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Why Britain struggles to build infrastructure
Britain's planning system for major infrastructure isn't working.
Many of Britain’s most pressing economic problems can be linked to our collective inability to build.
Housing shortages in the UK’s most productive places have led to low rates of home-ownership, a higher cost of living, and slower rates of productivity growth.
It is harder to capitalise on the UK’s world-class research universities because of a shortage of commercial lab space.
Many parts of South-East England were hit hard by droughts this year in part because of a failure to build new reservoirs.
Large cities outside of the South East such as Birmingham and Leeds are unable to capitalise the productivity benefits of being big due to a failure to build more tram and metro lines (and in turn to build enough houses near them).
There is a genuine risk of blackouts this Winter and energy bills have hit record levels in large part because not enough wind, solar, nuclear, and grid infrastructure has been built.
One of my main focuses since joining Britain Remade (more on that here) has been on trying to understand the last problem on that list. In the face of an energy crisis, why can’t we accelerate the deployment of new solar, wind, nuclear, and grid infrastructure?
Working with a team of researchers, I’ve been digging deep into the planning system for what are known as ‘Nationally Significant Infrastructure Projects’ or NSIPs for short.
First, a bit of context. As of 2012, planning applications for major infrastructure projects bypass local authorities and go straight to the planning inspectorate, who review the application and then make a recommendation to the relevant Secretary of State, who in turn decides whether or not to grant consent. (For a brief period between 2008 and 2012, the decision was made by an independent Infrastructure Planning Commission rather than a politician.)
Now as concerning as some of the stats below may seem, it is worth noting that the system that came before it was almost certainly worse.
Consider lawyer Matthew White’s description of the planning process for Heathrow’s Terminal 5.
“Planning permission for T5 was granted in November 2001, eight years after the planning application was lodged and following an inquiry that sat for nearly 4 years. The project involved 37 different applications across seven separate pieces of legislation. The total cost of the process was £84 million, of which approximately £18 million was borne by local and central government.”
Yet, the status quo is far from ideal either. It is close-to impossible for the Government to deliver its 2035 zero carbon power plan under the existing planning system. The same is even more true of Labour’s even more ambitious target of 2030.
For example, Hornsea 3, a wind farm off the coast of Norfolk, won’t be connected to the grid until 2027 despite originally being proposed in 2016. In some cases, offshore wind farms have taken as long as 13 years to go from development to deployment.
It’s not just new wind farms a hundred or so miles off the coast that need to be built either. We also need to build transmission lines to move the power from where it's windy to where people live and to build battery storage/nuclear power/hydrogen to provide baseload power so the lights stay on when the wind stops blowing. National Grid’s CEO reckons we need to build “about seven times as much infrastructure in the next seven or eight years than we built in the last 32.”
Is the system working?
Using data scraped from the Planning Inspectorate website, we looked at two things:
The time it takes from lodging an application to receiving a decision from the secretary of state.
The total administrative burden for projects.
Here’s what we found.
Many decisions are late.
In theory, a decision should be reached within 18 months from application. This is broken down as:
28 days for acceptance
6 months for examination
3 months for recommendation report
3 months for SoS to make decision
The eagle-eyed among you will notice that only adds up to 13 months, not 18. The remaining five months or so is the length of time between acceptance and the examination process beginning.
We looked at all NSIP projects over the last decade to see if they met this timescale. Over this period, almost a third (29%) were delayed. The average delay was 7 months. The most delayed project was the Norfolk Vanguard Offshore wind farm, which waited 44 months for a decision. The project, which when completed will power almost 2m homes was originally accepted by the Secretary of State in 2020, but approval was quashed by the High Court a year later. It finally got the go-ahead in February 2022.
Our analysis also shows that decisions are taking longer to reach. Projects accepted for examination in 2012 received a decision within 17 months on average, however projects accepted in 2020 must wait 22 months for a decision on average.
The share of projects being delayed has also increased from 20% between 2012 and 2016 to 43% between 2017 onwards.
Our data chimes with a recent piece in The Economist which looked at the NSIP process.
For a few years the system worked splendidly, says Ian Fletcher of Jacobs, an engineering and professional-services firm. A large sewer under the Thames River known as the Tideway Tunnel (which Mr Fletcher worked on) was approved quickly, as was a new nuclear power station at Hinkley Point. Then things began to slow. “You could see the slip starting to happen” about five years ago, says Robbie Owen of Pinsent Masons, a legal firm.
The Economist blames the rise in delays on the pre-application process stretching longer and politicians failing to make timely decisions.
More delays at the first hurdle
The Planning Act 2008 itself only requires a single 28 day consultation, but developers are coming under increased pressure to do more, for longer. Part of this is natural, the purpose was to front load more at the pre-application stage. However, consultation documents (both number, and length), as well the length and number of consultations themselves are also on the rise.
The application stage is also becoming increasingly protracted. Mustafa Latif-Aramesh, a lawyer at BDB Pitmans told me that in the last 2 years the number of refusals or withdrawals at the first hurdle when an application is first submitted is identical to the 10 years prior.
More decisions face judicial review.
Why has the system broken down? The Economist blames politicians, or at least, the ones in power.
