South Africa seizes Air Tanzania plane in Johannesburg

Air Tanzania aircraft
Image copyrightIKULU
A farmer claims the aircraft (not pictured) was seized because Tanzania’s government owes him $33m

South African authorities have seized a plane from Tanzania’s national carrier, the Tanzanian government said.

The Airbus 220-300 was due to fly from Johannesburg, South Africa, on Friday to Dar es Salaam in Tanzania.

It was not immediately clear why the action was taken, and South African authorities have not commented.

But a retired farmer has said the aircraft was impounded because Tanzania’s government had not paid him $33m (£28.8m) it owes in compensation.

Lawyer Roger Wakefield told the BBC the money was awarded after Tanzania’s government seized lands belonging to the South African farmer.

A Tanzanian government spokesperson told the BBC that the country’s lawyers had arrived in South Africa to investigate.

In a statement on Friday, Air Tanzania said that it expected to make flight schedule adjustments “due to unforeseeable circumstances” , but did not give any further details.

The carrier’s managing director Ladislaus Matindi told Reuters arrangements had been made for passengers to resume their journey on another flight.

Tanzanian President John Magufuli
Image copyrightGETTY IMAGES
Millions of dollars have been spent on the carrier, which Tanzania’s President John Magufuli is hoping to revive

The move comes barely two months after Air Tanzania opened its service to South Africa.

Tanzania’s President John Magufuli has led attempts to revive the state-owned airline, hoping to boost tourism and turn the country into a major transportation hub.

It had just one plane when the president was elected in 2015. Since then, millions of dollars have been spent on the purchase of eight new aircraft.

But the carrier is battling several multi-million dollar lawsuits with its former suppliers.

This is also not the first time Air Tanzania has had a plane seized. In 2017, Canadian construction firm Stirling Civil Engineering seized the airline’s new Bombardier Q400 plane in Canada over a $38m lawsuit.

The authors of a respected economic survey are predicting the UK economy contracted in the second quarter of the year, raising fears of a potential recession ahead.

According to an all-sector calculation, following the final IHS Markit/CIPS purchasing managers’ index (PMI) reading for June, the economy will have recorded negative growth of 0.1% between April and June.

If such a performance was to be confirmed by official statistics – and then the economy failed to achieve growth in the current third quarter – it would leave the country in a technical recession ahead of its next Brexit deadline of Halloween.

Young people who started work in 2008 are likely to face higher unemployment
Image:Consumers and businesses alike have been reluctant to make big investment decisions

UK output has proved resilient since the vote to leave the EU, with record employment and wage rises largely outpacing price growth – inflation.

But economists have pointed to a steady decline over the past 12 months.

Brexit stockpiling in the first quarter of the year, which boosted growth to 0.5%, is believed to have unwound in the following three months at a time when the US-China trade war hit demand in the global economy.

The latest PMI survey suggested the powerhouse service sector – responsible for much of the UK’s positive performance since 2016 – grew only marginally last month, slowing further since May.

The prediction of a contraction in the second quarter was based on the findings of earlier PMI surveys covering the three months, which also take in manufacturing and construction activity.

Output in the construction sector was found to have fallen at its steepest rate since April 2009 in June while UK factories suffered their worst monthly decline in six years.

The gloomy forecast did little to help the pound as it retreated on growing market fears the Bank of England may be forced to cut interest rates to help stoke demand.

The governor of the Bank of England, Mark Carney, outlines Brexit pressures on the economy.

It was trading below $1.26 versus the dollar.

Its weakness helped boost dollar-earning companies on the FTSE 100 which reached a ten-month high during the session and closed nearly 0.7% up on the day.

Chief business economist at IHS Markit, Chris Williamson, warned the surveys showed there was little sign of a pick-up ahead.

He wrote: “Importantly, the latest downturn differs from that seen in 2016 as it has followed a gradual weakening in the rate of economic growth rather than being a sudden and brief collapse in output after the ‘shock’ referendum result.

“The pace of growth has eased markedly since peaking a year ago, resulting in a steady deterioration in demand.

“Measured across the three sectors, inflows of new business fell in June for the fifth time so far this year, with the rate of decline gaining momentum to reach the second-steepest since April 2009.

“New orders fell in all three sectors, with construction registering the sharpest downturn followed by manufacturing, while services saw a marginal decline.”

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said he did not believe a recession was on the way.

He said of the figures: “Growth in households’ real incomes looks set to pick up, as the recent fall in energy prices pushes CPI inflation below the 2% target and job growth remains strong.

“Notably, services firms reported in June that employment rose at the fastest rate since August 2017.

“Optimism among services firms about the outlook for activity in the year ahead also remained above its 12-month average in June, despite falling marginally.”

HS2 train
Image copyrightSIEMENS/ PA
A proposed design for a HS2 train

The government and HS2 knew that the new high speed railway was over budget and was probably behind schedule years ago, documents seen by the BBC show.

Crucially, the documents were written in 2016, before MPs had signed off the first phase of the project.

