WEBVTT - How to Make Britain Prosperous Again with Sam Bowman 0:00:03.080 --> 0:00:13.840 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:16.520 --> 0:00:19.160 Welcome to Meren Talks Money, the podcast in which people 0:00:19.160 --> 0:00:21.840 who know the markets explain the markets. I'm Meren zum 0:00:21.920 --> 0:00:24.919 zat Web. This week we're looking at why Britain has stagnated. 0:00:24.960 --> 0:00:26.760 I don't think anyone's going to argue that Britain has 0:00:26.800 --> 0:00:30.120 not stagnated. It has definitely been stagnating. But what can 0:00:30.160 --> 0:00:33.560 we do to trigger or indeed to catalyze future growth 0:00:33.600 --> 0:00:36.320 to change where we are. My guest this week is 0:00:36.360 --> 0:00:38.960 Sam Bowman. Sam as the founding editor of the online 0:00:39.000 --> 0:00:43.159 magazine Works in Progress, now part of payment processing platform Stripe. 0:00:43.479 --> 0:00:46.160 He has been Director of Competition Policy at the International 0:00:46.159 --> 0:00:48.960 Center for Law and Economics and an executive director of 0:00:48.960 --> 0:00:53.200 the Adam Smith Institute. Now we have specifically asked Sam 0:00:53.280 --> 0:00:56.000 on as a result of an essay that he co 0:00:56.120 --> 0:00:59.720 authored called Foundations why Britain has Stagnated. There we go 0:00:59.760 --> 0:01:03.120 that word again, which looks at the main problems that 0:01:03.160 --> 0:01:05.720 are plaguing us, how we can fix them, whether it 0:01:05.800 --> 0:01:07.880 is possible to fix those problems, and of course that 0:01:08.040 --> 0:01:11.960 is the defining task of our generation and indeed of 0:01:12.080 --> 0:01:15.000 this new government. So we are hoping that Sam will 0:01:15.040 --> 0:01:17.440 be able to diagnose the UK's problems and tell us 0:01:17.480 --> 0:01:20.800 how to fix them in a hurry. Welcome Sam, Thanks 0:01:20.840 --> 0:01:23.080 for having me. Well, it's a great pleasure. You know, 0:01:23.280 --> 0:01:25.800 we spend a lot of time on this podcast worrying 0:01:25.800 --> 0:01:30.640 about productivity, worrying about infrastructure, worrying about housing, and in particular, 0:01:30.640 --> 0:01:33.920 of course, worrying about the miserable real wages in the UK, 0:01:34.040 --> 0:01:37.560 because we firmly believe on this podcast that money can 0:01:37.680 --> 0:01:41.520 indeed buy you happiness. Now, I just wanted to set 0:01:41.560 --> 0:01:43.640 the scene, which you do at the beginning of your essay, 0:01:43.640 --> 0:01:46.960 and I imagine that an awful lot of our listeners 0:01:47.000 --> 0:01:49.160 will have read this essay already, but for those that 0:01:49.600 --> 0:01:54.080 have not, you've got a wonderful not necessarily diagnosis, but 0:01:54.200 --> 0:01:57.480 description of the problem at the beginning. So I'm just 0:01:57.640 --> 0:02:00.720 going to read a few bits of that so that 0:02:00.800 --> 0:02:02.920 our listeners can get a sense of what it is 0:02:02.960 --> 0:02:06.720 we're trying to talk about here. Okay, Ready, between twenty 0:02:06.760 --> 0:02:10.200 twenty four and twenty twenty one, that's before Russa's invasion 0:02:10.280 --> 0:02:13.360 of Ukraine, the industrial price of energy in the UK 0:02:13.520 --> 0:02:18.040 tripled in nominal terms. We have significantly more expensive electricity 0:02:18.080 --> 0:02:22.320 than many similar economies with almost identical population sizes. The 0:02:22.440 --> 0:02:25.880 UK's under thirty million homes, France has thirty seven million. 0:02:26.240 --> 0:02:27.920 And then there is this thing that I always find 0:02:28.000 --> 0:02:30.440 really interesting. We complain a lot about second homes in 0:02:30.480 --> 0:02:33.640 the UK ren but only eight hundred thousand British families 0:02:33.680 --> 0:02:36.799 have second homes three point four million French families do. 0:02:37.160 --> 0:02:39.560 If the world was a better place, our coastline would 0:02:39.560 --> 0:02:43.560 be plastered, literally plastered with second homes. Then everybody would 0:02:43.600 --> 0:02:47.359 have their own summer house. Back to Electricity pert Capital, 0:02:47.400 --> 0:02:49.840 electricity generation in the UK is just two thirds of 0:02:49.880 --> 0:02:53.240 what it is in France. Our electricity generation is closer 0:02:53.240 --> 0:02:56.280 to developing companies such as Brazil and South Africa, home 0:02:56.320 --> 0:02:59.640 of the regular blackouts. Britain's last nuclear power plant, and 0:02:59.680 --> 0:03:01.440 this is really important and I want to talk about 0:03:01.480 --> 0:03:03.240 this a lot of time. I'm a great fan of 0:03:03.280 --> 0:03:05.560 the idea of let's go all in on the nukes. 