Many of these hitches have a common cause. The entire system for assessing large infrastructure projects rests on a pile of documents known as “national policy statements”, which set out the government’s approach in specific areas. There is one for airports, one for roads and railways, one for electricity networks and so on. Planning inspectors use these documents to assess projects. The national policy statements are supposed to be refreshed about once every five years, but this has not been happening. As they grow yellow, planning grows fraught.
If National Policy Statements are not updated as the law changes, the risk of the planning inspectorate rejecting an application or further legal challenges rises substantially. Developers are essentially forced to guess what the national policy on nuclear or roads is, instead of being able to rely on an up-to-date statement of policy. The Economist cites an example of the A428, a widely popular new road scheme, being challenged in the courts as a result of this failure to update National Policy Statements.
The 2008 Planning Act process has been described as “a highly formalistic regime” where “strict compliance with statutory requirements is necessary in order for an application to be successful.”
When National Policy Statements are clear and up-to-date, this is not a massive problem. However, when developers are forced to guess what the Planning Inspectorate’s and Government’s policies are, legal challenges become more likely and are more likely to succeed.
Between 2010 and 2020, there were 16 judicial reviews of infrastructure planning decisions. Only one was successful overturning a Secretary of State’s decision to refuse permission for gas storage. But since 2021, there have been 7 legal challenges of which 4 were successful.
Document counts are on the rise.
One implication of having an uncertain, but highly formalistic regime is planning lawyers try to cover every base in order to preempt any legal challenge. You can see evidence of this in the extensive documentation for major planning projects.
To secure approval for Hornsea 3, the developer Ørsted had to submit over 1,400 separate documents, commissioned numerous wildlife studies, attend 15 hearings, and answer over 700 questions.
Looking across all projects to have gone through the NSIP regime, the trend is striking. The number of documents submitted per application has tripled on average from 381 in 2012 to 1143 in 2020.
The trend is most stark when you consider two similar projects. Hinkley Point C and Sizewell C use similar reactor designs and are located next to working or decommissioned power stations. Yet EDF submitted 1001 documents for Hinkley Point C and 4,378 for Sizewell C. In the space of 9 years, the number of documents required quadrupled
Page counts are too.
It’s not just the document numbers that are rising. Many legal challenges are related to environmental impacts and compliance with habitats regulations. As a result, environmental statements have grown extremely long.
It should be noted, by the way, that although environmental impact assessments (EIAs) are longer than ever before, England remains one of the most nature-depleted countries in the world and the Government’s ambition is merely to halt the decline by the end of the decade.
The East Anglia Two offshore wind farm’s environmental assessment stretched to 10,961 pages. Page counts are rising across the board with EIAs for wind farms. Hornsea Four’s EIA was 10,209 pages long, slightly longer than Hornsea Two at 10,179 pages despite the fact that Hornsea Four is a project almost half the size of Hornsea Two. Hornsea Three was over double the size of Hornsea Four and yet its EIA was 7,924 pages long, almost a quarter less than Hornsea Four’s.
Hinkley Point C (31,401 pages) and Sizewell C (44,260 pages) stands out as a point of comparison again. The number of pages for two comparable nuclear projects has gone up 30% in ten years.
Why does this matter?
More projects than ever before are green. In fact, all but three large, major energy projects over the past decade were in renewables or low-carbon power sources. Longer planning delays mean we are locked into polluting technologies for longer. Worse, because gas plays such an important role in our energy supply and global prices are currently at record highs, households are struggling to pay their energy bills and British industry is put at a competitive disadvantage, threatening jobs.
HyNet’s proposed Carbon Dioxide Pipeline is a good example of how the existing process creates a large burden on projects that will get us nearer to Net Zero. The pipeline will play an important role in decarbonising heavy industry by transporting CO2 produced in hard-to-decarbonise heavy industry to be stored safely under the sea. Projects like it are essential to the UK meeting its Net Zero targets, but HyNet’s environmental statement alone stretches to 8,551 pages.
But, the problem isn’t just it taking an extra year or two to build critical infrastructure projects. The unpredictability and risk of legal challenge deters investment. This analysis has focused on the projects that have been put to the planning inspectorate, but under a more predictable and faster planning its likely many more would be proposed.
There are massive economic advantages to making it easier to deploy new clean technologies too. Take Hornsea 3 again, among the 5,000 jobs supported in its construction, there will be 750 in a new monopile factory in Teesside for whom Hornsea 3 will be their first customer. Having a clear route to market makes the UK more attractive to international investors such as SeAH, the South Korean firm who own the Teesside factory, but that route to market is dependent on the UK continuing to approve projects.
How to fix it?
So what’s to be done? There are no easy fixes, but publishing up-to-date national policy statements is a good place to start.
The EU’s been considering an interesting solution as part of their RePowerEU policy. Under their proposal, member states would designate certain areas as ‘go-to zones’ for renewable projects. In ‘go-to zones’ projects would be able to gain permission to go ahead without having to fill out environmental impact assessments.
In a YouGov poll commissioned by Britain Remade, we recently tested a similar idea: Clean Energy Zones, where new renewable projects would get fast-tracked planning approval. Just 11% of voters were opposed, while a majority (52%) supported the idea.
While NIMBY opposition often curtails or delays new infrastructure investment, across the wider population there’s strong support for making it easier to deploy new clean energy infrastructure.