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The eastern leg of HS2 has been scrapped and plans for Northern Powerhouse Rail have been downgraded, Grant Shapps has confirmed.

The transport secretary told MPs that a new £96bn Integrated Rail Plan for the north and the Midlands will instead deliver “faster” train journeys both earlier and cheaper than the original HS2 plans would have done.

But a senior Tory criticised the government for “selling perpetual sunlight” and delivering “moonlight” for people in the North of England.

One of the two tunnelling machines at the south portal HS2 align compound, in Rickmansworth, Hertfordshire. Picture date: Wednesday November 3, 2021.
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Grant Shapps said work on the new Integrated Rail Plan will start ‘by Christmas’

Unveiling the new plan in the Commons, Mr Shapps confirmed that the eastern leg of HS2 will no longer go all the way to Leeds. It will instead stop in the East Midlands near Nottingham.

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Plans for HS2 were originally meant to connect London with the city centres of Birmingham, Manchester, and Leeds.

The transport secretary told MPs a new £96bn rail plan will instead deliver three high-speed lines – HS2 Crewe to Manchester, Birmingham to East Midlands Parkway, Warrington to Manchester – but not HS2 to Leeds or Northern Powerhouse Rail Leeds to Manchester.

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Justifying the revised project, Mr Shapps said it “will bring benefits at least a decade or more earlier”, adding that under the original scheme, HS2 would not reach the North until the early 2040s.

“We will provide a journey time of 33 minutes from Leeds to Manchester, a significant, a very significant, improvement,” he told MPs, adding that the new plan “will provide a better service than the outdated plan for for HS2 a decade ago”.

But Conservative chairman of the Transport Select Committee Huw Merriman told the Commons the government’s new plan “compromises some fantastic projects that will slash journey times and better connect our great northern cities”.

HS2
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Grant Shapps told MPs the government’s new Integrated Rail Plan ‘will provide a better service than the outdated plan for for HS2 a decade ago’

Fellow Tory MP Robbie Moore pointed out that Bradford – the seventh largest city in the UK – will still not have a mainline station under the new plans.

“I’m deeply disappointed by today’s announcement. The Bradford district has been completely short-changed,” the MP for Keighley said.

Conservative MP for Thirsk and Malton in Yorkshire, Kevin Hollinrake, added that the original HS2 project could have been a great economic boost for Bradford.

And Conservative former minister Sir Edward Leigh described HS2 as “a white elephant missing a leg”.

Meanwhile, Labour’s shadow transport secretary Jim McMahon described the government’s new plan as a “great train robbery”, adding that ministers have “betrayed” the north.

He accused Prime Minister Boris Johnson of breaking a promise to build the entirety of HS2 made “60 times” in the past few years, telling MPs: “We were promised a Northern Powerhouse, we were promised a Midlands Engine, to be levelled up. But what we have been given today is a great train robbery.”

Commuters at Leeds railway station. Train services will be ramped up from today as schools in England and Wales reopen and workers are encouraged to return to offices
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Plans for HS2 were originally meant to connect London with the city centres of Birmingham, Manchester, and Leeds

Mr McMahon said most of the £96bn rail investment Mr Shapps confirmed is not “new money” and therefore amounts to “crumbs off the table”.

“He promised the North would not be forgotten. He hasn’t just forgotten us – he’s completely sold us out!”, the shadow transport secretary added.

And Labour former minister Hilary Benn accused ministers of leaving a “huge big hole in the middle” of the North of England.

But Mr Shapps said the new “landmark” Integrated Rail Plan is an “ambitious and unparalleled programme” to overhaul inter-city links across the North and the Midlands – and said work will start “by Christmas”.

“This new blueprint delivers three high-speed lines. First, that’s Crewe to Manchester Second, Birmingham to the East Midlands with HS2 trains continuing to central Nottingham and central Derby, Chesterfield and Sheffield on an upgraded mainline. And third, a brand new high-speed line from Warrington to Manchester and to the western border of Yorkshire – slashing journey times across the north,” the transport secretary told the Commons.

He also insisted that the new plans will “speed up the benefits for local areas”.

Mr Shapps added that it is “wrong” to say the government is just “electrifying the TransPennine route”.

“What we’re actually doing is investing £23 billion to deliver Northern Powerhouse rail and the TransPennine route upgrade, unlocking east-west travel across the north of England,” he told MPs.

“So, in total, this package is 110 miles of new high-speed line, all of it in the midlands and the north. It’s 180 miles of newly-electrified line, all of it in the midlands and the North.”

The government will “study how best to take HS2 trains into Leeds”, Mr Shapps said.

He also confirmed £360m to reform fares and ticketing with the rollout of contactless pay-as-you-go ticketing to 700 urban stations, “including 400 in the North”.

