Crumbling Britain

Over the course of the next week I am going to look in turn at the main areas of infrastructure, where the UK and especially southern England are badly provided . This is a good time to be considering substantial new investment in transport, water, communications, and energy. The construction industry is going to be short of orders, prices will become keener as a result, whilst even in this Credit Crunch there are substantial funds available from Infrastructure funds and banks for this type of investment.

The last eleven years have seen little progress in making the substantial new investments we need. Many road projects were cancelled when the new government arrived in power. With the exception of the completion of the Midlands relief toll motorway, proof that toll roads can be successfully built and financed as supplementary routes in the UK, there is little to show for this long period. It is the same story on the railways. Massive sums have gone into rail, but so much of it has been spent on consultants, advisers, repairs and remedial work, and little on new track or capacity enhancing facilities. The period has seen the completion of the Cross Channel rail link and a revamped St Pancras Station as exceptions to this rule of maximum spend for no gain.

In energy there has been a deathly silence. The Conservatives initiated the “dash for gas” as the newly privatised industry decided building more fuel inefficient and dirty coal fired power stations was a bad idea. The UK made its one decisive move to a lower carbon economy through this change of fuel for power generation, which has enabled the country to hit its Kyoto targets. Over the last decade little has happened. The nuclear stations have got that much older and closer to the point where they have to close as they exceed their design lives, whilst we have been treated to successive Energy consultation documents and the promise of a grand debate on new nuclear.

The water industry has remained a monopoly for all but the largest users, and has seen a drought of new provision leading to hosepipe bans and reduced supplies as if it were still nationalised. The regulators have allowed the industry to push through substantial price rises, exploiting the monopoly position. The South and east of the country are short of water capacity.

Only in telecommunications has there been an explosion of new capacity, as a more competitive industry has responded to the demand for much more capacity to handle the internet, increased demands for mobile telephony,. And new services ranging from data transmission through security to entertainment downloads. Even here there has been some difficulty in generating the extra line capacity needed to ensure all have access to good internet service, thanks to the strong market position enjoyed still by BT in controlling the local loop and the local exchange network. Mobile networks have expanded dramatically under the impetus of full competition and strong user demand.

The UK as a result of the missing decade of network investment is short of capacity of all kinds for running a twenty first century economy with substantial inward immigration increasing demand as well. The next few years of slowdown or worse present an ideal opportunity to start to remedy these defects. I will set out thought son what the government and the private sector can do in the months ahead to rectify the shortages.

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12 Comments

  1. Andrew Forbes
    Posted August 1, 2008 at 12:16 pm | Permalink

    This is what is most upsetting about the New Labour years. In 1997, the country's mood was that all public services were getting worse, because the Tories were under investing. We welcomed a government that said it was going to spend money and improve everything. If this had actually been done, the nation would have applauded. Instead, everything has got worse, possibly at a faster rate than before. All that money has been squandered. We seem to have employed vast numbers of people to do jobs that didn't need doing, or, worse, interfere with business, and interfere with and monitor our daily lives.

    Worse than this; since the money has been spent on employing people, it isn't being thrown away once; it's being thrown away every year, and the best that can be hoped it that a portion of this annual waste can be recovered by efficiency, but some of it will be permanent annual waste.

  2. no one
    Posted August 1, 2008 at 12:51 pm | Permalink

    On Telco

    Well in Telco backbone provision the markets didn't work quite in the nirvana fashion you imagine, there was massive investment in capacity as part of the internet bubble, when that bubble burst the worlds Telco's were left with massive overcapacity in backbone provision, which led to price drops, and pretty inefficient use of capacity at the moment, that overcapacity largely remains on the backbone

    BT has wasted money on 21 Century network, which is based on so many false ideas that I'm amazed the execs were not shot

    But crucially what the UK needs is FIBRE TO THE HOME (and small business), this needs incentives for the industry to rapidly swap out the copper from the exchanges to the homes with fibre

    Backbone Telco capacity can largely be left alone to the market to sort out

    What the state needs to do its sort out the rules so that the UK gets much faster links all the way to the home

    3G mobile coverage giving fast data access also needs to be encouraged, so that there are more base stations able to offer more capacity to more users

    Yep rail as a starter for 10 we need some new fast capacity north to south, and east to west, in this country, that means however planning capacity to bulldoze a straight line all the way through whatever is in the way, doing that in a democracy will be hard, otherwise its going to be a mess

