Britain needs to reclaim its Victorian vision

By Dieter Helm

Speed in the quest to meet infrastructure needs is not a British strength. The saga of the Channel tunnel and the railway connecting it to London took a couple of decades; the High Speed 2 railway line looks like another two decades in the making. Fourteen years elapsed between the decision to build the last nuclear power station and its completion; the current nuclear renaissance started in 2006 and will not produce an outcome before 2022. The search for a lasting solution to the squeeze on airport capacity in the southeast has taken a half century so far; this week’s Airports Commission report is yet another instalment.

As long as each infrastructure project is treated in isolation, and as a technical rather than a political proposition, delays are inevitable as the process gets bogged down in battles between winners and local losers worried about house prices and back gardens. What is missing is the bigger picture of our infrastructure needs – the package of investments that together make us all better off – and an effective national infrastructure plan.

The striking thing about the Airports Commission report is that the question it tries to answer is not really the one addressed in the detailed report and annexes. Civil servants could – and arguably should – have done all this. The real question is a political one, disguised as technical and economic: how can politicians commit to an answer?

Indeed, all the big infrastructure problems are ultimately political. The Airports Commission is another attempt to pass these difficult issues to technocrats in the hope this will solve the politics. It is a path widely advocated. Labour’s Armitt review and the London School of Economics Growth Commission reached the same conclusion this year. It is no surprise: the technocratic elite has recommended that such choices be left to experts such as themselves. 

In the case of airports, it is a mistake to think that the technical details are so complicated as to be beyond the understanding of our politicians. The facts are painfully obvious to everyone. A runway is just concrete and tarmac. Demand forecasts are widely produced – and surrounded by uncertainty. Except for the option of building an airport in the Thames estuary, the sums involved are not huge. It is probably less than the cost of the nuclear development to be built at Hinkley Point, and an order of magnitude less than planned offshore wind farms. There are private companies willing to build the main airport options, no subsidies needed. Nothing in the report should surprise Prime Minister David Cameron; Nick Clegg, his deputy; or Ed Miliband, Labour leader. It is not for want of facts about the specific project – or money – that they have dithered.

What is hard to analyse is the context within which a runway would sit. We might call this the Victorian question. It requires a vision of what sort of basic public goods will be required half a century hence. These are the backbone of the economy and must be fitted together. The Victorians knew they needed railways and sewers. We know we need new railways, airports, water and sewerage systems, broadband superhighways and energy transmission systems. We also need to greatly enhance our natural capital. Such systems are not amenable to marginal cost-benefit analysis for the very good reason that they are anything but marginal.

The Airports Commission report starts with these crucial elements missing. It asks about runways before we have decided on the main transport architecture, the location of a growing population and interconnectivity with the continent. It addresses the particular before the general. No wonder it maximises scope for the losers to shout loudest, notably local residents and MPs. 

This sort of political problem has a solution. It needs an overall package within which everyone is a net gainer. It is not about a runway decision but the set of network infrastructures that will provide the context for growth – within which everyone is a net gainer. 

West Londoners would probably be losers from a new Heathrow runway. As long as the question is narrowly conceived as about an extra runway, they have every reason to complain. Every local interest can shout about every local infrastructure project. Yet west London residents would gain from all the other infrastructure projects proposed as part of a broader, long-term plan to develop network infrastructure – for example from easier access to the north on HS2, from more power stations, and more natural capital. 

Such an aggregate approach recognises that “we are all in this together” – and the choice should be to create a modern infrastructure as a whole, within which decisions about airports and rail lines are nested, rather than proceeding on a case-by-case basis. Case-by-case too often turns out to be ditch-by-ditch.

All projects have losers. But if the aggregate results in net gains for all, compensation for the losers can and should follow. The negative social and environmental impacts of any plans need to be offset by payments for improvements elsewhere from those who benefit. If a project is worth doing, those who gain should be able to compensate the losers – whether for noise from aircraft, disturbance from fracking or the house-price effects of HS2. The fact that proper compensation is the exception rather than the rule is part of the reason for such opposition.

Ask a politician whether an extra Heathrow or Gatwick runway is a good idea and they reach for the political map. Ask them what sort of infrastructure the economy will need in 2050 and there is a greater chance of agreement. The first National Infrastructure Plan, published by the coalition government in 2010, set out to provide a system-wide framework. But it has not been carried through: the latest version, published this month, is a list of projects, each with its localised winners and losers. 

The next NIP should be explicitly designed to build a political consensus in the run-up to the general election. The Climate Change Act provides an example: think long-term, think national, think beyond immediate projects, and surprising progress could be made. Start with the right questions and the answers follow. Start with specific answers – specific projects – and the experience of the last half-century tells us very little progress will be made.

Copyright The Financial Times Limited 2013.