Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: Welcome to in the City.
Speaker 1: Each week we unpack a story that's crucial to the
Speaker 1: world's financial capitals. I'm alegra Stratton and I'm Fronci Laqua.
Speaker 1: Now the government's svend your Review is just around the corner.
Speaker 1: Next week, we're going to get a clearer picture of
Speaker 1: how funding will be allocated across departments for the next
Speaker 1: three years. Can you believe it? There's growing speculation that
Speaker 1: Rachel Reaves, the Chancellor, will make a significant push on infrastructure,
Speaker 1: a signal perhaps of shifting priorities.
Speaker 3: Welcome to the City of London, The City of the City,
Speaker 3: the City of London, the lease mind, the gap between
Speaker 3: the and the financial heart of the country, the City,
Speaker 3: the City.
Speaker 1: Welcome to in the City.
Speaker 3: Stand clear of the doors pe.
Speaker 4: So like were In this episode, we're stepping back to
Speaker 4: look at the bigger picture. Could this spending review mark
Speaker 4: a real turning point? Might it lay the groundwork for
Speaker 4: lasting resilience rather than just offering short term relief.
Speaker 3: Well.
Speaker 4: To discuss all of this, we're joined by Sam Richards,
Speaker 4: the chief executive of the think tank Britain Remade and
Speaker 4: former Special advisor at number ten Downing Street. Sam, great
Speaker 4: to have you with us. Thanks for having me today Wednesday,
Speaker 4: when we're recording this podcast, Rachel reeves Has says the
Speaker 4: Spending Review will be focused on the priorities of working people.
Speaker 4: What does that look like.
Speaker 5: I think that Britain has at its heart a fundamental
Speaker 5: problem with growth and what sits underneath that. It's been
Speaker 5: our failure to build the new sources of energy, the
Speaker 5: new homes and the new transport links that we need.
Speaker 5: So a focus on the priorities of working people have
Speaker 5: to be unlocking those building those key bits of instructure,
Speaker 5: bringing down the cost of housing. London has the most
Speaker 5: expensive housing in the world, bringing down the cost of
Speaker 5: energy from the highest industrial energy prices in the world,
Speaker 5: and making it easier to see friends and family. So
Speaker 5: hopefully we're going to see some of that with this
Speaker 5: new focus on building new infrastructure that they see not
Speaker 5: just in the Spending Review but also in the government's
Speaker 5: planning Bill.
Speaker 1: We're talking a second about how you turn a great
Speaker 1: big berzuoker of cash, to use a borish chance of
Speaker 1: phrase that I always think does the job very nicely,
Speaker 1: how you turn these many billions that her team of
Speaker 1: briefing into as France says, that kind of experience for people.
Speaker 1: So we talk about that later because that is tough
Speaker 1: and it's not quick, but before we do just in
Speaker 1: terms of the diagnosis of the problem, because you've worked
Speaker 1: in this all the time, Sam with Britain Remade, is
Speaker 1: you know, if you look at the energy transition and
Speaker 1: so on, we've got such a grid problem, We've got
Speaker 1: such an infrastructure problem that we have to clear away
Speaker 1: so many of those planning hurdles. Clearly the government's talking
Speaker 1: about doing that lots and lots in a separate piece
Speaker 1: of legislation. What's your sense even when they turn on
Speaker 1: the taps for this infrastructure, that it's going to work?
Speaker 5: So is Yeah, it's worth stepping back and remembering just
Speaker 5: how bad the problem is. We are currently building the
Speaker 5: world's most expensive railway line with HS two. We are
Speaker 5: currently building the world's most expensive nuclear power plant, indeed
Speaker 5: the most expensive nuclear power plant ever constructed in the
Speaker 5: history of the human race. The planning application for the
Speaker 5: Lower Tens crossing cost a quarter of a billion pounds.
