WEBVTT - Can the UK Spending Review Turn Ambition into Action?

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Welcome to in the City.

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<v Speaker 1>Each week we unpack a story that's crucial to the

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<v Speaker 1>world's financial capitals. I'm alegra Stratton and I'm Fronci Laqua.

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<v Speaker 1>Now the government's svend your Review is just around the corner.

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<v Speaker 1>Next week, we're going to get a clearer picture of

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<v Speaker 1>how funding will be allocated across departments for the next

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<v Speaker 1>three years. Can you believe it? There's growing speculation that

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<v Speaker 1>Rachel Reaves, the Chancellor, will make a significant push on infrastructure,

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<v Speaker 1>a signal perhaps of shifting priorities.

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<v Speaker 3>Welcome to the City of London, The City of the City,

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<v Speaker 3>the City of London, the lease mind, the gap between

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<v Speaker 3>the and the financial heart of the country, the City,

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<v Speaker 3>the City.

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<v Speaker 1>Welcome to in the City.

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<v Speaker 3>Stand clear of the doors pe.

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<v Speaker 4>So like were In this episode, we're stepping back to

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<v Speaker 4>look at the bigger picture. Could this spending review mark

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<v Speaker 4>a real turning point? Might it lay the groundwork for

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<v Speaker 4>lasting resilience rather than just offering short term relief.

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<v Speaker 3>Well.

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<v Speaker 4>To discuss all of this, we're joined by Sam Richards,

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<v Speaker 4>the chief executive of the think tank Britain Remade and

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<v Speaker 4>former Special advisor at number ten Downing Street. Sam, great

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<v Speaker 4>to have you with us. Thanks for having me today Wednesday,

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<v Speaker 4>when we're recording this podcast, Rachel reeves Has says the

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<v Speaker 4>Spending Review will be focused on the priorities of working people.

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<v Speaker 4>What does that look like.

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<v Speaker 5>I think that Britain has at its heart a fundamental

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<v Speaker 5>problem with growth and what sits underneath that. It's been

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<v Speaker 5>our failure to build the new sources of energy, the

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<v Speaker 5>new homes and the new transport links that we need.

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<v Speaker 5>So a focus on the priorities of working people have

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<v Speaker 5>to be unlocking those building those key bits of instructure,

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<v Speaker 5>bringing down the cost of housing. London has the most

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<v Speaker 5>expensive housing in the world, bringing down the cost of

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<v Speaker 5>energy from the highest industrial energy prices in the world,

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<v Speaker 5>and making it easier to see friends and family. So

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<v Speaker 5>hopefully we're going to see some of that with this

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<v Speaker 5>new focus on building new infrastructure that they see not

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<v Speaker 5>just in the Spending Review but also in the government's

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<v Speaker 5>planning Bill.

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<v Speaker 1>We're talking a second about how you turn a great

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<v Speaker 1>big berzuoker of cash, to use a borish chance of

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<v Speaker 1>phrase that I always think does the job very nicely,

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<v Speaker 1>how you turn these many billions that her team of

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<v Speaker 1>briefing into as France says, that kind of experience for people.

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<v Speaker 1>So we talk about that later because that is tough

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<v Speaker 1>and it's not quick, but before we do just in

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<v Speaker 1>terms of the diagnosis of the problem, because you've worked

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<v Speaker 1>in this all the time, Sam with Britain Remade, is

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<v Speaker 1>you know, if you look at the energy transition and

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<v Speaker 1>so on, we've got such a grid problem, We've got

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<v Speaker 1>such an infrastructure problem that we have to clear away

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<v Speaker 1>so many of those planning hurdles. Clearly the government's talking

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<v Speaker 1>about doing that lots and lots in a separate piece

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<v Speaker 1>of legislation. What's your sense even when they turn on

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<v Speaker 1>the taps for this infrastructure, that it's going to work?

