10 Ways To Revive Our Economy
7 min read
Why is the UK so slow to build? Sam Dumitriu, head of policy at Britain Remade, shares the think tank’s best ideas for injecting new life into the country
For almost two decades, Britain’s economy has stalled. Living standards have stagnated. The gap between Britain and the US has widened (though current policies may reverse that), while the gap between Britain and Poland has narrowed.
At the root of our relative economic decline is our inability to build. Britain has many strengths: world-class professional services, some of the best universities in the world, the City of London and the best VC sector in the world (outside of the US). Yet, we fall down when it comes to actually building stuff. HS2 is the world’s most expensive railway line. Hinkley Point C, the most expensive nuclear power plant. The Lower Thames Crossing’s 360,000-page planning application, finally approved after years of talk, cost more to produce than Norway spent building the world’s longest road tunnel. It wasn’t always this way. Britain built the first coal-fired power plant, the first railway, the first metro, and the first nuclear power plant. In fact, in 1965 Britain had more nuclear power plants than the rest of the world combined.
To get Britain growing again, we need to get Britain building again.
One: Make it easier for cities to build trams
Here’s another British first. In the 19th Century, Leeds had built Europe’s first electric tram system. Today, it is the largest city in Europe without a metro or tramway. Building a tram in Leeds has been talked about for years – there’s even legislation on the books for a Leeds super tram. Europe’s seen a tram boom. There are 28 French cities with a tram. Germany does even better with 60. Why can’t we replicate that? One issue is cost. British trams cost double the European average. When Brits build trams, the tram promoter pays to move most of the utilities underneath the tracks. In Europe, it’s the other way round. The result is Brits move more wires and pipes – pushing costs up. Another problem is speed; it takes cities more than three years to get the go ahead for a tramway (through what’s called a Transport and Works Act Order). In Europe, approvals are quicker and done at a local level. We should copy Europe on both fronts.
Two: Devolve funding for local infrastructure
Even with the rise of city and metro mayors, Britain is over-centralised. In most European countries, local governments fund local public transport upgrades through local taxes and fees. In Britain, councils spend years producing business cases in the hope that the Department for Transport is willing to part with the cash. Projects proceed slowly as a result. Cost control is weaker, too. This should change. Metro mayors should be given new powers to levy payroll taxes on employers to fund new transport (the “French model”), capture the uplift in stamp duty and business rates receipts, and levy new rate supplements and council tax precepts.
Three: Stop over-regulating nuclear power
Nuclear power is a miracle. Not only does it produce zero-carbon power – whatever the weather – on a tiny land footprint, it also creates thousands of good jobs. One problem: in Britain, it ain’t cheap to build these days. The big driver of costs is over-regulation based on scientifically illiterate fears around radiation exposure. Nuclear, in Britain, is regulated under a principle known as ALARP – as low as reasonably practicable. Extremely expensive safety upgrades are required for minimal benefits. For example, the Office for Nuclear Regulation required Hitachi-GE to add expensive filters to their design. The filters would reduce radiation exposure in a rare discharge event by the equivalent of eating one banana. We need a more proportionate approach.
Four: Create Clean Energy Zones
When gas prices spiked after Russia’s unprovoked attack on Ukraine, Spain re-wrote the planning rules for renewables. New wind and solar farms built on land of low biodiversity value benefit from fast-track planning permission. For example, there is no requirement to carry out an environmental impact assessment, which in Britain can stretch tens of thousands of pages. Britain should copy this approach and create clean energy zones for solar and onshore wind to fast-track clean domestic power.
Five: Let councils retain business rates in full for major infrastructure
Britain has an incentive mismatch problem. New infrastructure like pylons, power stations, and data centres creates massive benefits for Britain as a whole, but local people mostly experience them as costs: more traffic, disruption during construction, worse views. One way to better align local and national incentives would be to reform business rates and allow local authorities to retain the full increase from new infrastructure. At the moment, councils only retain 50 per cent. If they got the full whack, it would be transformative. The business rates bill of a large data centre on the scale of Stockley Park would cover the entire adult social care overspend of a council like Havering.
Six: Regenerate post-war housing estates
Many post-war housing estates are in poor condition and require expensive upgrades. They also often happen to have been built at low densities in desirable areas. This creates an opportunity. Demolishing and rebuilding estates at higher densities can deliver a win-win. Bigger, warmer homes for existing tenants funded by more market-rate housing sold on the private market. When tenants are balloted on it, they overwhelmingly vote in favour. We should make it even easier to renew estates by automatically approving projects with tenant ballots in favour.
Seven: Make it easier to build near stations
Britain should learn from New Zealand, where housing reforms have led to a construction boom and falling rents. The Kiwi rules grant near-automatic planning permission to new mid-rise housing in city centres and near public transport stations. The government should use new National Development Management Policy powers to automatically permit new housing (up to six-storeys) in high-rent cities within walking distance of train or tube stops.
Eight: Build new towns (in the right places)
New towns have a mixed record. Some such as Stevenage and Milton Keynes are economically successful, while others, most notoriously Skelmersdale, have been failures and seen high levels of poverty. What’s the common factor of the successes? Access to booming cities that have housing shortages. The new wave of new towns should be built within commuting distance of high-price, high-productivity cities like Cambridge, York, Bristol, Oxford, and most importantly, London. Where possible, they should take advantage of new investments in transport like Crossrail and HS2 (there will be much more capacity on the West Coast Mainline as a result).
Nine: Solve the Bat Tunnel problem (completely)
The Planning and Infrastructure Bill could revolutionise the way Britain protects nature. Instead of the inefficient site-by-site, specimen-by-specimen approach that gave us HS2’s bat tunnel and Hinkley Point C’s fish disco, the new approach looks at species and environmental features at a higher level. Instead of being forced to mitigate every impact, developers will be able to pay into a new fund to be spent on more effective nature recovery solutions. This is the right approach, but as currently written, the bill may still leave the door open for bat tunnel-style waste in certain circumstances. What’s needed is a backstop to allow the Secretary of State to disapply habitats rules when following them would lead to clearly disproportionate outcomes. In return, developers would be required to make significant payments to a fund tasked with delivering on the government’s 25-year environmental plan.
Ten: Make Statutory Consultee powers ‘Use it or Lose it’
Developments across Britain are held up by the requirement to consult numerous government bodies from Sports England (“Your cricket ball speed assessment was inadequate”) to Natural England. The government plans to remove a number of Statutory Consultees and make the process less onerous. However, there is still a risk of delay from the remaining Stat Cons. To speed things up, the government should move to a “use it or lose it” model. If a statutory consultee fails to respond within the 21-day deadline, then their silence should be recorded as “no objection lodged”.
