Northern Powerhouse Rail and other infrastructure projects under review

Business secretary Grant Shapps hinted that Northern Powerhouse Rail would be scaled back, amid confusion over the commitment to a new nuclear plant in Suffolk.

A senior Treasury source stressed they were rethinking “all capital spending” after an official told the BBC: “We are reviewing every major project – including Sizewell C.”

Others, along with sources in the Department for Business, Energy and Industrial Strategy, insisted that Sizewell C was not being scrapped or delayed.

A government spokesman said they are “seeking to approve at least one large-scale nuclear project in the next few years”. Chancellor Jeremy Hunt and Prime Minister Rishi Sunak are looking for sweeping cuts that can be made ahead of the 17 November budget, as the Bank of England warns of the longest recession on record.

In the manifesto by which the Conservatives won the 2019 election, the party promised to build the Northern Powerhouse Rail between Leeds and Manchester.

Liz Truss backed this line during her record-breaking short tenure as Prime Minister, while Boris Johnson also boasted of its achievement in his farewell speech from Downing Street.

However, Shapps told the BBC: “The line itself can deliver a 33-minute journey from Manchester to Leeds, quadruple nearly the capacity of that line, and do so without having to wait an extra 20 years beyond the delivery of what the upgrade can do.

“There wasn’t really much point in going and blasting new tunnels through the Pennines. It’s not true to say we’re not delivering on what we said we would do on levelling up the North.”

Meanwhile, Downing Street said it is committed to the ‘Integrated Rail Plan’, but that transport secretary Mark Harper would be reviewing how high-speed services are accomplished.

The Prime Minister’s official spokesman said: “We are committed to the Integrated Rail Plan which delivers a high-speed line and transport improvements across the North and the government is of the view that this approach will deliver those benefits sooner than under alternative plans.

“There are a number of options on how we deliver those high-speed services to Leeds, for example, and the transport secretary is looking at those closely.”

Shadow transport secretary Louise Haigh accused the government of having “crashed the economy” and then making the North pay for the fall-out.

“A lost decade of broken Tory promises has left the North with second-rate infrastructure and rail services in crisis, holding the economy back,” she said.

“Rishi Sunak told voters he would deliver Northern Powerhouse Rail, before abandoning it at the first opportunity. This Conservative government have no mandate, no platform and no plan – they crashed the economy and now they want northern communities to pay the price.”

Negotiations on the multi-billion Sizewell C project – set to be built north-east of Ipswich – are understood to be ongoing, with energy firm EDF behind the construction. Johnson had promised £700m of taxpayer funding to the project in his final policy speech in early September this year.

Energy independence is also a core focus of the government because of Russia’s war in Ukraine, making axing the project an unpalatable choice for the new leadership, which would also face questions over how it would meet net-zero targets without nuclear investment.

A government spokesman insisted that delivering “infrastructure to improve everyday life for millions of people” remains “a priority”.

They added: “HS2 is under way, within budget, and supporting 28,000 jobs, we are also seeking to approve at least one large-scale nuclear project in the next few years and aim to speed up the delivery of around 100 major infrastructure projects across the UK.”

Shadow climate secretary Ed Miliband warned that scrapping Sizewell C could worsen the cost-of-living crisis compounded by spiralling energy bills: “If the government turns its back on this project, they will be breaking all of the promises they have made, and undermining our vital nuclear industry.”

Unions also raised the alarm, with GMB national secretary Andy Prendergast warning: “Any decision to pull support from Sizewell C would be catastrophic – we really could see the UK’s lights go out.”

The UK’s financial outlook has also grown more dire, with the Bank of England hiking interest rates for the eighth time in a row, going from 2.25 per cent to 3 per cent on Thursday – the biggest increase since 1989.

Among other moves being considered by the new chancellor is an increase in capital gains tax on the sale of assets such as shares or bonds.

The government’s job has been made harder following the disastrous mini-budget unleashed by Truss and former chancellor Kwasi Kwarteng.

Questions remain for individuals in Sunak’s government, with his policing minister Chris Philp having been chief secretary to the Treasury under Kwarteng.

Speaking to 'BBC Breakfast' this morning (Friday 4 November), Philp refused to apologise for his role in the financial statement that unleashed turmoil in the financial markets and threatened the UK economy.

Instead, he sought to apportion maximum blame to Truss, telling the BBC show: “The decisions around the mini-budget were taken principally by the then-Prime Minister and to a lesser extent the then-chancellor.”