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<v Speaker 5>So is Yeah, it's worth stepping back and remembering just

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<v Speaker 5>how bad the problem is. We are currently building the

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<v Speaker 5>world's most expensive railway line with HS two. We are

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<v Speaker 5>currently building the world's most expensive nuclear power plant, indeed

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<v Speaker 5>the most expensive nuclear power plant ever constructed in the

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<v Speaker 5>history of the human race. The planning application for the

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<v Speaker 5>Lower Tens crossing cost a quarter of a billion pounds.

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<v Speaker 5>That is more than it costs Norway to build the

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<v Speaker 5>world's longest tunnel. Now what is the reason for all

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<v Speaker 5>of this. Well, if you take the example of HS two,

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<v Speaker 5>is a notable part down to the fact that we're

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<v Speaker 5>spending one hundred and twenty one million pounds on a

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<v Speaker 5>back tunnel to protect three hundred vextine bats that live

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<v Speaker 5>in a nearby wood to where the line goes through,

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<v Speaker 5>not actually the line goes through. If you take the

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<v Speaker 5>example of HS two, it's the fact that EDF have

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<v Speaker 5>been wrangling with regulators for eight years about installing this

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<v Speaker 5>fish disco. This is an underwater acoustic to terrent to

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<v Speaker 5>stop the fish room swim me into the exhaust pipes

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<v Speaker 5>of the plan. So the question is then if the government,

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<v Speaker 5>as you put fires this big berzuker of cash, is

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<v Speaker 5>it just going to go into these world record expensive

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<v Speaker 5>products and we're not actually going to see any output.

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<v Speaker 5>And that's where what they're doing with the Planning Bill

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<v Speaker 5>to streamline some of the environmental rules and regulations to

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<v Speaker 5>make it harder to sue the government the majority of

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<v Speaker 5>instructional products currently end up in the courts, and to

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<v Speaker 5>reduce the cost of building.

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<v Speaker 2>That's why that is so critical.

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<v Speaker 1>Just explain for us how you would sort of square

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<v Speaker 1>the circle if you're the labor government, because in the

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<v Speaker 1>Guardian today they've got hundreds of they've got people criticizing

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<v Speaker 1>them for the effect that their planning bill will have

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<v Speaker 1>on nature.

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<v Speaker 5>So it's worth bearing in mind that as we're making

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<v Speaker 5>it incredibly expensive to build the homes and the railway

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<v Speaker 5>lines and the roads and the energy that we need,

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<v Speaker 5>we're also failing to protect nature under the current regime.

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<v Speaker 5>So all of our key bio diversity indicators, from farmland

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<v Speaker 5>birds to insect life in decline.

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<v Speaker 2>Now, why is that? How have we arrived at the

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<v Speaker 2>worst of both world.

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<v Speaker 5>It's the system that both fails to protect nature and

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<v Speaker 5>also stops his building. Partly, it's the way that we

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<v Speaker 5>protect our site. So rather than having a strategic approach

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<v Speaker 5>where we go look across the country this is what

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<v Speaker 5>we want to happen with our various species, we do

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<v Speaker 5>it this site by site, piecemeal approach.

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<v Speaker 1>The next question is when we're looking ahead to next

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<v Speaker 1>week and you've got Rachel Reeves already in a speech

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<v Speaker 1>on Wednesday next week and saying you know it's going

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<v Speaker 1>to be big and meaningful, and Ran I'm reminded of

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<v Speaker 1>the interview in this podcast studio we did with Jim O'Neil,

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<v Speaker 1>where he was defending Rachel Reeves through some of her

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<v Speaker 1>difficult times and saying, just wait for this big infrastructure moment.

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<v Speaker 1>So it's really significant moment for Rachel Reeves and her allies.

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<v Speaker 1>But I suppose the question is is it it's these exorbitant,

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<v Speaker 1>expensive protections nature that are the significant thing, or is

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<v Speaker 1>it a bundle of things.

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<v Speaker 2>So there's a range of facts here.

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<v Speaker 5>If you look at something like building a new offshore

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<v Speaker 5>wind farm, right, it takes two years at most to

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<v Speaker 5>physically build an offshoal wind farm. At the moment, it

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<v Speaker 5>takes up to thirteen years to get one up and running.

