A map of the HS2 route

Labour leaders 'losing nerve' over HS2

Labour leaders could be "losing their nerve" over the £50bn HS2 high-speed rail project, according to a business leader.

The comment, from British Chambers of Commerce director general John Longworth, came after a speech by shadow chancellor Ed Balls at the Labour Party conference.

In his speech, Balls appeared to signal a significant weakening in Labour support for HS2 – the project to build a new rail link between London, the Midlands and the north of England – suggesting that the potential £50bn might be better spent elsewhere.

Repeating his line that, as chancellor, he would not offer a "blank cheque" to HS2, he added: "The question is not just whether a new high speed line is a good idea or a bad idea, but whether it is the best way to spend £50bn for the future of our country."

Longworth said: "Labour must address worrying hints that they are starting to lose their nerve on transformative investment projects, including HS2, in favour of current spending."

Balls's comments followed what has been seen by some as a recent move by Labour to distance itself somewhat from HS2 – a project that was enthusiastically supported by Lord Adonis, who was transport secretary in Gordon Brown's Labour government.

Former Labour cabinet ministers Lord Mandelson and Alistair Darling have spoken out against HS2, with Darling's reservations being of particular significance given that he served as both transport secretary and chancellor under Labour.

Much of the cooling in Labour's ardour for the scheme stems from the coalition Government's own rise, including contingencies, in the price of the scheme to £42.6bn, with a further £7.5bn for the trains.

One recent independent study put the eventual cost as high as £80bn, while there have been reports that the Treasury is working on the cost being more than £70bn. The House of Commons Public Accounts Committee, in a report earlier this month, has also questioned the project.

Today, HS2 Ltd, the company set up by the Government to deliver the project, said that £3.5bn could be sliced off the overall budget by recruiting contractors, such as designers, surveyors and engineers, at the start of the project to work in an integrated way, rather than commissioning contractors on an individual basis as the scheme develops.

The first phase of HS2 – from London to Birmingham – will cut through Tory heartlands in beauty spots in the Chilterns and would be completed by 2026. The second phase, taking the line north in a Y-shape to Manchester in the north west of England and to Leeds in the north east, would be completed in 2032/33.

In his conference speech Balls said Labour supported investment in better transport links for the future, adding: "We continue to back the idea of a new north-south rail link".

He went on: "But under this government the HS2 project has been totally mismanaged and the costs have shot up to £50bn. David Cameron and George Osborne have made clear they will go full steam ahead with this project no matter how much the costs spiral up and up. They seem willing to put their own pride and vanity above best value for money for the taxpayer."

Balls went on: "Labour will not take this irresponsible approach. So let me be clear, in tough times when there is less money around and a big deficit to get down there will be no blank cheque from me as a Labour chancellor for this project or for any project.

"Because the question is not just whether a new high-speed line is a good idea or a bad idea, but whether it is the best way to spend £50bn for the future of our country."

Katja Hall, the CBI's chief policy director, said: "We've always said that the Government must redouble its efforts to sell the benefits of HS2 while keeping a tight lid on costs. But let's not forget why this project matters.

“HS2 will connect eight of our 10 biggest cities, boost regeneration projects across the country for years to come, and will avert a looming capacity crunch on the West Coast main line."

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