ALEX BRUMMER: The madness of scrapping HS2

Britain’s biggest economic challenge is boosting productivity and increasing the incomes of the country’s working population. Tax incentives are part of the solution, but investment in infrastructure is essential.

All the engines of our political system are focused on short-term dividends.

It is no surprise that, as the Autumn Statement approaches, Chancellor Jeremy Hunt is exploring ways to unlock resources to prepare for tax reforms.

The three Hs – Hinkley, HS2 and a third runway at Heathrow – must all be delivered to boost Britain globally. Only the Hinkley Point supernuclear power station in Somerset offers certainty.

HS2’s enemies, a combination of Nimby’s home county residents, environmental campaigners and supporters of fixing railways and commuter roads, will be angry if Rishi Sunak and Hunt bring down the guillotine on the Birmingham-Manchester route.

Escalating costs (more than twice the original estimate of £33 billion) have already led to the sacrifice of the eastern side to Leeds and the delay of a major terminal at Euston.

The long-term waste associated with abandoning major infrastructure is enormous. It took a colossal effort by the last Labor government to preserve the fast rail link to the Channel Tunnel and the brilliant renovation of St Pancras, of which the country can be proud.

Likewise, it took enormous courage to persevere with the Elizabeth (Crossrail) line, but the difference it made to traveling in the South East is immeasurable. The economic value added in new and rebuilt stations contributed to prosperity.

There is a lot of talk about how in the age of AI and social media the time saved on the HS2 journey to Birmingham and Manchester will not be significant.

In Japan and France, the development of high-speed rail transport has led to fabulous economic development along the routes. It’s no surprise that Birmingham attracts more new business investment than any other UK conurbation, adding 36 per cent to the region’s GDP over the last decade, or £29 billion.

Airport problems: Heathrow operates with fewer runways than its main continental rivals

This is partly the HS2 halo effect. Manchester and bus stations along the route could expect the same.

The third runway H, the new runway at Heathrow, was canceled by Covid-19. Heathrow has now returned to pre-Covid passenger traffic. But it operates with fewer runways than its main continental rivals.

All preparatory work for a third runway has been completed and the case for additional capacity is stronger than ever. The zero carbon lobby must recognize that air traffic is not going to disappear. What needs to change is the sustainability of aircraft and incentives to use new, greener fuel sources.

Heathrow might be expected to hold back its ambitions until after the general election. An additional track is essential if the vision of Britain’s tilt towards the Indo-Pacific is to be realised. HS2, if built, will lift up neglected areas of the UK.

Armed robbery

Nasdaq’s happy, contrived photos, celebrating Arm Holdings’ pop return to the public markets, are one reason New York does IPOs better than London. The United States is the land of razzmatazz, so even if Arm stock isn’t shiny anymore, it will be gold for investment bankers as they launch next-generation tech floats.

Here in the UK, we can only note with deep regret that our flagship technology pioneer based in Cambridge has deserted these shores.

Arm CEO René Haas and his high-ranking colleagues parked themselves in the United States. And even if intellectual property and science remain in the UK, the question is for how long.

We must not forget who is responsible for the fiasco of losing Arm to the UK. Theresa May and her chancellor Philip Hammond treated SoftBank boss Masayoshi Son like a conquering hero in 2016, welcomed him to Downing Street and did nothing to protect Arm’s integrity. Only one shareholder of the foundation, Baillie Gifford, opposed the transaction. So infuriating and shameful.

X factor

When Carolyn McCall announced that ITV would spend £160m to develop ITVX, its own streaming services, shares sank.

The truth is that ITVX is a lifeline for the terrestrial broadcaster at a time when linear advertising is under pressure. In the first six months of 2023, the number of active users jumped 29 percent to 12.5 million and “wait time” is increasing.

UK long investors need to start looking beyond the next dividend check.