Northern political leaders had warned the government will pass up huge economic benefits and betray promises to voters if, as expected, it cancelled the eastern leg of HS2 and a new Manchester-Leeds line.

The Northern Powerhouse Partnership said the cuts, which will see upgrades on the existing trans-Pennine line, will save just £4bn, and short-change commuters and businesses.

“Watering down Northern Powerhouse Rail for the sake of only 10% of the overall original budget of £39bn is unforgivably short-sighted from the Treasury,” said director Henri Murison.

He added: “We won’t be hoodwinked into believing we’re getting £96bn for a transport revolution in the North.”

The cuts will raise questions about the prime minister’s oft-quoted “levelling up” agenda, designed to spread wealth beyond southeast England, leaving him vulnerable to a charge of breaking a promise to new Conservative voters in the North.

In a statement, the PM said: “If we are to see levelling up in action now, we must rapidly transform the services that matter to people most.

“That’s why the Integrated Rail Plan will be the biggest transport investment programme in a century, delivering meaningful transport connections for more passengers across the country, more quickly – with both high-speed journeys and better local services, it will ensure no town or city is left behind.”

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Carlyle joins list of possible Thames Water rescue backers

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Carlyle joins list of possible Thames Water rescue backers

Carlyle, the American investment giant, has become the latest global fund to weigh an investment in Thames Water as the stricken utility races to avoid being nationalised.

Sky News has learnt that Carlyle, which has roughly $435bn in assets under management, is at the very preliminary stages of assessing whether an investment in Thames Water Utilities Limited (TWUL) would be viable.

Britain’s biggest water and wastewater company, which has about 16 million customers, is edging towards the brink of collapse after warning in recent days that its financial liquidity is set to expire months earlier than previously anticipated.

It has also seen its credit rating downgraded further into junk territory by two leading rating agencies.

Carlyle is one of a long list of prospective investors approached by Rothschild, the investment bank advising Thames Water’s board, as the utility scrambles to raise more than £3bn in the coming months.

This weekend, people close to the process confirmed that Carlyle had been approached but said it was “too early” to judge whether the firm might participate in a rescue deal through one or more of its funds.

Among the others sounded out by Rothschild are Brookfield, the Canadian investment giant, and Global Infrastructure Partners, which is now owned by BlackRock.

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Many investors and industry analysts believe, however, that the Rothschild-led process is destined to fail given the massive financial restructuring which faces Thames Water.

The company has about £16bn in debt, with approximately £10bn of that accounted for by a group of 90 funds which have appointed Jefferies and Akin Gump to represent them.

That syndicate is now preparing its own rescue plan in the coming weeks, which is likely to include an enormous debt-for-equity swap that would wipe out the existing shareholders.

Thames Water’s future remains so shrouded in uncertainty because the industry watchdog, Ofwat, has rejected the company’s initial spending plans for the next five-year regulatory period.

The company is now engaged in discussions with Ofwat ahead of its final determination in December.

A bridging loan of about £1bn is being contemplated by some of Thames Water’s creditors, but some stakeholders remain sceptical that any new financing will be forthcoming without greater regulatory certainty.

“Until the lenders know what they are bridging to, the concern deepens that they risk throwing good money after bad,” said one fund.

TWUL’s board is said to have met in the last 48 hours to discuss the implications of its latest rating downgrades and impending liquidity shortfall.

One creditor said that Ofwat was expected to appoint an independent monitor next week to scrutinise the company’s progress against its turnaround plan.

Ofwat, which signalled in August that it would make such an appointment, declined to comment.

If new investment into Thames Water is not forthcoming before it runs out of cash, the government will have little choice but to sanction the temporary nationalisation of the company.

This would be done through a Special Administration Regime (SAR), a procedure tested only once before when Bulb Energy collapsed in 2021.

As part of its contingency planning for implementing a far-reaching restructuring, Thames Water has booked court dates in November to progress a rescue deal.

A source close to the company said that Thames Water “continues to look at all options for extending its liquidity and raising new equity”.

“Reserving court dates is sensible forward planning and a part of keeping all options open.”

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Former Missguided owner Alteri in talks to buy Kurt Geiger

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Former Missguided owner Alteri in talks to buy Kurt Geiger

A former owner of Missguided, the youth fashion brand, is in talks to buy Kurt Geiger, the upmarket shoe and accessories retailer.

Sky News has learnt that Alteri Investors, which was backed by the global private equity giant Apollo Management when it launched a decade ago, is among a number of parties in discussions about a takeover of the 61-year-old footwear brand.

City sources said this weekend that the talks were at an early stage and were not being held on an exclusive basis.

Several other parties are also considering bids for Kurt Geiger, which has been owned by Cinven, the private equity firm, since 2015.

