How do we get Britain building again?
The UK is not the most expensive nation in the world, nor is it the most densely populated, but according to recent research it is the most expensive place to build a nuclear reactor, and the third most expensive place to build a railway line. Our Byzantine planning process makes building in the UK more expensive than Turkey, and the Balkanisation of the opposition to any project means that the cost of a new railway in the UK is more expensive than in Serbia. As the chart below shows, the costs of building are two or three times higher than in our close neighbours and compares in France and Germany.
Source: https://transitcosts.com/new-data/ Turkey, Serbia, France Germany and UK arrowed.
To some extent, we as a nation have chosen to live in this world of low growth and high cost. We live in a democratic society where the nostalgia of the right and the distrust of business on the left have combined to prevent the completion of large projects. We have added planning laws to protect our environment from the most rapacious aspects of growth. We have put in place disclosure and consultation rules to expose any abuse and help prevent it. However, instead of being a shield to protect the environment, these rules have become a sword with which to attack any new proposal. As a consequence, growth and productivity in the UK, and much of Western Europe, have slowed to a crawl, and we have fallen behind competing nations like the USA.
Source: Financial Times
Today’s UK government was elected on the promise of growth, and one of the main things that government can do to stimulate growth and boost productivity is to deliver infrastructure projects in transport, energy, housing and health. These, however, are areas where we are failing to build, as we have seen with the delays and cost overruns on projects like HS2 and Hinkley Point C. The government’s policy of high taxation and changes to employment law do not contribute to the growth agenda. Their desire to correct injustices today seems to blind them to the solutions that might come tomorrow if only we generated economic growth.
Voters like it when new infrastructure projects are delivered efficiently, on time and to budget, and yet that is something this and previous governments have consistently failed to achieve. When infrastructure and public services are creaking and cease to function properly, we should not be surprised when voters turn to authoritarian figures who ignore the rules to get infrastructure built or make the trains run on time.
The UK’s recent Nuclear Regulatory Review looked at the delays and cost overruns prevalent in the industry and attributed them to three main causes – regulatory risk aversion, the priority of process over good outcomes, and the lack of incentives aligned with the public interest. It is not just the cover-your-actions (CYA) regulatory environment, though; the Review noted the power of the many to block change and observed that there were few with the incentive or ability to enable it.
It has not always been like this. The UK built the world’s first civil nuclear reactor, opened in 1956, and by 1965 had more nuclear power stations than the US, USSR and France combined. In living memory, we built today’s motorway network and accommodated the post-war Baby Boom. However, we have gone from a nation of engineers and architects to a nation of consultants and lawyers who specialise in navigating our increasingly complex legal and regulatory system. London used to be a place to make your fortune; now it is a place to spend one.
Despite all the rules and regulations, a determined government can get things done. In 2022, a tanker full of fuel exploded and caught fire under a bridge on the I-95 in Pennsylvania. Tragically, the driver was killed, and the bridge collapsed, bringing traffic to a standstill on a hugely important trunk road in the US. The state governor controversially called a state of emergency, took control, and saw that the bridge was rebuilt in 12 days without the usual complicated process of consultation, planning and control. Process was forgotten in favour of the outcome.
Similarly, the fastest-growing area of the UK over the last 10 years has been Manchester, where the mayor has co-ordinated generous central government subsidies, public services, the private sector and local expertise, and put “place over party” to get things done, focusing on socially desirable outcomes.
This is undoubtedly an important area and something we will return to in the coming months. In order to get growing again, and deal with popular discontent over public services, it seems that generational change is needed. We may have to accept that some bats and newts may lose their habitats close to our growing towns and cities, to be compensated by new habitats in our national parks. We have to accept less consultation, less local democracy, and trust in each other to reduce cost and increase efficiency so that we can build and thrive again.
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