Incremental improvements to infrastructure offer better value for money


Does it lift your heart to hear that “Britain is uniquely placed to lead the world in a smart power revolution”? Do you share the ambition of George Osborne, chancellor of the exchequer, to discover “what the government needs to do to become a world leader in 5G infrastructure”?

My heart sank when reading these words in the plans of the UK’s National Infrastructure Commission. The modern history of British government records a litany of failed commercial projects that were intended to catapult the country to technological leadership. We would feed the world with groundnuts, power it with advanced gas-cooled nuclear reactors, shrink it with Concorde, connect it with System X digital switching equipment. None of these pretensions to global leadership came to fruition.

Think of the failed plan to computerise National Health Service records, intended to provide a comprehensive medical database available to doctors and patients anywhere — and everywhere. And the years of procrastination that means, despite the crying need for more London airport capacity and new electricity generation, nothing at all has happened.

While the recent focus on infrastructure is welcome, the plans seem already to have succumbed to the political imperative for soundbites and predilection for the grandiose. The usual outcome is projects that run over time and over budget, as with the nuclear power stations; or do not deliver at all, as with NHS computerisation.

Technological improvements in electricity storage and transmission — “smart power” — could in principle transform energy production. However, the appraisal combines oddly specific promises of benefits — smart energy could save consumers £8.1bn a year — with vagueness about how it could be achieved and at what cost. We could have geothermal energy from Iceland, hydropower from Norway and solar power from Africa — but such transmission links are far from being economic. We might be able use all the power we can generate in a 24-hour cycle — but only with better batteries than anyone has yet made. It is hard to see why Britain is “uniquely placed” to achieve these technological breakthroughs.

As you follow the excited clichés — London as world city, the Northern Powerhouse, the need to “maximise the potential” of the “Cambridge-Milton Keynes-Oxford corridor” as a “single, knowledge-intensive cluster that competes on a global stage” — the concept of value for money never arises. While a new Tube route linking the north-east of London to the south-west seems a good idea, the proposed line is estimated to cost more than £32bn. The parallel Victoria line cost about £90m in the 1960s (£1.5bn at current prices). Heathrow expansion has much to be said for it but not at a cost of £23bn, which is the all-in cost estimated by the Airports Commission.

We could deal with alleged shortages of capacity on the main rail line from London to Birmingham by building a high-speed line about 200km long for an estimated £30bn (although French and Spanish links appear to cost less than €40m per km). Or we could, for example, tweak the fare structure to restrict customers’ use of off-peak fares immediately after peak hours. We could spend modest sums on a new runway at Gatwick and add terminal capacity piecemeal as needed; build smaller modular nuclear reactors instead of paying the French and Chinese more than £20bn for Hinkley Point.

A high proportion of the mooted benefits of grand projects could be obtained by incremental development at a fraction of the estimated cost of the world-beating schemes. Like most users, I do not care whether Britain is a global leader in 5G mobile technology. I only want a network that works.

This article was first published in the Financial Times on April 27th 2016.

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