One need only look at the protracted planning process that BAA, the owner of Heathrow Airport, went through to develop its £4.3 billion (€4.8 billion; $7.1 billion) Terminal 5 building to understand the planning challenges which private investors in UK infrastructure can face. The proposals struggled with planning glitches for seven years before finally gaining consent from the UK’s ministry of transport in 2001. The terminal finally opened to passengers last year.
Now the British government has taken action to prevent seemingly endless planning nightmares a la Heathrow in the future. The recently established Infrastructure Planning Commission, led by Sir Michael Pitt and his Bristol-based team of commissioners, has been tasked with preventing the next large-scale infrastructure schemes in the country from being dragged through long drawn-out planning nightmares.
“What frustrates private investors in infrastructure more than anything else is uncertainty about the planning process,” says Pitt, a down-to-earth civil servant who was knighted in 2005 for services to local government. Pitt, who started out as a civil engineer specialising in road and bridge infrastructure, hopes things are going to change for the better in this respect.
As a result of the 2008 Planning Act, the IPC was set up earlier this year as an independent national body. Sponsored by the government’s Department for Communities and Local Government and endowed with a first-year budget of £6.7 million, its mandate is to streamline the delivery of planning decisions on nationally significant infrastructure projects, thereby reducing the gestation period of these decisions from around seven years to less than 12 months. One benefit of achieving this goal would be to save the British taxpayer £300 million in the process, according to the body’s launch materials.
Its aim of speeding up the planning decision process notwithstanding, the IPC is perfectly prepared to say “no” to developers who plan to build infrastructure without adequately consulting the communities it could impact, Pitt insists. “It doesn’t mean to say that the IPC will be any more favourably disposed towards approving infrastructure; it just means that we will come to our conclusions more quickly and more professionally than the previous arrangements.”
Focused on energy
In October the IPC revealed the first batch of projects which it expects to receive as applications next March. From these it is obvious that energy is a big focus of the IPC. Of the first 11 projects to be considered, two relate to new nuclear power stations, five are wind farms and two electricity grid projects.
This is no coincidence. The need to develop the UK’s electricity grid infrastructure and generating capacity, from a variety of energy sources, is becoming an urgent matter. Business lobbying group the Confederation of British Industry (CBI), an early supporter of the new commission, has warned that at least six new nuclear power plants need to be built in Britain before 2030 in order to meet climate change targets and bolster energy security.
Energy infrastructure projects in the UK are notoriously tricky to get through the planning consent stage. One project currently under consideration under the old regime is the development of new overhead power lines in Scotland, the proposals for which have been under consideration for seven years. It is the kind of project that would have been accelerated through the process had the IPC been around at its launch, claims Pitt.
Outside the energy sector, other high-profile schemes he says would have benefitted from the new regime include the £5 billion Thameslink rail expansion programme, which was also bogged down at the planning stage and dragged through two public enquiries before being approved, as well as the aforementioned Terminal 5 building at Heathrow.
What Pitt would like to see in place is a planning regime similar to that in the Republic of Ireland. “The best comparator is Ireland,” he says, “which has had a similar regime up and running now for several years, which is very successful.” He and his team even visited the country to study the planning system while developing the IPC.
However, applying this model to Britain will not be easy: “We have a delightful landscape, and it’s quite a crowded country, so there are always going to be challenges in trying to find the best possible site for essential infrastructure,” he says. “Planning in this country is probably more challenging than most others.”
The good news is that the IPC has been given powers to get things done. Its decisions cannot be overturned by the government or any other body. It is only accountable to the courts, which cannot intervene unless the commission is deemed to have acted unreasonably.
Putting such authority in the hands of an unelected party has troubled the opposition Conservative party, which has vowed to merge the commission into the existing planning inspectorate should it win next year’s general election. This could unravel a great deal of the IPC’s efforts, and clearly worries Pitt: “The principal concern that I’m hearing all round is that a further disruption to the planning process could create more delay and undermine investor confidence.”
Meanwhile the Tory Party is not the only opponent facing the commission. Environmental groups are also concerned over plans to speed up the planning process. Upon Pitt’s appointment in March, Paul Miner, a senior planner at the influential environmental group the Campaign to Protect Rural England, commented: “While we wish Sir Michael good luck we remain doubtful that the Infrastructure Planning Commission model is workable. We do not share Ministers’ belief that it will, or should, take the politics out of decisions on controversial infrastructure projects.”
However, the campaign has since softened its stance, claiming in October it wants to “engage constructively” with the commission.
Shrink and grow
At the moment the IPC is acting in an advisory capacity, but will start to formally receive applications in March next year. The official estimate of the volume of applications is in the region of 40 to 50, although Pitt admits this could be significantly higher based on some of his conversations with the private sector. So will his team be drowning in work? “The IPC will have to shrink and grow according to the number of applications coming forward, and we do anticipate that we will have to increase our staffing levels over the next six months or so,” he says.
What investors in infrastructure really seem to want from the new institution is a noticeable change in the planning process for infrastructure projects in the UK, otherwise they may start to look for opportunities elsewhere. “Some firms, frustrated by the UK’s planning regime, have already taken their investments overseas, so the top priority for the government must be to publish the National Policy Statements on infrastructure development sooner rather than later. That will allow firms to invest with confidence, building the new transport and energy infrastructure needed to shift to a low-carbon economy,” cautions the CBI’s deputy director-general John Cridland.
Preventing further infrastructure investors from seeking out simpler planning regimes abroad is no small task. If the IPC succeeds, it could help deliver a big boost to Britain’s infrastructure – and inspire other contries in Europe and elsewhere to follow its lead.