‘Great train robbery’: Eastern leg of HS2 scrapped as plans for Northern Powerhouse Rail downgraded
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.
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.
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a very significant, improvement,” he told MPs, adding that the new plan “will provide a better service than the outdated plan for for HS2 a decade ago”.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”.
Grant Shapps told MPs the government’s new Integrated Rail Plan ‘will provide a better service than the outdated plan for for HS2 a decade ago’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.”
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.”
Shares in UK banks have fallen sharply on the back of a report which urges the chancellor to place their profits in her sights at the coming budget.
As Rachel Reeves stares down a growing deficit – estimated at between £20bn-£40bn heading into the autumn – the Institute for Public Policy Research (IPPR) said there was an opportunity for a windfall by closing a loophole.
It recommended a new levy on the interest UK lenders receive from the Bank of England, amounting to £22bn a year, on reserves held as a result of the Bank’s historic quantitative easing, or bond-buying, programme.
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It was first introduced at the height of the financial crisis, in 2009.
The left-leaning think-tank said the money received by banks amounted to a subsidy and suggested £8bn could be taken from them annually to pay for public services.
It argued that the loss-making scheme – a consequence of rising interest rates since 2021 – had left taxpayers footing the bill unfairly as the Treasury has to cover any loss.
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Why taxes might go up
The Bank recently estimated the total hit would amount to £115bn over the course of its lifetime.
The publication of the report coincided with a story in the Financial Times which spoke of growing fears within the banking sector that it was firmly in the chancellor’s sights.
Her first budget, in late October last year, put businesses on the hook for the bulk of its tax-raising measures.
Ms Reeves is under pressure to find more money from somewhere as she has ruled out breaking her own fiscal rules to help secure the cash she needs through heightened borrowing.
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Is Labour plotting a ‘wealth tax’?
Other measures understood to be under consideration include a wealth tax, new property tax and a shake-up that could lead to a replacement for council tax.
Analysts at Exane told clients in a note: “In the last couple of years, the chancellor has been protective of the banks and has avoided raising taxes.
“However, public finances may require additional cash and pressures for a bank tax from within the Labour party seem to be rising,” it concluded.
The investor flight saw shares in Lloyds and NatWest plunge by more than 5%. Those for Barclays were more than 4% lower at one stage.
A spokesperson for the Treasury said the best way to strengthen public finances was to speed up economic growth.
“Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms,” they added.
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