Parts of HS2 to be delayed for two years, government announces

Published

2 years ago

March 9, 2023

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The government has announced the construction of sections of HS2 will be delayed by two years to save money.

The high-speed railway was initially set to link London and the West Midlands with a further phase extending to cities in the North.

However, Transport Secretary Mark Harper said on Thursday: “We have seen significant inflationary pressure and increased project costs, and so we will rephase construction by two years, with an aim to deliver high-speed services to Crewe and the North West as soon as possible after accounting for the delay in construction.”

The delay will affect the northwest section of HS2, from Birmingham to Crewe, and then from Crewe to Manchester.

In a written ministerial statement, Mr Harper said the government is “prioritising HS2’s initial services” between Old Oak Common in west London and Birmingham Curzon Street.

On delivering services to central London, he also hinted at delays, saying: “We will address affordability pressures to ensure the overall spending profile is manageable.

“We will therefore take the time to ensure we have an affordable and deliverable station design, delivering Euston alongside high-speed infrastructure to Manchester.”

A planned extension to Leeds was already shelved in November 2021.

Labour said the latest delay meant the North was again having to “pay the price” for government failures.

Louise Haigh, the shadow transport secretary, said: “Tens of thousands of jobs, and billions in economic growth are dependent on this project.

“The North is yet again being asked to pay the price for staggering Conservative failure.

“Conservative chaos and chronic indecision is holding back jobs, growth and costing the taxpayer.

“This is the biggest project in Europe and delays pile costs up in the long run – ministers now need to come clean on precisely how much their indecision will cost taxpayers and the North.”

Raising a point of order in the Commons, Labour MP Sarah Owen also attacked Mr Harper for “avoiding scrutiny”.

She said the cabinet minister “should have had the decency to come to this House and explain to members why they are doing this” instead of publishing a written statement “at nearly 5 o’clock on Thursday afternoon”.

Commons speaker Lindsay Hoyle also criticised the way the delay was communicated, with his spokesperson saying: “The Speaker has consistently told the government that major policy announcements should be made to the House first so that members have the chance to ask questions on behalf of their constituents, rather than hearing about them via the media.”

Delay ‘could lead to higher costs’

Delivery of the high-speed railway has been a core pledge of the Conservative government but it has been plagued by delays and ever-increasing costs – from estimates of about £33 billion in 2010 to £55.7bn for the whole project in 2015.

By 2019, the estimated cost had soared to at least £71bn, excluding the final eastern leg from the West Midlands to the East Midlands.

Ministers are understood to be delaying construction of the northern section in the hope they can spread the cost over a longer period of time so it was more affordable annually.

Chancellor Jeremy Hunt is set to announce his spring budget next week and will have Rishi Sunak’s target in mind – to get government debt to fall as a percentage of GDP within five years.

However, the Confederation of British Industry (CBI) said the delay would hit confidence in the rail industry and could ultimately lead to higher overall costs for HS2.

John Foster, the CBI’s policy unit programme director, said the news “will ultimately reduce investor and contractor confidence in the rail sector”.

“To mitigate further loss of confidence, it is critical that government tackles the inflationary pressures which are biting hard across the infrastructure sector,” he said.

“Delays to projects may create short-term savings, but they can ultimately lead to higher overall costs and slow down the UK’s transition to a better, faster and greener transport network.”

HS2 a ‘colossal mistake’

Leader of Birmingham City Council, Ian Ward, said the delay is “another betrayal of the Midlands and the North, making a mockery of the government’s empty promises to level up the UK economy”.

But Conservative MP and former chief secretary to the Treasury Simon Clarke said delaying construction “would be a sensible decision”.

“Having observed HS2’s progress as chief secretary, I have serious doubts as to value for money and cost control,” he said.

Greg Smith, the Conservative MP for Buckingham, called for the government to “accept the whole thing was a colossal mistake and scrap it, all of it”.

Just last week, rail minister Huw Merriman told the Commons the government is “absolutely committed” to delivering HS2 but admitted “cost pressures” must be examined.

HS2 Ltd chief executive Mark Thurston said the project had suffered a “significant” impact from increased costs in building materials, fuel and energy due to high inflation.

HS2 is Britain’s biggest infrastructure project and has had support from governments of all stripes since it was first mooted more than a decade ago.

But last month, the government reportedly planned to make drastic changes that would almost halve the number of high-speed trains per hour and services would travel slower to save money.

The Department for Transport (DfT) said at the time it “does not comment on speculation” and said the government “remain committed to delivering the project”.

