The real reason Rishi Sunak cancelled HS2: the political economy of high speed rail

Sunak’s decision shows that he lives in a world of his own. But we all live in a different world to the one in which we embarked on HS2

It might end up being the thing Rishi Sunak’s premiership is most remembered for: he came, he saw, he cancelled. But has anybody really tried to understand why Sunak has decided to abandon the bulk of the plan for a high speed rail link between London, Birmingham and Manchester?

Since the decision obscured whatever it is that Sunak was trying to communicate at last week’s Conservative Party conference, we can conclude either that Sunak is a colossally inept politician, or that his commitment to a low speed and limited capacity inter-city railway system is serious and sincere.

Both of these explanations may of course be partially true, but it is worth dwelling for a moment on the latter, offering Sunak the benefit of the doubt that he believes he is doing the right thing. In this post, therefore, I explore the political and economic rationale for cancelling HS2. Get ready for some class warfare.

Is HS2 unpopular?

The political explanation for Sunak’s decision is disarmingly simple, but has received little media attention in the last week: ostensibly, there is limited support for HS2 among the electorate.

As YouGov’s data shows, across Britain, 26% of people support HS2, but 36% are opposed. Labour and Conservative voters both tend to oppose HS2. Londoners tend to support HS2, but there is opposition everywhere else in England, especially in the Midlands. Higher income voters (the ABC1s) tend to oppose HS2, and so do lower income voters (the C2DEs).

And one thing not depicted in the chart above is that opposition to HS2 is hard, and support rather softer. More than half of HS2’s opponents across Britain are strongly opposed, while less than a third of supporters are strongly supportive.

Of course, it is always dangerous for politicians to accept at face value what voters tell them. Preference and salience are different things: I may prefer x to happen, but not strongly enough to change my vote over it, especially if the party promising x also plan to do y and z, which I am not in favour of.

The fact that the vast majority of people do not regularly use trains – and certainly not to travel across the country – is part of the reason they are opposed to enormous investments in rail infrastructure. On average people in England make fifteen rail journeys each year, representing around 8% of the miles they travel (80% of travelling is by car or van).

However, this is also part of the reason that they do not think about this issue very much, either way. There are more people in the ‘don’t know’ or ‘neither’ camp than either supportive of or opposed to HS2.

Furthermore, you can be opposed in theory to HS2, but be equally concerned about what abandoning something which has been a flagship policy for more than a decade, with many billions already spent, tells you about the competence of a government.

And high speed rail just kinda feels like something governments should be doing – knowing that most other countries are better than us at this kind of thing – even if the benefit to you is not immediately obvious. Only 25% of people believe that Sunak will reinvest the £36 billion savings in alternative rail projects in the North.

The economy according to Rishi Sunak

It is clear that this saving is a motivating factor for Sunak. Even if the Network North plan could be relied upon (spoiler: it cannot), the new investment would roll out much more slowly, meaning at least some of the £36 billion is available to finance pre-election tax cuts next year.

However, there is a deeper economic rationale underpinning Sunak’s decision: the economic future he envisages (and indeed the economy he inhabits) does not require very much inter-city travel.

For Sunak, the economy consists of only two realms: first, financial services and big tech, concentrated in large cities where the workforce already lives, and of course increasingly amenable to remote working so that little travel is necessary. (Executives may need to occasionally travel to their country estates, corporate retreats or parliamentary constituencies, but that’s what helicopters are for.)

And with any luck, AI will soon negate the need for workers altogether, let alone commuters.

The second realm is the blob of locally-rooted service industries, including well-paid professionals such as his pharmacist mum, but mostly consisting of low-paid retail and hospitality jobs. Travelling by train is not essential to this economy.

Sunak is wrong about all of this too, but… not completely wrong.

HS2 and the polycrisis

The economic case for HS2 warrants further exploration. To be clear, I support HS2, no matter what, given the opportunity it presents to reduce car and air travel, even if only marginally. There is almost no investment too expensive when the consequence of not investing is climate catastrophe.

However, the rise of remote working associated with the COVID-19 pandemic means that people are already travelling for work less than when HS2 was envisaged.

The number of rail passenger journeys is 38% lower than before the pandemic (and note that this was measured before the current wave of rail strikes commenced). This shift is a big part of why cost-benefit analysis now tells us that HS2 is lower value for money than previously believed.

And of course, it will in future help to explain why Sunak, if re-elected, will probably not proceed with the Network North alternative either.

But there is clearly a more holistic account of the economic benefits of large-scale rail investment available. As the Northern Powerhouse Partnership has explained, the economic case for HS2 rests upon seeing rail investment as part of a wider programme of skills investment. Modelling based narrowly on journey time impacts will show declining value from a base of fewer journeys. Yet we need to simultaneously build a high speed rail network and the high-skilled jobs that will make more use of it.

HS2 and other stuttering projects such as Northern Powerhouse Rail are therefore necessary to arrest the UK’s economic stagnation. Not sufficient – we must also use industrial policy and public investment to support the foundational economy, which for the most part does not require inter-city rail travel – but necessary nevertheless.

The progressive case for HS2

We cannot assume that everyone benefits equally when ‘the economy’ prospers. It is possible to see the cancellation of HS2 as a class issue.

If combined with an uplift in skills investment, high speed rail gives workers more choice over where they work – and therefore more bargaining power.

In contrast, the intra-city rail projects contained in Network North would help to create a larger pool of lower-paid workers for employers to draw upon – undermining the bargaining power of these workers.

Do not get me wrong: I generally favour any and all improvements to public transport, to make all our lives more liveable, and all our industries more productive. However, for rail investment to have a progressive impact overall, we need high speed rail alongside better local rail services, and for both to be encased within a wider programme of supply-side investment.

The jobs of the future that will benefit from high speed rail are to a large extent engineering jobs, focused on renewable energy and clean infrastructure. High speed rail is part of how we ensure green growth is inclusive growth.

The danger of course is that the government is bringing to life the distorted economic reality that Rishi Sunak inhabits. The case for a high speed rail project where the benefits depend on skills upgrading, a long-term industrial strategy and a commitment to decarbonisation, is obviously weaker if you do not simultaneously do the skills upgrading, industrial strategy or decarbonisation bits.

Without HS2 and other large-scale rail improvements, the UK has little choice but to lean into Sunak’s economic vision, with an elite of finance and tech workers commuting short distances, if at all, serviced by a proletariat rooted in place.

That is the challenge therefore for progressives, in the North and elsewhere, disappointed by Sunak’s decision. If we want HS2, we need to work it. Paint a picture of how it would enhance our lives, and transform our economy. We might then start to see the electorate’s indifference to HS2 ebb away.