finance

Boris Johnson’s broken promises to northern England


Levelling up disadvantaged regions has become the totemic slogan of Boris Johnson’s Conservative government. Its pledges are now crashing into the realities of cost. Twice in a week the government has broken or rowed back from promises — scrapping parts of the HS2 and Northern Powerhouse Rail projects, and scaling back social care support for poorer households. In both cases, the impact will be felt most keenly in northern England. The political cost, especially in some formerly Labour-held areas that helped Johnson win his landslide 2019 election victory, may be considerable.

Big capital projects must be rigorously compared, in cost-benefit terms, with other investments that would boost productivity. HS2 has become more problematic as cost estimates have ballooned to more than £100bn. The government’s £96bn Integrated Rail Plan — still a huge investment, even if it is not all new money — is estimated by northern leaders to cut £36bn from the cost of the full HS2 and their vision of NPR. But the risk of false economies is high.

Excessive emphasis has long been placed on both projects’ ability to slash journey times. The more powerful argument is capacity. Britain needs more rail lines to take cars and freight off roads — and passengers off short-haul flights — to meet net zero pledges. The East and West Coast main lines, built in the 19th century, are at full capacity, forced to thread fast inter-city services between local stopping trains.

Building new corridors devoted to high-speed, long-distance traffic frees the east and west coast routes to carry many more local and freight services. The case for a new, east-west Liverpool-Manchester-Leeds line is similar.

Existing lines’ speed and capacity can be increased through engineering improvements and digital signalling. This can deliver results faster and more cheaply — the government’s calculus in scrapping HS2’s eastern leg to Leeds, and parts of NPR. The revised plans will produce winners — some areas served by upgraded tracks — and losers, above all Bradford and Leeds.

But upgrades mean years of disruption while work is done, and are hard to make work. Government claims on the speed and frequency of trains its scaled-down NPR will carry make some bold assumptions about what can be achieved by modernising sections of Victorian-era track. Yet fast, frequent links between northern cities are crucial to achieving agglomeration effects, reducing logistics and skills gaps, so the region can become a single economic unit competing with the south-east.

Upgrades also cannot achieve the capacity increases of new lines. Come the 2040s, when the original HS2 and NPR would have been completed, upgraded lines may be clogged again. That, however, is not a problem this or the next government will confront.

Given a narrative of “betrayal” taking hold in parts of northern England it is odd that the government chose, hours before its rail announcement, to publish details of its social care rules from 2023. Under the new plans, lower-asset households will pay a proportion of their care costs for longer before hitting a cap of £86,000, when state support kicks in. The effect is that pensioners with expensive homes in southern England will retain a much higher proportion of their assets than those in the north, where house prices are lower.

Since the government has some tax headroom, this looks like Treasury salami-slicing. Chancellor Rishi Sunak is committed to preserving the Tory reputation for prudent financial stewardship. But the way this is being done means the government will have to work much harder to persuade people in the north that it really is committed to levelling up — and not the opposite.



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