11 February 2020

Boris Johnson has approved HS2. But can the government afford it?

The Prime Minister has a penchant for grands projets, but it’s hard to see how he’ll raise the finances with which to deliver them.

By George Grylls

Boris Johnson will today give the go-ahead to HS2. Far from offering his unequivocal support to the controversial high-speed rail project, it is expected that the Prime Minister will approve only the first phase of the line, linking London to Birmingham. A decision on the onward connections to Leeds and Manchester has been delayed.

Much will be made of the potential for Tory infighting. Dominic Cummings is an outspoken critic of HS2. More importantly, there is a coalition of around 60 dissenting voices on the Tory backbenches. There are the committed Thatcherites who see the £106bn rail link as a white elephant. There are the old-fashioned Nimbyists, through whose constituencies the train is supposed to speed. Then, among the new crop of northern MPs, there are some who believe the money could be better spent on upgrading local trains and buses.

But Johnson has calculated that he can see off the divisions. To the new intake, Johnson has promised £5bn for bus and cycle routes. Meanwhile, even the Thatcherite monetarists have taken the hints from the Bank of England. Privately, although they would prefer to see the money spent elsewhere, some admit the time is right for “a dose of Keynesianism” given the continued low-interest rates.

More interesting is the emerging narrative of grands projets. Yesterday, along with HS2, No 10 floated a proposal to build a bridge between Northern Ireland and Scotland. Clearly the Johnsonian mayoralty – the buses, the cable car and, yes, the garden bridge – should be taken as a template for his premiership. The only problem is that big infrastructure comes with a big price tag, and Johnson has very little wriggle room.

The Prime Minister is bound by a promise to freeze income tax, VAT and national insurance. Over the weekend, pension reforms and a mansion tax were briefly taken out of the otherwise bare cupboard, only for them to be returned amid howls of Tory protest. Then there is Brexit, which is at least partly to blame for the £12bn black hole in Sajid Javid’s finances. Johnson would like his premiership to be marked with shiny new toys, but it is not at all clear that he can afford them.