James Heath: urgent planning reform needed to remove "binding constraint" on UK's economic future

Commission's chief executive speaks at NSIPs Forum in London.

Published: 7 Mar 2024

By: Ben Wilson

Tagged: , , , , ,

A modern bridge over a dual carriageway cutting through British farmland

James Heath, chief executive of the National Infrastructure Commission, spoke at the Nationally Significant Infrastructure Projects Forum in London yesterday (6 March). James offered the Commission’s view on the vital importance of speeding up the planning regime for major projects, given the need for pace in delivering tens of billions of pounds’ worth of schemes over the coming years. These schemes, James argues, are critical to achieving climate obligations and boosting UK productivity.

James summarises government’s response to the Commission’s report on the NSIPs planning system, and the gaps remaining.

The full text of James’ remarks can be found below.

I see you have a packed agenda over the next two days. Other speakers, I’m sure, will talk about the details of the infrastructure consenting regime and what is changing.

I will use this opening session to step back and talk about why reforming the consenting regime for nationally significant infrastructure projects matters for the UK’s economic future, and what effective reform looks like.

We build economic infrastructure too slowly in UK and the planning system is one of the key reasons for this.

There is a big infrastructure gap between the assets we have today and the assets we will need in the future, in order to decarbonise the economy, boost economic growth and increase resilience to climate change.

We will need to unlock a significant and sustained volume of investment over the coming decades to close this infrastructure gap. And, at present, the planning system is a binding constraint on infrastructure roll-out at the pace that is required. The past decade has seen average times for NSIPs increase significantly. Planning costs are rising and unreliability in the system is increasing.

At the Commission, we have looked at how we got into this situation and have advised government on what needs to change to get out of it. There have been positive steps towards reform with the Government’s NSIP Action Plan, measures to strengthen the capacity of the system, and the recent designation of the new National Policy Statements covering energy.

I’ll return to the question of what more needs to be done later. But, first, why does reform of the infrastructure planning regime matter?

In October last year, the Commission published the second National Infrastructure Assessment. This is our five-yearly look at the UK’s biggest, long-term economic infrastructure needs, how much will it cost to meet them and what policy and regulatory changes will be necessary.

The scale of change to modernise our infrastructure networks will be significant. We estimate that over £2 trillion of investment will be required – and the majority of this will come from the private sector. And we will need to build against the clock given the ambitious targets we’ve set on carbon reduction and the pressing challenges we face in areas like water supply and pollution.

To give an example of the scale of the challenge: without electricity transmission infrastructure, there is no net zero transition – and National Grid have estimated that meeting government’s 2035 power target would mean building five times more onshore transmission lines by 2030 than it has built over the past three decades. Similarly, at least nine new nationally significant water resource projects will be required before 2030 to prepare for a drier future.

Critically, a sizeable proportion of this investment in energy and other infrastructure networks will be consented through the planning regime for nationally significant infrastructure projects. The NSIP investment pipeline is estimated to be tens of billions of pounds per year – across our transport, energy and water networks.

Reducing the consent times for NSIPs will accelerate the realisation of the benefits associated with this investment. More broadly, an effective planning system that enables good decisions to be made swiftly can reduce costs and improve outcomes.

Planning reforms could have a material impact on productivity. Using OECD research, we’ve calculated that if the UK improved its infrastructure governance – of which planning is a core part – to perform as well as the best performers like the Netherlands, productivity could increase by between 0.3 and 1 percentage points within 10 years. In the context of UK productivity growth of 3.8 per cent over the 10 years to 2019, such an increase would represent a significant boost.

Despite this pressing need to modernise the UK’s economic infrastructure, the consenting system has slowed down and become more uncertain and adversarial. Initially the system worked well, but since 2012 average consenting times for NSIPs have increased by 65 per cent, moving from 2.6 to 4.2 years. And the rate of judicial review has spiked in recent years to nearly 60 per cent from a long-term average of ten per cent.

This creates risks for the infrastructure pipeline and for the attractiveness of the UK to investors. Planning delays and uncertainty increase the cost of infrastructure, which are ultimately passed onto the public and businesses who pay for the services.

It is worth us remembering how we got into this situation to avoid history repeating itself.

The system has, at least in part, become slower because National Policy Statements – the foundation of the infrastructure planning regime – have not been updated since they were first issued and have not been supported by clear guidance. As a result, the role of the Planning Inspectorate has shifted from that of inquisitor to that of arbiter, having to determine the meaning of old and sometimes subjective guidance. Without clear, well-structured and up-to-date statements of need for infrastructure, policy questions risk being debated at planning examinations, lengthening timeframes.

Speeding up the planning system for major infrastructure projects does not need to come at the expense of good decisions which take communities and the environment into account. Longer decision-making processes mean more uncertainty for communities while decisions are made. Similarly, inefficiencies in environmental data gathering and mitigation design slow down the process, but do not improve the quality of the environmental outcomes.

So, what do we need to do to remove planning as a binding constraint on infrastructure?

The Commission has made recommendations to government which would put the NSIP regime onto a more efficient and effective footing, and give us a chance of returning to the consenting timetables achieved in the early 2010s. In summary, we advised government to do four key things:

  • First, urgently finalise a new set of clear, updated National Policy Statements for infrastructure sectors and make it a legal requirement that these are updated at least every five years. National Policy Statements should link to sector specific spatial plans in energy, water and transport.
  • Second, introduce a menu of tangible benefits for local communities and individuals hosting nationally significant infrastructure such as electricity transmission lines.
  • Third, establish a central coordination and oversight mechanism for NSIPs reporting to the Prime Minister or the Chancellor.
  • Fourth, introduce a more strategic approach to environmental mitigation and the better use of environmental data across schemes.

Government responded to these recommendations at the Autumn Statement and also brought forward a package of measures that, if fully implemented, should speed up infrastructure consenting. While government accepted the first three changes we proposed, it has not fully adopted our recommendations on environmental assessments. While there are indications of progress on promoting greater access to environmental data, government needs to go further to provide firm commitments and timeframes for data sharing and to support the development of a library of effective mitigations that benefit multiple projects in key sectors and locations.

I’ll conclude with an important point that while urgent reform of the consenting regime is definitely necessary if we want to deliver the infrastructure needed to tackle climate change, boost growth and increase climate resilience, it is not sufficient. It is also critical that government provides policy stability and predictable regulatory models to secure the scale of investment that’s needed to close the UK’s infrastructure gap. We must also ensure that good design – both principles and processes – is embedded in major infrastructure projects from the outset.

The Commission’s hope is that, given the importance of the goals the UK has set for its economy, for communities and for the environment, we are able to reduce the barriers that cause delays to projects and increase costs.

That starts with reform of the infrastructure planning system, and it ends with a faster transition to low carbon, resilient infrastructure.

Thank you for listening.

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