It is evidence that both the public and Parliament were not given the full picture about the true cost.

The Department for Transport said: “Like all major, complex projects delivery plans evolve over time.”

“We regularly keep Parliament and members of the public updated on the progress of the project,” the DfT added.

HS2 Ltd is a public company, set up to build a new high-speed line linking London, Birmingham, Manchester and Leeds. It is funded by the taxpayer.

new map of confirmed route

The line was due to be built in two phases, beginning with a new railway linking London and the West Midlands.

This would be followed by a second phase taking services from Birmingham to Manchester and Leeds.

Phase one of the development was due to open at the end of 2026, with the second phase scheduled for completion by 2032-33.

In total, the railway was supposed to cost £55.7bn.

Earlier this month, the government said it planned to review the costs and benefits of the rail project, with a “go or no-go” decision by the end of the year.

But until recently, ministers and bosses at HS2 have insisted everything was on track.

Only last month, the Transport Minister, Nusrat Ghani MP, who is now a government whip, told Parliament “confidently” that the programme would be delivered on budget and on time.

“There is only one budget for HS2 and it is £55.7bn,” she said.

But the documents obtained by BBC News show that at least three years ago both the government and HS2 knew that wasn’t the case.

‘Dear George’

In May 2016, then Chancellor George Osborne received a letter from Patrick McLoughlin, the Transport Secretary at the time, in which he admitted that the first stretch of the railway was already a billion pounds over budget.

The budget for phase one of HS2, linking London to Birmingham, is £24bn.

Computer-generated image of HS2
Image copyrightHS2
The £1bn overspend did not include a realistic estimate for land and property costs

However a former HS2 director told the BBC that the £1bn overspend was considered, at the time, to be “a very conservative estimate”.

“Internally the teams knew it was a lot higher than that,” he added.

The £1bn overspend is worse than it first seems because it did not include a realistic estimate for how much the land and property needed to build the railway would cost.

Property estimate ‘ad-hoc’

The estimate for land and property which HS2 was using at the time for the London-Birmingham stretch was £2.8bn.

The consultancy firm PwC found that “fundamental parts” of that estimate had been calculated in an “ad-hoc manner”, according to a report seen by the BBC.

Protesters demonstrating against HS2Image copyrightAFP
Image captionThe plan has attracted fierce criticism from some of those living on the intended route

And two senior figures who worked in the Land and Property department at HS2 from August 2015 to April 2016 calculated that, in reality, the true cost was £4.8bn.

That would have added a further £2bn, taking the total overspend at the time on phase one of the project to at least £3bn.

Phase one delay

The May 2016 letter to George Osborne also shows that a one-year delay to the opening of phase one was already being considered as it could “bring cost savings”.

Cost was, in the words of the then transport secretary, “a significant challenge”.

The letter also reveals that, at that time, HS2 failed a critical hurdle called Review Point One.

According to a former HS2 director that “was like saying it wasn’t fit for purpose”.

Graphic showing how HS2 will reduce journey times: London-Birmingham 35 minute saving; London-Nottingham 35 minute saving; London-Sheffield 46 minute saving; London-Leeds 50 minute saving; London-Manchester 60 minute saving.

The BBC has also obtained a Department for Transport briefing note labelled as “confidential”, written in December 2016.

The document acknowledges that even with planned savings “a significant gap to target price will remain”.

And it says, following alterations to the scheme, phase one of HS2 would need to open a year late.

Worsening situation

The situation has become a lot worse since the two documents were written.

Last month, a leaked letter suggested that HS2 could be up to £30bn over its budget.

HS2 platformsImage copyrightBENNETTS ASSOCIATES
Image captionHS2 platforms in Manchester Piccadilly would be covered by a folded roof

But in December of last year, HS2’s chief executive, Mark Thurston, was still insisting everything was fine.

“We’re confident we have a good estimate for the first phase,” he told BBC Panorama.

“We are not over budget.”

Second phase doubt

The Department for Transport memo also states that there is a relatively small chance that the stretch of the railway, linking Birmingham to Crewe, which is known as phase 2a, would be delivered on time.

It puts the probability of that happening at a mere 35%.

The Crewe to Birmingham stretch is due to run trains from December 2027.

Euston stationImage copyrightGETTY IMAGES
Image captionSome commuters hope that HS2 could reduce overcrowding on trains

In a statement to the BBC, HS2 Ltd said it had “provided regular updates on the project”.

It said there had been “extensive scrutiny” from the National Audit Office and Parliamentary Committees.

And it said that chief executive Mark Thurston had “spoken publicly for some time about the cost pressures facing the project”.

Mr Thurston was appointed as HS2’s chief executive in March 2017.

His predecessor, Simon Kirby, said during his tenure HS2 Ltd “operated fully transparently in respect of the Department for Transport who were kept fully appraised of all relevant information on the cost and timetable of the project”.

The new Transport Secretary, Grant Shapps, is due to provide Parliament with a full update on the project next week.