The brand’s celebrity customers reportedly include Kylie Jenner, Jennifer Lopez and Paris Hilton.

Last October, Sky News revealed that Cinven had appointed Bank of America to oversee an auction of the retailer.

At the time, banking sources said they expected the company to fetch a price in the region of £400m.

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It was unclear what valuation a deal under discussion with Alteri would command.

Luxury goods groups and other buyout firms are understood to have been examining offers for Kurt Geiger in recent months.

Kurt Geiger, which was founded in 1963, is run by Neil Clifford, its long-serving chief executive.

Previously backed by Sycamore Partners, another private equity group, the brand is targeting significant expansion in the US through a chain of standalone stores.

To mark its 60th anniversary last year, Mr Clifford announced plans to establish a design academy for young people to embark on careers in the fashion industry.

Mr Clifford has run the business for the last two decades.

Last year, it announced a £150m debt deal to fund its international expansion and refinance existing borrowings.

In the UK, Kurt Geiger’s shoes have been sold at department stores including Harrods and Selfridges for years.

Alteri has owned a number of retailers in Europe since it was established, and is the current owner of the Bensons for Beds chain.

It specialises in distressed or turnaround situations, and has been linked with chains including BHS, the now-defunct department store group, and Poundworld, the discounter.

Kurt Geiger recently published results showing a 10% rise in sales in the year to the end of January.

Earnings of £40.4m on revenue of £360m put the business back in line with its pre-Covid performance, Mr Clifford said last month.

Alteri and Cinven both declined to comment this weekend.

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Southern Water considering shipping supplies from Norway to UK due to drought fears

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Southern Water considering shipping supplies from Norway to UK due to drought fears

One of the UK’s largest water companies is considering shipping supplies from Norway to the UK.

Southern Water said the idea was a “last-resort contingency measure” in case of extreme droughts in the early 2030s.

Up to 45 million litres could be brought to the UK per day under the proposals.

The Financial Times, which first reported the potential move, said the water, from melting glaciers by fjords in the Scandinavian country, would be transported by tankers.

It comes as fears grow over the future of water services in the UK following droughts in the summer of 2022 when some areas of the country came close to running out of supplies.

The Financial Times said Southern Water was in “early-stage” talks with Extreme Drought Resilience Service, a private UK company that supplies water by sea tanker.

The firm would pay for the measure out of customers’ bills, according to the report.

Southern Water, which covers Hampshire, Kent, East and West Sussex, and the Isle of Wight, currently gets its supplies from groundwater and rare chalk streams.

However, the Environment Agency (EA) has urged the firm to reduce its reliance on such sources amid concerns over the environmental impact and fears they could make the risk of droughts worse.

‘Costly and carbon-intensive’

Water firms have come under growing criticism in recent years over sewage spills and rising bills, with households facing an average increase of 21% over the next five years.

Companies have also been urged to improve their infrastructure to help supplies. Currently around a fifth of water running through pipes is lost to leaks, according to regulator Ofwat.

And a report by the EA earlier this year found that Southern Water, along with Anglian Water, Thames Water and Yorkshire Water, was responsible for more than 90% of serious pollution incidents.

Following criticism over sewage discharges, Southern Water’s chief executive Lawrence Gosden blamed “too much rain” in 2023 for the problem during an interview with ITV News.

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The company said it was facing a shortfall of 166 million litres per day in Hampshire alone during future droughts.

But the firm said it was already undertaking other measures to address the problem, including by building the UK’s first new reservoir in more than three decades in Havant Thicket.

However, Greenpeace UK’s chief scientist Dr Doug Parr criticised the Norway proposal and said the firm should focus more on addressing issues domestically.

“Tankering in huge quantities of water from Norway will inevitably be a costly and carbon-intensive alternative to that of doing a better job with the water resources that are available in a rainy country like the UK,” he said.

He added: “Despite the obvious failings of planning, water companies need to start thinking of potable fresh water as a precious and finite resource, and plan to start treating it as such.”

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From 2022: How can we protect ourselves from water crisis?

Tim McMahon, Southern Water’s managing director for water, said: “We put less water into supply now than we did 30 years ago and measures like reducing leakage have enabled us to keep pace so far with population growth and climate change.

“As we work to take less water from our chalk streams and build new reservoirs like Havant Thicket in Hampshire, we need a range of options to help protect the environment while this infrastructure comes online.”

Mr McMahon added: “Importing water would be a last resort contingency measure that would only be used for a short period in the event of an extreme drought emergency in the early 2030s – something considerably worse than the drought of 1976.

“We’re committed to continuing to work with our regulators on developing the right solutions to meet the challenge of water scarcity, while protecting the environment.”

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