UK finance minister attacks 'utterly unacceptable' HS2 costs before rail decision

By Elizabeth Piper, Andrew MacAskill and Alistair Smout

MANCHESTER, England (Reuters) -British finance minister Jeremy Hunt attacked what he called the "utterly unacceptable" cost of Britain's HS2 high-speed railway on Tuesday after his boss, Prime Minister Rishi Sunak, said he was considering whether or not to go ahead with the project.

At the Conservative Party's annual conference in Manchester, one of the destinations for the second phase of the high-speed train link, Sunak was under pressure from businesses and his party to make a decision about the project's future.

With Conservative lawmakers saying his announcement on delaying the second phase of HS2 was already in his closing speech due on Wednesday, the prime minister said again he would take his time to make the "right decision".

Hunt said the government needed to answer why the cost of building the railway was 10 times higher than in France.

"That is totally and utterly unacceptable," Hunt said at a fringe event at the party conference. "The practical impact of that kind of cost increase is that you can't spend money on other parts of the railway infrastructure."

Business leaders in Manchester say they believe a decision has already been taken to scale back Europe's biggest infrastructure project, with one boss, who declined to be identified, describing a probable scrapping or delay of the northern leg as a "betrayal" by government.

HS2, or High Speed 2, was originally expected to link London with cities including Birmingham, Manchester and Leeds, but has already been scaled back. Rail industry leaders say that every delay means the project gets more expensive.

'INCREDIBLE POLITICAL GAFFE'

Andy Street, a Conservative elected mayor for the West Midlands region of England, said Sunak was about to "make an incredible political gaffe" and he could not understand why he had allowed the speculation to dominate the conference.

If Sunak announces in his speech that he is cancelling the railway's northern leg, Street said, the opposition Labour Party will say the Conservatives "have come to Manchester to shaft the north. Is that really what we want to offer to our opponents?"

The Labour mayor of Manchester, Andy Burnham, criticised what he called the secretive nature of the government and said people living in northern England would not forgive the government if the project was cancelled.

"The way this has been handled in this city, at this moment, is totally wrong," he told Reuters. "I am totally in the dark and I don't think I should be."

One Conservative member of parliament said:. "There are lessons we need to learn here about the comms strategy."

Sunak, who is hoping to use his party's annual conference to revive his premiership and close the gap in opinion polls with Labour before an election expected next year, has repeatedly said he is the man to take "tough decisions".

Scrapping the link to Manchester would reduce HS2 to a line between London and Birmingham. Work on this initial phase is already advanced and the government has already spent 2.3 billion pounds on the northern part of the trainline.

BALLOONING BUDGET

Even before Britain's run of double-digit inflation from late 2022 to early 2023, the HS2 budget had ballooned.

Its 2015 cost of 55.7 billion pounds ($68 billion) reached 98 billion pounds by 2019, and a 2020 review showed that could rise to 106 billion pounds.

Jonathan Birkby, a 33-year-old mortgage adviser in Manchester, said that if the railway were cut it would show the government was prioritising the more affluent parts of southern England.

"They don’t really care about us up here," he said.

Sunak's Conservatives won the last election in 2019, in part with the help of traditionally Labour-supporting voters who switched to the governing party over its stance on Brexit.

(Reporting by Elizabeth Piper, Andrew MacAskill, Alistair Smout, Sachin Ravikumar, Sarah Young; editing by Kate Holton, Bernadette Baum, Christina Fincher and Gareth Jones)