In January, Chancellor Jeremy Hunt said he did not see “any conceivable circumstance” in which the original plan would not be followed after reports the high-speed line could stop before reaching central London.

There were claims the last leg of HS2 into Euston could be scrapped and replaced with a new hub at Old Oak Common in the suburbs of northwest London, where it is set to stop before travelling into Euston.

The government did not deny the reports or that a two to five-year delay to the entire project – currently due to be completed between 2029 and 2033 – was being considered due to record high inflation impacting costs.

Business

Bosses of Octopus Energy and SSE clash over ‘postcode pricing’ proposals

Published

9 hours ago

June 17, 2025

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Bosses of Octopus Energy and SSE clash over 'postcode pricing' proposals

The head of Britain’s biggest energy supplier has claimed his competitors oppose proposals for so-called postcode pricing because they financially benefit from the current system.

Octopus Energy chief executive Greg Jackson told Sky News his business’s rivals were against customers being charged based on where they lived, rather than on a national basis, because they would lose out on profits.

He said: “A very small number of companies that today get paid tens of millions, sometimes in a single day, to turn off wind farms and generate gas elsewhere, don’t like it.

“The reason you’re seeing that kind of behaviour from the rivals is they are benefiting from the current system that’s generating incredible profitability.”

The government is currently considering whether to introduce the policy, which is also known as zonal pricing. Energy secretary Ed Miliband is expected to make a decision on the proposals by this summer.

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Octopus has become Britain’s biggest supplier with more than seven million customers.

Mr Jackson has been a vocal proponent, as he said he wants to charge customers less and boost government electrification policies by having cheaper electricity costs.

What is postcode pricing?

Sarah Taaffe-Maguire

Business and economics reporter

@taaffems

Zonal pricing would mean electricity bills are based on what region you live in.

Some parts of Britain, like northern Scotland, are home to huge energy producers in the form of offshore wind farms.

But rather than feeding electricity to local homes and businesses, power goes into a nationwide auction and is bought to go across Britain.

As the energy grid is still wired for the old coal-producing sites rather than the modern renewable generators, it’s not straightforward to get electricity from where it’s increasingly produced to the places people live and work.

That leads to traffic jams on the grid, blocking paid-for electricity moving to where it’s needed and a system where producers can be paid a second time, to power down, and other suppliers, often gas plants, are paid to meet the shortfall.

Zonal pricing is designed to prevent paying the generators for power that can’t be used.

It would mean those in Scotland have lower wholesale energy costs while those in the south, where there is less renewable energy production, would have higher wholesale costs.

Whether bills go up or down depends on implementation.

Savings from one region could be spread across Britain, lowering bills across the board.

Mr Miliband has said he’s not going to decide to raise prices.

However, SSE’s chief executive Alistair Phillips-Davies described the policy as a “distraction” and said it could affect already agreed-upon upgrades of the national grid that will lower costs.

“I think you’ve got a very, very small number of people who are asking for this. It’s just a distraction. We should remove it now,” he said.

While Octopus Energy estimates that said postcode pricing could be introduced in two to four years, Mr Phillips-Davies said it could take until 2032 before it was implemented, by which time Britain would have “built much of the networks that are required to get the energy from these places down into the homes and businesses that actually need it”.

“We just need to stay true to the course,” he added.

Unions, as well as industry and energy representatives, have also spoken out against the policy. Opponents include eco-tycoon Dale Vince and trade body UK Steel.

A joint letter signed by SSE, UK Steel, Ceramics UK and British Glass, along with the unions GMB, Unite and Unison, said zonal pricing could lead to scaled-back investment due to uncertainty and higher bills.

A separate letter signed by 55 investors, including Centrica and the Ontario Teachers’ Pension Plan, has also criticised the policy.

However, Mr Jackson said many investors had not voiced opposition, with thousands of small and medium businesses instead backing the policy in the hope of paying less on energy bills.

Business

Poundland shake-up will see 68 stores and two distribution sites shut

Published

17 hours ago

June 17, 2025

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Poundland shake-up will see 68 stores and two distribution sites shut

The new owner of the discount retailer Poundland has revealed proposals to close 68 stores and two distribution centres under a shake-up that will also see frozen food and online sales halted.

Gordon Brothers, the investment firm which snapped up the struggling brand for a nominal sum last week, said its recovery plan “intended to deliver a financially sustainable operating model for the business after an extended period of under-performance”.

The plans are understood to be leaving 1,350 jobs at risk.

