The rot at the heart of British infrastructure projects is endemic

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2 days ago

When elected to power, Labour promised to be the party of the builders, not the blockers, and committed itself to unleashing a housebuilding and infrastructure boom.
Nearly a year into government, and the legislation that is supposed to make this happen, the Planning and Infrastructure Bill, is slowly wending its way through Parliament, having not yet been submitted to the House of Lords for scrutiny.
The intention is to cut planning restrictions, but whether it also delivers in reducing the spiralling costs and interminable delays of development in the UK is anyone's guess. There are good reasons for scepticism.
Meanwhile, the endless sorrow of HS2, the most expensive piece of infrastructure ever built in Britain, continues apace.
According to a recent report in Rail magazine, which has not been denied, the London to Birmingham route is now likely to be pushed back a further six years, and may not be complete until 2039.
Estimated costs have also further escalated to a jaw dropping £100bn, this despite the fact that the northern leg has been scrapped and that initially at least, the line will terminate not as planned at Euston but at Old Oak on the outskirts of London.
Just to add a touch of the surreal to this towering example of ill-spent taxpayer pounds, the spanking new Birmingham terminal at Curzon Street is likely to be completed years before the line itself, and will therefore stand empty, its seven platforms gathering tumble weed in the long wait for their first passengers.
In any case, the travails of HS2 have become a symbol of Britain's seemingly stultifying inability to get anything done. Somewhat misleadingly so, as it happens.
The largest part of the problem with HS2 is not the planning constraints, or even the ruinous project management, but that it should never have been attempted in the first place, an admission disarmingly made by Peter Mandelson, now Britain's ambassador to Washington, more than 12 years ago.
The previous Labour government only went ahead with the project, he admitted, because it was afraid of being upstaged by the Tories in creating a high-speed, north-south link. The economic case for it was always 'flimsy', he further conceded.
Back then, it should be pointed out, the line was expected to cost 'only' £35bn before rolling stock, and include stage two branch lines to Manchester, Leeds and Wigan.
The whole thing should have been axed there and then, but the Coalition government was terrified of the stick it would get from northern lobbies and voters for cancelling a project seen as totemic in any levelling up agenda.
What's more, so much time, effort and money had by then already been expended that it was considered too big a write off to be politically palatable.
So on it went, but the main explanation for its mounting costs was already obvious. Planning restrictions, constantly changing specifications, outlandish environmental demands such as the notorious £100m 'bat tunnel', were admittedly a part of it.
Yet the contrast with HS1, which came in roughly on time and on budget, could scarcely have been greater. HS1, which links the channel tunnel and London, actually had a purpose and an economic rationale.
Furthermore, it had a responsible minister, John Prescott, who after taunts from the French to the effect that the British couldn't organise a piss up in a brewery, was determined to grip the project and push it through.
HS2 has never commanded a similar consensus or a convincing commercial justification, making it an ongoing object of bitterness, compromise and delay.
Oppressive planning rules and environmental impact studies can no longer be used as an excuse; for HS2, these have all been put to bed, but still the costs keep rising.
Shockingly, according to a report by the National Audit Office, simply cancelling the second phase of the project linking Birmingham to Manchester and Leeds is in itself likely to consume £100m.
Why? Apparently it's to do with 'safely and efficiently' when closing down Phase 2 construction sites, insignificant though these are. Losses on land already compulsorily purchased but no longer needed further up the ante. And they wonder why the country is going bust.
The Department for Transport, the authority responsible for overseeing and funding the project, might seem a particularly egregious example of Britain's inability to get anything done, but sadly these failings are not confined to the public sector.
The other standout example is the privately funded Hinkley Point C nuclear power station in Somerset. It should have been up and running by now.
Indeed, the one-time boss of the sponsoring company, EDF Energy, once ventured that by 2017 people would be cooking their Christmas lunches on power supplied by Hinkley. It scarcely needs restating that the latest target date for completion stretches out to 2031.
In the meantime, costs have ballooned from an initial estimate of £18bn to £46bn in today's money. Once up and running, Hinkley will be one of the most expensive sources of electricity anywhere in the world.
If it's any consolation, the UK is far from alone in the sclerosis that seemingly grips infrastructure development, gainful or otherwise.
Like the UK, Germany used to be good at this kind of stuff, but became a laughing stock after Berlin's Brandenburg airport came in nine years behind schedule at a cost of more than three times the initial estimate.
A McKinsey study of more than 500 global infrastructure projects found that only 5pc of them were completed within their original budget and schedule. The average project ran 37pc over budget and 53pc over schedule.
Separate research by Oxford's Saïd Business School found that of more than 3000 infrastructure projects studied, only 0.2pc were completed on time and to budget.
All the same, the situation appears to be notably worse in the UK than elsewhere. According to the National Infrastructure and Service Transformation Authority (Nista), the cost of construction in Britain has risen by nearly a third more than GDP per capita since 2007.
That often asked question – why is it that we seem to be getting ever fewer bangs for our bucks in terms of public services and state-backed infrastructure – is partly answered by phenomena such as this.
It's not just about population growth or the demands of an ageing society; it's also about incompetence, lack of clear objectives, and a cartel-like contracting industry that knows how to play the system to its own ends. At both national and local level, it's endemic and verging on the corrupt.
As it embarks on the fantastically costly and disruptive decarbonisation of Britain's electricity network, the Government promises that it will be addressing these and many of the other issues that have been slowing things down and compounding their cost.
Relatively straightforward improvements in project delivery systems alone could reduce final construction costs by between 10pc and 25pc, Nista says. Don't hold your breath.
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