Infrastructure Costs: Feedback and future posts

What next for Britain Remade's infrastructure cost research

It has been a few weeks now since we released our data showing that Britain pays more than almost any other country to build new transport infrastructure and there’s been one common (and unsurprising) response: “Why?”

Some have chipped in with their own explanations. One Telegraph reader suggested that the problem was the use of smartphones on building sites. While Michael Walker of Novara Media asked me if neoliberalism was to blame. Others have focused in on the English language and the Common Law as the underlying source of costs.

Before we published our data, we shared it with the Financial Times’s John Burn-Murdoch. His column on the data homed in on one key cause: NIMBYism.

“Supersized costs and bloated durations are not unrelated. In a 2019 study, two American economists wrote that the rise of the environmental movement and the emergence of homeowners as organised lobbyists — they call this “citizen voice”, others might call it Nimbyism — have added significant delays, alterations and associated costs to construction projects in the US.

“The authors calculated that a 0.01 mile per year increase in the “wiggliness” of a road — the type of thing that could result from the requirement to add additional tunnels, cuttings or noise barriers to a route — comes with a $9.7mn increase in costs. These exact sorts of alterations have already added significant time and cost to HS2.”

Britain’s planning system clearly pushes up costs. The Lower Thames Crossing’s £267m planning application is powerful evidence of that, but the real harm comes from how projects are re-designed to avoid objections

Take this long list of costly changes made to the Lower Thames Crossing in response to consultation. Or the 1.7mile “green” tunnel being built in Northamptonshire for HS2. I put scare quotes around “green” because of course producing 5,410 massive concrete segments is anything but the green option.

In Powerbook, Britain Remade set out over twenty key reforms to speed up the planning processes that hold back the deployment of clean energy. Many would be equally helpful at making it easier to build new transport infrastructure quickly, flexibly, and cheaply. Yet, planning and NIMBYism are clearly not the only problems. 

Alon Levy, who has done more to raise awareness about the fact that some countries build infrastructure cheaply and some don’t than anyone else, offered some thoughts on our research on the Pedestrian Observations blog.

While praising our research, Levy reckons there were a few things we missed. 

First, Levy argues our research would benefit from looking back further, writing:

“The construction costs as presented are a snapshot in time: in the 21st century, British (and Canadian, and American) costs have been very high compared with Continental Europe. … The biggest missing numbers are from London in the 1960s and 70s: the Victoria and Jubilee lines were not at all atypically expensive for European subway tunnels at the time – at the time, metro construction costs in London, Italian cities, and German cities were about the same. Since then, Germany has inched up slightly, Italy has gone down due to the anti-corruption laws passed in the 1990s, and the United Kingdom has nearly quadrupled its construction costs over the Jubilee, which was already noticeably higher than the Victoria.

“The upshot is that whatever happened that made Britain incapable of building happened between the 1970s and the 1990s. The construction cost increase since the 1990s has been real but small.”

Second, Levy draws attention to what are termed soft costs.

“Britain has a soft costs crisis. Marco Chitti points out how design costs that amount to 5-10% of the hard costs in Italy (and France, and Spain) are a much larger proportion of the overall budget in English-speaking countries, with some recent projects clocking in at 50%. In the American discourse, this is mocked as “consultants supervising consultants.” Every time something is outsourced, there’s additional friction in contracting – and the extent of outsourcing to private consultants is rapidly growing in the Anglosphere.”

Levy is also critical of the media’s singular focus on NIMBYism. This is a little harsh in my view for two reasons. 

First, by far the most explosive stat in our analysis was that of the Lower Thames Crossing’s incredibly expensive planning application - £267m. And it chimes into a wider true narrative on infrastructure, major infrastructure projects are forced to wrestle with much greater bureaucracy than ever before. Compare the Jubilee Line Extension’s less than 400 page Environmental Impact Assessment with the 44,000 page equivalent for Sizewell C. The latter of which may not yet be deemed long enough as opponents of Sizewell C recently won an appeal to have the project judicially reviewed on the grounds that not all environmental impacts had been assessed. So while NIMBYism isn’t the only problem, it clearly is a major one and I’m glad it is being highlighted.

Second, in the weeks since the media has covered a wider range of causes. In particular, I recommend Helen Thomas’s recent FT Column on how indecision and delay pushes up costs.

She argues stop-start investment pushes up costs in a number of ways. First, there’s the skills issue: 

“Companies have little incentive to invest in training and career development without a pipeline of work. Specialist skills, such as that taught at the welding academy set up for the nuclear construction at Hinkley Point C, dwindle when there isn’t more work to move on to. Knowhow isn’t transferred from one (preferably standardised) project to the next.” 

Second, Thomas makes an important point about industry structure.

Companies don’t build bigger in-house capabilities or invest in advanced technology when their biggest client is erratic. The UK’s biggest construction group, Balfour Beatty, with about £9bn in revenues last year, is dwarfed by French or Spanish contractors such as Vinci with €62bn in revenues or ACS with €34bn. 

Large UK contractors employ only 14 per cent of the construction workforce, with 86 per cent in small and medium-sized enterprises, according to Noble Francis at the Construction Products Association. “The volatility of infrastructure demand means that the business models of contractors are not based on the most efficient ways of working but on dealing with volatility, which means subcontracting out the cost, activity and risk to smaller specialist contractors,” he says. 

Our initial research was heavy on comparisons but relatively light on causes and even lighter on solutions. In the coming weeks, we’ll try to fix the first part of that at least and set out what we think are some of the key reasons why infrastructure is more expensive to build in Britain than almost anywhere else.

Here’s what you can expect future posts on:

• The planning system (or how NIMBYs make everything cost more)

• Short-termism (or how stop-start infrastructure cycles push up costs)

• State capacity (or how a lack of engineering expertise within the civil service and bad procurement practices leave us paying more)

• How we build (or how a lack of standardisation and a desire to ‘be world-leading’ comes at a price)

We’re also going to be posting deep dives into rail electrification and why Edinburgh's tram cost more than twice as much per mile as the most expensive French tram project we looked at.

Watch this space!

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What I’ve been reading

It’s not just roads, railways, and trams that Britain pays over the odds on. Harry Rushworth’s Full Steam Ahead Substack points out that installing zebra crossing (i.e. painting a few lines on a road) is more expensive here than almost anywhere else. Why? Britain somewhat uniquely gold-plates zebra crossings by requiring that “to legally paint a zebra, you must also erect black and white totem poles with flashing yellow bulbs on top, or to use their technical name, Belisha Beacons.”

The good news is that fixing this would be easy, it only requires an update of the Traffic Signs regulations, and councils such as Greater Manchester are desperate to paint beacon-less zebras.