UK planning system hinders leveraging private finance for transport projects, experts agree

Speaking at a parliamentary hearing of the Transport Committee on Wednesday, 1 May, a number of views were put forward detailing how the cost and uncertainty of the planning system in the UK means private investment into the nation’s transport objectives is done a lot more cautiously.

Britain Remade, a campaign to promote economic growth in the UK, was represented by policy researcher Ben Hopkinson who said: “It is completely right to highlight the effects of the planning system in dampening private investment into transport projects.

“It’s currently too expensive for private companies to feasibly think about investing in building new transport directly.”

Hopkinson further discussed how the cost of navigating the planning system compares to France.

“In France, there was a fully funded private motorway, the A65, that was built for just £10M per lane mile,” he said. “You’re never going to get those costs down in the UK unless we figure out how to fix the planning system.”

While the cost is one thing, Hopkinson did go on to say how the risk of not succeeding when trying to get a project through planning in this country is more of a deterrent.

“If you take the risk and the uncertainty away from planning applications, I think you’d be much more likely to see private finance getting involved in the direct funding,” he said.

“That’s not to say that you can’t have land value capture mechanisms to fund transport when you combine private developments and new public transport.

“Whether that’s a tram regeneration of Salford Quays or investment into the Docklands that funded part of the Jubilee line extension there. I think we need to expand on that here.

“But fully funded private infrastructure, I think it’s a ways off unless we fix the planning challenges.”

Oxera Consulting, an economics consultancy, partner Andrew Meaney discussed how there is a lack of private investment in transport projects in the UK because the conditions for the arrangements to be successful do not exist, with the planning system being one of them.

He said “What you need to do is spend time creating the conditions for private investment, whether it’s a large scheme or a small scheme.

“Certainly there have been examples of schemes in recent years that have really struggled, that would [otherwise] be completely privately financed, and have hit against the challenges of the planning system.”

Meaney believes the only way the partnerships between public and private can work in the current situation is if the majority of the planning is done before private investors are involved.

“I think it’s probably the case that investors will require that,  lot of that planning that we’ve been talking about has been completed before they’re willing to invest,” he said.

“They don’t want to be taking planning risk, construction risk and operational risk.

“I think you have to have horses for courses and the public sector taking some of the burden and then allowing the private sector to come in.”

Meaney further discussed how the conditions for increased private investment in transport could be created in the UK.

He said: “The public sector doesn’t seem to have the capacity, or at least isn’t choosing to spend that capacity in transport.

“Therefore, we need to deliver schemes big or small differently and encourage private finance to come in.

“Of course, we’ve got a very high interest rate environment here which doesn’t help.

“One would imagine that if we were to establish a scheme, effectively – and we’re trying to do this in nuclear at the moment – then private finance could be encouraged in, but what you have to offer private finance is a degree of control and perhaps a lack of intervention.

“That would need to come from regulators or politically for quite a long period of time.

“You have to really make sure that you’re comfortable with that, or that if you do want to have five yearly periods, where you go back and look at the investment and see how it’s performing.”

Doing this will leverage confidence for private investment into UK transport projects, Meaney continued to say, something that doesn’t currently exist at the moment.

He said: “You do that [five year periodical reviews] in a clear way, with really clear rules of the game, so that investors have confidence in what they’re investing in.

“This is, of course, quite a different way of delivering schemes compared to the public sector at the moment, where you sort of undertake the scheme and then it’s done and perhaps you move on to the next one.

“Whereas the private sector will typically get their money back over a long period of time as it’s transport capital investment.

“I think you do have this important trade off to bear in mind between the degree of intervention that you can have politically or from a regulatory perspective under public investment versus private investment.”

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