0:03:05.880 --> 0:03:08.400 Our last nuclear pad plant was built between nineteen eighty 0:03:09.120 --> 0:03:13.239 seven and nineteen ninety five. The next one, Hinckley Point C, 0:03:13.480 --> 0:03:16.320 is between four and six times more costly per megaworking 0:03:16.360 --> 0:03:19.200 capacity than South Korean nuclear pals. We've talked about this 0:03:19.240 --> 0:03:23.079 and that on this podcast before. It's ridiculous. Tramp projects 0:03:23.080 --> 0:03:24.840 in the UK two and a half times more expensive 0:03:24.880 --> 0:03:27.320 than French projects on a per mile basis. Now I 0:03:27.360 --> 0:03:29.880 know all about this because I live next to the 0:03:29.960 --> 0:03:34.120 tram line in Edinburgh. I have watched the cost of 0:03:34.200 --> 0:03:37.320 building that kind of infrastructure in the UK in real time. 0:03:37.360 --> 0:03:39.200 And by the way, trams to new Haven. If you 0:03:39.240 --> 0:03:41.040 are listening, please, with the love of God, come and 0:03:41.040 --> 0:03:43.920 pick up the rest of the rubbish. It's not finished yet. 0:03:44.960 --> 0:03:46.840 I'm going to stop there because if I keep reading 0:03:46.840 --> 0:03:49.000 for all these lists, I'm going to get myself terribly upset. 0:03:49.240 --> 0:03:52.320 So here we are. We have this this problem, and 0:03:52.360 --> 0:03:56.960 as you say, they're not disconnected observations. They highlight our 0:03:57.080 --> 0:04:00.160 real problem. What you diagnos is our real problem. We 0:04:00.200 --> 0:04:02.440 can't build anything. And now I'm going to hand in 0:04:02.520 --> 0:04:04.800 for you. Is it really that simple? We can't build 0:04:04.840 --> 0:04:07.520 anything and that's destroying our economy. 0:04:07.640 --> 0:04:10.360 Yeah, I think it is that simple. We point to 0:04:10.680 --> 0:04:14.560 France as an example of a country that on first glance, 0:04:14.600 --> 0:04:17.040 gets everything wrong. You know, we all know France has 0:04:17.160 --> 0:04:21.560 incredibly high taxes, it has incredibly high regulation, to the 0:04:21.600 --> 0:04:24.120 point where there's a cliff edge. If you look at 0:04:24.120 --> 0:04:28.000 the size of French companies, French companies are lots with 0:04:28.120 --> 0:04:31.320 forty nine employees, and then there's a huge collapse in 0:04:31.360 --> 0:04:35.520 the number of French companies that have fifty employees, either 0:04:35.680 --> 0:04:38.600 because companies just aren't refusing to grow because so many 0:04:38.680 --> 0:04:41.880 regulations kick in at that point, or because they're effectively 0:04:41.880 --> 0:04:45.000 committing fraud and under reporting the number of employees they have, 0:04:45.080 --> 0:04:47.240 both of which are pretty bad. We know that the 0:04:47.360 --> 0:04:51.440 French public hates any attempt to liberalize its economy. There 0:04:51.440 --> 0:04:54.880 have been riots over raising the retirement age to sixty four. 0:04:54.960 --> 0:04:57.440 I mean, imagine if we were talking about raising the 0:04:57.480 --> 0:05:01.039 retirement age to sixty four in the UK. So, according 0:05:01.080 --> 0:05:04.400 to all those kinds of metrics, and I think almost 0:05:04.440 --> 0:05:08.560 anybody would agree, will hold back an economy, France should 0:05:08.600 --> 0:05:12.240 be doing incredibly badly. But actually France is doing roughly 0:05:12.279 --> 0:05:14.200 as well as we are. By some measures, they're doing 0:05:14.200 --> 0:05:16.480 better than us. I think it's reasonable to say they're 0:05:16.480 --> 0:05:19.040 doing about as well as we