Jeremy Hunt says ministers committed to HS2 running ‘all the way to Euston’ – business live

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Jeremy Hunt has signalled tax cuts will only come “when the time is right” and be matched by “spending restraint”, as he sought to temper restive Conservative backbenchers’ expectations ahead of the budget in March.

However, the chancellor hoped to inject what he said was much-needed optimism about the country’s future, saying he wanted Britain to “have nothing less than the most competitive tax regime of any major country”.

He has finally publicly stated that he has never paid a tax penalty, when asked by BBC News – the third time he has been asked that question today.

I don’t normally comment about my own tax records.

But, I am chancellor, so, for the record: I haven’t paid a HMRC fine.

Back to HS2. Jeremy Hunt has now said that ministers are committed to HS2 going through to central London.

In an interview he said did not see “any conceivable circumstances” in which HS2 would not run to its planned Euston terminus, following reports that because of cost cutting measures, the north-south railway route could terminate to the west of London.

Asked by BBC News after his Bloomberg speech whether ministers were committed to HS2 going “all the way to Euston”, said:

Yes we are.

And I don’t see any conceivable circumstances in which that would not end up at Euston.

And indeed I prioritised HS2 in the autumn statement. We have not got a good record in this country of delivering complex, expensive infrastructure quickly, but I’m incredibly proud that, for the first time in this last decade, under a Conservative government, we have shovels in the ground building HS2 and we’re going to make it happen.

Nadhim Zahawi, the beleaguered former chancellor and current chair of the Conservative party, is under pressure to reveal the source of about ?30m of unsecured loans made to his wife’s UK property company.

The loans were used to finance parts of a large UK property portfolio, reported last year as worth about ?100m, and were declared in company accounts which span a period from 2017 to 2021 but give no information about who the lenders are.

The calls for greater transparency are the latest request for the former chancellor to explain how his family’s fortune has been managed, after he became embroiled in a mounting controversy over his tax affairs that prompted the government to launch an ethics investigation.

Bestway, the owner of the Costcutter chain, has taken a near ?200m stake in Sainsbury’s and said it could seek to increase its stake further.

The privately owned Bestway, which is one of the UK’s largest grocery wholesalers and also owns the country’s third-largest pharmacy chain and more than 2,700 convenience stores under the Costcutter and Best-one brands, has bought almost 81m shares, giving it a 3.45% stake in the UK’s second-largest supermarket chain.

“Bestway Group intends to hold its shares in Sainsbury’s for investment purposes and looks forward to supporting the executive management team,” the company said. “Bestway Group may look to make further market purchases of Sainsbury’s shares from time to time, subject to availability and price.”

Rachel Reeves, Labour’s shadow chancellor, has responded to Jeremy Hunt’s speech this morning. She said:

Britain has so much potential.

From creating good, new jobs in the industries of the future, to making our country the best place to start and grow a business, Labour’s proper plan for growth will grasp those opportunities and make our economy stronger to face up to the challenges.

13 years of Tory economic failure have left living standards and growth on the floor, crashed our economy, and driven up mortgages and bills.

The Tories have no plan for now, and no plan for the future. It’s time for a Labour government that will build a better Britain.

At the Bloomberg event, during the Q&A session Jeremy Hunt also reiterated his commitment to the HS2 rail project, without commenting specifically on whether HS2 will run all the way through to London Euston. He said:

HS2 was a specific priority for me in the autumn statement.

It is a source of national embarrassment that the Japanese opened their first high speed line between Tokyo ands Osaka in 1964, two years before I was born.

And I am incredibly proud that under a Conservative government, for the first time, we have shovels in the ground for the London to Birmingham part of HS2. We are absolutely committed to showing we can deliver big important infrastructure projects.

By the way I think they are incredibly important for levelling up.

The boss of the UK motor and home insurer Direct Line, Penny James, has stepped down, a fortnight after the company released a fresh profit warning and ditched its dividend.

James, who joined Direct Line as finance chief in late 2017, became chief executive in May 2019 and steered the insurer during the pandemic when the number of drivers on the road fell sharply, leading to fewer accidents and insurance claims.

More recently, the insurer has hit a rough patch. A spell of freezing cold weather in December pushed up the cost of home claims, exacerbated by the soaring cost of motor claims, and sent its shares sharply lower.

The company appointed chief commercial officer Jon Greenwood as acting CEO.

Here is some analysis from our transport correspondent Gwyn Topham.

There is only so long you can prune the branches of a major infrastructure project. Now the government is considering hacking away at the roots of HS2.

The high-speed network was always a likely target as inflation bit. Its budget is designed to be uprated with inflation – it was originally set at 2011 prices, at a hugely optimistic ?32bn. But, as with rail salaries, real-terms increases at higher numbers are politically challenging, and building materials and costs have gone up above the wider 10%. Few would want to simply say yes to what Lord Berkeley today claimed could spin up to ?160bn.

Following proposals in the 2019 Oakervee review, HS2 planned to terminate services at Old Oak Common for the first few years of operation in c2030. Now, the Sun reports, that could be a permanent stop.

