Rishi Sunak’s transport cuts are a false economy – and the whole country will pay the price

The Chancellor’s self-imposed straitjacket on infrastructure spending means that difficult decisions need to be made on capital projects, however valuable they are.

By Stephen Bush

Photo by Chris Ratcliffe/Bloomberg via Getty Images

The Birmingham to Leeds leg of HS2 will be scrapped, with the money instead diverted to local rail improvements, while Transport for London has announced that it will have to cut bus and train services and halt its infrastructure programmes due to the looming end of its central government funding next month. That means cuts both to public transport and to measures encouraging more walking and cycling in the capital.

What connects both decisions is Rishi Sunak’s self-imposed straitjacket on infrastructure spending: keeping that at 3 per cent of GDP means that difficult decisions need to be made on capital projects. Given the UK’s urgent need to continue cutting carbon emissions, that target is far too tight: we need the Birmingham to Leeds leg of HS2 and local rail improvements, we need cycle superhighways and to maintain the current level of London Underground services, and much else besides.

Transport Secretary Grant Shapps announces the government’s “integrated rail plan” to parliament.

What also connects them is crude electoral politics: although scrapping the Birmingham to Leeds leg of HS2 does harm “the north”, it also means avoiding large-scale construction projects in Ashfield, Bolsover, North East Derbyshire, Rother Valley and other marginal Conservative constituencies in South Yorkshire and the Midlands, where HS2 means years of building work but no new train station. And scrapping infrastructure projects in London, thus slowing or reversing the capital’s economic recovery, does harm to the whole country because London’s tax revenues are redistributed elsewhere. But as both Andy Burnham and Boris Johnson could tell you, no one ever goes broke in English politics running against “that London”.

The thing is though, Rother Valley does benefit from a HS2 train that increases connectivity between Sheffield and Birmingham. Ashfield does, in fact, pay a price if London’s recovery slows. And one reason why Sunak faces difficult choices on tax and spend is that England’s great cities are relatively unproductive. If all these cities produced the same amount of GVA (gross value added) per head as London, then Sunak would have many more billions of tax revenue to play with, and many of the unpopular measures in his last Budget could have been avoided.

Now it may be that in 2024, smaller and more eye-catching infrastructure projects – a play park here, a new road there – are more than enough to send the message to the Conservative Party’s new voters that the government is keeping its promises and delivering for them. But a Tory government that wants to wield power and not just retain office does, at some point, need to reckon with the fact that the success of England’s cities is England’s success, even if the cities themselves continue to obstinately return Labour MPs to parliament.