are. And the reason 0:05:19.120 --> 0:05:21.560 we think that is is that even though they get 0:05:21.600 --> 0:05:25.840 those things wrong tax regulation things like that, they get 0:05:25.880 --> 0:05:29.960 the basics right. So the footprint of Paris has tripled 0:05:30.120 --> 0:05:32.840 since the Second World War, whereas London has basically not 0:05:32.839 --> 0:05:35.520 grown at all. As you mentioned, they build many, many 0:05:35.520 --> 0:05:38.160 more homes. They have far more homes per person than 0:05:38.200 --> 0:05:41.360 we do with about the same population size. They build 0:05:41.440 --> 0:05:44.240 things like tramways much more cheaply than we do. They 0:05:44.240 --> 0:05:47.560 build much much more high speed rail, much more cheaply 0:05:47.600 --> 0:05:49.640 than we do, and all of those things are related. 0:05:49.920 --> 0:05:53.440 There there's I think big, big misunderstanding or kind of 0:05:53.480 --> 0:05:57.320 gap in the UK between costs and what you actually get. 0:05:57.560 --> 0:05:59.640 So we always talk about, oh, well, you know, we 0:05:59.680 --> 0:06:02.839 should build Hinckley Point C, which I agree with, we 0:06:02.880 --> 0:06:05.839 should build HS two, which I don't agree with, we 0:06:05.880 --> 0:06:09.719 should build crossrail, but never really recognize that the very 0:06:09.839 --> 0:06:13.360 very high costs of those projects mean that we really 0:06:13.400 --> 0:06:15.440 don't get to build more than one. If we get 0:06:15.440 --> 0:06:17.719 that one at all, we should be in a situation 0:06:17.800 --> 0:06:20.880 where we're able to build things like crossrail and other 0:06:20.960 --> 0:06:24.919 metros much more cheaply at the price that for example, 0:06:24.960 --> 0:06:27.400 Madrid built its metro which was less than a quarter 0:06:27.440 --> 0:06:29.680 of the price of crossrail, so that we can have 0:06:29.760 --> 0:06:30.280 more of them. 0:06:30.480 --> 0:06:31.000 So when we. 0:06:31.000 --> 0:06:34.279 Talk about the cost of nuclear power, we're not just 0:06:34.360 --> 0:06:37.039 complaining that we have to pay high prices for it, 0:06:37.240 --> 0:06:39.240 we're complaining that we don't get enough of it, and 0:06:39.279 --> 0:06:41.400 so we don't have anything like the kind of energy 0:06:41.400 --> 0:06:44.600 abundance that we want, and all of this adds up 0:06:44.640 --> 0:06:49.280 to a massive shortfall investment. So the real origin of 0:06:49.320 --> 0:06:53.159 writing this paper was a frustration in the run up 0:06:53.200 --> 0:06:57.200 to and after the election that many commentators were kind 0:06:57.240 --> 0:06:59.960 of finally beginning to catch up with people like new Marin, 0:07:00.120 --> 0:07:02.360 people like me who've been talking about the UK under 0:07:02.360 --> 0:07:07.040 investing for years. But the main conversation sort of thinks 0:07:07.080 --> 0:07:11.200 of investment as this sort of abstract number, as investment 0:07:11.240 --> 0:07:13.560 as measured by how many pounds we're putting into some 0:07:13.880 --> 0:07:16.920 accounts somewhere or spending, when really what we care about 0:07:16.920 --> 0:07:19.680 with investment is what we're getting out of it. How 0:07:19.680 --> 0:07:21.960 many nuclear power plants are we getting, how many miles 0:07:21.960 --> 0:07:23.960 of railway, how many miles of tramline, how many miles 0:07:23.960 --> 0:07:26.000 of road, how many houses are we getting. And so 0:07:26.120 --> 0:07:29.280 the fundamental point that we're making is that we underinvest 0:07:29.640 --> 0:07:32.920 both in terms of costs are so high that it 0:07:32.960 --> 0:07:35.680 wouldn't be economic to put much more money in than 0:07:35.720 --> 0:07:37.880 we do and for the money we do put in, 0:07:37.960 --> 0:07:40.360 we get much less out the stuff that we really 0:07:40.360 --> 0:07:44.080 care about than we should and changing that is really 0:07:44.120 --> 0:07:46.880 in our hands. Very very little of this is a 0:07:46.880 --> 0:07:51.400 technological problem. It's almost all a political problem. And yes, 0:07:51.520 --> 0:07:55.160 politics can be very difficult to fix, but politics should 0:07:55.200 --> 0:07:59.040 be eminently fixable. And the fundamental argument that we make 0:07:59.360 --> 0:08:01.840 is that the UK could be a much more prosperous 0:08:01.840 --> 0:08:05.800 country without any change in technology, without any real change 0:08:06.080 --> 0:08:08.840 in the constituency of the economy. We just need to 0:08:08.840 --> 0:08:10.679 make it much easier to build the dances. 