Heathrow airport expansion; the Norfolk Boreas offshore wind farm; and the next phase of Britain’s smart motorways – what do these projects have in common? They are all planned government-supported infrastructure projects that have hit the buffers. Each might not be significant on its own, but put together they impart the idea of a general malaise affecting Britain’s ability to build major infrastructure, especially following the government’s decision to cancel the £36bn northern section of the High Speed 2 railway line.
The cancellation of large projects risks damaging the UK’s reputation as a good destination for future infrastructure investment, and has ramifications for companies in the infrastructure supply chain that were anticipating being involved in projects. But how severe is the problem? Large projects can give a distorted impression, but our analysis of the Infrastructure and Projects Authority’s report National Infrastructure Construction Pipeline echoes that downbeat message.
A snapshot taken in September is worrying. Of all 250 projects in the planning and consents process between 2013 and 2021, just a third are up and running. Of the rest, a fifth (20 per cent) were turned down at planning or have stalled or been cancelled, 43 per cent have the green light but have not yet been completed, while 5 per cent are waiting for a planning decision.
Even that 20 per cent failure rate may be an underestimate, as projects that have passed planning and are awaiting or under construction may never be completed. Just under a third of projects that were in the planning system in 2013 have still not been completed.
One area of particular concern is the energy sector, especially in light of the recent price crisis and the need to enlarge our renewable energy capacity. A database published by the Department for Energy and Net Zero tells a story of slow progress and stagnation. Between 2010 and 2018 a quarter of the megawatt capacity that was proposed was withdrawn or refused. An even higher proportion of projects will probably not be completed: of projects that received planning permission in 2010, a third are not operational or under construction.
Onshore wind projects had the highest failure rates, with 45 per cent of capacity that was proposed between 2010 and 2018 having planning applications withdrawn or rejected. This was partly a symptom of changes in political minds: in 2016 David Cameron, the prime minister, imposed a de facto ban by allowing a single objection to a wind turbine application to block its development. This was only reversed in September this year.
The impact of delays or cancellations does not just mean the UK is less able to achieve its net zero or levelling up goals now. It threatens international investors’ confidence in the UK at a time when they are being wooed by incentives elsewhere, not least the US Inflation Reduction Act. Delays also create significant uncertainty for developers and construction firms, which is likely to lower investment levels.
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Is there light at the end of the tunnel? Against that backdrop, investors, landowners and developers alike are keenly awaiting Jeremy Hunt’s Autumn Statement tomorrow (22 November) for proposals to unblock the logjam. The Chancellor has an opportunity to unveil initiatives to help unlock the planning system and get Britain building. We lay out three proposals.
The first is creating a semi-independent body to determine priorities, similar to the Office for Budget Responsibility, to “de-politicise” infrastructure planning. This would prioritise activities such as repairs and maintenance and help to avoid vanity projects such as the London Garden Bridge.
Second, introduce measures necessary to ensure local communities receive fair benefits from hosting network infrastructure which supports national objectives, such as electricity transmission lines. This would help to reduce the risk of legal challenge. Increasing network infrastructure is essential as it will help to ease the long wait times energy projects are currently experiencing to receive a grid connection.
Third, make it a legal requirement to review national policy statements for energy, water resources and national networks every five years. Part of the reason consent times and judicial reviews for projects have increased is because national policy statements have not been updated, making it hard for the planning inspectorate to determine the meaning of old guidance.
By ensuring strong and targeted support for infrastructure projects, the government can power economic recovery and growth.
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