HS2: British Prime Minister Rishi Sunak scales back giant rail project as companies warn of a blow to their credibility

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A train passes through construction work at the HS2 site in London on October 3.


London
CNN

British Prime Minister Rishi Sunak has halted Britain’s largest existing infrastructure project, ignoring warnings from business leaders that a complete shift would harm… Investor confidence in the country.

On Wednesday, Sunak announced plans to scale back High Speed ​​Rail 2, known as HS2, the government’s flagship transport project aimed at boosting rail capacity and cutting journey times between London. Birmingham And Manchester – the three largest cities in England.

The government is set to cancel the remainder of the project, scrapping the high-speed rail line from Birmingham to Manchester, and dashing hopes that it would bring much-needed investment to less affluent parts of the UK.

Sunak said at the Conservative Party conference in Manchester, northern England, that the money saved would instead be reinvested in “hundreds” of new transport projects in the English central regions and the north of the United Kingdom.

He added: “This means investing £36 billion in projects that will make a real difference across our country.” “Our plan will create more growth and opportunity here in the North than any faster train to London will ever have.”

Sunak said the economic case for HS2 – a project 14 years in the making, plagued by repeated delays and cost overruns – had been “significantly weakened” by a decline in business travel following the pandemic.

But business and political leaders, including members of the ruling Conservative Party, strongly criticized the decision – which was leaked before the official announcement on Wednesday – as the latest example. Confounding policy making By the UK Government.

“This is the biggest and most damaging turning point in the history of UK infrastructure,” the High Speed ​​Rail Group, which represents rail and engineering companies, including Siemens and Hitachi, said in a statement. “What we have now is a rail plan that will not provide the transformative benefits the north of England needs.”

Andy Street, Birmingham’s Conservative mayor, said there had been a change It “damages” Britain’s international reputation, and as a “dangerous G7” country the UK had to be able to deliver “difficult” infrastructure projects.

He said in an interview with LBC radio this week that investors had already committed “hundreds of millions, if not billions, of pounds” on the “promise” of HS2. “You can’t then turn to those investors and say, ‘We’ve changed our mind.’”

One such investor is Tom Wagner, co-chairman of US private equity firm Knighthead Capital Management, which bought Birmingham City Football Club earlier this year.

in letter According to Sunak’s publication late last month, Wagner, now the club’s chairman, said the improved communications with the rest of the UK that HS2 would bring was a “major” factor in Knighthead’s decision to invest in the club.

“The government is expected to honor its commitment to implement the long-term plans announced publicly,” he wrote. “Any deviation could lead to a loss of investor confidence, and this would have a significant negative impact on the UK. The ambitious HS2 project falls into this category.

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Apart from the impact on business and investor confidence, there may also be an impact Contractors and local workers.

Mark Reynolds, chief executive of construction company Mace Group, one of the contractors on the project, said scaling back the line would have a “dreadful impact on the UK construction industry”.

“We look forward to seeing details of hundreds of new railway and road projects planned,” he added, calling on the government to roll out an updated infrastructure pipeline to give investor confidence and allow construction. sector to plan for the future.

Trade union GMB said the cuts to HS2 would cost “hundreds” of jobs.

“Political instability in the UK is already holding back the economy, and it will now be difficult to finance and deliver the new infrastructure the country so desperately needs,” Lawrence Turner, head of research and policy at the consortium, said in a statement.

The decision to scrap the northern leg of HS2 is just the latest muddled policy offering by the UK government.

This follows a decision last month to postpone a ban on the sale of new gas and diesel cars for five years, a move criticized by leading automakers, including Ford.F), which has already invested heavily to meet Original goal.

Sunak defended the recent policy shift, saying “the facts have changed” and this required a change of direction.

He promoted “ambitious” plans for new east-west transport links, dubbed the “Northern Network”, and said the government would work to provide faster rail journeys and increase rail capacity between Birmingham and Manchester.

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The HS2 intercity line was supposed to run between 2035 and 2040.

Mark Allen, chief executive of listed property group Landsec, said the root of the problem was “not to do with the details of what HS2 will or will not bring to the economy”. Rather, it is what it says about our ability, or lack thereof, as a country to implement major infrastructure projects.

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