HS2 Fate Hangs in the Balance

Chancellor Jeremy Hunt has unveiled his strategy to streamline the civil service, aiming to save £1 billion annually and potentially reduce taxes. Although significant tax cuts are not expected this year, Hunt hasn't ruled out the possibility of pre-election tax adjustments in 2024.

Former Prime Minister Liz Truss, in a packed meeting, called for reductions in corporation tax and the removal of bureaucratic red tape. Her continued popularity among party members was evident.

In his speech, Hunt confirmed plans to raise the national living wage for over-23s to at least £11 per hour and implement stricter benefit conditions. He also outlined intentions to halt civil service recruitment, saving £1 billion per year.

Hunt emphasized the need to enhance public-sector productivity to potentially lower taxes: "By increasing public-sector productivity growth, we can stabilize public spending as a proportion of GDP, and further improvements could reduce the tax burden."

However, Dave Penman, General Secretary of the FDA union representing senior civil servants, argued that such reductions in resources were unrealistic, given the challenges posed by the post-Covid recovery.

Hunt also announced a cap on the size of the Civil Service, with plans to curb the projected increase to 490,000 civil servants by March 2025 from the current 457,000.

Mike Clancy, General Secretary of the Prospect union, viewed this move as a U-turn from previous commitments by the Prime Minister against top-down staff reduction targets.

Hunt took the opportunity to present an optimistic economic outlook and criticized those who spoke negatively about the economy.

Additionally, he defended Rishi Sunak's focus on reducing inflation and its impact on families, emphasizing the plan's progress in halving inflation.

In contrast, Liz Truss urged party members to "unleash their inner conservative" and advocated for lower corporation taxes, reduced government spending, and measures to stimulate housing construction.

Speculation continued about the future of the HS2 high-speed rail route from Birmingham to Manchester. While no final decision had been made, there were reports suggesting possible shelving in favor of other transport projects. A No 10 spokesman clarified that no final decisions had been taken on HS2 Phase Two.