about the UK’s commitment to modernising its infrastructure.

Mark Allan, chief executive of FTSE 100 property group Landsec, told the Financial Times: “It’s less about the specifics of what HS2 will or won’t bring [to the economy]. It’s more what that says about our ability, or lack of ability, as a country to deliver major infrastructure projects.”