Rishi Sunak’s plan to build HS2 between London and Birmingham but not extend it to Manchester will be “very poor value for money”, cross-party MPs have warned.
The Public Accounts Committee (PAC), which examines government spending, said there are “many uncertainties” in the assessment that it was better to complete Phase 1 of the project than cancel the whole thing.
The group also said it is “highly sceptical” that the Department for Transport (DfT) will be able to attract the private investment needed for the planned central London terminus at Euston.
The report stated: “HS2 now offers very poor value for money to the taxpayer, and the department and HS2 Ltd do not yet know what it expects the final benefits of the programme to be.”
A spokesperson for the Department for Transport said they disagreed with the committee’s assessment.
It comes as the Conservative mayor of the West Midlands, Andy Street, and his Labour counterpart in Greater Manchester, Andy Burnham, are due to hold an event on Wednesday to outline their plans to work with private investors on improving rail in the North and Midlands.
The prime minister made the controversial decision to scrap the northern leg of the high speed rail project last year amid ballooning prices.
The estimated cost of building HS2 between London and Birmingham could be as high as £67bn, according to HS2 Ltd, up from a budget of £44.6bn in 2019.
The original bill for the whole project – at 2009 prices – was supposed to be £37.5bn.
The PAC report said there are many “unknown ramifications” of the decision to scale back the railway, ranging from how land and property no longer needed will be disposed of, impacts on other rail projects dependent on the cancelled phases, what will be delivered with the money saved, and how HS2 trains will operate on existing lines.
The report said the DfT have acknowledged to the committee that the total costs of building Phase 1 “will significantly outweigh benefits”, but officials have judged that continuing with that section “was value for money”, partly due to avoiding £11bn of costs that would be incurred from cancellation.
However, the report said: “There are many uncertainties in this assessment and we were left with little assurance over the calculations.”
Mr Sunak’s October 2023 announcement also included a new plan to rely on private investment to extend HS2 from Old Oak Common in the suburbs of west London to Euston, near the centre of the capital.
This is aimed at saving £6.5bn of taxpayers’ money.
But the PAC said: “We are… highly sceptical that the department will be able to attract private investment on the scale and speed required to make the London terminus station a success.”
Dame Meg Hillier, the Labour MP who chairs the committee, said: “HS2 is the biggest ticket item by value on the government’s books for infrastructure projects.
“As such, it was crying out for a steady hand at the tiller from the start.
“But, here we are after over a decade of our warnings on HS2’s management and spiralling costs, locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.”
The move to ditch the northern leg of HS2 was highly controversial, triggering a backlash from Tory grandees, regional leaders, businesses and the rail industry.
HS2 was touted as the UK’s biggest infrastructure project and was supposed to transform public transport between London, the Midlands and the North.
Last month, HS2 Ltd executive chairman Sir Jon Thompson said reasons for the cost increase include original budgets being too low, changes to scope, lower than expected productivity, weak contractual models and inflation.
In response to the PAC report, a spokesperson for the company said they have been “clear about the cost challenges”, adding: “HS2 Ltd is now under new leadership and implementing changes across the programme aimed at controlling costs and learning the lessons of the past.”
A DfT spokesperson said: “We disagree with the Committee’s assessment.
“Our plans for Euston have already received extensive support from the private sector to invest and will offer a world class regeneration opportunity, mirroring the successful King’s Cross and Battersea and Nine Elms development programmes.
“The Permanent Secretary has already written to the Committee chair setting out her assessment on value for money, and we have repeatedly made clear we will continue to deliver HS2 at the lowest reasonable cost, in a way that provides value for taxpayers.”
Budget 2024: Rishi Sunak hints at further national insurance tax cut – citing boost for union
A reduction in national insurance would be a “union tax cut”, the prime minister has said ahead of the budget next week.
Rishi Sunak told journalists at the Scottish Conservative conference in Aberdeen on Friday that while he could not comment on what the chancellor Jeremy Hunt will announce on 6 March, he could see the case for trimming the levy – which is paid by workers across the UK – over income tax.
When asked about the fact a cut in the headline rate of income tax may not benefit voters in Scotland if the SNP government chooses not to pass it on, he said national insurance had been cut in January because it is a “tax on work” and benefits all parts of the nation.
“I’m sure people will appreciate that I can’t comment on any fiscal policy in advance of the budget,” he said.
“But to your broader point, the chancellor and UK government chose to cut national insurance, for lots of reasons but first and foremost because it’s a tax on work and I believe in a country and society where hard work is rewarded.”
