Rubble in British railway town raises red flags for PM Sunak

[February 06, 2024]  By Andy Bruce

CREWE, England (Reuters) - A grand project to help revitalize the railway town of Crewe lies buried under mounds of earth, serving as a bleak warning for Britain's Conservatives and their fight to retain power.

The large building site at the centre of the town in northwest England was supposed to be transformed into a glossy retail and entertainment complex that would crown a bus terminal and car park already under construction.

That part of the plan has now been halted, with local officials citing the government's scrapping of the northern leg of the High Speed 2 (HS2) rail project as a factor, alongside high inflation, declining property values and stretched households.

"It feels like Crewe's just kind of a dying town. I think that HS2 was one of the ways we were going to improve that, and now it's not going to happen," said local resident Andy Lewis as he waited patiently for a train at the historic railway station, a regional hub almost two centuries old.

Voters across northern England were instrumental in driving the Conservatives to a big election win in 2019, inspired by Boris Johnson's pledges to deliver the dividends of Brexit and "level up" Britain's regions, long the poor cousins to London.

More than four years on, the political ground has shifted and opinion polls show the ruling party losing that support, a reversal that could help put it on course for a thumping national defeat by Labor at a general election expected this year.

Johnson was ousted as prime minister by his own lawmakers over COVID lockdown breaches, triggering a bout of chaotic infighting that saw Liz Truss reign for a matter of weeks before she too was forced out and replaced by Rishi Sunak, whose own premiership has been marked by resignations and rebellion.

The leveling-up drive has since been dented by the axing of the northern leg of the HS2 rail network, a project aimed at better connecting-up Britain's cities and economy, in a move decried by the former PM Johnson as "betraying the north of the country and the whole agenda of leveling up".

Many local businesses and residents had hoped the Crewe-to-Manchester spur of HS2 would bring billions of pounds of investment into the town.

"That was our opportunity, really, and I guess now it's gone," said Paul Colman, chief executive of the region's South Cheshire Chambers of Commerce.

The northern leg was cancelled by Sunak in September as estimated costs for the overall HS2 project soared above 100 billion pounds ($126 billion) and the infrastructure watchdog warned there was a fundamental problem with Britain's ability to manage such large projects.

Sunak described it as a tough decision, but one driven by the spiraling cost, as well as a reduction in passenger numbers following the COVID pandemic. Speaking in the northern town of Accrington in January, he said all money saved by cancelling the northern leg would be reinvested across the country.

"Fixing potholes, capping bus fares at two pounds, improving your local roads, dealing with pinch points, electrifying rail lines across the north, east, west. And that for me is all leveling up," the prime minister added.

Nonetheless, Crewe's Conservative member of parliament Kieran Mullan acknowledged that the loss of the HS2 link was a blow.

"I was disappointed," he told Reuters. "It had particular potential to help us when it came to connectivity."

He said the government had committed to extensive work to regenerate Crewe in light of the cancellation, though.

"I think actually people understand that leveling up is not an overnight challenge," he added. "It might be a generational challenge to unpick some of this longstanding inequality."

'RED WALL' TURNS ON SUNAK

That may be of limited value to the party in the coming months. The parliamentary seat for Crewe and neighboring Nantwich is likely to revert to Labor at the next election, four separate polling models over the past year have predicted.

Crewe is part of the "Red Wall" of constituencies in the north of England that have traditionally voted Labour, but which swung to the Conservatives in 2019. They are widely expected to be crucial to the outcome of the election set to be held this year, and the omens are unhappy for Sunak and his party.

A YouGov opinion poll last week showed only 20% of voters in the north intended to vote Conservative compared with 37% before Johnson's 2019 election landslide win.

The government's perceived failure to deliver on leveling is one reason Red Wall voters are abandoning the Conservatives, according to polling published in November from advocacy group More in Common, which researches the polarization of society. The issue ranked fourth, behind illegal immigration, health service failures and government competence.

A strip of newly laid pavement sits next to a piece of undeveloped land on part of the Royal Arcade development in Crewe, Britain, January 29, 2024. REUTERS/Phil Noble

Nationally, Sunak's Conservatives are almost 20 points on average behind the Labor Party in opinion polls carried out over the last couple of months and on track to lose more than half of their 349 parliamentary seats, according to the Electoral Calculus polling analysis website.

LONDON VERSUS THE REST?

Britain remains a divided nation.

London's share of the national economy has surged by over 3 percentage points since 2000 to 24%, with no other British region increasing its share over the same period, according to official data.

Comparable data from the EU statistics agency Eurostat show far less polarization between regions in Germany and France.

Investment data illustrates the gap.

Public infrastructure spending in London between 2010 and 2021 totalled 4,763 pounds per person, adjusted for inflation, official data shows. That's 63% more than the average outside the capital, according to Reuters calculations.

"The gap between London and the rest of the UK - and particularly poorer areas - is at the extreme among OECD economies," said Diane Coyle, professor of economics at Cambridge University.

"Even a country like France, which is highly politically centralized, has a system whereby there is a constitutionally guaranteed distribution of funding," she said.

"So we stand out."

Over the last 20 years, more political power has flowed to the regions - including parliaments for Scotland and Wales and elected city-region mayors - but that devolution now needed to include economic levers such as control over infrastructure spending, Coyle added.

'BOARDED UP AND DERELICT'

HS2, once billed as Europe's biggest infrastructure project, has been halved in size since the Conservatives won their 2019 landslide. Originally the line would have connected London to the northern cities of Manchester and Leeds, but it will now terminate at Birmingham, about 100 miles (161 km) north of London.

Even after the construction of the shortened HS2, Britain will lag France, Germany, Italy and Spain several times over in terms of dedicated high speed rail track capacity, according to OECD data.

Labour leader Keir Starmer has said, if elected, he won't revive the northern leg of HS2, describing the budget as "blown" and citing the fact that contracts are already being cancelled. Instead, he says he would stick with Sunak's Northern Powerhouse Rail plan to improve east-to-west rail links in the north.

Labour also promises to transfer more power from Westminster, giving local leaders greater economic autonomy.

This may be cold comfort for Crewe.

Business leaders stress the town's continuing advantages as a well-connected centre for distribution and manufacturing, though concede the loss of HS2 is a major blow.

Mark Haase, chief executive of SG World, whose activities in Crewe including printing, manufacturing and software development, said the town was an "amazing area" for business.

The company may nonetheless have to look further afield of new business opportunities because the downsizing of HS2 would make it more difficult to further improve supply chains between Crewe, the rest of the north of England and Scotland, he added.

Meanwhile, the building site that was supposed to turn into a retail and entertainment centre has been downgraded for temporary use, perhaps as a go-kart track or a trampoline park.

Mullan, the Conservative MP for Crewe, said he appreciated people were frustrated by the axing of the retail plans.

"But actually that means in the short term, we can probably do something with the space," he added. "It's this space having been boarded up and derelict that I think has dragged down the town centre for too long."

(Reporting by Andy Bruce; Graphics by Sumanta Sen; Editing by William Schomberg and Pravin Char)

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