Goodbye HS2, hello Network North
The business news that matters
Hello and welcome to Off to Lunch. Today’s edition is later than usual so it can cover Rishi Sunak’s speech…
The prime minister has scrapped plans to extend High Speed 2 between Birmingham and Manchester and said the £36 billion saved from the project will instead be used to improve transport infrastructure across the North of England and the Midlands.
Sunak said that HS2 was “the ultimate example of the old consensus” and the economic case for building the line had “massively been weakened” by the Covid-19 crisis and the rise of flexible working. “The facts have changed,” the prime minister said in a speech to the Conservative Party Conference in Manchester.
Instead, a new Network North will be launched, which will improve transport connections between cities and towns. Sunak said this would mean travelling between Manchester and a new station in Bradford in 30 minutes. “I challenge anyone to tell me with a straight face that this isn’t what the North really needs,” Sunak said.
The government has published a full announcement on its plans here. This breaks down how the savings on HS2 will be spent…
Communities in towns, cities and rural areas will see improved transport infrastructure far sooner through £19.8 billion reinvested in the North, including:
£2 billion for a new station at Bradford and a new connection to Manchester;
£2.5 billion to deliver a new mass transit system in West Yorkshire;
£3 billion for upgraded and electrified lines between Manchester and Sheffield, Sheffield and Leeds, Sheffield and Hull, and Hull-Leeds.
Nearly £4 billion more funding for local transport in the North’s six city regions.
A new £2.5 billion fund for local transport across all areas in the North outside the six city regions – smaller cities, counties, towns and countryside.
A new £3.3 billion fund for road resurfacing.
Landmark investments in roads, reopened train lines and new stations;
We will also invest a further £12 billion to better connect Manchester to Liverpool. This would allow the delivery of Northern Powerhouse Rail as previously planned, including high-speed lines. But we will work with local leaders to agree whether they wish to suggest other ways to achieve the objectives within that cost envelope.
£9.6 billion reinvested in the Midlands:
Funding the Midlands Rail Hub in full with £1.75 billion, connecting 50 stations and over 7 million people – doubling capacity and frequency;
Over £1.5 billion guaranteed local transport funding for the new East Midlands Mayor;
Over £1 billion extra local transport funding for West Midlands City Region;
A new £2.2 billion fund for local transport across all areas in the West and East Midlands outside the city regions – smaller cities, counties, towns and countryside.
Reopened train lines and new stations such as the Ivanhoe Line;
The development of Midlands road schemes to benefit businesses and their employees at Rolls Royce, Toyota, and Magna Park, generating over £12 billion for the local economy.
£6.5 billion for the rest of the country:
Rail improvements in the Southwest;
Keeping the £2 bus fare until the end of December 2024;
Ensuring the delivery of road schemes;
Transforming Ely Junction; and billions to fix potholes on the country’s roads;
Greater connectivity for both Scotland and Wales with improvements to the A75 between Gretna and Stranraer, and £1 billion to fund the electrification of the North Wales Main Line.
Sunak sought to address criticism of the move by offering to work with local leaders such as Andy Street, the mayor of the West Midlands, to improve transport infrastructure. He added: “There is nothing ambitious about pouring more and more money into the wrong project.” Reports suggest that Street, the former boss of John Lewis, could resign over Sunak’s announcement. He is planning to hold a press conference this afternoon.
The redevelopment of Euston station in London will still go ahead, although this will be overseen by a new body and taken away from HS2 Limited, the organisation that has been overseeing the project.
The prime minister revealed other significant proposals too. Sunak has proposed a ban on smoking that means no-one aged 14 or below today will be able to legally smoke. He also announced plans to overhaul education for 16 to 18-year-olds by merging A-Levels and T-Levels into a new Advanced British Standard. You can find more details below….
Other stories that matter…
1. The yield on 30-year gilts has risen to the highest level since 1998 amid a sell-off in the bond market around the world. Gilts are bonds issued by the UK government and this means the government will have to pay more interest on its debt. Jeremy Warner has written in The Telegraph about a peculiar sell-off in gilts with longer maturities that expire in the 2070s. Piece here
2. Shares in Tesco, the UK’s largest retailer, have risen nearly 5 per cent after the company said that annual profits would be larger than expected. Ken Murphy, chief executive, said: “Food inflation fell across the half and while external pressures remain, we expect that it will continue to do so in the second half of the year. We are in a strong position to keep investing for customers, and will continue to lower prices wherever we can - doing everything in our power to make sure customers can have a fantastic, affordable Christmas by shopping at Tesco." Murphy made the comments in Tesco’s half-year results, which you can find here
3. Matt Clifford, a senior adviser to the government on AI and the chief executive of Entrepreneur First, has said the UK should not look to slow the development of AI technology and that it would be “premature” to use a global summit next month to launch a new regulator. The UK is due to host the first AI Safety Summit at Bletchley Park on November 1 and 2. Interview with Sifted here
4. Chief executives have become too short-term with their thinking and are overly focused on hitting quarterly earnings targets and launching share buybacks, writes Brooke Masters in the Financial Times here
5. Author David Epstein has written about the importance of stopping doing things to improve your overall performance. Scientific research, books and case studies (such as the dangers of distracting car drivers with too many road signs) have demonstrated this point. Piece here
And finally…
Thank you to everyone who has been in touch after the announcement yesterday about the future of Off to Lunch, Business Studies and Business Leader magazine. I am replying to every message but it is going to take some time! If you missed the announcement, you can find it here. There are exciting times ahead…
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Best
Graham