ONE of the basic unfairnesses built into the British economy is the disparity known as the north-south divide. Whichever government is in power, this inequity remains. Boris Johnson’s much vaunted “levelling up” proved to be a mirage. Will Labour’s first Budget next week offer anything beyond financial probity and fiscal rectitude?
The reductio ad absurdum of the last government’s indifference to the north was Rishi Sunak’s decision to cancel the HS2 high-speed train line from Birmingham to Manchester — the busiest passenger and freight corridor in Europe. Adding insult to injury, he travelled to Manchester to do it.
The irrationality of the decision was made clear when the government watchdog the National Audit Office found that the faster trains from London to Birmingham would have “fewer seats than existing services” — reducing capacity by 17 per cent. The solution, apparently, was “incentivising people . . . not to travel by rail”. A replacement bus service has been built in from the outset.
Yet, last weekend, Labour denied reports that it might revive the northern leg of HS2, though it may find the money to extend the line from its west-London terminus into Euston, adding billions to current costs. Once again, money for the south, but not the north.
This is immensely short-sighted. The NAO warns that the half-baked scheme will mean that the full benefits of the first phase of HS2 will not be realised, constraining economic growth and increasing environmental costs. The National Infrastructure Commission and the Public Accounts Committee agree.
There is a way out of this. The mayors of Manchester and the Midlands, leaders of chambers of commerce, university vice-chancellors, and a raft of infrastructure companies have come up with “HS2 Lite”: a new slightly less high-speed line that would deliver 85 per cent of the benefits of HS2 but at only 60 per cent of the cost. The former Tory Chancellor George Osborne, who attacked Rishi Sunak’s cancellation of the northern arm of HS2 “as an act of infrastructure vandalism”, is backing the idea.
The new plan would utilise the £592-million worth of land and the thousand properties that the previous government had bought along the northern route and save the £100 million that it would cost for remediation work there. The mayors say that their plan should unlock “up to £70 billion in economic growth annually, contributing substantially to regional economies and providing a robust financial return to the Treasury”.
Private-sector partnerships could bring the Government £20 billion in income and contribute to the Government’s target of 75-per-cent rail-freight growth by 2050, crucial to national targets for reducing carbon emissions. The alternative is that demand on the West Coast mainline and the M6 — already one of UK’s most congested motorways — will outstrip capacity within a decade, creating new barriers to economic growth.
Rachel Reeves will not be able to find the money for this in her Budget speech next week. But she could set up a steering group in which central government, local authorities, and the private sector joined together to develop a feasibility study, to report within six months. Labour’s mantra about the importance of economic growth will mean little if that growth is restricted to the London region. It is also a matter of social justice.