With an impassioned intervention on HS2, Mayor Andy Street gives PM a dilemma
The cost of HS2 has spiralled out of control because the Government has managed it as a 'statist project', and failed to engage properly with the private sector.
Those words come not from the CBI, a lobby group for business, or a right-wing think tank, but from the Tory Party's own man in the Midlands, West Midlands regional mayor Andy Street.
Mr Street didn't pull his punches when he made his plea to the Prime Minister not to abandon the Manchester link of the scheme. He warned that failure to deliver the scheme will not just be a setback for Britain's infrastructure, but would also deal a critical blow to the country's reputation as a place to do business.
"We all know the budget is escalating well beyond the budget, and indeed he is right to try to get a grip of the situation, which is fully accepted," he said.
"But gripping the situation means re-examining it, it does not mean giving up, admitting defeat, or even, you could say, cancelling the future."
Mr Street said nothing that had happened over the past decade has changed his view about HS2, the importance of making it easier to travel between the great cities of the UK, and to free up capacity on the existing overcrowded rail network.
"My arguments have not changed around HS2," he said. "But it has become about a lot more than just a railway, it has become a debate about Britain's ability to do the top stuff successfully, as previous generations of Britons certainly did, and of course now, it has become a debate about Britain's credibility as a place to invest.
"We must not give up, we must stay the course, but we have to think radically how we are going about this, and in particular how we are engaging the private sector."
And Mr Street did not hold back about why he thought the scheme had run into trouble.
"The Government will tell you the private sector has been fully engaged, that is not correct," he said.
"This has been run as a statist project, by a state organisation.
"So over the last few days what I have been doing is spending my time with the leaders and chief executives of global private companies, engineers, designers, with banks, investors, all sorts to say 'is there a different way of doing this?', and I promise you there are many of them who are willing to come forward and offer to help the Government find a new innovative way of doing this.
"To reduce cost we have got to do this, and possibly to take some of it off the public balance sheet."
He did not elaborate on the latter, but it would be reasonable to assume he was hinting at some kind of PFI scheme, where private companies bore the brunt of initial investment, and in turn take a share of the revenue.
Mr Street said the Prime Minister faced a stark choice: "Either as the rumours say, cancel Euston, cancel Manchester, but you will be turning your back on an opportunity to level up, a once-in-a-generation opportunity, and you will be damaging our international reputation as a place to invest.
"Or the alternative is to work with us, engage with us, fully embrace the private sector, hear out what they could do to find a way to build this national piece of infrastructure in a way we can afford at a cost we're all comfortable."
Sarah Moorhouse, chief executive of the Black Country Chamber of Commerce, has also warned against the long-term consequences of abandoning the northern leg of HS2. She says not only will it damage Britain's credibility as a place to invest, it will also have a big impact on existing industries based in the region.
Mrs Moorhouse said more than £1.7 billion worth of work had been secured by firms in the West Midlands, allowing businesses to retain and employ new staff, expand their operations, and purchase new plant and machinery. A total of 422 businesses in the West Midlands have been awarded work on HS2 across the whole supply chain, she added.
“Here in the Black Country, we have a combined population of 1.5 million, and a strong manufacturing and steel production base," said Mrs Moorhouse.
"HS2 would be hugely beneficial to our region, bringing more jobs, more workers, and better transport links to the major economic centres of the country.
“Wolverhampton has had £150 million investment into the local bus, Metro, railway, and cycle interchange, with the newest Metro extension opening very recently.
“The Black Country has an enormous amount of untapped potential, and HS2 would go a long way to unlocking this. Connecting towns in the north, east to west, with the Midlands and the south-east, is a huge part of keeping the Government’s promise to ‘level up’ the country.
“Scrapping the HS2 project at this stage feels like a betrayal and an abandonment of the North."
Mrs Moorhouse said during a time of economic turbulence, HS2 contracts have provided an important boost to companies in the region, with many securing repeat contracts.
“Scrapping HS2 will leave us with the most expensive white elephant in UK history," she says.
"It will undermine business and international confidence in our ability to stick to our word and deliver world-class infrastructure, as well as further exacerbate the gap between us and our European neighbours who are already miles ahead when it comes to high-speed rail connections between their major economic hubs.”
Not everyone shares these views. Indeed, Mr Street's intervention puts him in direct opposition to his close friend, Lichfield MP Michael Fabricant, who last week called for the Prime Minister to 'cut his losses' and abandon the northern extension.
Mr Fabricant said HS2 was initially a 'brilliant idea', which would have connected with the channel tunnel, and link up with the existing rail network.
"It was going to go into Birmingham New Street, which would have made sense because that actually is a big interchange," said Mr Fabricant.
"The demand has fallen. Since Covid, the number of people who hold season tickets has fallen by about 38, 40 per cent because people aren’t using the train as much.
“The Government’s own estimates originally were that for every pound invested in HS2, they would get £2.50 back - the latest estimate suggests we would get just 90p back.
“We have got to cut our losses.”
The Transport Salaried Staffs' Association has spoken out against the cancellation of the Manchester link.
Interim joint general secretary Peter Pendle said: “This is a bad decision from a Conservative Party that doesn’t understand economic growth. Rishi Sunak isn’t just letting down the Midlands and the North of England by cutting the Manchester leg of HS2. He’s letting down all of Britain."
Mr Pendle said the Birmingham-to-London line had so far been delivered within its annual budget set by the Government.
"Questions are rightly being asked about the impact of inflation and estimated costs from Birmingham to Manchester," he said. "But that doesn’t mean the Conservatives should cancel critical infrastructure investment because of Sunak’s short-term politics. Each delay just costs more, as we saw at Euston costing £366 million to down tools."
Mr Pendle said the country instead needed long-term decision making to attract investment, increase productivity and achieve the ‘levelling up’ of our towns and cities.
“It is not clear what Sunak is trying to achieve, with the clock ticking on land powers between Birmingham and Crewe, and significant construction already underway north of Birmingham," he said. "The Government is literally paying contractors to hang around when they should be building Britain's future. No wonder we have a productivity problem."
This is, of course, what one would expect to hear from a trade union in the rail sector, but Mr Street's comments will probably hurt more.
However, Mr Fabricant's comments are also a timely reminder that HS2 is very much a 'Marmite' project, and that whatever decision he makes will attract a fair share of criticism. This – coupled with the timing of the party conference, is probably why Mr Sunak is taking so long to make an announcement, However, the longer he prevaricates, the greater the divisions will become.
Nobody said being in government was easy.