Hs2

Ministers' attention is now firmly focused on arguing that to abandon HS2 would be a sign that Labour is 'playing politics with prosperity', as Transport Secretary Patrick McLoughlin is set to say later today, or 'abandoning the North'. Yesterday the Prime Minister slipped in a joke about Ed Balls being absent from the Commons because he was trying to work out what his party's policy should be on the new line. Today Julian Smith is batting for CCHQ, predicting that 'if Labour oppose HS2 they'll be dismissing the long-term future of the country for a short-term political gamble'. As James explained last night, this is all part of an attempt to 'smoke out' the Opposition.

The government’s approach to the HS2 debate has changed. Up until recently, government sources would wave away the suggestion that Labour might withdraw its support for the project. They’d point to Andrew Adonis and his influence on Ed Miliband to explain why Ed Balls’s doubts about it didn’t matter that much. But this has now changed. They’ve now decided, in the words of one Number 10 figure, that they need to ‘smoke Labour out on the issue’. Over the next few weeks, we’ll see the Tories trying to put more and more pressure on Labour to say whether or not they’ll back it. Number 10 is acutely aware that, at the moment, Labour’s ambiguous position is simply emboldening opponents of the project, including many Tory MPs.

David Cameron insists that a project like high-speed rail needs cross-party support. That may well be sensible, but his desire for Labour to retain its support for the new line is founded more on the necessity of getting the legislation through Parliament, rather than a great belief in parties working together on the big things. The fact is that Cameron needs Labour votes because yet again he cannot rely on his own party, the party of government, to push the bills through. Labour obviously scents blood, not just because there's sport to be had in making a Prime Minister squirm and plead for the Opposition's votes, but also because dropping support for HS2 would lend the party some useful credibility.

Newcastle upon Tyne Andrew Adonis is not your conventional ‘retired’ politician. The sprightly 50-year-old shadow infrastructure minister remains more influential than his current job title suggests. After running Tony Blair’s policy unit at No. 10, Adonis kick-started the academies programme and paved the way for Michael Gove’s education revolution. Under Gordon Brown he rose to Secretary of State for Transport, where he renationalised the East Coast railway and conceived High Speed 2. Adonis took a central role in Labour’s failed coalition negotiations with the Lib Dems (a party he was once a candidate for) before quitting frontline politics.

If the strange mood of Tory unity over Europe is giving you the heebie-jeebies, then have a look at high-speed rail. When disunity boils over, which it is likely to do later this autumn, it will cause the party real problems. Unless, of course, Adam Afriyie decides to launch some kind of coup on HS2, in which case Parliament will probably unite to support the new line and that will be the last we hear of it. Labour is now crouching in the undergrowth, waiting for the Tory disunity to bubble over. The party hasn't quite dropped its love of stirring things up a bit, and the disappearance of Maria Eagle from the Shadow Transport Brief means the party is really ready for the right moment to trash the 'north-south line'.

Here’s what jumped out at me from David Cameron’s interview with Andrew Marr in Manchester this morning: Tax cuts: the Tory weapon 'As this economy has started to recover, it’s very difficult for people to make ends meet. Their wages are relatively fixed, and the prices are going up. That’s why cutting people’s taxes is so important. That’s why lifting people out of the first £10,000 of income tax is so vital. That’s why freezing the council tax matters.' So Cameron acknowledges Miliband's premise, that the cost of living is an issue, then presents tax cuts as the solution. Precisely the right strategy, as tax cuts are bankable and Miliband's claim to freeze energy bills is less so.

When Lord Howell described parts of the North East of England as 'desolate' (or did he mean the North West?), he was talking about shale gas exploitation, but he could have more accurately applied the term to the map of Tory support in the region. The urban north hasn't supported the party since the late 1980s. Seats like Manchester Withington, Newcastle Central and Nottingham North (that last is not in the North, of course, but another example of the urban problem) were once Conservative, but now it's hard to imagine them ever being safe blue seats again. The Tories can win without the urban North, but as their electoral map continues to shrink, it's a risky strategy to let the rot continue.

So now there isn't just uncertainty over Labour's support for HS2, but also uncertainty over the uncertainty after Maria Eagle tried her best to deliver as upbeat a speech as possible about the high speed rail link. The Shadow Transport Secretary did deal with the issue, and she made clear that Labour's support is now conditional. But what she didn't do was suggest that Labour was questioning the value of the whole project. Eagle told the conference hall: 'That's why we support High Speed 2. And, unlike the Tories, no blank cheque for any government project.

Ed Balls has just taken the scalpel to HS2 in an interview with Steve Richards. He talked about the project having ‘huge fiscal implications’ and questioned whether the ‘benefits are really there’. He then went on to stress that the question was not just whether HS2 provided value for money, but whether it was the best use of £50 billion. As he emphasised, £50 billion could be used on other transport projects or new housing, hospitals and schools. One could see Balls gleefully contemplating just how much fiscal wriggle room cancelling HS2 would give him. Now, Balls did say that Labour had not reached a final decision on what to do about HS2.

George Osborne's speech on the economy today will show how much the Chancellor's stock has risen in the past year. It also shows that in spite of the embarrassing defeat on Syria two weeks ago, the Conservatives still feel they can be confident about their appeal to voters, because things are going well on the domestic front. If the growth forecasts were still terrible and key sectors such as manufacturing were still producing terrible figures, the Syria vote would have had far more dangerous consequences for the Tory leadership. But instead, they are able to bounce back from defeat with the statistics that make them look strong. As James pointed out in his Mail on Sunday column yesterday, this will be his most upbeat verdict yet on the economy.

The coalition government is preparing a new case for HS2. Concerned that public and political support for the project is slipping away, there’ll be a major effort to renew enthusiasm for it. In this new case, there’ll be far less emphasis on speed and far more emphasis on how HS2 is needed because the existing railway lines are full up. This marks a recognition inside government that the savings on the journey time to Birmingham, which are less than half an hour, are too small to act as a public justification for the project. Expect to see this new argument reflected in the Transport Secretary Patrick McLoughlin’s speech on Wednesday. I suspect that HS2 will retain the support of all three front benches in this parliament.