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UK chancellor Jeremy Hunt has warned Tory activists that tax cuts must be funded by a squeeze on public spending, as he prepares to swing the axe over the HS2 high speed rail project’s northern leg and the civil service.
Treasury officials refused to deny that Hunt had signed off plans to scrap the leg of HS2 from Birmingham to Manchester to release savings for other transport projects.
“A decision will be announced in due course,” one aide to Hunt said, amid growing speculation at the Conservative party conference in Manchester that the axe will fall on the project before UK prime minister Rishi Sunak makes his keynote speech on Wednesday.
Hunt also told the conference he would save £1bn by freezing civil service numbers, with an eventual plan to cut 66,000 posts and reduce the public sector workforce to pre-pandemic levels.
Downing Street said no emergency cabinet meeting to sign off the HS2 decision was planned “at the moment”. A spokesman for Sunak said: “No final decisions have been taken on phase 2 of HS2.”
Tory officials believe that the decision to scale back Britain’s biggest transport project could be announced on Tuesday, allowing Sunak to announce “good news” about other transport schemes.
In a bullish speech, Hunt said: “It’s time to roll up our sleeves, take on the declinists and watch the British economy prove the doubters wrong.”
However, four former prime ministers have already warned that if Sunak scraps the northern leg of HS2 — and possibly terminates the route at Old Oak Common, six miles from central London — he will fuel a declinist narrative.
Boris Johnson, former prime minister, said of the plan to stop the line in Birmingham: “We must be out of our minds.” Gordon Brown, David Cameron and Theresa May have also called for the line to be built in full.
While ministers wait to sign off the HS2 plan, Hunt told the Conservative conference he would freeze recruitment to the civil service, which he said was “the best in the world”.
Hunt’s plan is to cap the total number of civil servants at their current level of 457,000 until 2025. His allies said that on current projections total numbers would have increased by about 40,000.
They said this would save £1bn, while government departments would be told to draw up plans to cut the civil service to pro-Covid levels of under 400,000 by 2028.
Hunt said: “Even after the pandemic is over we have 66,000 more civil servants than before.”
But Mark Serwotka, general secretary of the Public and Commercial Services union, said shrinking “an already overstretched and under-resourced” civil service would inevitably result in cuts to vital services.
“If ministers want fast-moving border controls at our ports and airports, an end to backlogs for those seeking driving licences or applying for driving tests, they must employ more civil servants, not less,” Serwotka added.
The Tory conference has been dominated by a clamour from senior Conservatives, including some ministers, for Sunak and Hunt to cut taxes before the next general election, expected in 2024.
But the chancellor sought to shift the debate to pay and benefits, telling activists tax cuts could only come once the public sector was made more efficient and spending is under control.
Hunt added that fighting inflation — rather than tax cuts — was his top priority, telling the conference: “Nothing hurts families more.”
He insisted that battle was being won: “The plan is working and now we must see it through, just as Margaret Thatcher did many years ago.”
Hunt confirmed the government would raise the national living wage from £10.42 an hour to at least £11 an hour, which he described as “a pay rise for nearly 2mn workers”.
He also said the government would take steps to ensure that people actively looked for work. “It isn’t fair that someone who refuses” to look for a job “gets the same as someone trying their best”, he said.