0:08:10.960 --> 0:08:15.280 Let's go back then and talk about the reasons why 0:08:15.360 --> 0:08:18.680 everything costs so much more. Here I mean again, as 0:08:18.720 --> 0:08:21.240 I say, watching the Edinburgh tram in real time and 0:08:21.280 --> 0:08:23.120 watching the costs go up and up and up, and 0:08:23.240 --> 0:08:26.800 comparing the cost per milder tramp projects elsewhere was a 0:08:26.920 --> 0:08:30.560 genuine shoka. Genuine shoka. When you run through the list, 0:08:30.600 --> 0:08:33.000 what of the reasons why the cost is so high? 0:08:33.040 --> 0:08:33.800 What are the main ones? 0:08:34.920 --> 0:08:38.960 The three big things that I would point to are 0:08:39.400 --> 0:08:42.120 number one the planning system. Some people have read the 0:08:43.040 --> 0:08:47.200 paper as just being about the planning system, which isn't true, 0:08:47.200 --> 0:08:49.640 but it's understandable that some people would interpret it that 0:08:49.679 --> 0:08:52.600 way because the planning system that we have is a 0:08:52.640 --> 0:08:55.120 relic of the Athlete government. You know, it's a relic 0:08:55.160 --> 0:08:57.079 of post war socialism in the same way that the 0:08:57.200 --> 0:09:00.960 NHS is, and I think it's similarly dysfunctional, dysfunctional in 0:09:00.960 --> 0:09:04.480 a much more invisible way. So after the Second World War, 0:09:04.720 --> 0:09:08.319 the Athleague government nationalized huge amounts of the economy, including 0:09:08.840 --> 0:09:11.960 the way we use land, and it went from a 0:09:12.040 --> 0:09:15.560 system where even the local council did have the power 0:09:15.640 --> 0:09:18.199 to stop people from building things on their land. They 0:09:18.200 --> 0:09:21.480 had to compensate you if they stopped you from building something, 0:09:21.679 --> 0:09:24.600 so they had an incentive not to just block everything. 0:09:24.840 --> 0:09:27.920 They could block things, but they would have to bear 0:09:27.960 --> 0:09:29.880 some of the cost of blocking, and that meant that 0:09:30.240 --> 0:09:32.680 pre the Second World War we had a much more 0:09:32.720 --> 0:09:35.440 balanced system that allowed lots of things to be built. 0:09:35.679 --> 0:09:38.959 And the nineteen thirties I think really should be famous 0:09:39.080 --> 0:09:43.280 for being the most impressive decade of housebuilding that we 0:09:43.320 --> 0:09:46.119 have ever had, almost entirely private house building. 0:09:46.080 --> 0:09:50.480 And nice houses too, crucially, really nice houses. Really anyone 0:09:50.480 --> 0:09:52.760 would want to live in a thirty's house lovely. 0:09:53.000 --> 0:09:55.960 They're brilliant and much larger than houses that have been 0:09:55.960 --> 0:09:59.200 built after the Second World War very affordable, often with 0:09:59.280 --> 0:10:04.520 a lot of gardens. There was a huge, huge shift 0:10:04.840 --> 0:10:09.520 in the British economy towards building nice, affordable family homes 0:10:09.679 --> 0:10:11.920 in the nineteen thirties. It actually is one of the 0:10:11.920 --> 0:10:14.880 reasons that we were able to avoid the worst effects 0:10:15.000 --> 0:10:17.920 of the Great Depression, the global Great Depression, and one 0:10:17.920 --> 0:10:20.080 of the reasons that we were able to rearm to 0:10:20.160 --> 0:10:22.280 fight the Germans in the Second World War. It was 0:10:22.880 --> 0:10:25.000 really as important as that. And if we were building 0:10:25.080 --> 0:10:27.439 at the same rate today that we built in the 0:10:27.520 --> 0:10:30.280 nineteen thirties, if you adjust for population, we'd be building 0:10:30.280 --> 0:10:32.200 more than half a million homes a year. I mean, 0:10:32.480 --> 