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<v Speaker 5>That eleven year gap is in grit connections and planning.

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<v Speaker 5>About half of it is GRET connection and the planning chunk,

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<v Speaker 5>a big chunk of it is the compiling of environmental

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<v Speaker 5>impact assessments that stretch to tens of thousands of pages,

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<v Speaker 5>especially examples here. But a new railway line, I should

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<v Speaker 5>rather say reopening an existing railway line three point three

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<v Speaker 5>miles of track right between Bristol and Portishead. The environmental

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<v Speaker 5>impact assessment for that, well, the overall planning document was

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<v Speaker 5>eighty thousand pages. So the challenge that we have with

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<v Speaker 5>investment in this country is that it is actually incredibly

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<v Speaker 5>hard for private capital and indeed for government two actually

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<v Speaker 5>invest when there are such barriers on building. And actually

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<v Speaker 5>this is a problem that Joe Biden had with IRA

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<v Speaker 5>in that it was getting the money out the door

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<v Speaker 5>because of the permitting issues in America. It comes back

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<v Speaker 5>to the problem of it's all very well government signing

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<v Speaker 5>the checks, but if it's impossible to actually build that.

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<v Speaker 5>When farmed the factories for the new electric cars, if

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<v Speaker 5>you can't actually physically build the things because of the

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<v Speaker 5>planning rules and in particular the environmental rules, the environmental permitting,

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<v Speaker 5>then you're not going to get their growth.

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<v Speaker 1>Is Rachel Reeves when she announces this money next week,

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<v Speaker 1>do you believe that there's the parallel supply side reforms

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<v Speaker 1>on planning liberalization. Obviously, it's very very high profile that

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<v Speaker 1>they're pushing through this legislation through Parliament and they are

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<v Speaker 1>being criticized for all the reasons we've just discussed around

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<v Speaker 1>being too cavalier with nature. But do you think she's

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<v Speaker 1>got the balance right?

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<v Speaker 5>So the government's planning bill, there have lots of steps

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<v Speaker 5>in the right direction. Consultation adds years to the process,

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<v Speaker 5>and they are scrapping in a genuinely significant move, they

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<v Speaker 5>are removing pre application consultation for big infrastructure projects. So

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<v Speaker 5>that's a couple of years that we've gone from that

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<v Speaker 5>long timeline that I set out earlier.

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<v Speaker 2>That's important.

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<v Speaker 5>They are also, as I've said, making it harder to

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<v Speaker 5>sue the government. It is the case at the moment

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<v Speaker 5>that the majority of our infrastructure projects end up bogged

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<v Speaker 5>down in the courts, and they are reducing the number

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<v Speaker 5>of opportunities that people will have to sue the government.

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<v Speaker 2>It will to be the case though, that your costs.

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<v Speaker 5>Will be capped if you sue the government under environmental grounds.

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<v Speaker 5>A guy who the primesis himself has highlighted, who has

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<v Speaker 5>brought judicial reviews against pretty much every single road project

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<v Speaker 5>that the government has sought to build and will that

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<v Speaker 5>will likely still continue. And then the big question of

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<v Speaker 5>THEA is around this whether they're going far enough to

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<v Speaker 5>change the way that we do environmental protections. They are

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<v Speaker 5>looking to bring in this new system that is a

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<v Speaker 5>move to a strategic approach, and that is to be welcomed,

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<v Speaker 5>But the problem with the way that they're doing is

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<v Speaker 5>it's not a wholesale change to a new system. It's

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<v Speaker 5>rather instead on top of all of the existing planning

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<v Speaker 5>rules and the town and country Planning Acts and habitats regulations,

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<v Speaker 5>they're adding another layer on top that they hope will

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<v Speaker 5>kind of bypass that current system. And while there's some

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<v Speaker 5>evidence that will work for housing, and less confident that

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<v Speaker 5>that will work for other infrastructure projects.

