27
Examination of witnesses
Professor Juliano Denicol and Dr Alexander Budzier.
Q44 The Chair: Good morning and welcome to the House of Lords Built Environment Committee. As everybody knows, over the past 18 months or so, we have been looking into the subject of new towns. Our third module has been specifically on what we have called bricks and mortar, which includes some of the stumbling blocks to making these new towns happen. This is our final public session before the Summer Recess. People will be pleased to know that we will return after the summer to conclude this inquiry. Today is not just the end of this module but, in effect, the end of our discussions on new towns, so we are seeking to bring the whole debate on this programme to a conclusion and to raise some of the issues around delivering what we would term megaprojects, or big projects, as new towns, as well as whether it can and should be done.
We are delighted to welcome two guests to talk to us about that: Dr Budzier from the Saïd Business School at the University of Oxford, and Professor Denicol, who is a professor of megaproject management at UCL. I welcome you both. We have a series of questions from around our horseshoe. My request to our witnesses and members alike is to keep the questions and answers as short as possible. If there are any bits where you do not have anything to add or on which you want to write to us, please say so.
Baroness Janke: This question is for both of you. What would the successful delivery of the new towns programme look like to you?
Dr Alexander Budzier: It is all about the outcomes; it is not about the announcements. It is about towns that have an established population with lived-in housing units that function. That is a successful outcome. It can probably be judged only in the decades to come. Milton Keynes was 50 years ago, and now we see a flourishing town. Ebbsfleet has not flourished so much. Success should look more like Milton Keynes than Ebbsfleet.
Professor Juliano Denicol: It should be about infrastructure first—that is, be infrastructure-led and systems-led. We have a collection of interdependent major projects to be delivered together. It cannot be about only housing. There is confusion in previous reports around the narrative. Is this housing or is it economic growth as well? How do we square that vision and proposition? People need to have a place. The place-making perspective needs to be beyond housing and assets. It needs to have an identity. It needs to have access to jobs. There is a collection of assets, from transportation to hospitals and schools, that need to be in place before you start a discussion with the private sector on unblocking the delivery aspects. For the people living there, it needs to have an identity.
Baroness Janke: Can I go a bit further? Some of our witnesses have raised the spectre of decades-long building sites. How do you think we can move forward without ending up with these sorts of projects that seem to go on for ever and do not end up delivering what we are looking for?
Professor Juliano Denicol: If we unpack some of the findings from your previous reports, it seems that there is a consensus that development corporations are the way to go and the delivery model for these things. Equally, it is missing a central body, such as central government oversight of the delivery of towns across the country. If we are to unpack the concepts of central oversight and government leadership, along with several terms and expressions from previous reports, what does that look like? It is missing an entity or agency that would be there for 50 or 60 years and have Cabinet-level oversight, would report and would have influence, because you need to unpack and herd several sectors and money from different departments. That is a systemic effort that I doubt local development corporations will have the power to do. In terms of a governance structure, we need an entity that will be there for much longer and ensure consistency and standardisation.
Dr Alexander Budzier: That should also deal with the argument of speed. If you think about it, what are the current choke points? A lot of that is about local co-ordination and consenting processes. In the current powers, a local master plan does not automatically imply consent. If we look at successful development corporations, such as the Queen Elizabeth Olympic Park, the power was delegated or taken away from local authorities and given to the development corporation for a limited time. Therefore, the choke point was taken away. Equally, we see where that is not taken away. Take, for instance, the Social Housing Innovation Fund and how quickly it rolls out projects, or the school rebuilding programme, where announcements and local support for a scheme do not necessarily mean that it gets built or built quickly. It is then held up in all sorts of co-ordination and consenting things.
As I was coming here, I thought I would look at some numbers. If you have a development consent order, the statutory limit is 15 to 18 months until it should be granted. I looked through the last 75 DCOs. Only 40% of those achieved 18 months or fewer. Some 60% of all DCO processes take longer than that, which is already an expedited process. That is a real choke point right at the beginning. As Juliano said, without a system in place to deliver this or have some sort of capability, announcements and small enablement projects will lead to small developments but not reach the required scale.
Baroness Janke: Do you see financial barriers as a significant issue?
Professor Juliano Denicol: It is a question of sequencing as well. Do we have the money to afford it? Where is the evidence for that? We have a big vision and a big ambition. We had 40 new hospitals. We had many different PowerPoint presentations. Where is the infrastructure delivery road map sequencing for each town? Can we afford them all? Should we prioritise? What is the plan to bring money in and attract private sector investment?
Dr Alexander Budzier: If you think about it in terms of building a new town with 10,000 units, the infrastructure and public buildings alone, such as hospitals and schools—Juliano mentioned these—will cost about £4 billion. We have the announcements and the bank under Homes England now, but these are all numbers that have been announced but not actually committed to. There is a real difference there in terms of the commitment.