Speaker 5: That is more than it costs Norway to build the
Speaker 5: world's longest tunnel. Now what is the reason for all
Speaker 5: of this. Well, if you take the example of HS two,
Speaker 5: is a notable part down to the fact that we're
Speaker 5: spending one hundred and twenty one million pounds on a
Speaker 5: back tunnel to protect three hundred vextine bats that live
Speaker 5: in a nearby wood to where the line goes through,
Speaker 5: not actually the line goes through. If you take the
Speaker 5: example of HS two, it's the fact that EDF have
Speaker 5: been wrangling with regulators for eight years about installing this
Speaker 5: fish disco. This is an underwater acoustic to terrent to
Speaker 5: stop the fish room swim me into the exhaust pipes
Speaker 5: of the plan. So the question is then if the government,
Speaker 5: as you put fires this big berzuker of cash, is
Speaker 5: it just going to go into these world record expensive
Speaker 5: products and we're not actually going to see any output.
Speaker 5: And that's where what they're doing with the Planning Bill
Speaker 5: to streamline some of the environmental rules and regulations to
Speaker 5: make it harder to sue the government the majority of
Speaker 5: instructional products currently end up in the courts, and to
Speaker 5: reduce the cost of building.
Speaker 2: That's why that is so critical.
Speaker 1: Just explain for us how you would sort of square
Speaker 1: the circle if you're the labor government, because in the
Speaker 1: Guardian today they've got hundreds of they've got people criticizing
Speaker 1: them for the effect that their planning bill will have
Speaker 1: on nature.
Speaker 5: So it's worth bearing in mind that as we're making
Speaker 5: it incredibly expensive to build the homes and the railway
Speaker 5: lines and the roads and the energy that we need,
Speaker 5: we're also failing to protect nature under the current regime.
Speaker 5: So all of our key bio diversity indicators, from farmland
Speaker 5: birds to insect life in decline.
Speaker 2: Now, why is that? How have we arrived at the
Speaker 2: worst of both world.
Speaker 5: It's the system that both fails to protect nature and
Speaker 5: also stops his building. Partly, it's the way that we
Speaker 5: protect our site. So rather than having a strategic approach
Speaker 5: where we go look across the country this is what
Speaker 5: we want to happen with our various species, we do
Speaker 5: it this site by site, piecemeal approach.
Speaker 1: The next question is when we're looking ahead to next
Speaker 1: week and you've got Rachel Reeves already in a speech
Speaker 1: on Wednesday next week and saying you know it's going
Speaker 1: to be big and meaningful, and Ran I'm reminded of
Speaker 1: the interview in this podcast studio we did with Jim O'Neil,
Speaker 1: where he was defending Rachel Reeves through some of her
Speaker 1: difficult times and saying, just wait for this big infrastructure moment.
Speaker 1: So it's really significant moment for Rachel Reeves and her allies.
Speaker 1: But I suppose the question is is it it's these exorbitant,
Speaker 1: expensive protections nature that are the significant thing, or is
Speaker 1: it a bundle of things.
Speaker 2: So there's a range of facts here.
Speaker 5: If you look at something like building a new offshore
Speaker 5: wind farm, right, it takes two years at most to
Speaker 5: physically build an offshoal wind farm. At the moment, it
Speaker 5: takes up to thirteen years to get one up and running.
Speaker 5: That eleven year gap is in grit connections and planning.
Speaker 5: About half of it is GRET connection and the planning chunk,
Speaker 5: a big chunk of it is the compiling of environmental
Speaker 5: impact assessments that stretch to tens of thousands of pages,
Speaker 5: especially examples here. But a new railway line, I should
Speaker 5: rather say reopening an existing railway line three point three
Speaker 5: miles of track right between Bristol and Portishead. The environmental
Speaker 5: impact assessment for that, well, the overall planning document was
Speaker 5: eighty thousand pages. So the challenge that we have with
Speaker 5: investment in this country is that it is actually incredibly
Speaker 5: hard for private capital and indeed for government two actually
Speaker 5: invest when there are such barriers on building. And actually
Speaker 5: this is a problem that Joe Biden had with IRA
Speaker 5: in that it was getting the money out the door
Speaker 5: because of the permitting issues in America. It comes back
Speaker 5: to the problem of it's all very well government signing
Speaker 5: the checks, but if it's impossible to actually build that.
Speaker 5: When farmed the factories for the new electric cars, if
Speaker 5: you can't actually physically build the things because of the
Speaker 5: planning rules and in particular the environmental rules, the environmental permitting,
Speaker 5: then you're not going to get their growth.