He added: “It’s also important to us to be a government that delivers for people in every part of the United Kingdom.
“It’s a union tax cut and a tax cut for everyone in work and the contrast between what we’re doing and what the SNP are doing couldn’t be starker.
“I want to make life easier for people, I want to give them the peace of mind there’s a brighter future for them and their families.”
Some Conservative MPs have been pushing for a pre-election cut to income tax in the hope of boosting the Conservatives’ flagging popularity.
It was also one of the promises of Mr Sunak’s leadership campaign.
In Scotland, where the Conservatives are up against the SNP in all of the seats they hold and are targeting, the prime minister has dubbed the SNP the “high tax capital of the United Kingdom”, with Scots earning around £28,000 a year already paying more income tax than those who live in England due to policy decisions at Holyrood.
MSPs passed the final budget for the next financial year this week, including a new income tax band being created, which will see those on a salary between £75,000 and £125,140 paying 45%; while a 1% increase to the highest rate of tax – for those earning more than £125,140 – will take it to 48p in the pound.
In passing the budget, deputy first minister Shona Robison insisted Scotland’s tax system was “progressive” and will provide £500m in funding for the NHS.
Scotland Secretary Alister Jack confirmed he had been lobbying the chancellor for a cut in national insurance – rather than income tax.
Mr Sunak would not comment on reports the government is considering raising revenue by increasing the windfall tax on oil and gas companies, or may force “non-doms” to pay UK tax on foreign income – both ideas Labour has put forward.
PM rails against ‘extremist forces trying to tear us apart’ in Downing Street address
Rishi Sunak has railed against “extremist forces trying to tear us apart” during a Downing Street address to the nation.
The prime minister said there has been a “shocking increase in extremist disruption and criminality” and added that “now our democracy itself is a target”.
He also described the Rochdale by-election result on Thursday night as “beyond alarming”, and claimed “our streets have been hijacked by small groups who are hostile to our values” as he urged the need to “beat this poison”.
His surprise speech came after the victory of maverick politician George Galloway in the Greater Manchester seat, following a campaign dominated by the highly-emotive issue of Gaza and dogged by accusations of abuse and intimidation.
In response, Mr Galloway told Sky News he “despised” the prime minister and did not care what he thought as he had won “a free and fair election”.
Community tensions in the UK have heightened against the backdrop of the Israel-Hamas conflict, triggered by the militant attack on 7 October.
In the face of ongoing pro-Palestinian protests, MPs have spoken of their experiences of receiving death threats and their concerns for the safety of their families, prompting the government to announce an extra £31m to protect elected representatives.
It followed chaotic scenes in Westminster over the vote on a ceasefire in Gaza, when Commons Speaker Sir Lindsay Hoyle broke with precedent in his handling of proceedings because he had concerns about the intimidation suffered by some parliamentarians, sparking a backlash.
But critics argue members of the ruling party have stoked divisions, highlighting former deputy Tory chairman Lee Anderson being stripped of the party whip after he accused London mayor Sadiq Khan of being controlled by Islamists, and former home secretary Suella Braverman referring to protests as “hate marches”.
Mr Sunak said: “In recent weeks and months, we have seen a shocking increase in extremist disruption and criminality.
“What started as protests on our streets have descended into intimidation, threats and planned acts of violence.
“Jewish children fearful to wear their school uniform lest it reveals their identity. Muslim women abused in the street for the actions of a terrorist group they have no connection with.
“Now our democracy itself is a target. Council meetings and local events have been stormed. MPs do not feel safe in their homes. Long-standing parliamentary conventions have been upended because of safety concerns.
“And it’s beyond alarming that last night, the Rochdale by-election returned a candidate that dismisses the horror of what happened on 7 October, who glorifies Hezbollah and is endorsed by Nick Griffin, the racist former leader of the BNP.”
He added: “We are a country where we love our neighbours and we are building Britain together.
“But I fear that our great achievement in building the world’s most successful multi-ethnic, multi-faith democracy is being deliberately undermined.
“There are forces here at home trying to tear us apart.”
He went on: “Islamist extremists and far rights groups are spreading a poison, that poison is extremism.”
Mr Sunak announced a “new robust framework” would be introduced to “ensure we are dealing with the root cause of this problem”.
The prime minister said ministers would redouble their support for the anti-terrorism Prevent programme, demand universities stop extremist activity on campus and act to prevent people from entering the country whose “aim is to undermine its values”.
In an appeal to those taking part in pro-Palestinian protests, Mr Sunak said: “Don’t let the extremists hijack your marches. You have a chance in the coming weeks to show that you can protest decently, peacefully and with empathy for your fellow citizens.
