Impending cancellation of the flagship 'levelling up' had been in the news for days but minister had refused to comment on 'speculation', leaving the axing of the Birmingham-Manchester HS2 line as the main headline in the prime minister's party conference speech.
Not without irony, the party conference is being held in Manchester, in what was originally a railway shed.
Sunak condemned HS2 as “the result of the old consensus”.
He said that in the years since it was initially conceived, with spiralling costs and changes in travel patterns, “the facts have changed – and the right thing to do when the facts change is to change direction”.
In his first Conservative party conference speech as prime minister, Sunak also announced that responsibility for building the HS2 London terminus at Euston would be stripped from HS2 Ltd – “there must be some accountability for the mismanagement,” he said – and handed to a new Euston development corporation.
He promised that the £36bn saved from HS2 phase two would be spent instead on hundreds of other infrastructure projects, including a Network North east-west rail initiative, electrifying lines to reduce rail journey times between Manchester and Bradford to 30 minutes and Manchester to Hull to 84 minutes. He also promised government funding for a Leeds tram network and expansion of the Midlands Metro.
HS2 trains will still be able to go to Manchester, he said, but will travel on existing tracks.
The policy switch has not gone down well with the construction industry.
Marie-Claude Hemming, director of operations for at the Civil Engineering Contractors Association (CECA) said: “This is a dark day for the UK economy, and for everyone who has placed trust in successive UK governments to level up the country and close the north-south divide.
“While the prime minister has promised to reinvest HS2 money in alternative schemes, we as an industry know how unlikely this will be to materialise and impact communities in anything like the game-changing way that high speed rail would have delivered.
“Britain now lags far behind our competitors and will remain so due to this short-sighted decision. That the UK government can make such a decision without a democratic mandate – after the scheme has been supported by all parties throughout successive general elections – frankly beggars belief.”
Mineral Products Association (MPA) chief executive Jon Prichard said: “Scrapping the next leg of HS2 is the latest and largest example of the government’s commitment being unreliable, with projects continuously falling victim to political games. Future prospects for our industry and the wider UK economy should not hinge on the latest political opinion, but on evidence-based policymaking and long-term strategic thinking. Using infrastructure spend to balance the books, without looking at the wider economic, social and environmental impacts is short-sighted. Pretending that this is a strategic decision simply does not tally with the facts.”
MPA director of economic affairs Aurelie Delannoy said: “Delivery of public infrastructure has been poor for years, with delays, descoping and cancellations being the government’s modus operandi. Our members’ investments, based on expected demand, rest on business confidence, which is eroded by decisions such as this. HS2 north of Birmingham is the biggest such disappointment to date, but it’s part of a concerning trend, given similar decision taken on roads projects earlier this year.”
Robert McIlveen, MPA director of public affairs, added: “While not a surprise, the decision to run high-speed trains on normal speed means that our members’ aspirations to grow their use of rail freight are stymied as they will have much less capacity to use on the West Coast Main Line, meaning more HGVs, carbon emissions and congestion. From a transport perspective it’s the worst of both worlds.”
Philippa Spence, UK managing director of consulting engineer Ramboll, said: “The axing of the northern leg of HS2 is a devastating blow. Major capital projects like HS2 have an incredible economic multiplier effect which enables skills growth and world-leading innovation in technology and construction techniques. When such projects are cut, there is a ripple effect on jobs and growth through many sectors. We haven't seen the likes of anything as significant as the recent infrastructure rollback the government is leading for a long time, so will the replacement Network North deliver the growth we need?”
“The scale of the pause or reversal on major infrastructure projects such as the northern leg of HS2 has a ripple effect on skills. Companies in the construction sector who are reliant on it will suffer as a result. The ability to bring in early career staff, be they graduates or apprentices, gets curtailed and that then has knock-on effects that can roll forward for decades.”
Institution of Civil Engineers' director of policy Chris Richards said: "The lesson from today’s announcement on HS2 is the UK must change how it approaches planning and delivering infrastructure.
"The stop/start approach the country takes to major infrastructure benefits no one. We need long-term plans, supported by evidence, long-term thinking on financing options, and robust and consistent policy to achieve desired outcomes.
"The prime minister outlined several projects and schemes in his speech. Many of these projects aren’t new, and many have been previously caught in this stop/start cycle of decision-making, which drives up costs. This is likely to happen again.
"Changing direction and switching projects delays businesses and communities from benefitting from infrastructure investment. These positive outcomes are how we should be measuring success, not just by lowest cost to deliver.
"The National Infrastructure Commission will publish its second National Infrastructure Assessment in a few weeks. Before politicians rush off to make the same mistakes again on infrastructure, they should pause, look at the commission's advice and use this as a long-term plan to prioritise investment and rebuild credibility."
Eddie Tuttle, director of external affairs at the Chartered Institute of Building, said: “Long-term infrastructure projects, like HS2, employ large numbers of skilled workers and apprentices and go some way to securing a pipeline of consistent work for the construction sector. It is well recognised that the built environment industry works best when it has certainty in policy making and investment, so we hope the HS2 funding is reinvested into similar projects which will support the upskilling of the construction workforce, particularly in the north of England, where such investment is so vital for the levelling up agenda.
“In a time of economic uncertainty, where we are witnessing supply-chain collapse, it is now more necessary than ever for government to commit to public sector projects that benefit not only the local workforce and their communities but also the wider economy. Its therefore important government moves quickly to provide more detail on the plans it now has to improve the transport infrastructure in the north and communicates with the construction sector which will be responsible for delivering them.”
Construction Plant-hire Association chief executive Stu McInroy said: “The news that the Manchester leg of HS2 is to be cancelled is extremely disappointing and a significant blow to the UK construction sector. This decision shall undoubtedly further undermine confidence and impact future investment at a time when the economy remains fragile.
“While in no way likely to offset the negative effect of cancelling the Manchester leg of HS2, it is imperative that Mr Sunak’s commitment to completing the HS2 line to Euston, and diverting Manchester leg funding to a plethora of other projects aimed at boosting transport infrastructure in the north, are actioned without delay. Construction is a key driver of economic growth and CPA members will now be watching very closely what the government does next.
“Failure to follow through with current infrastructure plans has already damaged confidence in UK construction and impacted on the UK as a destination for international investment. We can ill-afford the government to repeat this failure again.”
Mace chairman and chief executive Mark Reynolds said: "HS2 will not deliver the growth and capacity we need without it terminating in central London – and so it is positive news for the country and the industry that the prime minister has committed once again to build the new station at Euston, working with the private sector to find a solution that works for everyone.
“His proposed Euston business and development zone may work, but the detail will be critical. We know there is a deliverable and cost-effective solution to Euston Station that can be built within the existing budget, allowing the station to open much earlier; enabling housing and placemaking to be offered sooner; and most importantly that delivers the best value to the taxpayer.
“Conversely, the decision to not build new high-speed rail north of Birmingham to Manchester will seriously undermine business and investor confidence in the UK and our ability to deliver on our promises – as well as having a chilling effect on the UK’s construction industry.
“The use of the expected £36bn saving to create Network North instead is a bold statement, and we look forward to seeing the detail of the hundreds of planned new rail and road projects. It is now more important than ever that government release an updated infrastructure and construction pipeline to give confidence to investors and allow the sector to plan and invest in jobs, skills and equipment to meet the announced demand.”