“This is the opposite of levelling up” – PM confirms scrapping of HS2 line

Speaking at the Conservative Party conference earlier today, Prime Minister Rishi Sunak confirmed that the HS2 line running from Birmingham to Manchester will be scrapped.

The Tory leader said the HS2 will still run into London Euston and that the section from London to Birmingham will be completed.

After cancelling the project, the Prime Minister pledged to “reinvest every single penny” with £36 billion to be spent on new transport project in the North and Midlands. This includes enhancements to the A1, A2, A5, and M6 roads, electrification of the North Wales mainline, a new station at Bradford, the expansion of the West Midlands metro, and a tram for Leeds.

Industry Reaction

Following the announcement, business leaders from a range of sectors reacted to the news.

Diane Gilpin, CEO and Founder of Smart Green Shipping, commented on what it means for the UK tech scene and its investment and projects in green tech.

She says: “Business needs certainty and this Government’s chopping and changing gives investors grave concerns about supporting British businesses. The cancellation of HS2 between Birmingham and Manchester won’t be fatal, but it would be good to see the funds being invested in better North East to North West train routes which have been entirely overlooked and connect some of our key emerging green industrial areas.

“High speed trains connecting major cities are commonplace across Europe – our inability to do anything similar highlights the lack of concern for UK business displayed by this government.”

Laurence Turner, GMB Head of Research and Policy, said: “Rishi Sunak’s decision to inflict the biggest rail cut since the Beeching axe will send a shockwave through the construction industry and railway supply chain, costing hundreds of jobs.

“The UK’s political instability was already holding the economy back – it will now be even harder to fund and deliver the new infrastructure that the country desperately needs.

“We can’t rebalance the economy or fix the railway capacity crisis without HS2. It’s essential that the planned route is now protected so that a future government can reverse this disastrous decision.”

However, Mark Littlewood, Director General of the Institute of Economic Affairs, says: “The derailing of HS2 is a victory for common sense. It never made sense to spend over £100 billion for slightly faster trips between London and Manchester. Commuter transport, linking people to work and family, delivers far better value for money. Though it is deeply disappointing not a single penny of the savings will be returned to taxpayers.

“More broadly, the government must address our broken planning system and the astronomical cost of building infrastructure in Britain. It shouldn’t be impossible to build big projects without going outrageously over budget.

“The Prime Minister rightly committed to making long term decisions — but it’s all long-term central planning like cigarette prohibition rather than meaningful reform. The government appears to have given up on the truly thorny issues like cutting spending, reforming the NHS or fixing the broken planning system.”

Henrietta Brealey, CEO of Greater Birmingham Chambers of Commerce, comments: “While the Prime Minister’s speech was full of big promises, it was short on the practical reality of what cancelling Phase 2 of HS2 at this late stage actually means.

“No Phase 2 means no enhanced capacity for passengers or freight between Birmingham and Manchester. A huge amount of cost and disruption has already been incurred to prepare for Phase 2. Many projects, including some of those he highlighted, are predicated on the arrival of HS2.

“Faith in the government to deliver on the long-term investments that this country needs to grow has been hugely damaged.

“It is time for the Prime Minister to be transparent on the costs of scrapping HS2 Phase 2 and how long it’ll be before any of the projects he listed come to fruition, given that these savings won’t become a reality until the 2030s.

“All we really have right now are short-term cuts and long term questions.”

Jon Stott, Group Managing Director of Ardent, said: “This will have a massive impact on the UK’s reputation as a place to invest and no amount of spin can underplay the damage the decision does to the north/south levelling-up agenda.

“Aside from the macro factors, today’s decision is also a travesty for so many individuals and businesses and it raises huge questions about how we protect landowners and property owners whose land is earmarked to be acquired for major projects in the future.

“The statutory blight provisions are very narrow and mean that only owner-occupiers of property in certain circumstances can force the Government to acquire their land/property once it has been identified as potentially being required for a major scheme.

