Why The UK Can’t Build

There was a time when Britain led the way in building. Britain built the first railway, the first iron bridge, the first underground system. Isambard Kingdom Brunel was voted the 2^nd greatest Britain for his exploits, in transforming the country. But, if Brunel were alive today, would he find himself thwarted by red tape, NIMBY’s and austerity? Whether its reservoirs, housing or power stations, Britain has stopped building, and it is having a disastrous effect on the economy. Can anything be done to change the story?

Britain was the first country to industrialise, it was also the first to introduce planning restrictions. The 1947 Planning Act gave substantial powers to local authorities to object to building in their local area. The main parties all have national targets to build more houses. But, for local councillors, the political incentive is to block new builds in their areas. New houses bring more congestion and more demand for public services, but not more money to local authorities.  The Lib Dems have a notional manifesto commitment to build 380,000 homes a year, yet at the same time they have won many by-elections by opposing housing development. It’s not just the Lib Dems it’s a paradox shared across the spectrum.

But it’s not just housing, Buckinghamshire council recently rejected an application for a £750 film studio on the site of a former quarry. Forget manufacturing Britain’s main exports are in services like film production, but local residents didn’t want the development.

It’s not just NIMBY’s though. To build anything in the UK, there are innumerable barriers to overcome. Stringent rules protect bats, squirrels and rare fungi. For example, to deal with bats on route HS2 was forced to spend £40m on a bat tunnel. NIMBYs have been known to install bat houses, as the presence of bats will add delays and costs to any project. Now I like bats and newts as much as any animal lover. But, with the UK recording record levels of homelessness, what about the right to a home?

Planning Rules

Planning rules are strictly enforced by the courts. After a ruling from the European Court of Justice in 2018, Natural England was able to block any housing development which might cause a net increase in nitrate or phosphate pollution in rivers. For a time it severely curtailed homebuilding, and is still something of an added cost. In 2019, a nuclear power station was proposed in North Wales, but was blocked by planning inspectors, who amongst other things cited a detrimental effect on terns and the dominance of the Welsh language.

Lack of Electricity

Even when local objections can be overcome, it doesn’t mean it is a done deal. Housing developments in West London were blocked because there wasn’t sufficient access to the National Grid. In other words, building was blocked because we hadn’t built enough electricity infrastructure. The UK has a very low rate of  investment in on-shore wind and solar energy. Partly, this is because on-shore wind was effectively banned but, also because even if you do get permission, the tricky thing is getting connected to the national grid. Renewables are the future, costs are falling, and uptake is great, but it does need substantial investment in new grid and battery storage e.t.c. It’s essential, but very low down the list of priorities.

HS2 Fiasco

Of course, there is a way to get past the veto of local authorities, you can pass legislation in Parliament, like for example HS2. Once Parliament has approved legislation, judicial reviews rarely succeed – the state has great power to build. But, if you want to prove Britain can build things HS2, is maybe not the best example. Passed in 2012, HS2 gained cross-party support. But, years of delays and rising costs, saw the estimated cost rise from £38bn to £136bn. Shocked by rising costs, the government cancelled the most useful northern legs of the railway. The first leg to get cancelled was the leg to Leeds. Ironically, Leeds (my home town by the way) is the largest city in Europe to not have a metro system. In 2001, a new Leeds super tram scheme was approved, But, 23 years later can you guess whether it got built?

HS2 is emblematic of many reasons the UK struggles to build. Firstly, it is just more costly than comparable countries. More expensive than Europe, and more expensive than California. Why is it so expensive? Over-engineering, poor management, excessive bureaucracy and then political meddling. Local constituencies in the path of HS2 were pretty mad with HS2, all costs no benefits. It led to a typical British compromise, the railway would be built but with extra tunnels and costs to hide the view. So we’re left with a rump of HS2 from London to Birmingham – the least attractive part of the network with a net return of 80p in the Pound. The damaging cancellation will only reduce confidence in future UK engineering projects. Any potential investor has to factor in the delays, costs and uncertainties of dealing with the UK.

Austerity

HS2 was one of the few projects protected from the austerity of George Osborne. Chancellors tend to prefer big shiny projects, even if smaller scale local projects offer better returns. But aways from HS2, the years of austerity had a negative impact on Britain’s building. Public sector net investment has been in decline since the post-war period. The buildings we built in the 1960s, may not have been very good, but we did at least still build things. However, since 2010, public investment has been further cut. UK finances have been stretched by years of very low economic growth, the tax burden has risen to a record level but public services struggle to keep up with demand. The problem is that if your trying to balance the books, cutting investment is the easiest short-term solution. No-one notices if you don’t build a new reservoir or new power grid. It is only a cumulative sense of crumbling infrastructure, more congestion, higher prices – someone else’s problem. Given the average life expectancy of Prime ministers in recent years, no wonder short-termism has become endemic. When Joseph Bazelgette built the sewers in London in the Victorian age, he took the prescient view that since they were only going to do this once, they should plan for an unforeseen rise in the population. It is the kind of long-term thinking that served London very well, but this has been replaced by short-termism.

Bureaucracy

The UK planning process is long and expensive. East of London the Thames has only one crossing at Dartford. A proposed new crossing has so far cost £267m, and it hasn’t got beyond the planning phase.  The planning process currently runs to 359,866 pages, but not a spade in the ground. To read the planning process would take 365 days, 24 hours a day. Norway, a country noted for its high cost of living, built the similar length – Laerdal tunnel for pretty much the same price as the Thames planning process and all done within 3 years. The eventual cost for the Thames Crossing is forecast to be £9 billion, but that is before the inevitable cost-overruns.

Role of Private Firms

However, are NIMBY’s solely to blame? The Local government association claims since 2009, 2.5 million plots have been approved but only 1.5 million have been built on. Private firms effectively are banking planning permission, but their business model prioritises high value, low volume and not the kind of higher volume cheaper price the country needs. Certainly, the decision to stop building social housing has been critical for reducing the overall level of homebuilding, peaking at 400,000 in the late 1960s.

A final observation is that the UK has a greater population density than say France. The UK population is effectively squeezed into the lower half of England. This only adds to the pressure between protecting green space and building.

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