    All new rolling stock should be air-conditioned

    Lengthen the vast majority of platforms, changes to allow longer trains, incentives for the operators to run longer trains

    But also need incentives for folk to work staggered shifts (as the peak is the problem), and move some hubs away from London, would do a lot to improve transport

    Energy needs a radical review, starting with conservation, make triple glazing compulsory on new windows, double the thickness of loft insulation demanded by the standards etc, look at how the Scandinavian countries do it, but yes too we need planned capacity over the medium to long term which we don't currently have

    Water yep agree

    Labour has thrown masses of money at hospitals (keeping it off balance sheet with PFI etc) but these are largely badly designed hospitals still with mixed and crowded wards, we need to change the game completely, use state funds to subsidise the patients not the providers of care, let the patients take their payouts from state medical insurance anywhere they want, and incentives the building of new proper world leading hospitals

    Also we need 24×7 minor's clinics staffed by DOCTORS not just nurses in all towns and cities, so that there is an alternate to queuing up at A & E for non-life threatening but important problems

    Same for schools we need to free up the market, stop this mass migration towards the better schools imposed by labour, and let the schools compete for the kids, and the kids compete for the schools, let people living in the worse areas access the better schools

    Change the rules so that we are not just building flats in this country, and that houses have space for cars, as all this nonsense building of large housing estates with no car parking is a disaster for all to see

    Get rid of speed cameras on all 70 mph roads, if the road is that dangerous it should not be a 70 limit

    etc etc etc etc

    There is so much common sense that if explained as substance to the British people would wipe Labour off the political map forever

  3. Freeborn John
    Posted August 1, 2008 at 1:59 pm | Permalink

    Technology and market liberalisation have led to very significant changes in the telecoms industry worldwide. In the last two decades the power to decide the evolution of telecommunications technology has migrated from the former monopoly phone companies (e.g. BT, FT, DT, NTT, etc.) to a smaller number of global equipment suppliers. BT’s former monopoly power to mandate gold-plated technical solutions has been reduced to just the copper line going into most homes where the high-cost of digging up the streets sustains their exclusive position. However this copper will not last for ever, and a technical discontinuity (e.g. Ethernet-to-the-home, or something similar) will eventually emerge which attracts competitors into their access network business too.

    Telecoms technology has the potential to tackle wider problems of public ploicy. Road congestion can be mitigated to a degree by Satellite Navigation systems that receive traffic congestion updates through mobile networks. High-speed internet access to the home, supplemented by other emerging technologies such “Telepresence”, will allow more people to avoid the environmentally-damaging commute to the office.

    The UK has if anything rather lagged in recent developments, with the pace being set by companies like Fastweb in Italy. 2Mbit/s "broadband" going into half of UK homes is a big improvement on even a decade ago, but the Internet revolution will not be over until we have Gigabit speed Internet running into every home in Africa.

  4. DiscoveredJoys
    Posted August 1, 2008 at 3:38 pm | Permalink

    I do hope that in your much needed review you also consider which areas of infrastructure need only repair rather than growth. After all, spending on infrastructure that won't be needed (because of changes in climate, technology etc) would be wasteful.

    A massive investment in rail would offset some of the investment needed in roads, and vice versa. A big switch to electric cars would increase the need for investment in electricity generation, but reduce the need for investment in new refineries. A big investment in internet capacity might reduce the need for the much overdue investment in local libraries.

  5. NigelC
    Posted August 1, 2008 at 4:44 pm | Permalink

    Don't forget sewage treament works alongside water capacity. The proposed housing growth in the M11/ Stanstead corridor will be scuppered (I hope) because the sewage capacity is not in place.

  6. mikestallard
    Posted August 1, 2008 at 5:01 pm | Permalink

    It is going to be a real challenge to clear up John Prescott's legacy to transport. Rather than Great Projects it might be good, perhaps to concentrate on the little things? I very much look forward to your ideas, John, on the subjects which you have mentioned.
    You did leave out Air travel, by the way, which has boomed, thanks to the Irish input.
    I do not think, myself, that it will be that difficult to put humpty together again tackled in small, thoughtful pieces.

  7. Neil Craig
    Posted August 1, 2008 at 6:14 pm | Permalink

    Infrastructure spending is one of the few areas where government spending achieves things private entrepreneurs find more difficult because they don't have the integrated scope.

