HS2 to Manchester axed in favour of ‘Network North’ – as former PM Cameron calls decision ‘wrong’
Rishi Sunak has confirmed the long-rumoured decision to scrap the northern leg of HS2 .
Reports the planned high speed rail line would end in Birmingham – rather than continuing up to Manchester – have been circling for weeks, with sources telling Sky News on Monday the decision had been made.
But the prime minister has spent days dodging the question, only making the announcement as he gave the closing speech to this year’s Conservative Party conference.
Read more: HS2 axe branded betrayal of the north – politics latest
Mr Sunak defended the move by promising to spend the billions of cash savings on hundreds of other transport schemes across the country instead.
They will include:
• The ‘Network North’ project to join up northern cities by rail
• A ‘Midlands Rail Hub’ to connect 50 stations
• Keeping the £2 bus fare cap across the country
But a number of the projects appear to have been announced before and critics have suggested Mr Sunak is reviving schemes he was responsible for cancelling.
HS2 will still go to Euston despite suggestions it could end in the west London suburb of Old Oak Common, rather than in the centre of the capital.
Speaking from a former railway station in Manchester, where the Tories’ annual event was held this year, Mr Sunak told members getting infrastructure right was key to driving growth, but a “false consensus” had emerged, with projects “driven by cities at the exclusion of everywhere else”.
‘I am ending this long running saga’
He said HS2 was “the ultimate example of the old consensus”, saying the cost had doubled and the “economic case” for the line had “massively weakened with the changes to business travel post-COVID”.
The prime minister added: “I say, to those who backed the project in the first place, the facts have changed. And the right thing to do when the facts change, is to have the courage to change direction.
“So I am ending this long-running saga. I am cancelling the rest of the HS2 project.”
Mr Sunak said scrapping phase two to Manchester would free up £36bn, and “every single penny” would be spent on “hundreds of new transport projects in the North and the Midlands, and across the country”.
But the government’s new “focus” would be on a project called Network North, which would “join up our great towns and cities in the North and the Midlands”.
The fully electrified line would see trains make the journey from Manchester to Hull in 84 minutes, to Sheffield in 42 minutes and Bradford in 30 minutes.
“No government has ever developed a more ambitious scheme for northern transport than our new Network North,” the prime minister added.
“This is the right way to drive growth and spread opportunity across our country. To level up.”
Sunak has rolled the dice
Rishi Sunak’s speech was packed with policy – on banning smoking, replacing A-levels with a new qualification – though not for quite a few years – and of course the long awaited axing of HS2 to fund regional transport upgrades.
There were also some indications of campaign attacks on Labour – in particular with his references to trans issues, and Sir Keir Starmer’s previous positions on Brexit.
A year out from an election, these are long term plans that may never happen, if voters don’t want to keep the Conservatives in the short term.
But Sunak has rolled the dice on the idea his party can regenerate for the future.
Listing other transport pledges, Mr Sunak said he would “protect” the £12bn project to link Manchester and Liverpool, build a tram in Leeds and upgrade the A1, A2, A5 and the M6.
He also promised to extend the West Midlands Metro, electrify the North Wales main line and 70 further road schemes.
“I challenge anyone to tell me with a straight face that all of that isn’t what the North really needs,” he said.
“Our plan will drive far more growth and opportunity here in the North than a faster train to London ever would.”
The plans immediately drew criticism from regional mayors, including Andy Burnham in Greater Manchester, who said the HS2 announcement was “no way to treat our city when they are in our city”.
He said the government had not announced a “coherent plan” but a “transport plan patched together in hotel rooms at a party conference with no input with northern leaders or mayors”.
Mr Burnham went on to say the current plan would not solve the problem of bottlenecks and lack of capacity on the railway network in the north, which covers from Liverpool in the west to Hull in the east.
He also accused the government of failing to turn its transport pledges into reality and suggested that previous statements had been made “with political intentions in mind to try and win votes here”.
“It’s starting look very much like that’s what it was all about – and what has been announced today feels more of the same,” he added.
His concerns were echoed by Labour’s shadow transport secretary Louise Haigh, who said the north and Midlands had been “left to pay the price” for this “staggering Tory fiasco”.
“Only after 13 years of dismal failure could the Conservatives make the centrepiece of their conference a re-announcement of promises the Conservatives have made before,” she said.
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Read more:
Analysis: Sunak’s woes are a conference sideshow
HS2 explained – what is the route and why has leg been axed?
West Yorkshire Mayor Tracy Brabin called the decision “yet another betrayal of the North which will punish passengers and businesses alike”.
The head of research and policy at the GMB union, Laurence Turner, also said the scrapping of the northern HS2 leg would “send a shockwave through the construction industry and railway supply chain, costing hundreds of jobs”.
He added: “The UK’s political instability was already holding the economy back – it will now be even harder to fund and deliver the new infrastructure that the country desperately needs.
“We can’t rebalance the economy or fix the railway capacity crisis without HS2. It’s essential that the planned route is now protected so that a future government can reverse this disastrous decision.”
Mr Sunak accepted he would face criticism for the decision – having already been slammed by Tory grandees, regional politicians and businesses before the announcement was even made.
“They will say that halting it signals a lack of ambition,” he told the audience. “There will be people I respect, people in our own party, who will oppose it.
“But there is nothing ambitious about simply pouring more and more money into the wrong project.
“There is nothing long-term about ignoring your real infrastructure needs so you can spend an ever-larger amount on one grand project.
