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George Osborne: Scrap HS2 and we'll regret it

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George Osborne today defied some of Britain's top company bosses as he threw his weight behind a Government 'fightback' on the HS2 high-speed rail project.

moreHe told the Institute of Directors – IoD – annual convention the country would regret not investing in the HS2 high-speed rail project if it was scrapped.

The IoD has called HS2 a 'grand folly' and has urged the Government to scrap the project but the Chancellor said the Government would not make the same mistakes as past administrations by not making big investments in infrastructure.

He told the convention: "It would have been so easy to scrap that project when we came into government with a massive deficit to cut.

"After all the benefits will not be realised in this Parliament or even the next.

"But I don't want to make the same mistake that frankly governments of all colours have made over the past 50 years of failing to make the big investments in infrastructure that are needed for our country to compete.

"Our rail system is already full and we know that it will get worse without HS2. Last week a report by KPMG showed that HS2 will provide a boost to the economy of £15 billion a year.

"And funding for HS2 isn't instead of other transport investment, it's on top.

"Projects like these take decades to build, you can't go back and fix the mistakes you have made if you don't invest when you wished you had.

"I passionately believe if we don't invest now we will regret it."

A survey of IoD members found that just 27 per cent felt the £42.6bn HS2 project represents good value for money, and 70 per cent said the scheme will have no impact on the productivity of their business.

But Mr Osborne joined what Prime Minister David Cameron has called a 'fightback' over the project. It started when Transport Secretary Patrick McLoughlin promised to 'squeeze every penny' of economic benefit out of the project after a KPMG analysis concluded it would be worth £15bn a year by 2037.

Meanwhile, a senior minister has raised concerns about the proposed £42.6bnHS2 high-speed rail line damaging irreplaceable ancient woodland.

Agriculture Minister David Heath said other environmental impacts along the planned network, which would link London to cities in the Midlands and northern England, could be mitigated but 'you can't grow old trees'.

Answering questions from party members at the Liberal Democrat conference in Glasgow he said: "The officers will tell us what the consequences are, where there are areas of mitigation.

"There is one thing that I will admit more than slightly concerns me, and that is where it touches on areas of ancient woodland, because you can mitigate lots of things but you can't grow old trees."