HS2: Balls Signals Labour Could Pull Support

Shadow chancellor Ed Balls has signalled Labour could scrap the controversial high-speed rail project if it regains power in 2015.

Mr Balls appeared to suggest a significant weakening in his party's support for HS2 in his keynote conference speech in Brighton.

He attacked the spiralling costs of the scheme, currently estimated to be £50bn, and warned there would be no "blank cheque" if he was chancellor.

The comments will fuel fears in Tory high command that cross-party support for the project could fall apart and will ramp up tensions ahead of its own conference next week.

Mr Balls said: "Under this government, the High Speed 2 project has been totally mismanaged and the costs have shot up to £50bn.

"David Cameron and George Osborne have made clear they will go full steam ahead with this project - no matter how much the costs spiral up and up.

"They seem willing to put their own pride and vanity above best value for money for the taxpayer.

"Labour will not take this irresponsible approach. So let me be clear, 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 for any project."

The costs of HS2 have already risen to £50bn

Shadow chief secretary to the Treasury Rachel Reeves later said Labour could scrap the project if it was no longer "good value for money and costs continue to rise".

British Chambers of Commerce chief John Longworth called on Labour to clarify its position, while 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."

Lord Adonis, a former transport secretary under Gordon Brown, is an enthusiastic supporter of the scheme but Lord Mandelson and Alistair Darling have both spoken out against it.

Mr Darling, who was both transport secretary and chancellor, withdrew his support last month, warning it was "foolish" and could "easily run out of control".

The Institute of Directors has called it a "grand folly" and the Commons spending watchdog has warned its apparent benefits are dwindling as the costs rise.

Transport Secretary Patrick McLoughlin insists HS2 is essential to the UK and recent analysis for the Government suggests it will ultimately generate an extra £15bn a year for Britain.

Much of the cooling in Labour's support has stemmed from the rise in costs to £42.6bn, with a further £7.5bn for the trains.

One recent independent study put the eventual cost as high as £80bn and there were claims the Treasury was working on it being at least £70bn.

HS2 Ltd, the company set up to deliver the project, said on Monday that £3.5bn could be sliced off the overall budget by recruiting contractors at the start instead of ad hoc.

The first phase of the link, from London to Birmingham, will cut through Tory heartlands in beauty spots in the Chilterns and is due to 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 east, should be finished in 2032/33.

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