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<v Speaker 2>So, you know, I think that there is a risk.

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<v Speaker 1>And that brings us back to where we started with

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<v Speaker 1>your question fran around. You know, she's talking today about

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<v Speaker 1>you know, working people, and this money's going to change

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<v Speaker 1>working people's lives. Well, it might do, but in ten

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<v Speaker 1>years time, we.

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<v Speaker 4>Also don't know how much money. How much money does

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<v Speaker 4>she need to make a material difference Right before we

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<v Speaker 4>even count on where she spends it, there's a spending review,

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<v Speaker 4>like how much money does she have to play with?

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<v Speaker 4>I know there's this tussle within government about saying, what's

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<v Speaker 4>the accountant that are setting policy she wants to spend.

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<v Speaker 4>But we're kind of beholden to investors, global investors.

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<v Speaker 5>As I say, when it comes to Britain's infrastructure, it

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<v Speaker 5>really is a question of making sure we get much

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<v Speaker 5>more bang for our buck. The nuclear power stations that

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<v Speaker 5>we built in the eighties and nineties were half the

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<v Speaker 5>price of Hinckley. The ones that we built in the

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<v Speaker 5>fifties and sixties were a quarter of the price. There

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<v Speaker 5>is nothing inherent in the technology that means that it

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<v Speaker 5>has to be as eyewateringly expensive.

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<v Speaker 1>You started the podcast Sam with these sort of really

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<v Speaker 1>inglorious titles like We're the slowest, to be the worst

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<v Speaker 1>with the most expensive? How did Britain get here?

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<v Speaker 2>Like?

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<v Speaker 1>How did we get so slow?

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<v Speaker 2>Yeah?

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<v Speaker 5>I mean, it's been the steady accretion of regulation in

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<v Speaker 5>a range of sectors, particularly in environmental rules, some of

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<v Speaker 5>which are come from domestic law, some of which come

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<v Speaker 5>from the EU. But it's also the case that there

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<v Speaker 5>are more rules on health and safety here, for example,

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<v Speaker 5>than there are if you're trying to build nuclear power

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<v Speaker 5>plants in Korea. There's a whole steady accretion of rules

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<v Speaker 5>and regulations across different areas that have gone as to

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<v Speaker 5>this point, and that is going to be the only

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<v Speaker 5>way through is going to be cutting away some of

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<v Speaker 5>that red tape.

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<v Speaker 1>There's quite a large number that are very pro these

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<v Speaker 1>reforms but there's a significant number that are worried that

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<v Speaker 1>it's going too far, and that is the tensions. But

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<v Speaker 1>it's sort of thematically played out on a number of issues,

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<v Speaker 1>isn't it. Between the leadership we still saw it probably

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<v Speaker 1>when we were in number ten two, but between the

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<v Speaker 1>leadership and the backbench that feel they're not sure what

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<v Speaker 1>the soul of this party is.

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<v Speaker 5>It is although I was at an event with Labor

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<v Speaker 5>Growth Group MPs on Monday, huge room, packed room, and

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<v Speaker 5>I think they recognize, not least given where the polls

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<v Speaker 5>are now that this government has to deliver. They have

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<v Speaker 5>to be the proof of the They've had all this

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<v Speaker 5>positive rhetoric about building and we've said we're going to

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<v Speaker 5>make it easy to get my housing gladder and they

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<v Speaker 5>have to have come twenty twenty nine actually delivered that stuff.

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<v Speaker 1>Will this help the bills pledge that Milibaan made there

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<v Speaker 1>three hundred pounds cheaper.

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<v Speaker 5>The source of our high energy bills is our reliance

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<v Speaker 5>on expensive gas and we need to build more of

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<v Speaker 5>our own clean energy sources to get off gas. So

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<v Speaker 5>yes in the long run. In the short run, he

0:12:22.679 --> 0:12:25.600
<v Speaker 5>is ultimately at the mercy of international gas markets.

