The real reason the UK is so bad at infrastructure

HS2 is in the headlines again. The government is considering scrapping the Birmingham to Manchester section of the planned high-speed rail route as cost pressures mount.

This isn’t just a problem with cost inflation, though. Infrastructure projects in the UK are unjustifiably expensive compared with those in Europe and the price of HS2 is a case in point.

It was once estimated the entire project – which included a branch to Leeds via Sheffield on top of the London-Birmingham-Manchester lines – would cost £57bn. Now the bill for just the London to Birmingham leg could come in not far under that.

Data from Britain Remade shows the scale of the project cost difference between the UK and countries on the continent. It found the average cost-per-mile of the 10 most expensive rail projects was £397mn for the UK compared with £306mn for Italy and £221mn for France.

It’s often the case in the UK that eyes glaze over when we hear about infrastructure delays and billions added to budgets, given how normalised waste and underperformance has become. But we shouldn’t just accept that building key projects here is more expensive than elsewhere.

The situation is damaging at both a macro and micro level. Much needed projects won’t be completed if the sums do not add up. This hits productivity and economic performance. Communities across the country are stuck using crumbling infrastructure, and in some cases completely lack good transport options to easily connect them with centres of economic activity. 

And it’s important to understand just why building infrastructure is more expensive in the UK and US (where costs are even more pricey than here). The unfortunate truth is that infrastructure and housing crises are self-inflicted. ‘Nimbys’ – those who take the ‘not in my back yard’ approach to building – have driven up costs by protesting, slowing, and blocking projects. 

US economists Leah Brooks and Zachary Liscow argued in a paper that the growth of Nimbyism was a key cause behind the tripling of spending per mile on the Interstate highway system between the 1960s and 1980s. The Nimby voice has only gotten stronger since then. And it isn’t as simple as high rates of homeownership leading to higher infrastructure costs. The proportion of homeowners in France is higher than in England in Wales, and just below that of the US, yet its project costs are significantly lower.

So what is to blame? The legal and regulatory approach to Nimbyism, along with the sclerotic UK planning system, are much bigger factors. But, on the flip side, Nimbys can often have fair points, ranging from aesthetics to the environment. It would be foolish to dismiss infrastructure objections as selfish. Homeownership roots you in a community which gives you insights regarding the local area. It is fully understandable that, for example, there is discontent about a ugly new build estates with no GP practice or shops being put up all over the place. And there has been much justifiable criticism about the loss of natural habitats because of HS2.

The UK finds itself in a bind, stuck between the desires of existing homeowners and those who desperately need new infrastructure. This is a complex situation with competing objectives. Cost-benefit analysis of every infrastructure project is immediately weakened by the country’s inability to provide them on time and at cost, which results in such scaling back as seen with HS2. Every time the costs increase, it becomes harder to justify, and you end up throwing good money after bad and wasting billions on a sub-optimal outcome.

It is unclear what the long-term solution will be to bring the two groups together. But the UK desperately needs to get a grip on its infrastructure cost problem, if it truly wants to boost its economic growth.