The UK is in a state of chronic stagnation - if not outright decline. The list of problems is longer than an NHS waiting list: high housing costs; expensive energy; stagnant productivity; a literally crumbling public sector. But the solutions are simple: we need to spend more on public services, improve our productivity, and grow the economy1. How do we go about doing that? The Financial Times’ annual survey of economists showed a consensus in favour of increasing investment (with some also advocating for relaxing / reforming the planning system).
But announcing more investment is not enough. We are in danger of no longer being able to perform the basic functions of a developed nation. We need, as political commentator Aaron Bastani says, to think like a developing country and fix the housing, transport and energy sectors.
Below are ways to fix these three key sectors, by ensuring the benefits of these improvements are shared by everyone.
I also intend to submit this to the TxP Progress Prize so please check that out for more excellent ideas on how to remedy the UK’s many ills.
Housing
High housing costs plague the UK, eating up an increasing share of the average monthly pay cheque, but our limited housing supply causes even more problems than high rent and high prices: by making it diifficult to move, it prevents people seeking out and getting better paid jobs. To increase supply and lower prices, we need to reform the planning system that controls housing construction.
However, the history of planning reform in the UK is largely one of failure and is much easier said than done, as Boris Johnson found out to his cost. Johnson’s radical reforms proposed replacing the planning system with a zoning system that permitted housinng by default if it met a clear set of criteria. Howeverr, the problems with this were obvious - they potentially applied to the entire country2, mobilising every conceivable objector to oppose it, and it provided too little in the way of benefits for people who may be negatively affected. Reform proposals need to be feasible as well as effective. There are three options for increasing the number of homes that should meet these two criteria.
Firstly, Street Votes devolve decisions down to nearly the smallest possible unit, allowing residents to vote to permit more intensive development on their road. This allows suburbs and cities to densify, and the residents benefit directly from the change because they see the uplift in land values as a result. By working within the existing planning system, it doesn’t require dramatic reform, and the opt-in element means we aren’t forcing development onto voters who oppose it.
Another option is to liberalise the rules around extensions. Haringey council in London permits upwards extensions to add an extra floor to a house as long as it maintains the same design. We should also relax the rules on loft conversions, allowing larger conversions without requiring planning permission, and adding an extra bedroom or two to almost every house in the country. This gives people the freedom to expand and improve their own homes, and should be more popular than imposing extra buildings nearby.
Lastly, councils could be directly incentivised to build more homes by receiving extra funding for hitting housing targets, or handed more control over locally generated tax-revenue, which would encourage them to pursue growth-focused policies.
Transport
British cities (except for London) have poor transport networks:
All of our major cities should have better public transport, with electrified train lines3, centralised control of their bus networks, and maybe some high speed train lines between them all. The issue with HS2 wasn’t its price, but that it was only the second bit of high speed track in the entire country. Why shouldn’t our ten biggest cities all be connected by HS2-HS11, like in other developed economies? This inability to travel is not a minor inconvenience: it radically limits the beneficial effects of urban density. Fixing it is crucial to unlocking growth outside of London.
While it is necessary for the UK to announce more investment in transport infrastructure, reducing the high costs relative to other nations will allow us to buy more of it and raise living standards faster. The Lower Thames crossing was first proposed in the late 2000s, is still not confirmed, has already cost over £870 million and the planning document is over 63,000 pages long. Meanwhile, the Faroe islands have just opened a new sub-sea tunnel, almost 3 times as long as the Lower Thames crossing tunnel, for about the same price as its planning costs alone. This has to be fixed for the UK to exit its slump.
Energy
The UK has very high electricity prices, for both households and industry.4 This is a huge burden, impoverishing its residents, and holding back the private sector. As we aim for net zero, we need to substantially increase the amount of electricity we generate. However, it is difficult to build the energy generation and transmission lines needed: as well as an effective ban on onshore wind, solar power projects are also frequently rejected by the planning system, as are transmission lines and pylons. People who live near new electricity generation or transmission should be compensated with discounted bills.
Conclusion
The UK is in a parlous state and in danger of slipping behind the rest of the developed world. Two of the three biggest things we could do to restore growth to the UK are infrastructure investment and planning reform - but these are related problems: you can’t just spend your way to growth because you get poor value for money without planning reform, and if you don’t invest in public goods, you don’t get the full benefits of reform. We need more housing, better transport and more electicity generation. That will be a positive sum outcome which creates more winnings than losses. Unfortunately, the benefits are diffuse but the costs are concentrated. British governance structures have many veto points, which makes it easy for motivated opponents to slow down or prevent vital infrastructure, making us all worse off. We need to give benefits to locals negatively affected by infrastructure, ensuring everyone becomes a winner from positive sum development and we can build what we need to thrive.
The former is a lot easier if accompanied by the latter two.
A more limited approach would be to do this for land just around train stations - a report estimated that it could lead to two million extra homes for just five British cities. This should generate fewer opponents than allowing it for the entire country.
In 2050, there won’t be any diesel cars but we’ll still have diesel engines chugging along our train tracks.
Gas tends to be a bit cheaper and the exact ranking depends on whether you use market exchange rates or purchasing power standard units.