HS2: Cameron in cost-cutting call on rail link

Prime Minister David Cameron, speaking at the CBI annual conference today. Picture: Getty

The Prime Minister announced that Sir David Higgins, the new boss of the planned high speed rail link between London and the North, has been tasked with finding ways to cut the estimated £50 billion price of the scheme, to drive down costs and “make it affordable for our country”.

Speaking to the CBI’s annual conference in London, Mr Cameron dismissed as “nonsense” suggestions that there were other ways of cutting back the cost of modernising the railways, insisting HS2 was a “vital investment” which would ensure growing prosperity is not confined to the South of England but is shared with the North.

The scheme needs cross-party approval if it stands a chance of being built, but shadow chancellor Ed Balls threw Labour’s support into doubt by raising concerns about the spiralling costs earlier this year, insisting he would not sign a “blank cheque”.

‘Good investment’

In a clear swipe at Labour, Mr Cameron said: “To people who say there is some other cost-reduction plan we could also have, I say that is nonsense. I think with Sir David Higgins in charge, with the budget we have and the contingency we have, this is a good investment for Britain.

“People who are against it, in my view, are putting our country’s future at risk, they are putting the future of the North of England at risk. We need to have a concerted consensus across business, across politics, that we get behind these large infrastructure projects.”

And he added: “I think it is absolutely right to make this investment. It is going to unite our country, it will help drive economic growth, it will make sure our economy shares growth between the North and South, it will link eight of our 10 biggest cities.”

He rejected arguments that the cost of HS2 will divert investment away from other necessary work on the UK’s transport network, pointing out that the planned spending on the project in the period 2015-20 totals £16 billion - less than a quarter of the £73 billion overall bill for improvements to roads and railways.

‘Budget can be cut’

Former chief executive of the London Olympic Delivery Authority Sir David, who takes over as HS2 chairman next year, believes the scheme can come in at “substantially” less than current estimates by trimming the £14 billion earmarked for contingency costs.

And Mr Cameron told the CBI: “I want to make sure we get every penny of value for money from this HS2 investment. I think it is fantastic that Sir David Higgins - the man who built the Olympics on time and on budget - is going to be running HS2.

“One of the first things he is going to do is make absolutely sure we drive every extra bit of cost out of this that we can, so it comes in under the budget that’s been set.

“There is already a contingency of £14 billion there. I know he will do a good job and make it affordable for our country.”

Shadow chancellor Ed Balls welcomed what he called Mr Cameron’s “belated recognition that he needs to get a grip” and insisted he was acting as a responsible political opposition by questioning the project.

‘Don’t turn blind eye on cost’

Building consensus did not mean “turning a blind eye to value for money”, he said, adding that it was wrong for the Chancellor to become “a cheerleader for any particular project”.

In his own speech to the conference, Mr Balls told business leaders: “Labour supports HS2 and the idea of a new North-South rail link because of capacity constraints on the existing rail network.

“But our support for it is not at any cost.

The Labour Party cannot - and will not - give the Government a blank cheque. That is what you would expect from any credible official opposition seeing a Government desperately mismanaging a project.

“And that is what is happening here with the costs having shot up to £50 billion.

“Indeed, the costs have gone up by a staggering £10 billion in the last year, so I of course welcome the Prime Minister’s belated recognition that he needs to get a grip.

“As you at the CBI have said recently: ‘The increased costs of HS2 are a matter of concern. For HS2 to go ahead it has to wash its face. The value for money test has to be properly applied’.

“We agree - and we will put the national interest and the taxpayer interest first. We will take a hard-headed look at the costs and benefits of the scheme to ensure this is the best way to spend £50 billion for the future of our country.”

He went on: “As chancellor, I would be a strong advocate for infrastructure investment. And I believe the Government should be acting now to bring forward that long-term investment, as the IMF has also argued.

“But the Chancellor should never simply become a cheerleader for any particular project.

Building a consensus about long-term infrastructure does not mean turning a blind eye to value for money.”