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Osborne backing HS2 investment
Chancellor of the Exchequer George Osborne addresses the Institute of Directors annual conference at the Royal Albert Hall
George Osborne defied some of Britain's top company bosses as he threw his weight behind a Government "fightback" on the HS2 high-speed rail project.
The Chancellor told the Institute of Directors (IoD) annual convention the country will regret not investing in the HS2 high-speed rail project if it is scrapped.
The IoD has called HS2 a "grand folly" and has urged the Government to scrap the project but Mr Osborne 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 so been 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% felt the £42.6 billion HS2 project represents good value for money, and 70% said the scheme will have no impact on the productivity of their business. The survey also showed there was little enthusiasm for the project even in the regions where the benefits are supposed to be strongest.
In August 2011 a survey of IoD members found 54% rated HS2 important to their business. This figure has now fallen to 41%, with the IoD saying that this illustrated "how businesses see high-speed rail as a lower priority than it was two years ago".
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 £15 billion a year by 2037. He said it would be "absurd" to claim the scheme was perfect and ministers promised to "adapt and improve" the plans in response to criticism of the project, which will create the high-speed link.