0:10:34.600 we talk at the moment as if three hundred thousand 0:10:34.600 --> 0:10:36.960 homes a year is really ambitious, and you know, if 0:10:36.960 --> 0:10:38.760 we're really, really lucky, we might be able to get 0:10:38.760 --> 0:10:40.840 three hundred thousand homes a year. I mean, that's chicken 0:10:40.880 --> 0:10:43.320 feet compared to what we should be building and what 0:10:43.400 --> 0:10:46.240 we have been building as a proportion of the economy 0:10:46.240 --> 0:10:50.480 in the past. So shifting to the Atli government, what 0:10:50.520 --> 0:10:52.920 I would argue is a socialist land use planning system 0:10:53.360 --> 0:10:56.120 was really disastrous and you can see the number of 0:10:56.679 --> 0:11:00.600 houses being built by the private sector collapse after that happens, 0:11:00.840 --> 0:11:04.160 And what also happens is that where homes are built 0:11:04.440 --> 0:11:08.080 becomes much less driven by market signals and prices and 0:11:08.200 --> 0:11:11.920 much more driven by effectively central planning. And that's left 0:11:12.000 --> 0:11:14.840 us with a situation where we don't build enough houses 0:11:14.840 --> 0:11:17.520 every year, and the houses we do build are often 0:11:17.600 --> 0:11:20.560 not anywhere near where people actually want them to be built, 0:11:20.840 --> 0:11:23.800 and the consequence of that is that people can't move 0:11:24.160 --> 0:11:27.920 to where good jobs are. So housing is not just 0:11:27.960 --> 0:11:31.040 a problem of bills. It's not just a problem of 0:11:31.160 --> 0:11:32.960 us having to spend more of our money on rents 0:11:32.960 --> 0:11:35.839 and mortgages than we'd like to. It's also, and I 0:11:35.880 --> 0:11:39.000 would say much more importantly, a problem of what jobs 0:11:39.040 --> 0:11:40.280 people can do and where. 0:11:40.400 --> 0:11:41.959 And one of the things you say about that, let's 0:11:41.960 --> 0:11:43.360 won't go back quickly. One of the things you say 0:11:43.360 --> 0:11:45.400 about that is a major problem in London being the 0:11:45.480 --> 0:11:48.280 lack of a middle income group. Only the very rich 0:11:48.320 --> 0:11:50.480 and the very poor eleven social housing can afford to 0:11:50.480 --> 0:11:52.439 live in London, which means that you know, if you're 0:11:52.480 --> 0:11:56.040 a young or quite young person, you should, under normal circumstances, 0:11:56.120 --> 0:12:00.800 be drawn to the city to enter productive work you want. 0:12:01.360 --> 0:12:05.280 Yeah, I mean during the during the Industrial Revolution, towns 0:12:05.280 --> 0:12:08.960 of ten thousand people grew by more than ten times 0:12:09.240 --> 0:12:12.080 in less than a century. I mean some towns, some 0:12:12.120 --> 0:12:14.280 cities that we now think of as being great cities 0:12:14.600 --> 0:12:17.520 like Sheffield went from being almost nothing at the beginning 0:12:17.520 --> 0:12:21.520 of the Industrial Revolution to centers of world commerce and 0:12:21.559 --> 0:12:24.440 world industry by the end of the nineteenth century. We 0:12:24.480 --> 0:12:27.720 haven't had anything like that kind of ability to move 0:12:27.760 --> 0:12:32.680 around and to migrate internally according to economic changes and 0:12:32.760 --> 0:12:35.199 changes in economic reality, and I think that's one of 0:12:35.280 --> 0:12:39.280 the really big reasons that we have been held back 0:12:39.440 --> 0:12:41.840 in our ability to grow. And you're absolutely right. You know, 0:12:41.920 --> 0:12:45.560 there are some places in London inner London boroughs that 0:12:45.840 --> 0:12:50.200 have thirty to forty percent of the housing being assigned 0:12:50.240 --> 0:12:54.679 to social housing, and that means that a lot of 0:12:54.720 --> 0:12:58.200 the most valuable, most central housing stock is occupied by 0:12:58.200 --> 0:13:00.520 people who are often not in work at all. If 0:13:00.520 --> 0:13:04.080 they are in work, they're often in fairly low productivity jobs, 0:13:04.320 --> 0:13:08.120 and they're occupying homes that could be occupied by people 0:13:08.160 --> 0:13:12.400 who could be far more economically