The trains will remain in the factory for now. Photo: Getty Images
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The government has questions to answer over the rail fiasco

Passengers deserve better than ministers who are happy to be photographed next to new trains but then withhold the truth from the public.

Aptly, Patrick McLoughlin initially wanted to call the government’s spending on rail the “Rail Investment Programme” – until a civil servant pointed out that its acronym would be RIP. Eight weeks ago, those spending plans were still at the forefront of the Tory election campaign. The Conservative manifesto promised electrification for the Midlands and the North. We were treated to long lectures about the how Ministers were building a ‘Northern Powerhouse,’ and even a ‘Midlands Engine.’

Yesterday the electric dream died. Two major projects have been cancelled – or ‘paused,’ as the government delicately puts it – and the status of other plans is unclear. Contingent investment in new electric trains has been put off.  The economy is not going to be rebalanced after all. The Northern Powerhouse has had the power turned off. The Midlands Engine is rusting in a siding.

The most important question for the government is simple – who knew? Which of those Ministers who spent April touring marginal constituencies, reading out long lists of investment projects and hinting at more to come, knew that the axe was about to fall?

The case against the Transport Secretary and other Ministers in the Department for Transport is compelling. It has been a matter of public record for well over a year that the Great Western electrification project was in trouble – indeed, Labour first raised the issue in Parliament in May 2014. Network Rail’s Chief Executive, Mark Carne, said yesterday that: ‘We knew, already, very early on last year that certain aspects of the plan were going to be incredibly difficult to deliver.’

Ministers must bear ultimate responsibility. As the Transport Select Committee warned in January:

Key rail enhancement projects—such as electrification in the North and North West of England—have been announced by Ministers without Network Rail having a clear estimate of what the projects will cost, leading to uncertainty about whether the projects will be delivered on time, or at all.”

Claire Perry, the rail minister, conceded the point last week, when she admitted at an event for rail engineers that ‘we’ve given Network Rail the biggest challenge it has ever faced,’ and that Ministers had place a ‘massive demand on engineering capacity.’

Labour has documented how the combined cost of Midland Main Line and Great Western electrification doubled from £1.5 billion to £3 billion in just two years. As a consequence, in November of last year, Network Rail started to compile a list of ‘those items/projects that would be stopped or refused in order to live within the capital constraints.’

Minutes published today in response to a FOI request I made reveal that, on March 19th Network Rail’s Chief Executive said that the Department for Transport ‘had a line of sight to most of the information in the current iteration of the Business Plan,’ and went on to say the company would have to ‘close the funding gap but the Board needed to be aware that the funding gap could be significant.’

Crucially, Patrick McLoughlin was handed a report on September 1 on the state of Network Rail’s plans, which was jointly written by the Regulator, Network Rail, and the Department for Transport. He has subsequently refused to publish it. In the absence of a copy in the public domain, it is difficult to resist the conclusion that this report recommended that cuts be made in order to reduce the cost of Network Rail’s overall programme.

It is clear that ministers knew that Network Rail’s plans were in jeopardy and remained silent. As I warned on this blog back in March, the government knew that its rail investment plans were ‘falling apart’ and that this was ‘a story that the government is desperate to keep quiet.’

However, railways are hierarchical structures, and we need to ask just how far up the hierarchy awareness of these problems rose. Yesterday the Prime Minister’s official spokesperson refused to comment when they were asked when David Cameron was made aware of these cost overruns. As Michael Dugher said in his letter to Cameron this morning:

"It appears that despite you and your ministers knowing that these projects were in serious difficulty before the election, you decided to wait until after the election to reveal the extent of the problems before reneging on the commitments you had previously made.”

Passengers deserve better than ministers who are happy to be photographed next to new trains but then withhold the truth from the public, and who think that rail lines are the words they need to remember to get through their next interview. Unfortunately the Transpennine and Midland Main Line electrification schemes are not the only Network Rail projects that in trouble, and the government now needs to set out whether there are additional problems heading down the track.

Lilian Greenwood is Labour MP for Nottingham South. She was formerly shadow secretary of state for Transport. 

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.