All capital spending under review ahead of Jeremy Hunt’s autumn statement

Grant Shapps hints scaling back of Northern Powerhouse Rail could be among cost-saving measures

All capital spending is under review before Jeremy Hunt’s autumn statement with a view to making billions in savings on infrastructure projects, with a senior cabinet minister hinting a key northern rail line could be scaled back.

No 10 denied reports on Friday that plans for the new Sizewell C nuclear power station could be scrapped, but big energy projects along with every other major infrastructure plan such as HS2 and Northern Powerhouse Rail will have costs reviewed.

The biggest ticket item under threat appears to be the northern rail scheme, which was a manifesto promise in the 2019 election. Grant Shapps told the BBC: “The line itself can deliver a 33-minute journey from Manchester to Leeds, quadruple nearly the capacity of that line, and do so without having to wait an extra 20 years beyond the delivery of what the upgrade can do.

“There wasn’t really much point in going and blasting new tunnels through the Pennines. It’s not true to say we’re not delivering on what we said we would do on levelling up the north.”

Hunt is looking at cuts to the £100bn-plus capital spending budget as he seeks to fill an approximately £50bn black hole in the public finances at his fiscal event on 17 November. “We are looking at all capital spending as part of the autumn statement,” one Whitehall source said.

Asked last week whether HS2, which is over budget, could also be subject to cuts, Michael Gove, the levelling up secretary, said: “I am sure everything will be reviewed.”

The chancellor is also examining the case for a rise in capital gains and dividend tax, including the headline rate and allowances, as well as freezing the pension lifetime allowance for two years, which was first reported by the Telegraph.

Nevertheless, the Institute for Government has said that approaches such as “cutting capital spending, preventative services or lower-profile services – could be counterproductive, reducing productivity or increasing pressure on other services”, noting that maintenance backlog costs for schools, the NHS, courts and prisons already stand at £23.7bn.

In an interview with the Times, Rishi Sunak warned the public that government “cannot do everything”. The prime minister added: “You have to make sure that as you’re doing things, you’re doing it in a way that’s fair and being honest with people that, of course, no government can fix every problem. Life is not that simple.”

The approach of cutting back on capital spending and cancelling tax cuts is the opposite to that of Liz Truss’s government, which was focused on growth at all costs. The Tory MP John Redwood, one of the backers of her economic programme, said on Friday: “I read the government is thinking of cutting investment. It should not cut projects to produce more energy as we are very short of domestic supply. It should cut the massively expensive HS2, where we have plenty of rail capacity for post-Covid demand.”

Labour cautioned the government against reneging on the party’s promises to the north of England when it comes to spending on rail projects.

Louise Haigh, the shadow transport secretary, accused the government of having “crashed the economy” and then making the north pay for the fallout. “A lost decade of broken Tory promises has left the north with second-rate infrastructure, and rail services in crisis, holding the economy back,” she said.

“Rishi Sunak told voters he would deliver Northern Powerhouse Rail, before abandoning it at the first opportunity. This Conservative government have no mandate, no platform and no plan – they crashed the economy, and now they want northern communities to pay the price.”

Ed Miliband, the shadow climate secretary, also told the government it would be “shortsighted” not to go ahead with Sizewell C, although Downing Street said this was not in doubt.

A senior Treasury source had told the BBC: “We are reviewing every major project – including Sizewell C.”

But No 10 and others later said it was not being scrapped or delayed. A government spokesperson said it was “seeking to approve at least one large-scale nuclear project in the next few years”.

Contributor

Rowena Mason Whitehall editor

The GuardianTramp

Related Content

Article image
‘Foulest medicine’: Tory press lashes out at Jeremy Hunt’s autumn statement
Headlines in traditionally friendly Daily Mail, Sun and Telegraph make for tough reading for chancellor

Aubrey Allegretti Political correspondent

18, Nov, 2022 @11:01 AM

Article image
No 10 denies ministers seeking political fight with rail unions
Denial comes as language toughens on both sides and head of RMT again warns of de facto general strike

Peter Walker, Pippa Crerar and Tom Ambrose

18, Aug, 2022 @6:34 PM

Article image
Autumn statement: which tax rises and spending cuts are most likely?
The potential impact of the chancellor’s various options and which ones we think he will pursue

Peter Walker and Phillip Inman

12, Nov, 2022 @6:00 AM

Article image
Jeremy Hunt faces rebellion on Tory right over autumn statement
Esther McVey, John Redwood and Richard Drax among backbench critics of chancellor’s tax rises

Rowena Mason Whitehall editor

18, Nov, 2022 @4:15 PM

Article image
Autumn statement and spending review – the key points at a glance
George Osborne has unveiled the results of the government’s spending review; here we analyse the key points in 25 main areas

Jill Treanor and Rowena Mason

25, Nov, 2015 @3:55 PM

Article image
Labour lambasts autumn statement but Tory dissent is muted
Shadow chancellor attacks ‘crisis made in Downing Street’ but there are few signs of anger on Tory benches

Peter Walker Political correspondent

17, Nov, 2022 @4:25 PM

Article image
Labour demands action over Avanti West Coast reduced train service
Transport secretary urged to press for restoration of full timetable or strip operator of contract after 12 cancellations on Monday

Peter Walker Political correspondent

15, Aug, 2022 @9:30 PM

Article image
The pain may be partially postponed, but Hunt’s statement will win him few friends
Analysis: with half of all British households set to be worse off next year, many Tory MPs fear voters will turn against them

Pippa Crerar Political editor

17, Nov, 2022 @7:39 PM

Article image
Stark north-south divide in railway reliability, UK figures reveal
Labour demands government close loophole of pre-emptive cancellations

Helen Pidd North of England editor

03, Dec, 2022 @8:00 AM

Article image
Sunak set to end ban on new onshore windfarms in face of Tory rebellion
Deal reached that paves way for communities in England to authorise projects without unanimous support

Aubrey Allegretti and Helena Horton

06, Dec, 2022 @7:31 PM