“Let’s prove these extremists wrong and show that even when we disagree we will never be disunited from our common values of decency and respect.
“I love this country, my family and I owe it so much. The time has now come for us all to stand together to combat the forces of division and beat this poison.”
Labour leader Sir Keir Starmer backed Mr Sunak’s call.
In a statement, he said: “The prime minister is right to advocate unity and to condemn the unacceptable and intimidatory behaviour that we have seen recently.
“It is an important task of leadership to defend our values and the common bonds that hold us together.
“Citizens have a right to go about their business without intimidation and elected representatives should be able to do their jobs and cast their votes without fear or favour.
“This is something agreed across the parties and which we should all defend.”
Electoral Dysfunction: How big a threat is Galloway and Gaza to Starmer’s Labour?
George Galloway will be back in parliament on Monday with his megaphone and a new platform to rail against Labour.
His theme is Gaza and his menace is clear.
As he accepted victory in the Rochdale by-election at around 3.30am (at a rally in a Subaru car showroom of all places), the veteran left-wing agitator warned Sir Keir Starmer “[his] problems just got 100 times more serious than they were before today”.
In Mr Galloway’s world, his win was the beginning of an earthquake that would flatten Sir Keir’s Labour.
“This is going to spark a movement, a landslide, a shifting of the tectonic plates in scores of parliamentary constituencies,” he said.
Labour, he said, was “on notice that they have lost the confidence of millions of their voters who loyally and traditionally voted for them”.
It is something that Ms Phillips, who has a large Muslim community in her Birmingham Yardley constituency, feels very strongly about.
She resigned from the Labour frontbench last year after deciding she couldn’t support the party over the Israel-Hamas war.
And she is fuming over what she sees as Mr Galloway’s sanctimony as he purports to be fighting for the people of Gaza when all he really wants to do is to sock it to Labour, as he has been trying to do in various seats for various political parties since he was kicked out of the party more than 20 years ago.
Ms Phillips said: “He is not a legitimate voice for the people of Gaza.
“He’s just trying to attack Keir Starmer.
“Knock yourself out. Attack Keir Starmer. That’s politics. I’m here for that. But don’t pretend to people who care about something that you’re going to change something.”
Mr Galloway would reject the suggestion he is not a “legitimate voice” for the people of Gaza, having campaigned on behalf of the Palestinian cause for decades. Speaking to Sky News in the wake of his victory last night, he said his views on the issue were “quite well known”.
As for whether Labour would have lost this seat to Mr Galloway regardless of whether its suspended candidate Azhar Ali had stood for Labour or not – a view of some in the party – Ms Phillips says she doesn’t know.
But what she does acknowledge is Mr Galloway’s near 6,000 majority is “testament to a broader problem” for the party.
She said: “There is a clear problem with Muslim communities feeling represented currently by the Labour movement.
“Muslim people do not want to be represented by total charlatans.
“They also want to come to you for help and need decent representation and good, good people, both from within and without their community.
“They have been saying for some time, we are losing faith, if only we noticed it.”
I don’t buy Mr Galloway’s assertion that he is triggering a “movement” across “scores” of Labour seats – not least because these divisions have been in plain sight for months, with councillors and activists quitting Labour because of the tensions over Gaza.
In some Labour seats it is undoubtedly a real problem, but what doesn’t follow is that these difficulties lead to electoral failure in a general election across a number of seats.
The by-election swings in all other races tell a very different story, with over half of Labour’s biggest by-election swings ever happening in the last couple of years.
“Rochdale was the anomaly and not any kind of indication of where we are,” says one senior Labour figure.
“At the beginning of the [Rochdale] campaign it was clear that some previous Labour voters had moved away from us on the issue of Gaza but at the same time we were picking up a lot of previous Tory voters.”
While Ms Phillips is clearly frustrated with her party leadership over Gaza, Ms Davidson says she feels “a little bit sorry” for Sir Keir, who she thinks had no option but to be fulsome in support of Israel against the backdrop of a Labour party that had been so badly tarnished by the rows over antisemitism in its ranks during the Jeremy Corbyn years.
“I think what the Gaza situation thing has exploded about is the fact that Keir Starmer had so much work to do off of Jeremy Corbyn to try and rebuild trust with Jewish communities across this country,” says Ms Davidson.
“He had to do that if he was going to be a credible candidate for the prime minister of this country; he had to make that reparation.
“And that is now being used against him. The bit [from Galloway’s election flyers], which was about Starmer being this great friend of Israel, is being used as a stick to beat him with.”
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