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The Guardian - UK
The Guardian - UK
Comment
Larry Elliott

HS2 is the white elephant in the room. If the Tories won’t scrap it, Labour must

Illustration of the Angel of the North with train tracks for arms.
‘In truth, the case for HS2 was never all that strong, with its benefits exaggerated and its costs downplayed from the start.’ Illustration: Ben Jennings/The Guardian

Down the years Britain has had its fair share of prestige projects that have turned out to be expensive flops, but as white elephants go, HS2 is in a class of its own. Over budget, years behind schedule and already pared back in a bid to save money, the new rail link between London and the north-west of England makes Concorde look like good value for money. A decision to stop throwing good money after bad is long overdue.

Last month, the government’s infrastructure watchdog gave its assessment of how HS2 is progressing. Not at all well, was the answer. The Infrastructure and Projects Authority (IPA) gave the project a red rating, by which it means successful delivery appears to be unachievable.

There was more. “There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable. The project may need re-scoping and/or its overall viability reassessed,” it said. Other than that, everything is going swimmingly.

In a sense the IPA report told us nothing that wasn’t known already. HS2 is a scandalous waste of money. It is a vanity project that has caused immense environmental damage. The pressure on the Department for Transport’s budget from cost overruns means spending on projects that offer bigger economic and social returns is being squeezed. Delays mean the first trains to Manchester won’t arrive – even assuming there is no further slippage – until the late 2030s at the earliest and perhaps not until 2043.

There are still those who insist that HS2 is needed to boost capacity on the rail network, which even if true misses the point: that every pound spent on HS2 is a pound that can’t be spent on other rail projects.

In truth, the case for HS2 was never all that strong, with its benefits exaggerated and its costs downplayed from the start. As the years have passed, the benefits have become smaller and the costs have ballooned. The part of the eastern leg that was supposed to run from the East Midlands to Leeds has been scrapped.

Boris Johnson had the opportunity to axe HS2 in 2020 but gave it the go-ahead after buying the argument that a new high-speed rail line was vital for the government’s levelling up agenda. This was February 2020, a month before Britain went into Covid-19 lockdown. The pandemic and its inflationary aftermath have massively increased pressures on public spending while at the same time encouraging more people to work remotely.

Johnson could cite the findings of the government-commissioned Oakervee review as justification for his decision, but the committee’s support was far from unconditional. It said, for example, that the economic case depended on the project going ahead in full and that key design issues – such as what would need to happen at London’s Euston station – needed to be sorted out. Neither of those conditions has been met.

Tony Berkeley, a Labour peer and former deputy chair of the Oakervee review, who issued a dissenting report on HS2, said this month in a letter to the Times: “There is no safe and buildable station design for it at Euston, no forecasts for demand post-pandemic and no easy connection to other rail lines. Parts of HS2 where construction has not started should be cancelled and what has been built repurposed to improve regional services.”

Berkeley is right. To be sure, there are now considerable sunk costs in HS2, amounting to some £20bn at the latest count. Construction work is under way and calling a halt would be messy, expensive and no doubt challenged in the courts. However, enough is enough. It is time to call a halt to HS2 and if the current government can’t bring itself to do it, a future Labour government should.

Although the opposition has given no hint that it intends to take such a radical step, the attraction for Rachel Reeves is obvious. For months the shadow chancellor has been banging on about how she will keep an iron grip on the public finances and highlighted how a Labour government will make a priority of fiscal prudence. Reeves knows that financial markets are always wary of Labour governments and she will need to show a willingness to make tough decisions.

Gordon Brown solved this problem within five days of Labour’s 1997 election win by announcing he was going to make the Bank of England independent. Scrapping – or repurposing – HS2 would not be nearly as dramatic a move as giving Threadneedle Street the right to set interest rates. But it would be a statement of intent, with three additional benefits.

First, it would give an incoming Labour government money to spend on other – more worthwhile – projects. These would inevitably include improvements to rail infrastructure in the north, which would be less glamorous but would be far more likely to deliver in terms of levelling up.

When I asked an old friend who lives on Merseyside what he thought of HS2, he said: “It is mainly about cutting journey times between Birmingham and London. We aren’t bothered at all about it. However, the rail connections between Liverpool, Manchester and Leeds are an absolute disgrace and that is much more important to all of us up here.”

Second, it should make it cheaper for Labour to borrow the money it needs to fund the decarbonisation of the economy and other long-term challenges such as the health and social care costs of an ageing population.

Finally, it will send out the signal that Reeves intends to secure value for money from Labour’s green prosperity plan, which will eventually involve a budget of £28bn a year. Announcing the intention to invest big in net zero is one thing. Delivering the promised benefits – as HS2 proves all too clearly – is altogether more challenging.

  • Larry Elliott is the Guardian’s economics editor

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