Lucy Parsons is Senior Economics Researcher at Reform and co-author of Road To Recovery, which is published today.
At a Reform fringe event last week in Manchester, Jeremy Hunt advocated a more open approach in the UK’s telecommunications industry. He proposed an alternative to the Government’s £175 million tax on consumers to fund high speed broadband roll out – BT’s competitors could lay fibre in existing ducts, as is happening in France.
Reform’s new Road To Recovery report on infrastructure published today suggests that this is the kind of approach needed across the whole of the UK’s infrastructure. A recent competitiveness study ranked the UK 34th on the quality of its infrastructure, behind countries including Namibia and Spain. Strong infrastructure is a powerful driver of growth and critical for the next period of prosperity. But the UK is in the infrastructure slow lane.
Politicians have been blinded by the “green heat of technology”, moving towards a more interventionist approach in infrastructure markets. This comes at a high cost. In energy, £2.6 billion is being spent on Renewable Obligation Certificates and climate change levies which reflect a political desire to advance certain technologies and to create thousands of “green jobs”. Much like Harold Wilson’s “white heat of technology revolution” in the sixties, this green corporatist approach will fail to address the real problems: over-zealous bureaucracy and planning sclerosis.
Departments have been clawing back their powers in infrastructure markets. Civil servants in the transport department are now ordering trains and specifying timetables. The new energy department is using public money to finance four demonstrations of carbon capture and storage. Reform’s research finds that the UK’s most successful infrastructure markets have been the most free – energy, telecoms and water. While the most heavily regulated – road, rail and renewable energy – have got stuck in bureaucratic treacle.