The HS2 review
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
The future of High Speed 2 (HS2) continues to dominate the news agenda as the government debates scrapping the second phase of the infrastructure project between Birmingham and Manchester.
After significant coverage over the weekend (check-out our Sunday press review for more on that here) The Financial Times and The Times splash on the story again today…
The Times story appears to be well-sourced and says that Rishi Sunak, the prime minister, is “alarmed” at the growing cost of the project and that the officials working on HS2 have acted like “kids with the golden credit card”. More than 40 executives who work for HS2 Ltd are paid more than £150,000. Sunak has reportedly been told that the overall cost of the scheme could potentially clear £100 billion, compared to initial estimates of £32.7 billion in 2012, although a big reason for this increase in the costs is that inflation is running at more than 10 per cent and there have been changes to the project so that much of the track running through the Chilterns is in tunnels.
Sunak, the Times story says, is expected to make a decision on the future of the project by the Autumn Statement on November 22. Resources from HS2 could be reallocated to a new train link between Manchester and Leeds and a new underground station in Manchester. You can read the story here
However, since it emerged last week that Sunak and Jeremy Hunt, the chancellor, were considering changes to HS2 there has been a backlash from business and political leaders in Birmingham and Manchester, as well as criticism from politicians who were involved in giving the green-light to the project, such as David Cameron, George Osborne and Boris Johnson.
The FT reports that the new US owners of Birmingham City Football Club, a consortium including hedge fund Knighthead Capital Management and former NFL star Tom Brady, have written to Sunak to encourage him to go-ahead with the project. They say that HS2 is one of the reasons they invested in the Midlands. The letter adds:
Any deviation could result in a loss of investor trust and this would have a considerable negative impact on the UK. The ambitious HS2 project falls into this category.
You can read that story here
However, there are others who think the project does need to be rethought, if not scrapped. For example, William Hague, the former Tory leader (and someone who is close to Sunak), is quoted in that Times story as saying the costs are “out of control” and that HS2 should have been scrapped when plans to extend the line to Leeds were cut.
Meanwhile, Nils Pratley writes in The Guardian that the government could look at a lower-cost connection between Birmingham and Manchester, with the trains running slightly slower and the track not needing to be as straight. You can read that piece here. Alistair Osborne says in The Times that the government should have started building HS2 in the north, not between London and Birmingham. That piece is here. And The Economist has laid out the case for why the UK needs HS2, but also conceded that the project “has become a case study in how not to carry out a long-term infrastructure upgrade”. You can read that piece here
Other stories that matter…
1. The number of sick days that UK employees are taking has hit the highest level in a decade, according to a new report by the Chartered Institute of Personnel & Development. Stress and Covid-19 are key factors. Story by The Guardian here
2. Nissan, the largest carmaker in the UK, has said it will stop selling new petrol and diesel cars in 2030 despite Rishi Sunak delaying a ban until 2035. Makoto Uchida, Nissan’s chief executive, said: “We believe it is the right thing to do for our business, our customers and for the planet.” BBC story here
3. Some interesting media news. The billionaire American hedge fund boss Ken Griffin is in talks to join Sir Paul Marshall’s bid for The Telegraph. Marshall is the co-founder of Marshall Wace, the hedge fund, and has invested in GB News and UnHerd. The Telegraph has reported on this story here. Meanwhile, UK accounts for Financial Times Limited show revenues grew 14 per cent to £422.5 million in 2022, with operating profits more than doubling to £13.4 million. Story by Press Gazette here
4. Retailers in York are considering taking legal action against the local authority because work to install anti-terrorism bollards in the Shambles - one of the oldest shopping areas in the world - is restricting access for customers. Story by Retail Week here
5. The Telegraph has an interesting column by property expert Phil Spencer on the mistakes he has made in the industry. The column is ostensibly about buying and selling property, but it includes insights on the art of growing a business and doing deals. For example, it covers the importance of not getting ahead of yourself and focusing on what you can actually control. Piece here
And finally…
For those looking for a new book to read, check-out the six finalists for the Financial Times and Schroders Business Book of the Year Awards. They include Elon Musk by Walter Isaacson, Material World by Ed Conway, Right Kind of Wrong by Amy Edmondson, and How Big Things Get Done by Bent Flyvbjerg and Dan Gardner. You can find the full list here
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Best
Graham