    Doing a little brainstorming:

    Automated rail.
    Automated delivery of goods by rail.
    Lighter trains (actually this is John's idea I am nicking).
    Build lots of inexpensive reliable nuclear power.
    Cut all the regulations/planning commissions/reviews/bureaucracy etc that increase public building prices up to 13 times.
    Expand airports.
    Provide an interest free bridging loan to any off site manufactured home for the period from completion of manufacture until installation – this would allow investment in mass manufacturing of houses.
    Tunnels – the Norwegians have cut hundreds of kms of tunnels at about £7 m a mile – roads to the Isle of wight, Anglesey, the Scots islands & motorways under some cities, underground railways.
    Automated monorails – produce a simple proces to allow the building of such above existing roads, without having rates etc charged.
    Prizes – X-Prizes for space development, per kilometre awards for monorails or tunnels, X-Prizes for commercial airships etc.

  8. Acorn
    Posted August 1, 2008 at 7:28 pm | Permalink

    Hansard column XXXX
    Questions to Mr John Redwood, Secretary of State for National Infrastructure Security.

    Could the Minister tell the house how the building of new Natural Gas Storage facilities is progressing? He will be aware that the UK gas storage is only the equivalent of 4% of annual demand. This compared with 19% in Germany and 25% in France? Could he also tell the House, how many projects are stuck in the planning system? Does he further consider that OFGEM has concentrated too much on appeasing tabloid headline writers and not enough on long term system security? http://www.deloitte.com/dtt/cda/doc/content/UK_EI… .

    Has the minister had time to read my letter to him detailing an experiment in the USA for domestic electricity management; http://arstechnica.com/news.ars/post/20080110-ele… . Does he agree, that varying the retail price of electricity, throughout the day; to more nearly approximate the cost of supplying electricity; would encourage energy saving and a consequential reduction in CO2 emissions? Has he considered that the current retail pricing structure does not encourage users to spread their consumption into lower generation cost periods of the day? Does he further agree that such a scheme would reduce the amount of “peak lopping” and “spinning reserve”, generating units required on the grid system? [The current n-power trial in the UK just draws a pretty graph of your electricity use]

    Does the Minister agree with Oxford University who have calculated that it costs consumers up to £510 for each tonne of CO2 emission avoided through the use of wind turbines; and that the level of subsidy for wind farms is very high and is distorting the market, making it more attractive to invest in this technology than in others, like solar power. Will he, on this occasion, agree with OFGEM, when they say that they calculate that renewable energy subsidies will add £60 to consumer bills this year and that will keep rising? Is it not time to scrap this Renewable Obligation Certificates system? http://www.timesonline.co.uk/tol/news/environment

    Order, Order. I have to tell the honorable gentleman that I didn’t understand a bloody word of that; order, Mr. Redwood ………………….

  9. DennisA
    Posted August 1, 2008 at 8:27 pm | Permalink

    Why, oh why does everyone go on about CO2 emissions and Kyoto? If all Kyoto targets were met by all signatories the net calculated theoretical result would be a reduction in global temperature of 0.2 deg C by 2050. The planet is not heating up, in fact the contrary is true. The whole issue is a nonsense and we will need coal for many years yet.

    The big supply problem is that we will have to close coal fired power stations not because they are too old, but because of the EU Large Combustion Plant Directive. CO2 is not pollution, SOx, NOx and particulates are, but can be addressed with clean burn technology. Combined Heat and Power for district heating systems and industrial use should be implemented where possible. It isn't rocket science.

  10. adam
    Posted August 1, 2008 at 10:49 pm | Permalink

    I agree we should invest in infrastructure in some way, that will help our economy.

    I think the civil service will be reluctant to build roads but will be supportive of rail.

  11. Patrick
    Posted August 1, 2008 at 11:14 pm | Permalink

    My pet subject is the under-investment in cycle lanes. Only London seems to have invested in cycle lanes in the last ten years. London is so much more cycle friendly than probably any where else i know.

    Also the "cycle to work" scheme is a good one, but take up is poor.

    Even portugal has brand new national and regional cycle routes ( paid for by the EU – I believe ). I look forward to the day when man, woman and children a like can safely ride dedicated and purpose built cycle lanes throughout the land ( and not just in London).

    It is the best way to travel short distances. Arent most car journeys under 2 miles or something? It is also the most healthiest and greenest way to get around.

  12. Stuart Fairney
    Posted August 2, 2008 at 9:34 am | Permalink

    JR

    Might I suggest you also look at the failure to provide more prison spaces despite predicted and subsequently actualised rises in crime leading to a great many offenders who should be locked up getting "non-custodials"

    This is one of their great failings, (and it's a crowded field!)

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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