Shapps: ‘Costs have accelerated… we’d be crazy not to reassess HS2’
It would be “crazy” and “irresponsible” not to reassess the spiralling costs of high-speed rail link HS2, Cabinet Minister Grant Shapps insisted yesterday.
Rishi Sunak and Chancellor Jeremy Hunt are expected to meet this week to decide whether to scrap a large chunk of the project. A decision on the fate of the leg north from Birmingham to Manchester is expected within days and former transport secretary Mr Shapps said the scheme risked sucking money away from local projects.
The Defence Secretary said the Government could not write an “open-ended cheque” if costs were “inexorably going higher and higher”.
Mr Shapps said: “We have seen the costs accelerate a lot. Of course, inflation has been part of that.
“There are various different estimates and that’s one of the things that the Government wants to check, particularly on the costs now post the inflationary picture out of the war in Ukraine. I have to say that it would be irresponsible to simply spend the money, carry on as if nothing had changed, if there has been a change in that fiscal picture.”
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He added that when previous commitments had been made, “no one knew we’d be in a war in Europe right now with all of the consequences, all of the costs, and all of the inflation. And any government that doesn’t go back and then look at it is crazy”.
Government sources insisted no decision has been taken but Mr Hunt believes the costs are “out of control”. Officials fear the project, that started construction under
former PM Boris Johnson, could cost more than £100billion – up from £30billion when MPs first approved the scheme in 2010.
The budget jumped to £55.7billion, before the Government issued a revised estimate of up to £98billion before deciding to scrap the eastern leg to Leeds. But the future of the line from Birmingham to Manchester was thrown into doubt after costs for the London to Birmingham leg surged by around £8billion to £53billion.
The ballooning price tag could mean other transport projects would be scrapped. And the proposed benefits are falling rapidly. When the scheme was first approved, the Government expected it to generate £2.40 for every pound invested. But this has fallen to just 90p per pound and it could plummet further.
Mr Shapps added: “We do have to respond to the budgets. We’ve not only been hit by coronavirus, but the war in Ukraine. Any responsible government has to ask whether that sequencing still stacks up for what the country requires.” Mr Shapps stressed HS2 was not the “be all and end all” for Northern transport projects.
“You have to make decisions about whether you’re going to invest in, for example, local transport schemes, which might be very helpful for people who are commuting. Obviously the large things like HS2, which I think is the biggest construction project in Europe, suck up a lot of that money.”
London Mayor Sadiq Khan has written to Mr Sunak warning it could end up being a “colossal waste of money” if the northern leg and the Euston terminus are not completed.
When the railway first opens between London and Birmingham, between 2029 and 2033, its terminus in the capital will be Old Oak Common in the western suburbs.
HS2 trains are not expected to run to Euston until around 2041 at the earliest and there are now doubts the central London extension will ever go ahead. Tory MP Craig Mackinlay said: “Most damaging is the ragged state of the benefit assessment. It means the cost to the taxpayer will never return a surplus leaving the project as a mere nice-to-have trinket.
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“Work patterns have changed radically since 2009 with online meetings and hybrid working. There is a sense of permanency that public transport will never return to pre-Covid levels.”
Fellow Tory MP Daniel Kawczynski added: “I do know that this is a highly polarised issue and I know that there are many constituents who feel that we ought to scrap it.
“It’s something that the Government will have to address over the coming weeks and months, to explain what their strategy is, but I don’t apologise for voting for it.”
Andy Burnham, the Labour Mayor of Greater Manchester, said people in the North are treated like “second-class citizens” by facing a choice between HS2 and a cross-Pennine east-west route. He told Sky News the southern half of the country could end up connected by modern high-speed lines, while the North is left with Victorian infrastructure.
Labour has so far refused to confirm it would fund the line to Manchester if the Tories axe it.
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