Speaker 1: Is Rachel Reeves when she announces this money next week,
Speaker 1: do you believe that there's the parallel supply side reforms
Speaker 1: on planning liberalization. Obviously, it's very very high profile that
Speaker 1: they're pushing through this legislation through Parliament and they are
Speaker 1: being criticized for all the reasons we've just discussed around
Speaker 1: being too cavalier with nature. But do you think she's
Speaker 1: got the balance right?
Speaker 5: So the government's planning bill, there have lots of steps
Speaker 5: in the right direction. Consultation adds years to the process,
Speaker 5: and they are scrapping in a genuinely significant move, they
Speaker 5: are removing pre application consultation for big infrastructure projects. So
Speaker 5: that's a couple of years that we've gone from that
Speaker 5: long timeline that I set out earlier.
Speaker 2: That's important.
Speaker 5: They are also, as I've said, making it harder to
Speaker 5: sue the government. It is the case at the moment
Speaker 5: that the majority of our infrastructure projects end up bogged
Speaker 5: down in the courts, and they are reducing the number
Speaker 5: of opportunities that people will have to sue the government.
Speaker 2: It will to be the case though, that your costs.
Speaker 5: Will be capped if you sue the government under environmental grounds.
Speaker 5: A guy who the primesis himself has highlighted, who has
Speaker 5: brought judicial reviews against pretty much every single road project
Speaker 5: that the government has sought to build and will that
Speaker 5: will likely still continue. And then the big question of
Speaker 5: THEA is around this whether they're going far enough to
Speaker 5: change the way that we do environmental protections. They are
Speaker 5: looking to bring in this new system that is a
Speaker 5: move to a strategic approach, and that is to be welcomed,
Speaker 5: But the problem with the way that they're doing is
Speaker 5: it's not a wholesale change to a new system. It's
Speaker 5: rather instead on top of all of the existing planning
Speaker 5: rules and the town and country Planning Acts and habitats regulations,
Speaker 5: they're adding another layer on top that they hope will
Speaker 5: kind of bypass that current system. And while there's some
Speaker 5: evidence that will work for housing, and less confident that
Speaker 5: that will work for other infrastructure projects.
Speaker 2: So, you know, I think that there is a risk.
Speaker 1: And that brings us back to where we started with
Speaker 1: your question fran around. You know, she's talking today about
Speaker 1: you know, working people, and this money's going to change
Speaker 1: working people's lives. Well, it might do, but in ten
Speaker 1: years time, we.
Speaker 4: Also don't know how much money. How much money does
Speaker 4: she need to make a material difference Right before we
Speaker 4: even count on where she spends it, there's a spending review,
Speaker 4: like how much money does she have to play with?
Speaker 4: I know there's this tussle within government about saying, what's
Speaker 4: the accountant that are setting policy she wants to spend.
Speaker 4: But we're kind of beholden to investors, global investors.
Speaker 5: As I say, when it comes to Britain's infrastructure, it
Speaker 5: really is a question of making sure we get much
Speaker 5: more bang for our buck. The nuclear power stations that
Speaker 5: we built in the eighties and nineties were half the
Speaker 5: price of Hinckley. The ones that we built in the
Speaker 5: fifties and sixties were a quarter of the price. There
Speaker 5: is nothing inherent in the technology that means that it
Speaker 5: has to be as eyewateringly expensive.
Speaker 1: You started the podcast Sam with these sort of really
Speaker 1: inglorious titles like We're the slowest, to be the worst
Speaker 1: with the most expensive? How did Britain get here?
Speaker 2: Like?
Speaker 1: How did we get so slow?
Speaker 2: Yeah?
Speaker 5: I mean, it's been the steady accretion of regulation in
Speaker 5: a range of sectors, particularly in environmental rules, some of
Speaker 5: which are come from domestic law, some of which come
Speaker 5: from the EU. But it's also the case that there
Speaker 5: are more rules on health and safety here, for example,
Speaker 5: than there are if you're trying to build nuclear power
Speaker 5: plants in Korea. There's a whole steady accretion of rules
Speaker 5: and regulations across different areas that have gone as to
Speaker 5: this point, and that is going to be the only
Speaker 5: way through is going to be cutting away some of
Speaker 5: that red tape.
