Good article. Suspect delay is one of the largest and most underappreciated impact of regulation. Especially when cost of capital is high. You buy land for £100m, say your cost of capital is 8%, if you have to wait four years for permission to build, you are already at £136m of sunk cost. Plus there is the risk permission may be refused.
I think there is a key difference between the UK and France that is missed which is rural population density.
With the TGV lines (LGVs) along the vast majority of them the population density is extremely low and there are very few towns of even 5000 people who could plausibly claim to be negatively affected by it who don’t have direct TGV service.
The only real places where that isn’t true is the Seine River towns south of Paris but a) they directly benefit because there isn’t express Paris-Lyon service barrelling through so they can have better service to Paris and b) apparently initially they did have TGV service (and there’s track for this) which they ended to have stronger TER service to Paris.
Also unlike Japan or Taiwan it’s more difficult to do Kodama style service as there are more destinations that aren’t in a line. Basically you have at least 4-5 top tier destinations that need separate service - Birmingham, Manchester, mainline destinations from Warrington Bank Quay, Liverpool and arguably Chester/North Wales and Stoke/Macclesfield.
Now clearly better choices could have been made - but it was certainly harder to deliver than in other countries.
This is such a super interesting analysys, it really lays out how centralised govenment can just make everything so much more expensive. I was wondering, what exactly is that 'Versement Transport' mechanism Dijon used? Sounds like a smart way to fund local stuff.
Although I don't agree with all of her worldview, Mariana Mazzucato has long been banging the drum for building state capacity and reducing reliance on consultants - as you allude to, that must be part of the answer. This doesn't need to mean a bigger state with more regulation - just one where expertise in the civil service is valued and nurtured rather than outsourced.
But clearly that's not the end of the matter. The incentive structure for councils to approve development is perverse, and I sadly cannot see that changing any time soon. Westminster is just not going to cede tax-and-spending powers to councils in any material way - notwithstanding your vv compelling case that doing so could unlock growth and development.
Lower population density also means you can e.g shut roads for an extended period or have construction traffic using roads without negatively affecting people.
Plus there’s just fewer people to organise opposition or to vote against you for doing something - and there’s also fewer people to pay off.
Good article. Suspect delay is one of the largest and most underappreciated impact of regulation. Especially when cost of capital is high. You buy land for £100m, say your cost of capital is 8%, if you have to wait four years for permission to build, you are already at £136m of sunk cost. Plus there is the risk permission may be refused.
I think there is a key difference between the UK and France that is missed which is rural population density.
With the TGV lines (LGVs) along the vast majority of them the population density is extremely low and there are very few towns of even 5000 people who could plausibly claim to be negatively affected by it who don’t have direct TGV service.
The only real places where that isn’t true is the Seine River towns south of Paris but a) they directly benefit because there isn’t express Paris-Lyon service barrelling through so they can have better service to Paris and b) apparently initially they did have TGV service (and there’s track for this) which they ended to have stronger TER service to Paris.
Also unlike Japan or Taiwan it’s more difficult to do Kodama style service as there are more destinations that aren’t in a line. Basically you have at least 4-5 top tier destinations that need separate service - Birmingham, Manchester, mainline destinations from Warrington Bank Quay, Liverpool and arguably Chester/North Wales and Stoke/Macclesfield.
Now clearly better choices could have been made - but it was certainly harder to deliver than in other countries.
This is such a super interesting analysys, it really lays out how centralised govenment can just make everything so much more expensive. I was wondering, what exactly is that 'Versement Transport' mechanism Dijon used? Sounds like a smart way to fund local stuff.
Reminds me a lot of Tom Forth's post https://tomforth.co.uk/whynorthenglandispoor/
Excellent piece.
Although I don't agree with all of her worldview, Mariana Mazzucato has long been banging the drum for building state capacity and reducing reliance on consultants - as you allude to, that must be part of the answer. This doesn't need to mean a bigger state with more regulation - just one where expertise in the civil service is valued and nurtured rather than outsourced.
But clearly that's not the end of the matter. The incentive structure for councils to approve development is perverse, and I sadly cannot see that changing any time soon. Westminster is just not going to cede tax-and-spending powers to councils in any material way - notwithstanding your vv compelling case that doing so could unlock growth and development.
So why are places like Manchester so pro-growth if they are not incentivised to be?
Lower population density also means you can e.g shut roads for an extended period or have construction traffic using roads without negatively affecting people.
Plus there’s just fewer people to organise opposition or to vote against you for doing something - and there’s also fewer people to pay off.