Euston has long been shrouded in doubt, given problems in revamping the station and running mainline services, and with supporting projects in central London axed for cost since the initial HS2 vision was first unveiled. A direct link to the existing high-speed network, HS1, was scrapped, while plans for fast pedestrian connections between Euston and St Pancras never got off the drawing board. Transport for London warned that Crossrail 2 would be crucial to stop Euston’s Tube being overwhelmed by HS2 passengers, but that line was also jettisoned.

Tunnels are being dug west from Old Oak Common but not yet east into the city. So stopping at the west London hub has tempting short-term savings, but with bigger long-term benefits lost – for the north and south of England – and with even less value for the money spent. The idea that HS2 never serves Euston would be sickening for many Camden residents and businesses who saw homes and premises bulldozed.

The government is more likely to plough on – but possibly delay yet again, at a time when rail is already swallowing so much money, until passengers return. To truncate HS2 permanently risks making it less a white elephant than some extremely expensive tusks.

The chancellor said said the public sector has rebounded more slowly from the pandemic than he wanted, but hit out at “declinism”.

In a speech to City executives at an event hosted by Bloomberg in London, he said:

Declinism about Britain is just wrong. It’s always been wrong in the past, and it’s wrong today.

Some of the gloom is based on statistics that don’t reflect the whole picture. Like every G7 country, our growth was slower in the years after the financial crisis than before it.

But since 2010, the UK has grown faster than France, Japan and Italy. Not at the bottom, but right in the middle of the pack.

Since the Brexit referendum, we’ve grown at about the same rate as Germany. Yes, we’ve not returned to pre-pandemic employment or output levels, but an economy that contracted 20% in a pandemic, still has nearly the lowest unemployment for half a century.

Whilst our public sector continues to recover more slowly than we would like from the pandemic strengthening the case for reform, our private sector has grown 7.5% in the last year.

More on his speech on our politics live blog:

Jeremy Hunt has said the “best tax cut right now is a cut in inflation”, arguing that reducing inflation was the “only sustainable way to restore industrial harmony” in Britain. The UK chancellor has come under pressure to announce tax cuts in his budget on 15 March.

In a speech at Bloomberg’s London headquarters, Hunt said:

My party understands better than others the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth.

Another Conservative insight is that risk-taking by individuals and businesses can only happen when governments provide economic and financial stability.

So the best tax cut right now is a cut in inflation.

And the plan I set out in the autumn statement tackles that root cause of instability in the British economy.

The prime minister talked about halving inflation as one of his five key priorities and doing so is the only sustainable way to restore industrial harmony.

Tony Smith, policy executive at Birmingham City Council, has tweeted about Lord Berkeley’s earlier comments:

Earlier this week, the Department of Transport’s permanent secretary warned that rapidly rising prices of construction materials were putting a strain on capital spending, and could mean “quite tough decisions” on the phasing and delivery of projects, including HS2.

Bernadette Kelly told the House of Commons transport select committee that ministers would be taking decisions “over the next few weeks” on how the pressures would be managed. She told MPs:

It is likely that there will be some quite tough decisions that need to be taken then, including around the phasing and delivery of all our capital programmes, including HS2.

Asked about company executives playing golf on Fridays and joking about only working Tuesday, Wednesday and Thursday, and the impact on Britain’s economic growth, the CBI boss, Tony Danker, said:

You want me to launch an all out attack on Friday golfers?

Look. Yeah, you might be right. I think the whole world of work is totally gone crazy. We have no idea where it’s going to land.

The head of Britain’s biggest business group claims most bosses “secretly” want their staff to come back to the office.

Tony Danker, director general of the CBI, said the “whole world of work” had “gone crazy” since the pandemic. During lockdowns, office workers were forced to work from home, and since restrictions eased, many have continued to work at least partly from home.

Many companies have changed their policies on remote working, allowing hybrid working, although in recent months some have asked staff to return to the office. For example, Disney’s boss Bob Iger has told employees who are working from home to return to the office four days a week from the start of March. Other US businesses – Snap, Tesla and Goldman Sachs – have also asked their staff to come back to the office

Speaking on BBC radio 4’s Political Thinking with Nick Robinson, the boss of the CBI said he had “no idea” where working patterns were “going to land”.

You ask most bosses, everybody secretly wants everyone to come back into the office.

I just don’t think that’s going to happen overnight. I think we are all coping with this….but we’re going to be talking about this for a few years.

According to the Office for National Statistics, the number of people who are economically inactive – people aged between 16 and 64 not looking for work – has risen.

The House of Lords’ economic affairs committee said retirement, increased sickness, changes to migration and the UK’s aging population were contributing to labour shortages.

Danker said he wanted to create “pathways” for people to return to work for those who were on universal credit, or had been unable to work due to sickness.

We are going to work with companies to make sure that they can bring you health support and wraparound care to absorb yourself back into work.

Henry Murison, chief executive of the Northern Powerhouse Partnership which supports HS2, said about the reports:

It’s very disappointing and I don’t think it should reflect the government’s settled view.