Speaker 1: There's quite a large number that are very pro these
Speaker 1: reforms but there's a significant number that are worried that
Speaker 1: it's going too far, and that is the tensions. But
Speaker 1: it's sort of thematically played out on a number of issues,
Speaker 1: isn't it. Between the leadership we still saw it probably
Speaker 1: when we were in number ten two, but between the
Speaker 1: leadership and the backbench that feel they're not sure what
Speaker 1: the soul of this party is.
Speaker 5: It is although I was at an event with Labor
Speaker 5: Growth Group MPs on Monday, huge room, packed room, and
Speaker 5: I think they recognize, not least given where the polls
Speaker 5: are now that this government has to deliver. They have
Speaker 5: to be the proof of the They've had all this
Speaker 5: positive rhetoric about building and we've said we're going to
Speaker 5: make it easy to get my housing gladder and they
Speaker 5: have to have come twenty twenty nine actually delivered that stuff.
Speaker 1: Will this help the bills pledge that Milibaan made there
Speaker 1: three hundred pounds cheaper.
Speaker 5: The source of our high energy bills is our reliance
Speaker 5: on expensive gas and we need to build more of
Speaker 5: our own clean energy sources to get off gas. So
Speaker 5: yes in the long run. In the short run, he
Speaker 5: is ultimately at the mercy of international gas markets.
Speaker 4: If you look at holistically the spending review. There's loads
Speaker 4: of ours heavily debated taxes right, it's rules around gifting
Speaker 4: inheritance tax that could be in the crosshairs. The option
Speaker 4: of freezing income tax threshold is also something that could
Speaker 4: possibly change. So I know that through the lensam of infrastructure,
Speaker 4: is this going to be the focal point or if
Speaker 4: at the end of the day, this is a holistic
Speaker 4: choice of whether you are fairer for the Brits at large,
Speaker 4: does infrastructure come as a second or third priority.
Speaker 5: Well, that's always been the challenge joint and that happened
Speaker 5: in the twenty tens was one of the DISASTERUS decisions
Speaker 5: then that we saw capsule budgets, long term capital budgets
Speaker 5: slashed in order to patch up. If you keep delaying that,
Speaker 5: if you keep putting that off, then fundamentally, yeah, you
Speaker 5: get to a point where as we are now, you
Speaker 5: have these incredibly ianie coss and you are relying in
Speaker 5: some areas still on creaking Victorian infrastructure.
Speaker 2: I mean, this is not.
Speaker 1: The reservoir point is so interesting, So we've a net.
Speaker 1: Last week they announced they'll be nine new reservoirs by
Speaker 1: twenty fifty, but two of them by twenty thirty. And
Speaker 1: to your point about how they're reforming planning that they're
Speaker 1: going to take these the building of these two outside
Speaker 1: of the local authority planning process, is that going to work?
Speaker 5: Yeah, it's necessary because I mean you have seen the
Speaker 5: opposition to reservoir in Oxfordshire, and this is to point
Speaker 5: the fact that local MPs there, particular pee Leila Moran,
Speaker 5: who has campaigned to bring in many more refugees to
Speaker 5: Oxfordshire and yet opposes.
Speaker 2: The building when new homes or resid was which our
Speaker 2: need is, which increased population.
Speaker 5: Yeah, because that's of it, right, I mean the need
Speaker 5: of reservoirs. Without the levels of migration that we had,
Speaker 5: we wouldn't need more reservoirs. And yet you will have
Speaker 5: politicians who both at the same time so that we
Speaker 5: need to have massively increase levels of migration and yet
Speaker 5: are unwilling to build the infrastructure needed to meet that demand.
Speaker 1: Tam, thank you, thanks for listening to this episode of
Speaker 1: In the City from Bloomberg. This episode was hosted by
Speaker 1: me Alekra Stratton and Francine Lackworth. It was produced by
Speaker 1: Sersadi Moses and dam And Tala Armadi, Brendan Francis Nenham
Speaker 1: is our executive producer. Special thanks to Sam Richards. Please subscribe, rate,
Speaker 1: and review wherever you listen to podcasts.