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It currently employs 16,000 people across the business.

Poundland said it was also seeking store rent reductions more widely under the plans.

Sky News reported on Monday that if creditors backed the restructuring, with a vote expected in late August, 250 of Poundland’s sites would also see their rent bills reduced to zero.

Poundland said its future focus would be on profitable stores, with its web-based operations becoming confined to browsing only.

As a result of the new priority, along with a shift away from most chilled and all frozen products, the company said it would no longer need its frozen and digital distribution centre at Darton in South Yorkshire.

It was to shut later this year.

Poundland also planned to close its national distribution centre at Bilston in the West Midlands early in 2026.

The retailer said it expects to end up with between 650 and 700 stores after the overhaul – assuming it achieves court approval.

It currently runs around 800 stores across the UK and Ireland but stressed Irish shops, which trade as Dealz, have not been affected.

Poundland’s struggles in recent years have included increased competition, poorly-received stock and rising costs.

Its managing director, Barry Williams, said: “It’s no secret that we have much work to do to get Poundland back on track.

“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.

“It goes without saying that if our plans are approved, we will do all we can to support colleagues who will be directly affected by the changes.”

Business

US-UK trade deal ‘done’, says Trump as he meets Starmer at G7

Published

18 hours ago

June 17, 2025

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US-UK trade deal 'done', says Trump as he meets Starmer at G7

The UK-US trade deal has been signed and is “done”, US President Donald Trump has said as he met Sir Keir Starmer at the G7 summit.

The US president told reporters: “We signed it, and it’s done. It’s a fair deal for both. It’ll produce a lot of jobs, a lot of income.”

As Mr Trump and his British counterpart exited a mountain lodge in the Canadian Rockies where the summit is being held, the US president held up a physical copy of the trade agreement to show reporters.

Several leaves of paper fell from the binding, and Mr Starmer quickly bent down to pick them up, saying: “A very important document.”

Sir Keir said the document “implements” the deal to cut tariffs on cars and aerospace, adding: “So this is a very good day for both of our countries – a real sign of strength.”

Mr Trump added that the UK was “very well protected” against any future tariffs, saying: “You know why? Because I like them”.

However, he did not say whether levies on British steel exports to the US would be set to 0%, saying “we’re gonna let you have that information in a little while”.

What exactly does trade deal being ‘done’ mean?

The government says the US “has committed” to removing tariffs (taxes on imported goods) on UK aerospace goods, such as engines and aircraft parts, which currently stand at 10%.

That is “expected to come into force by the end of the month”.

Tariffs on car imports will drop from 27.5% to 10%, the government says, which “saves car manufacturers hundreds of millions a year, and protects tens of thousands of jobs”.

The White House says there will be a quota of 100,000 cars eligible for import at that level each year.

But on steel, the story is a little more complicated.

The UK is the only country exempted from the global 50% tariff rate on steel – which means the UK rate remains at the original level of 25%.

That tariff was expected to be lifted entirely, but the government now says it will “continue to go further and make progress towards 0% tariffs on core steel products as agreed”.

The White House says the US will “promptly construct a quota at most-favoured-nation rates for steel and aluminium articles”.

Other key parts of the deal include import and export quotas for beef – and the government is keen to emphasise that “any US imports will need to meet UK food safety standards”.

There is no change to tariffs on pharmaceuticals for the moment, and the government says “work will continue to protect industry from any further tariffs imposed”.

The White House says they “committed to negotiate significantly preferential treatment outcomes”.

Mr Trump also praised Sir Keir as a “great” prime minister, adding: “We’ve been talking about this deal for six years, and he’s done what they haven’t been able to do.”

He added: “We’re very longtime partners and allies and friends and we’ve become friends in a short period of time.

“He’s slightly more liberal than me to put it mildly… but we get along.”

Sir Keir added that “we make it work”.

The US president appeared to mistakenly refer to a “trade agreement with the European Union” at one point as he stood alongside the British prime minister.

Mr Trump announced his “Liberation Day” tariffs on countries in April. At the time, he announced 10% “reciprocal” rates on all UK exports – as well as separately announced 25% levies on cars and steel.

In a joint televised phone call in May, Sir Keir and Mr Trump announced the UK and US had agreed on a trade deal – but added the details were being finalised.

Ahead of the G7 summit, the prime minister said he would meet Mr Trump for “one-on-one” talks, and added the agreement “really matters for the vital sectors that are safeguarded under our deal, and we’ve got to implement that”.