Belfast Telegraph

HS2 must be value for money - Balls

Ed Balls has suggested the £50 billion earmarked for HS2 could be spent on housing and other transport projects, fuelling speculation that Labour is poised to pull backing for the scheme.

The shadow chancellor told a conference fringe event that Labour support for the high-speed rail project was not "off the table" but insisted it must be proved to be value for money.

Sounding distinctly lukewarm about the north-south rail link, the shadow chancellor said "real questions have been asked" about cost control on the project as well as the benefits it would deliver.

Business leaders earlier raised fears that senior Labour figures were "losing their nerve" after Mr Balls used his main conference address to question whether it was "the best way to spend £50 billion for the future of our country".

Pressed on his position at a question and answer session staged by The Independent, he did little to dispel the prospect of the party withdrawing support.

He said: "I think a better approach for a Labour shadow chancellor to say is that we need to know the costs are properly under control and the benefits are really there and this would be the best way to spend £50 billion that could be used on other transport projects or housing."

"I'm not taking our support for HS2 off the table but what I'm not going to do is write a blank cheque," he added.

Mr Balls said "at no point" had there been any internal party discussions about announcing opposition to the plans.

He added: "I'm not meaning to sound un-keen. It's about time we injected a bit of hard thinking into this debate and if, at the end of it, we go ahead, good."

Mr Balls said increased journey times were "not enough to make this case", insisting the party "needs to know it really adds up".

British Chambers of Commerce director general John 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."

It is the latest in a series of moves where Labour has appeared to to distance itself 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 Mr Darling's reservations being of particular significance given that he served as transport secretary and chancellor under Labour.

A Labour source denied that the party was giving up on HS2, but said the cost of the project must be kept in check.

It comes after a massive hike in the cost of the scheme to £42.6 billion, with a further £7.5 billion for the trains.

One recent independent study put the eventual cost as high as £80 billion, while there have been reports that the Treasury is working on the cost being more than £70 billion.

The House of Commons Public Accounts Committee, in a report earlier this month, also questioned the project.

Today, HS2 Ltd, the company set up by the Government to deliver the project, said £3.5 billion 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, would be completed in 2032/33.

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."

Speaking outside a fringe event, shadow transport secretary Maria Eagle said she would not ask Mr Balls, if he became chancellor, for any more money for HS2 over what has already been allocated.

She said: "What Ed Balls has said today is that we have got a commitment to having a zero-based review of all spending because of the economy and the way in which the Government have not got us growing as a nation, and that this project is in that."

Asked about the shadow chancellor's comments, Labour peer Lord Adonis, a former transport secretary and architect of HS2, said: "I am not speaking about HS2 today, thanks."

Stop HS2 campaign manager Joe Rukin said: "We are ecstatic that the shadow chancellor is looking seriously at the cost of HS2 and whether the project is worth it, as opposed to the coalition, who seem to be saying, no matter what the cost, that we can't afford not to build it.

"As the costs of HS2 have gone up, and will continue to go up, Ed Balls is dead right to question whether HS2 is worth it.

"We have long said that it is only the vanity of politicians which is keeping this white elephant on life support. It has always been the case that there are more sensible ways to spend the sort of money being talked about, and it is irresponsible of Government not to accept this."

Bob Crow, the general secretary of the RMT union, said: "It is as clear as day that Ed Balls is clearing the way for a wholesale sell-out on high-speed rail, a move that would set rail modernisation in the UK back a generation.

"Britain is already in the slow lane when it comes to the railways and RMT will fight any plans by Ed Balls and the political class to leave us stuck there."

Former London mayor Ken Livingstone told a fringe meeting that any rail project needed to assess what could be done for the North rather than focus on people getting to London.

He said: "A lot of the policies of all parties talk about really improving the economy of the North. I suspect if you wanted to improve the economic opportunities of the north of England, a high-speed rail link with Liverpool, Manchester, Leeds and right up to Newcastle would have much greater potential, but once again everyone is focusing on coming down to London.

"I'm not being anti-London - we are just bloody well full up. We would like to see a better balanced development of the economy."

Shadow chief secretary to the Treasury Rachel Reeves said that as an MP for one of the cities set to benefit, she wanted to see a new north-south rail link but warned the Government was running out of time to get a grip on the costs.

"The costs of HS2, the risk now is that they spiral up and up and that the Government are not keeping a check," she told a fringe meeting hosted by the New Statesman magazine.

"Andrew Adonis has said that there should be a minister responsible for HS2 to get a grip on the costs and that has to happen sooner rather than later.

"We can't say we're going to have to take difficult decisions on benefits, difficult decisions on public services, but HS2 will just cost as much as it costs. That is just not acceptable and we have to get a grip.

"I'm a Member of Parliament for Leeds and I want to see a new north-south rail link but not at any cost because there are other things that money can be spent on."