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<v Speaker 4>If you look at holistically the spending review. There's loads

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<v Speaker 4>of ours heavily debated taxes right, it's rules around gifting

0:12:31.760 --> 0:12:34.800
<v Speaker 4>inheritance tax that could be in the crosshairs. The option

0:12:34.840 --> 0:12:37.800
<v Speaker 4>of freezing income tax threshold is also something that could

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<v Speaker 4>possibly change. So I know that through the lensam of infrastructure,

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<v Speaker 4>is this going to be the focal point or if

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<v Speaker 4>at the end of the day, this is a holistic

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<v Speaker 4>choice of whether you are fairer for the Brits at large,

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<v Speaker 4>does infrastructure come as a second or third priority.

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<v Speaker 5>Well, that's always been the challenge joint and that happened

0:12:57.640 --> 0:13:01.840
<v Speaker 5>in the twenty tens was one of the DISASTERUS decisions

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<v Speaker 5>then that we saw capsule budgets, long term capital budgets

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<v Speaker 5>slashed in order to patch up. If you keep delaying that,

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<v Speaker 5>if you keep putting that off, then fundamentally, yeah, you

0:13:14.520 --> 0:13:16.680
<v Speaker 5>get to a point where as we are now, you

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<v Speaker 5>have these incredibly ianie coss and you are relying in

0:13:19.559 --> 0:13:22.800
<v Speaker 5>some areas still on creaking Victorian infrastructure.

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<v Speaker 2>I mean, this is not.

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<v Speaker 1>The reservoir point is so interesting, So we've a net.

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<v Speaker 1>Last week they announced they'll be nine new reservoirs by

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<v Speaker 1>twenty fifty, but two of them by twenty thirty. And

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<v Speaker 1>to your point about how they're reforming planning that they're

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<v Speaker 1>going to take these the building of these two outside

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<v Speaker 1>of the local authority planning process, is that going to work?

0:13:41.800 --> 0:13:44.559
<v Speaker 5>Yeah, it's necessary because I mean you have seen the

0:13:45.080 --> 0:13:48.400
<v Speaker 5>opposition to reservoir in Oxfordshire, and this is to point

0:13:48.400 --> 0:13:52.319
<v Speaker 5>the fact that local MPs there, particular pee Leila Moran,

0:13:52.800 --> 0:13:56.680
<v Speaker 5>who has campaigned to bring in many more refugees to

0:13:56.720 --> 0:13:59.080
<v Speaker 5>Oxfordshire and yet opposes.

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<v Speaker 2>The building when new homes or resid was which our

0:14:01.040 --> 0:14:02.800
<v Speaker 2>need is, which increased population.

0:14:03.000 --> 0:14:06.640
<v Speaker 5>Yeah, because that's of it, right, I mean the need

0:14:06.679 --> 0:14:09.400
<v Speaker 5>of reservoirs. Without the levels of migration that we had,

0:14:09.440 --> 0:14:12.160
<v Speaker 5>we wouldn't need more reservoirs. And yet you will have

0:14:12.360 --> 0:14:14.280
<v Speaker 5>politicians who both at the same time so that we

0:14:14.360 --> 0:14:17.400
<v Speaker 5>need to have massively increase levels of migration and yet

0:14:17.440 --> 0:14:20.520
<v Speaker 5>are unwilling to build the infrastructure needed to meet that demand.

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<v Speaker 1>Tam, thank you, thanks for listening to this episode of

0:14:30.800 --> 0:14:34.040
<v Speaker 1>In the City from Bloomberg. This episode was hosted by

0:14:34.120 --> 0:14:37.480
<v Speaker 1>me Alekra Stratton and Francine Lackworth. It was produced by

0:14:37.520 --> 0:14:42.040
<v Speaker 1>Sersadi Moses and dam And Tala Armadi, Brendan Francis Nenham

0:14:42.120 --> 0:14:47.160
<v Speaker 1>is our executive producer. Special thanks to Sam Richards. Please subscribe, rate,

0:14:47.360 --> 0:14:49.840
<v Speaker 1>and review wherever you listen to podcasts.