“HS2 introduced various discretionary hardship schemes that did help some additional people but still left many landowners and developers without any ability to sell their property, leaving them in a horrible state of limbo whilst their land has also been subject to safeguarding directions.

“In addition to being unable to sell, the safeguarding directions have effectively precluded landowners from obtaining their own planning consent for any form of development. This has impacted huge swathes of land and thousands of landowners for over a decade.

“I am aware of hundreds of property owners who have incurred thousands of pounds of costs in engaging with HS2. Whilst some have been opposing the scheme, the majority have simply been seeking certainty, or design changes that would reduce the impact on their lives and businesses. These property owners have no route to being reimbursed and, in light of this new announcement, it means they have incurred the costs totally unnecessarily.

“In addition to financial impacts, there’s a human aspect to all of this too which should not be underestimated. Thousands of businesses and families have already been displaced, in many cases causing significant mental and emotional anguish.”

Corin Crane, Chief Executive of Coventry and Warwickshire Chamber of Commerce, commented: “This is an incredibly frustrating decision for businesses across the Midlands and the North of England and the fact that this two-week debate about whether it was speculation or not has been played out in public, is frankly insulting.

“Hundreds of thousands of hours have been wasted planning this project, community-changing regeneration plans are now not feasible along the route, businesses and residents have already been moved to clear the way for a line that will never appear and overseas investors will be looking at the UK in bewilderment.

“Now, we must start another decades-long planning process to get our infrastructure reform started and businesses across our region will continue to see their trucks stuck on motorways with no capacity for freight and their staff stuck on trains with no more capacity for passengers. This is the opposite of levelling up.”

Bradley Post, MD of RIFT, said: “In recent years, we’ve seen how the economic prosperity of the UK isn’t solely refined to the boundaries of the capital and a number of regional powerhouses have emerged thanks to commitments from big business to call them home.

“However, the scrapping of HS2 will come as a real blow, removing a vital infrastructural lifeline that would have ensured the longevity of their economic success.

“What’s more, it will come as devastating news to the 30,000 off UK professionals working across a myriad of sectors in order to deliver the required infrastructure. People who could be essentially out of work at a time when the cost of living remains extremely high and with Christmas right around the corner.”

Director of Benham and Reeves, Marc von Grundherr, commented: “Plans for a Euston development zone are sure to help revive the area and bring about a boost to the local property market in the process.

“However, this will bring little comfort to those outside of London who will rightfully argue that the capital has benefitted greatly already from the likes of HS1 and the Elizabeth Line. Talk about cutting the North off at the knees.”

University of Salford Business School’s Dr Zeeshan Syed, Lecturer in Finance, says: “Their economics are not right. Initially estimated at £37.5bn (2009 prices), the project’s cost rose to £78.4bn by 2015 (as reviewed by Allan Cook) and is estimated at £110bn in 2019 (as reviewed by Lord Berkeley). These figures have not been adjusted for inflation, implying the increases result from cost overruns and operational inefficiencies. Notably, there were projections for HS2 to realise efficiency gains between 2015 and 2017. Given the current inflation rates and expectations of prolonged high interest rates, the financial implications warrant thorough examination.

“A reassessment of the prevailing concept of connectivity is warranted. Contemporary infrastructure could be envisioned as ‘corridors’ that incorporate enhanced train systems, augmented frequency and the integration of digital infrastructure, aligning with the reduced necessity for work-related travel.

“Furthermore, as highlighted by Lord Berkeley, regional transport predominantly relies on public conveyance. The established cross-country network, exemplified by the roughly two-hour train journey between Manchester and London, underscores the system’s efficiency. In light of this, the decision to forego the northern extension of HS2 appears justified, and a reconsideration of HS2 phase 1 might also be apt.

“However, transparent communication is essential, outlining alternative strategies such as the ‘levelling up corridor’ which emphasises digital infrastructure, enhanced railway lines, and punctual, modern trains.”