The Tory Government is facing a £110bn “dead money” threat which could be costing them the ability to carry out the completion of the troubled HS2 project, according to GB News’ Business and Economics Editor Liam Halligan.
The Manchester leg of the rail plan hangs in the balance with mixed reports as to whether the Tories will scrap it or not as Rishi Sunak, along with his Chancellor Jeremy Hunt, dither over whether to commit more billions to the costly project.
The Prime Minister is facing increased pressure over the matter and has had to insist the UK is not a “laughing stock” as he failed to announce whether a decision on HS2 has been reached.
According to Halligan, the Government is stretched financially, which is hampering their ability to complete HS2.
Liam Halligan spoke about a key decision looming over the Conservative Party
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“The Government is on course to spend £110bn in debt interest this year”, he said.
“This is dead money. You don’t get any nurses or schools or hospitals for that.
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“HS2 being scrapped looks embarrassing to the outside world, to most Tory activists, they will be cock-a-hoop about it being curtailed.
“It has never been popular within the party and Labour were very supportive. There will be silent cheering going on that this runaway train of a project in terms of costs appears to have been put out for pasture.”
It comes after it was revealed that the Government spent more than it did on education on debt interest, speaking fears that too much is being borrowed at too great a cost.
The Office for Budget Responsibility (OBR) is concerned that public debt could surge as the population ages.
HS2 has already seen its costs balloonPAAn ageing population means the proportion of people of working age flops, meaning the Government takes less in tax while paying more in pensions.
The Government’s commitment to HS2 has been thrown into question by Rishi Sunak’s pledge to reduce the national debt.
Chancellor Jeremy Hunt has also set a target of getting underlying debt to fall in five years’ time.
According to Halligan, the Government’s bid to reduce debt could be undermined as a result of a potential continued commitment to HS2.
“Interest payments on the Government’s debt are the second biggest thing on their balance sheet”, he said.
“To do another train leg from London to Birmingham and to spend tens of billions on it, the return on the taxpayers cash is clearly going to be negative in economic terms.”
Levelling Up Secretary Michael Gove described HS2 as an “important project” but he said “we do need to look at value for money”.
“The costs of this project have been significantly greater than originally estimated,” he told Sky.
Rishi Sunak’s predecessors, David Cameron and Boris Johnson, have warned the Prime Minister against abandoning the Manchester leg of HS2, with the latter dubbing it “insanity”.
