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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a very significant, improvement,” he told MPs, adding that the new plan “will provide a better service than the outdated plan for for HS2 a decade ago”.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Grant Shapps told MPs the government’s new Integrated Rail Plan ‘will provide a better service than the outdated plan for for HS2 a decade ago’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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Bread producers Hovis and Kingsmill close in on historic merger

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Bread producers Hovis and Kingsmill close in on historic merger

The owners of Hovis and Kingsmill are closing in on a definitive agreement to merge two of Britain’s most famous grocery brands following months of talks.

Sky News has learnt Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, has proposed paying roughly £75m to acquire Hovis from its long-term private equity backers.

Banking sources said a deal could be formally agreed to combine the businesses as early as the end of next week, although they cautioned the complexity of the transaction meant the timing could yet slip.

Confirmation of a tie-up would come nearly three months after Sky News revealed ABF and Endless – Hovis’s owner since 2020 – were in discussions.

Industry sources have estimated that a combined group could benefit from up to £50m of annual cost savings from a merger.

ABF has also been exploring options for the future of Allied Bakeries separate from its talks with Hovis in the event a deal could not be agreed or is prevented from completing by competition regulators.

If it does go ahead, the merger will unite two historic bread producers under common ownership, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning “strength of man”.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair breadmakers’ financial health in recent decades, however.

In accounts filed at Companies House earlier this month, Hovis said it had “achieved positive financial progress despite continued tough trading conditions”.

The company reported sales of £439.6m in the 52 weeks to 28 September last year, down from £477.6m in the 53 weeks to 30 September 2023.

Earnings before interest, tax, depreciation and amortisation fell from £20.9m to £18.7m, which Hovis said was the result of the revenue decline and higher distribution costs.

“Overall bread share remained stable, despite significant price inflation and the ongoing cost-of-living crisis, demonstrating the resilience of the Hovis brand and its iconic status as one of Britain’s most loved food brands,” the accounts said.

This week, the trade publication The Grocer reported that Britain’s big four supermarkets, including Asda and Sainsbury’s, had delisted a number of Hovis-branded products.

The publication quoted a Hovis spokeswoman as saying the company was “aware of some adjustments to Hovis product lines in certain stores”.

“We remain fully committed to working collaboratively with our retail partners to grow our mutual businesses.”

The overall UK bakery market is estimated to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

Critical to the prospects of a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis taking place will be the view of the Competition and Markets Authority (CMA) at a time when economic regulators are under intense pressure from the government to support growth.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group the largest share of that segment of the market, although one source said Warburtons’ overall turnover would remain higher because of the breadth of its product range.

Responding to Sky News’ report in May of the talks, ABF said: “Allied Bakeries continues to face a very challenging market.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value.”

In a separate presentation to analysts, ABF – which is also in the process of closing its Vivergo bioethanol plant in Hull after pleading for government support – described the losses at Allied, which also owns own-label bread manufacturer Speedibake, as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Prior to its ownership by Endless, Hovis was owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites, as well as its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF declined to comment, while Endless could not be reached for comment.

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Good economic news as sunny weather boosted retail sales

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Good economic news as sunny weather boosted retail sales

Retail sales grew in June as warm weather boosted spending and day trips, official figures show.

Spending on goods such as food, clothes and household items rose 0.9%, the Office for National Statistics (ONS) said.

It’s a bounce back from the 2.8% dip in May, but last month’s figure was below economists’ forecast 1.2% uplift as consumers dealt with higher prices from increased inflation.

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Also weighing on spending was reduced consumer confidence amid talk of higher taxes, according to a closely watched indicator from market research firm GfK.

Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.

Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.

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What does ‘inflation is rising’ mean?

Where have people been shopping?

June’s retail sales rise came as people bought more in supermarkets, and retailers said drinks sales were up.

While hot and sunny weather boosted some brick-and-mortar shops, the heat led some to head online.

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Non-store retailers, which include mainly online shops, but also market stalls, had sold the most in more than three years.

Not since February 2022 had sales been so high as the Met Office said England had its warmest ever June, and the second warmest for the UK as a whole.

The June increases suggest that the May drop was a bump in the road. When looked at as a whole, the first six months of the year saw retail sales up 1.7%.

Filling up the car for day trips to take advantage of the sun played an important role in the retail sales growth.

When fuel is excluded, the rise was smaller, just 0.6%.

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Despite lower consumer sentiment and more expensive goods, consumers are benefitting from rising wages and are cutting back on savings.

The ONS lifestyle survey – backed up by hard data like the Bank of England’s money and credit figures – shows that households have rebuilt their rainy day savings and are cutting back on the amount of money they squirrel away each month.

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Former Poundland owner lines up advisers as restructuring looms

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Former Poundland owner lines up advisers as restructuring looms

The former owner of Poundland is lining up advisers to supervise its transition to new shareholders through a court-sanctioned process that will involve store closures and job cuts at the discount retailer.

Sky News has learnt that Pepco Group, which is listed on the Warsaw Stock Exchange, is drafting in FRP Advisory weeks after it struck a deal to sell Poundland to Gordon Brothers.

Industry sources said FRP had been asked by Pepco to act as an observer, with the High Court scheduled to sanction a restructuring plan in the last week of August.

Under the proposed deal, 68 Poundland shops would close in the short term, along with two distribution centres.

More shops are expected to be shut under Gordon Brothers over time, resulting in hundreds of job losses.

Pepco is said to be particularly focused on IT systems which Poundland uses in common with Pepco’s operations in Poland.

Barry Williams, managing director of Poundland, said at the time of the deal’s announcement: “It’s no secret that we have much work to do to get Poundland back on track.

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“While Poundland remains a strong brand, serving 20 million-plus shoppers each year, our performance for a significant period has fallen short of our high standards and action is needed to enable the business to return to growth.

“It’s sincerely regrettable that this plan includes the closure of stores and distribution centres, but it’s necessary if we’re to achieve our goal of securing the future of thousands of jobs and hundreds of stores.

Prior to the deal’s announcement, Poundland employed roughly 16,000 people across an estate of over 800 shops in the UK and Ireland.

Tax hikes announced by Rachel Reeves, the chancellor, in last autumn’s Budget have increased the financial pressure on high street retailers.

In recent months, chains including WH Smith, Lakeland and The Original Factory Shop have changed hands amid challenging circumstances.

In June, Sky News revealed that River Island, the family-owned clothing retailer, was also working with advisers on a rescue plan aimed at averting its collapse.

Pepco and Poundland declined to comment.

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