Scrapping HS2 was a smart move – now bring on more bold action
Structural reforms are one thing: cultural shifts are altogether more difficult. Many a football manager has learnt this over the years, where a formation change and a sprinkling of new talent in an under-performing club fails to make a difference because something in the club isn’t right. Creating winning cultures is hard.
City bigwigs are increasingly talking about the Square Mile’s own culture. In particular, those with a vested interest in the rebound of our equity markets are talking as much about changing mindsets as they are thinking about technical changes.
The argument goes that giving pension funds more scope to invest and simplifying our listing regimes from two-ish to one-ish is helpful, but it won’t be enough on its own unless investors in London-listed firms are able to take a little more risk on new and growing companies.
Clare Cole, the FCA’s head of market oversight, says the capital needs a ‘debate’ on the matter, which – as it appears is true in this case – is usually shorthand for a debate that leads to a change. It is hard to argue that markets benefit from more short-term investors and fewer long buyers.
Risk is something that Rishi Sunak clearly understands. With his poll ratings, there wasn’t much choice but to do something bold, and his gamble that the country will reward him for taking politically challenging decisions may well backfire.
But looking at the cards he had available to him, ditching HS2 looks a smart one to play – not just politically, but economically, moving away from the shaky business cases of grand projects towards the quick productivity wins of a new bypass and modern signalling on commuter lines. He has irritated many in his party and no doubt many voters; but HS2 was an unloved project that most agreed had gone off the rails sometime ago.
More risky is Sunak’s desire to present himself as a change candidate. Does Britain need change, or competence? Do we need a zig, or a zag, in direction, or do we just need to deliver? Sunak still has a year or so to prove he can do, not just decide.