Ed Balls statement puts Labour commitment to HS2 under threat.

Shadow Chancellor Ed Balls MP, a long-time critic of HS2 has again raised the question of whether or not a new Labour Government would scrap the project, after telling the BBC that there would be a manifesto commitment from the party not to borrow money for infrastructure projects.

The current estimate for the capital spend of HS2 is £42.6billion, with the construction period due to take 15 years, meaning it is unlikely that the approximate £3bn per year is intended to come from any source other than increased borrowing. An additional £7.5bn would be required for rolling stock.

Mr Balls started rumours running that Labour were ready to drop support for the project when in his 2013 conference speech he said:

“In tough times, when there is less money around and a big deficit to get down, there will be no blank cheque from me as a Labour Chancellor for this project, or any other project. The question is not just whether a new high speed line is a good idea or a bad idea, but whether it is the best way to spend fifty billion pounds for the future of our country.”

He also went on to say that the costs had spiralled out of control, and questioned whether the claimed benefits are really there. However, as confirmed at Labour conference this year by Lord Adonis, strong lobbying from Northern council leaders dashed his hopes for a Labour u-turn on HS2 at the time.

However, since then, the option of HS3 bringing better Trans-Pennine links has been put on the table, with council and business leaders and from Northern cities telling the House of Lords Economic Affairs Committee recently that if there was a choice between HS2 and HS3, they would chose HS3.

Following the Autumn Statement, Mr Balls told Andrew Neill on the BBC Daily Politics;

“There is a case for capital spending within the overall budget. In this parliament the Chancellors rules, ours in the past were to say, consistent with the national debt falling, you could have some borrowing for investment, but I’ve also said very clearly to our party that in our manifesto there will be no plans for additional spending for infrastructure paid for by extra borrowing. With these deficit figures so big, the priority has to be to get the current budget into surplus and the national debt falling.”

After he had responded to a question from Robert Peston asking him where cuts would come from, he continued:

“I have said to you today, and very clearly, no promises which cannot be paid for, no unfunded spending commitments, no borrowing for capital spending in our manifesto, no spending unless taxes are raised to pay for it, or the spending is cut to pay for it.”

Stop HS2 Campaign Manager Joe Rukin responded:

“Ed Balls seems to be setting out his stall again that getting national debt down and building HS2 are two incompatible objectives. If the Shadow Chancellor is right and the Labour Manifesto will have a commitment not to take on new borrowing to pay for capital infrastructure projects, then that is surely an end to their support for HS2. The chance of getting private companies to invest in the building HS2 is zero, so without cuts elsewhere, HS2 would have to be funded via borrowing.”

“Some HS2 proponents have claimed that the current spending on Crossrail would simply transfer to HS2, but only 40% of the spending on Crossrail is coming from the Department for Transport. DfT funding of £5bn over 11 years for Crossrail works out at less than £500m per year, but HS2 would need around £3bn per year for 15 years, and that is too big a shortfall to make up.”

“No politician would ever suggest that people should have to endure more cuts to pay for HS2, so if the money isn’t going to come from extra borrowing, and it isn’t going to come from private investors, then it simply isn’t going to come. Last time Mr Balls suggested dropping HS2, Northern councillors ganged up on him and Labour kept their support. Now HS3 is on the table, which is a fraction of the cost and Northern leaders say would be far more useful to them, it would seem the writing is on the wall for Labour support of this vanity project.”