productive and grow and 0:13:12.480 --> 0:13:17.920 drive economic growth much more. The result, as you've mentioned, 0:13:18.160 --> 0:13:20.720 is this kind of missing middle where if you want 0:13:20.720 --> 0:13:24.280 to live in kind of inner London, by which I 0:13:24.320 --> 0:13:27.240 mean sort of zones three, two and one, you either 0:13:27.280 --> 0:13:31.200 have to be very rich or very poor. Nobody in 0:13:31.240 --> 0:13:34.160 the middle can really afford to live in central London 0:13:34.160 --> 0:13:36.080 because they can't get into social housing and they cannot 0:13:36.080 --> 0:13:39.360 afford private housing. I think that's a disaster. I think 0:13:39.440 --> 0:13:44.800 socially and economically that's a disaster. And what's so frustrating 0:13:44.840 --> 0:13:49.400 about it is that fixing that problem is really really simple. 0:13:50.000 --> 0:13:52.760 London is one of the least dense major cities in 0:13:52.800 --> 0:13:58.720 Western Europe. The nicest parts of London, places like Bloomsbury Belgravia, 0:13:58.800 --> 0:14:02.079 are the densest part of London. You know, density doesn't 0:14:02.080 --> 0:14:04.440 have to mean towers in the park. Density can mean 0:14:04.720 --> 0:14:09.880 six story, eight story Jordan Edwardian terraces and building more 0:14:10.000 --> 0:14:13.280 beautiful and livable housing like that would allow us to 0:14:13.320 --> 0:14:16.440 allow many, many millions more people to move into London, 0:14:16.640 --> 0:14:19.440 get better jobs, start more companies with each other, and 0:14:19.600 --> 0:14:22.520 I think produce huge amounts of extra output and we're 0:14:22.560 --> 0:14:25.440 just not doing it. And I think fixing that would 0:14:25.440 --> 0:14:28.440 be a tremendously easy way to drive a lot of 0:14:28.520 --> 0:14:30.960 economic growth, and to just get a lot of output 0:14:31.040 --> 0:14:33.440 just building those homes would be a lot of economic 0:14:33.480 --> 0:14:36.360 activity and a lot of economic outputs that we could 0:14:36.400 --> 0:14:38.600 have tomorrow. We could begin working on that tomorrow if 0:14:38.600 --> 0:14:39.040 we want such. 0:14:39.040 --> 0:14:43.160 Planning isn't just about houses. It's about transport and all 0:14:43.280 --> 0:14:45.640 the other infrastructure that we need, and there we have 0:14:45.680 --> 0:14:47.480 a major problem as well, don't we. 0:14:48.040 --> 0:14:51.080 Absolutely. I mean, the example that I find most frustrating 0:14:51.960 --> 0:14:54.680 is this tunnel called the Lower Thames Crossing, which is 0:14:54.680 --> 0:14:57.120 being built, or at least being proposed to be built 0:14:57.440 --> 0:15:01.400 under the Thames to link up Kent and Essex. And 0:15:01.440 --> 0:15:04.520 this will also link up England's two busiest seaports, so 0:15:04.560 --> 0:15:08.560 there's a very obvious economic need for this. Now, the 0:15:08.600 --> 0:15:11.760 planning application for this alone has run to three hundred 0:15:11.760 --> 0:15:15.160 and sixty thousand pages and cost two hundred and ninety 0:15:15.160 --> 0:15:19.000 seven million pounds, which for context, is twice what it 0:15:19.040 --> 0:15:21.880 costs the Norwegians to actually build the world's longest tunnel. 0:15:22.200 --> 0:15:24.400 Okay, we now we need to reread that. The planning 0:15:24.480 --> 0:15:27.600 documentation for the Lower Thames Crossing, which as you've just said, 0:15:27.760 --> 0:15:32.800 is incredibly important, three hundred and sixty thousand pages going 0:15:32.840 --> 0:15:35.360 on three hundred million so far. I'm going to repeat 0:15:35.360 --> 0:15:38.720 this because it's so important. That is more than twice 0:15:38.960 --> 0:15:43.720 as much as it costs Norway to actually build the 0:15:43.760 --> 0:15:46.160 longest road tunnel in the world. We have spent more 0:15:46.200 --> 0:15:50.160 on planning, double as much on planning alone than Norway 0:15:50.200 --> 0:15:54.640 has spent on building something similar. That is off the scale. Shocking, 0:15:54.680 --> 0:15:55.360 isn't it. 0:15:55.360 --> 0:15:58.680 It's astonishing And it's one of those figures that you 