Parts of HS2 to be delayed for two years, government announces
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.
The delay will affect the northwest section of HS2, from Birmingham to Crewe, and then from Crewe to Manchester.
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.
The high-speed trains were set to go from London Euston to Birmingham and up to Crewe and Manchester
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.
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HS2 unearths unexpected treasure
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.
Aerial view of the HS2 Euston station construction site in London
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.
KitKats, Gaviscon, toothpaste, and even Freddo have all fallen victim to shrinkflation, consumer group Which? has found.
As families struggle with the cost of a trip to the supermarket, a survey of shoppers revealed how many products are getting smaller – while others are being downgraded with cheaper ingredients.
Among the examples are:
• Aquafresh complete care original toothpaste – from £1.30 for 100ml to £2 for 75ml at Tesco, Sainsbury’s and Ocado
• Gaviscon heartburn and indigestion liquid – from £14 for 600ml to £14 for 500ml at Sainsbury’s
• Sainsbury’s Scottish oats – from £1.25 for 1kg to £2.10 for 500g
• KitKat two-finger multipacks – from £3.60 for 21 bars to £5.50 for 18 bars at Ocado
• Quality Street tubs – from £6 for 600g to £7 for 550g at Morrisons
• Freddo multipacks – from £1.40 for five bars to £1.40 for four bars at Morrisons, Ocado and Tesco
Which? also received reports of popular treats missing key ingredients, as manufacturers seek to cut costs.
The amount of cocoa butter in white KitKats has fallen below 20%, meaning they can no longer actually be sold as white chocolate.
It comes after Penguin and Club bars lost their legal status as a chocolate biscuit, as they now contain more palm oil and shea oil than cocoa – as reported in the Sky News Money blog.
Which? retail editor Reena Sewraz called on supermarkets to be “more upfront” about price changes to help households “already under immense financial pressure” get better value.
While keeping track of the size and weight of products can be tricky, Which? has two top tips for detecting shrinkflation.
The first is to be wary of familiar products labelled as “new” – because the only thing that’s new may end up being the smaller size.
Meanwhile, the second is to pay attention to how much an item costs per 100g or 100ml, as this can be an easy way of finding out when prices change.
What have the companies said?
A spokeswoman for Mondelez International, which makes Cadbury products, said any change to product sizes are a “last resort”, but it’s facing “significantly higher input costs across our supply chain” – including for energy.
A Nestle spokesman said it was seeing “significant increases in the cost of coffee”, and some “adjustments” were occasionally needed “to maintain the same high quality and delicious taste that consumers know and love”.
“Retail pricing is always at the discretion of individual retailers,” they added.
A spokesman for the Food and Drink Federation also pointed to government policy, notably national insurance increases for employers and a new packaging tax.
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Is inflation reaching its peak?
Fresh food prices on the rise
The Which? report comes as latest figures showed fresh food costs 4.3% more than it did a year ago.
The increase in October, reported by the British Retail Consortium (BRC) and market researchers NIQ, was up on the 4.1% year-on-year rise in September.
Overall food inflation was down slightly, though, to 3.7% from last month’s 4.2%.
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There has also been a slowdown in overall shop price inflation, which the BRC said was down to “fierce competition among retailers” ahead of Black Friday sales.
The annual shopping extravaganza will this year arrive in the same week as the chancellor’s budget, which is set for Wednesday 26 November.
BRC chief executive Helen Dickinson called on Rachel Reeves to help “relieve some pressures” keeping prices high, with the national insurance rise in last year’s budget having “directly contributed to rising inflation”.
“Adding further taxes on retail businesses would inevitably keep inflation higher for longer,” Ms Dickinson warned.
Business
Petrofac administration not a great start to the week for Ed Miliband though relief could come
More than 2,000 Scotland-based jobs are at risk as oil and energy services group Petrofac has applied for administration.
The group’s operations will continue to trade, and options for restructuring of the company and a possible merger or acquisition are being actively explored with its key creditors, the company said on Monday.
People close to the company say they are hopeful a buyer can be found swiftly for its North Sea operations, with one suggesting that it could even happen in the coming days.
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Administrators will work alongside company management to “preserve value, operational capability and ongoing delivery”, its announcement read.
News of a possible insolvency announcement was first reported by Sky News.
Energy Secretary Ed Miliband and other ministers have been briefed on the situation.
An advisory firm, Kroll, had been engaged by the Department for Energy Security and Net Zero to work with ministers and officials on the unfolding crisis for the company.
What is Petrofac?
Petrofac employs about 7,300 people globally, according to a recent stock exchange filing.
It designs, constructs and operates offshore equipment for energy companies.
The company has been valued at more than £6bn but has been struggling with debt.
It also faced a Serious Fraud Office investigation, which resulted in a 2021 conviction for failing to prevent bribery, and the payment of millions of pounds in penalties.
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Founded in 1981 in Texas, the business has been in talks about a far-reaching financial restructuring for more than a year.
A formal restructuring plan was sanctioned by the High Court in May this year with the aim of writing off much of its debt and injecting new cash into the business.
This was subsequently overturned, prompting talks with creditors about a revised agreement.
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