We’ve already had in the Boris Johnson era on bad advice from a small number of advisers close to him unfortunately the lopping off of places like Leeds where I’m stood right now.

Every time this happens, every time the opponents find an excuse to lop bits off HS2, they turn around and say this project isn’t value for money. Every time we take away from the network we make the rest of the money we’re spending less worth it.

Speaking on the Today programme, he said not running HS2 through to central London would be “damaging to the north of England as well as London” and affect UK productivity. He suggested other ways to save money, by leasing the HS2 trains, instead of buying them.

I believe Manchester will still get its line but I’m interested in what’s right for the whole of the UK. Even for the north of England, not going to Euston has a number of significant disadvantages. Because people in the north of England, people in Birmingham, will want to get access to central London, that’s what they currently have through the normal mainland network… You do need these stations to be centrally located.

The intellectual argument, and the economic argument is that we need to raise UK productivity, it’s terribly low and that’s why I don’t believe this is ever going to happen. Jeremy Hunt is a huge supporter of HS2 and there are other ways to save the money.

For example we’re buying the trains for HS2, we lease every other train in the country, for every other route, why on earth are we having to report a cost for buying trains? No other rail project has to do that. There are ways to deal with the current inflationary pressures.

It’s incredibly short term to take a project over decades and rip it apart to solve an accounting problem.

In the end the benefits of this to UK plc will still far outweigh the costs but if we keep salami slicing it fundamentally we will not get anywhere the transformational change that the whole of the UK was promised.

Lord Berkeley, who has been very critical of HS2 and was deputy chair of a government review into the project, has been on radio 4’s Today programme. Asked about the reports that the central London terminus at Euston could be scrapped, he said:

They are to a large extent true because the budget for the whole project is now over ?160bn and you get inflation pressures.

But what they are not spending the money on is getting improved rail services east to west, between Liverpool and Manchester, Leeds and other places, and across from Birmingham to Derby.

The money would be much better spent for people to get local and regional services much more efficiently comfortably and move people onto rail.

Do we really need everybody to get to London that much quicker when there are some pretty good services at the moment?

He said “probably ?10bn has been spent so far” and the rest of the budget could be redirected to improve other rail services.

We should aim for the regions, the north and Midlands, to have a commuter service that’s as good as in the south east.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The UK government has refused to confirm that its flagship rail project HS2 (High Speed 2) will reach central London following reports.

The Sun reported that because of rising construction prices, the high speed rail project may not run to Euston until 2038 – or the terminus may be scrapped completely, with trains instead stopping at a new hub at Old Oak Common to the west of London, about 8km (five miles) away.

Commuters would have to use the new Elizabeth line to get into central London.

A Department for Transport spokesman said:

The government remains committed to delivering HS2 to Manchester, as confirmed in the autumn statement.

As well as supporting tens of thousands of jobs, the project will connect regions across the UK, improve capacity on our railways and provide a greener option of travel.

The Sun also reported that a two-to-five-year delay to the entire HS2 project is being considered, with fresh fears that the Birmingham to Crewe and Manchester legs could also be scrapped. HS2 was intended to connect London with Birmingham, Manchester and Leeds, but the leg to Leeds has been scrapped.

Work on the first phase of the project, between London and Birmingham, is well under way and that part is scheduled to open by 2033.

The project has been dogged by criticism over its cost and environmental impact.

In October, the levelling up secretary Michael Gove suggested capital investment for HS2 would be reviewed, but chancellor Jeremy Hunt subsequently backed the project.

The target cost of phase one between London and Birmingham was ?40.3bn at 2019 prices, but the Sun said that first phase alone could cost ?60bn. A budget of ?55.7bn for the whole HS2 project was set in 2015.

US stocks rallied yesterday after better-than-expected economic data, with the Nasdaq gaining 2% and the S&P 500 up 1.1%. Asian shares have hit near-nine-month highs as recession fears faded, in their fifth week of gains. MSCI’s broadest index of Asia Pacific shares outside Japan rose 1.14% to 559.01.

Investors were encouraged by news yesterday that the US economy grew faster than expected in the fourth quarter, although it could be the last quarter of solid GDP growth before the effects of the Federal Reserve’s rate hikes are fully felt. Some economists still expect a “mild recession” in the coming months.

The Fed is expected to raise rates by 25 basis points to 4.75% next Wednesday, which would be a smaller hike than previous moves. Markets see the Fed’s main rate at 4.45% next December lower than the 5.1% Fed officials have projected into next year. Today, data on US personal consumption expenditure (PCE) could provide further clues on inflation.

In Japan, core consumer prices in Tokyo, a leading indicator of national trends, rose 4.3% in January. from a year earlier, marking the fastest annual rate in nearly 42 years. If replicated nationwide, this could force the Bank of Japan to abandon its ultra-easy monetary policy.

The Agenda

8am GMT: Spain GDP for fourth quarter flash (forecast: 0.1%)

10.30am GMT: European Central Bank president Christine Lagarde speaks

1.30pm GMT: US Core PCE Price index for December (forecast: 4.4%, previous: 4.7%)

3pm GMT: US Michigan consumer sentiment for January (forecast: 64.6)