0:15:58.800 --> 0:16:00.720 have to read it and you have to check it, 0:16:00.960 --> 0:16:03.480 you know, you please. I encourage people who are sort 0:16:03.480 --> 0:16:07.160 of rolling their eyes in this belief check the sources, please, 0:16:07.240 --> 0:16:12.720 because it's so unbelievable and far fetched that it feels 0:16:12.760 --> 0:16:16.000 like no reasonable person could possibly have allowed the system 0:16:16.000 --> 0:16:18.120 to get this way. But it isn't just planning in 0:16:18.160 --> 0:16:21.520 the case of infrastructure. It isn't just planning in the 0:16:21.560 --> 0:16:24.560 case of housing either, but it's primarily planning for housing. 0:16:25.800 --> 0:16:30.120 There are environmental assessments that slow down projects enormously cost 0:16:30.200 --> 0:16:33.840 huge amount of money. To reopen a three mile train 0:16:33.920 --> 0:16:37.040 trap between Bristol and Porto's Head, there is an eighteen 0:16:37.160 --> 0:16:40.800 thousand page environmental assessment that cost thirty two million pounds 0:16:41.000 --> 0:16:44.080 and to put that into context. The Jubilee Line extension 0:16:44.160 --> 0:16:46.840 in the early nineteen nineties had a four hundred page 0:16:46.960 --> 0:16:50.560 environmental assessment. So this is a recent phenomenon. This is 0:16:50.600 --> 0:16:54.520 a new development that we are requiring environmental assessments like 0:16:54.560 --> 0:16:57.240 this and of this cost and of this time, and 0:16:57.280 --> 0:16:59.400 it's one of the really really major reasons we have 0:16:59.480 --> 0:17:03.200 other Some people would call them checks. I would call 0:17:03.240 --> 0:17:08.320 them hugead roadblocks to building things. Something called the Aarhus Convention, 0:17:08.640 --> 0:17:11.359 which is an international convention that the UK as a 0:17:11.359 --> 0:17:16.159 signatory to, which caps the cost of legal challenges to 0:17:16.600 --> 0:17:20.080 infrastructure projects. So if you are a even if you lose, 0:17:20.400 --> 0:17:24.520 so if you are a vexatious claimant you don't want 0:17:24.560 --> 0:17:27.520 a tunnel being built near you, you can sue or 0:17:27.600 --> 0:17:31.639 you can judicially review the project, and even if you lose, 0:17:32.240 --> 0:17:35.200 the costs that you will have to pay to cover 0:17:35.280 --> 0:17:39.399 the winners' costs are capped at between five and ten pounds, 0:17:39.440 --> 0:17:42.280 so trivial, trivial amount of money. And this is something 0:17:42.280 --> 0:17:45.200 that we have made stricter in the last seven or 0:17:45.200 --> 0:17:47.479 eight years. But Theresa May government actually made this stricter 0:17:47.800 --> 0:17:53.679 unbelievably and what we've created is a situation where legal 0:17:53.760 --> 0:17:58.080 challenges to infrastructure are very easy and very cheap. There 0:17:58.080 --> 0:18:01.639 are huge numbers of triggers for judicial reviews, there is 0:18:01.880 --> 0:18:04.680 huge compliance cost with the planning system and the environmental 0:18:04.720 --> 0:18:07.280 assessment system. And then on top of all of that, 0:18:07.920 --> 0:18:10.840 the way that we pay for major infrastructure projects in 0:18:10.880 --> 0:18:13.920 the UK has moved from being something that was devolved 0:18:14.200 --> 0:18:16.480 and was either done by a private company as in 0:18:16.520 --> 0:18:19.080 the case of most of our railroads, or by local 0:18:19.160 --> 0:18:22.760 authority as in the case of many roads and tramways 0:18:23.160 --> 0:18:26.160 during the era of the tram to a situation where 0:18:26.280 --> 0:18:30.280 national government pays for things and oversees major projects, and 0:18:30.760 --> 0:18:34.160 almost nobody in that project has an incentive to keep 0:18:34.200 --> 0:18:36.520 costs down. And I think this is the real problem 0:18:36.600 --> 0:18:40.800 that HS two had, where basically nobody in the decision 0:18:40.840 --> 0:18:44.199 making pipeline had any incentive to keep costs down for 0:18:44.400 --> 0:18:48.560 HS two and that includes the cost of appeasing objectives, 0:18:48.880 --> 0:18:50.919 you know. I think there probably