“For too long, people in Westminster have invested in the transport they want, not the transport the rest of the country, particularly the North and Midlands, wants and needs.”
Mr Sunak addressed one critic in particular – the Tory mayor in the West Midlands, Andy Street – saying he was a man he had “huge admiration and respect for”, Mr Sunak added: “I know we have different views on HS2.
“But I know we can work together to ensure a faster, stronger spine: quicker trains and more capacity between Birmingham and Manchester.”
Mr Street confirmed he would not resign from his post despite being “incredibly disappointed” about the HS2 decision.
He said he had “thought incredibly long and hard about what my future in the Conservative Party should be”, but had decided to remain a member.
“The West Midlands must be at the heart of the UK’s modern transport network and reap all the benefits that will bring,” he said.
“The prime minister has today reached out to work with me to make that happen and to turn my back on that offer would be doing a serious dis-service to my region.
“I know this decision will make me deeply unpopular in some circles, and indeed many wanted me to resign and make a statement against my party.”
The prime minister announced a number of other policies that had been trailed in the days leading up to the conference – including introducing a British baccalaureate to allow pupils over 16 to study a wider range of subjects, and new tactics for making England smoke-free.
Octopus Energy Group, Britain’s largest residential gas and electricity supplier, is plotting a £10bn demerger of its technology arm that would reinforce its status as one of the country’s most valuable private companies.
Sky News can exclusively reveal that Octopus Energy is close to hiring investment bankers to help formally separate Kraken Technologies from the rest of the group.
The demerger, which would be expected to take place in the next 12 months, would see Octopus Energy’s existing investors given shares in the newly independent Kraken business.
A minority stake in Kraken of up to 20% is expected to be sold to external shareholders in order to help validate the technology platform’s valuation, according to insiders.
One banking source said that Kraken could be valued at as much as $14bn (£10.25bn) in a forthcoming demerger.
Citi, Goldman Sachs, JP Morgan and Morgan Stanley are among the investment banks invited to pitch for the demerger mandate in recent weeks.
A deal will augment Octopus Energy chief executive Greg Jackson’s paper fortune, and underline his success at building a globally significant British-based company over the last decade.
Octopus Energy now has 7.5m retail customers in Britain, following its 2022 rescue of the collapsed energy supplier Bulb, and the subsequent acquisition of Shell’s home energy business.
In January, it announced that it had become the country’s biggest supplier – surpassing Centrica-owned British Gas – with a 24% market share.
It also has a further 2.5m customers outside the UK.
Kraken is an operating system licensed to other energy providers, water companies and telecoms suppliers. Pic: Octopus
Sources said a £10bn valuation of Kraken would now imply that the whole group, including the retail supply business, was worth in the region of £15bn or more.
That would be double its valuation of just over a year ago, when the company announced that it had secured new backing from funds Galvanize Climate Solutions and Lightrock.
Shortly before that, former US vice president Al Gore’s firm, Generation Investment Management, and the Canada Pension Plan Investment Board increased their stakes in Octopus Energy in a transaction valuing the company at $9bn (£7.2bn).
Kraken is an operating system which is licensed to other energy providers, water companies and telecoms suppliers.
It connects all parts of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries.
The business also unlocks smart grids which enable people to use more renewable energy when there is an abundant supply of it.
In the UK, its platform is licensed to Octopus Energy’s rivals EON and EDF Energy, as well as the water company Severn Trent and broadband provider Cuckoo.
Overseas, Kraken serves Origin Energy in Australia, Japan’s Tokyo Gas and Plentitude in countries including France and Greece.
Its biggest coup came recently, when it struck a deal with National Grid in the US to serve 6.5m customers in New York and Massachusetts.
Sources said other major licensing agreements in the US were expected to be struck in the coming months.
Kraken, which is chaired by Gavin Patterson, the former BT Group chief executive, is now contracted to more than 70m customer accounts globally – putting it easily on track to hit a target of 100m by 2027.
Earlier this year, Mr Jackson said that target now risked being seen as “embarrassingly unambitious”.
Last July, Kraken recruited Amir Orad, a former boss of NICE Actimize, a US-listed provider of enterprise software to global banks and Fortune 500 companies, as its first chief executive.
A demerger of Kraken will trigger speculation about an eventual public market listing of the business.
Its growth in the US, and the relative public market valuations of technology companies in New York and London, may put the UK at a disadvantage when Kraken eventually considers where to list.
One key advantage of demerging Kraken from the rest of Octopus Energy Group would be to remove the perception of a conflict of interest among potential customers of the technology platform.
A source said the unified corporate ownership of both businesses had acted as a deterrent to some energy suppliers.
Kraken has also diversified beyond the energy sector, and earlier this year joined a consortium which was exploring a takeover bid for stricken Thames Water.
This weekend, Octopus Energy declined to comment.
The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.
Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.
The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.
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Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.
He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.
Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?
Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA
“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”
He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”
The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.
Michael O’Leary believes the EU can take action on competition grounds. Pic: PA
Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.
The beginning of July marks the start of the European summer holiday season.
The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.
Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.
DGAC has warned of delays and further severe disruption heading into the weekend.
Many planes and crews will be out of position.
Mr O’Leary is not alone in expressing his frustration.
The French transport minister Philippe Tabarot has denounced the action and the reasons for it.
“The idea is to disturb as many people as possible,” he said in an interview with CNews.
Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.
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