does need to be 0:18:50.960 --> 0:18:55.160 some appeasement nim of Nimbi's in some cases for political reasons, 0:18:55.400 --> 0:18:58.080 but there has to be a counter a counterweight to 0:18:58.240 --> 0:19:01.040 that that says, if you appease these people too much, 0:19:01.080 --> 0:19:03.600 and if you spend you know, billions of pounds on 0:19:03.760 --> 0:19:06.880 unnecessarily tunneling loads and loads of miles of this line. 0:19:06.920 --> 0:19:09.240 A quarter of HS two is supposed to be tunneled 0:19:09.520 --> 0:19:13.320 to basically avoid NIMBIA complaints. Then you're going to go bankrupt, 0:19:13.480 --> 0:19:15.399 you know, or the project is not going to happen, 0:19:15.760 --> 0:19:18.640 or you will get fired, or your voters will vote 0:19:18.680 --> 0:19:21.040 you out. And we have very few of those mechanisms 0:19:21.080 --> 0:19:23.920 in place now for these projects. The only real mechanism 0:19:24.000 --> 0:19:27.119 that we have is the Treasury coming in and saying, okay, 0:19:27.160 --> 0:19:29.199 you know what, Actually, you spend too much money on this, 0:19:29.400 --> 0:19:31.480 We're canceling this, or we're going to cancel some of this, 0:19:31.720 --> 0:19:33.919 which is a very blunt to cancel. 0:19:34.080 --> 0:19:37.120 Are awful, that's not the correct incentive. Spend too much 0:19:37.160 --> 0:19:38.760 and we don't do it. Not norful. 0:19:40.200 --> 0:19:42.720 Absolutely, we don't want a situation where the only two 0:19:42.720 --> 0:19:48.280 options are extremely expensive infrastructure or canceled infrastructure. We want 0:19:48.320 --> 0:19:51.399 there to be incentives. And you know, anybody who's worked 0:19:51.680 --> 0:19:54.200 for any kind of on any kind of complex project 0:19:54.240 --> 0:19:56.920 knows you need people at every step of the decision 0:19:56.920 --> 0:20:00.000 making chain to be worried about costs. There is all 0:20:00.000 --> 0:20:02.359 always going to be cost inflation, and you need people 0:20:02.400 --> 0:20:05.080 with strong incentives to keep the costs down to make 0:20:05.119 --> 0:20:07.439 decisions that say, you know, this isn't going to be 0:20:07.440 --> 0:20:09.199 the fastest ty speed rail line in the world. This 0:20:09.280 --> 0:20:10.840 is going to be the second fastest or of the 0:20:10.840 --> 0:20:12.720 fifth fastest. You know, it's going to be a lot 0:20:12.720 --> 0:20:14.679 better than what we've got, but it's going to be 0:20:15.160 --> 0:20:18.560 not by it's not going to be gold plated. And unfortunately, 0:20:18.600 --> 0:20:21.639 we just don't do that. So all of the problems 0:20:21.680 --> 0:20:25.879 that we have with environmental assessments and with planning and 0:20:25.960 --> 0:20:28.320 judicial reviews and stuff like that are compounded by the 0:20:28.320 --> 0:20:30.560 fact that the incentives for the people who are actually 0:20:30.600 --> 0:20:33.920 running the project don't factor costs in at all, really, 0:20:34.280 --> 0:20:36.919 and I think that's the kind of underlying reason that 0:20:37.000 --> 0:20:40.640 cost disease has grown so badly in infrastructure and things 0:20:40.640 --> 0:20:44.840 like nuclear power as well, but infrastructure especially, And again, 0:20:44.880 --> 0:20:48.360 we can change that. You know, we can evolve decision 0:20:48.400 --> 0:20:51.160 making to people who are more accountable for the decisions 0:20:51.160 --> 0:20:53.560 they make and who can go bankrupt, and we can 0:20:53.600 --> 0:20:56.480 bring a more involved role for the private sector that 0:20:56.600 --> 0:21:00.000 includes loss as well as profit. I think a huge, 0:21:00.040 --> 0:21:02.280 huge problem that we've got is when we do these 0:21:02.359 --> 0:21:05.720 sort of quasi private projects. There is still the kind 0:21:05.760 --> 0:21:10.200 of government, a funder of last resorts that that insulates 0:21:10.240 --> 0:21:13.600 the private sector from its cost increases. And we can 0:21:13.680 --> 0:21:16.280 change that, but it will be challenging and it's not 0:21:16.320 --> 0:21:17.920 straightforward to get there from where we are. 0:21:18.200 --> 0:21:20.840