Q45 Lord Porter of Spalding: On that ever-decreasing list of what is up and running, do any of them look like they could be a perfect new town? This is not just an academic exercise now, is it? We know where they are going to be—at least, we know the list they might be on, even though it gets shorter on a monthly basis.
Dr Alexander Budzier: If you look back, the sequencing was done in the wrong way. The longlist was announced first, then that was whittled down by the Government to the seven sites. Now, finally, the environmental and delivery studies have been done, so are we allowed to construct on the site? That kind of sequencing was completely out of sync. In an ideal world, you would have done an investigation survey for all the sites and then land on one. Why? Because of the whole thing around land uplift values, which has happened: as soon as you announce the 12 sites, everybody increases the options on the sites and the money is gone. The sites are less viable so there is less public infrastructure, Section 106 and so on.
Lord Porter of Spalding: We know about the sequencing. We complained about that a year or two ago—probably before they even started. Do any of the ones left on the list, even though they might not be on it tomorrow, look like they could be a perfect new town? Is it one or all of them?
Dr Alexander Budzier: The problem is fixable now. You can make them all successful. If it were me, I would first publish the funding model concurrently with the arising environmental impact assessments so that things do not come one after the other but are done in one package. There are safeguarding powers in statute that could be used to safeguard the land value now and take away the hope value, which just increases the cost of these projects rather than delivering something. Exercise these powers now, be very clear that this is the funding for the projects, and give the constructability study and the environmental impact assessment. As Juliano said, create something that is a single accountable owner for the seven together, not just a random collection of seven projects.
Lord Porter of Spalding: So we can still hope that the Government can retrieve this and do at least some of it if someone says, “I’m owning it”.
Professor Juliano Denicol: To that point, you need more than individuals who are behind that. What is the structural mechanism, entity or agency that will match the policy announcement and the ambition? Nobody disagrees with the ambition—we need 1.5 million houses and so on—but how do you make that happen in a co-ordinated manner? We can go back to multiple examples from different megaprojects around the world on the accountability of the client. At the Megaproject Delivery Centre at UCL, we look at the client as one of the most important actors in the system—that is, the guiding mind or co-ordinating view. Mark Wild made that point on Crossrail, and again on High Speed 2, and Sir Andy Mitchell did so on Tideway. We have many examples in the UK, such as CLM and the Olympics model, or ODA; I am sure you heard from Nick Smallwood and Sir John Armitt. It will not be successful without that agency, whatever that is and whatever its capabilities.
Q46 Lord Bassam of Brighton: We look back historically at the immediately post-war new towns and we probably assume that that was a successful programme. Do you think that there are lessons to be learned from it?
Dr Alexander Budzier: I like Milton Keynes and the single development corporation. You might think that it is funny with its little road layout, and its house numbering system is a bit odd—
Lord Bassam of Brighton: With all its roundabouts.
Dr Alexander Budzier: Ultimately, for most people who come from Milton Keynes and live there, it is a thriving town; it is a definite success. How did that happen? You had the development corporation and the powers and funding associated with it. Most importantly, so that it did not just create its own inflation bubble—Juliano mentioned things such as HS2, which makes itself more and more expensive—in Milton Keynes, the land was assembled by the public purse, not private developers. It was assembled by use value. They bought it at the price for agricultural land and took the value uplift that came from making it developable, so that it could be borrowed against, and put that into the infrastructure that needed to be built. The financing mechanism used was to finance it from the agricultural-use land to the future-use land, to borrow against that gap and to put it into the financing of the infrastructure. It was a very successful model.
Lord Bassam of Brighton: Are there ways in which we can replicate that with the current new towns programme? Which similarities we could focus on to deliver the thing I think we all want: new homes for people?
Dr Alexander Budzier: There is nothing that we could not sort out. Give the development corporations similar powers and find a similar financing arrangement, which means stopping any land value speculation because those powers exist. The Government could do that and address the hope value debate by recycling it into paying for the infrastructure needed to enable the sites and lay the foundational fabric for future successful towns.
Professor Juliano Denicol: I would add to that the need for the consideration of speed. The post-war landscape was significantly different, in terms of planning and consent, to what we have now. Hinkley Point C’s development took around 10,000 pages to get permission to build. Sizewell C was seven to eight times more, with supplementary documentation—80,000 pages in a space of how many years? There is a new network and infrastructure working group at the OECD, which is the first new network created by the OECD in 17 years for infrastructure delivery, recognising the challenge that multiple countries are facing.
It raises this question: how do you have accountability for these things? Who owns the model? How do we learn from planning and the expansion of requirements? That takes time. Once you address all the pillars you have, you start again because the regulations changed. How fast do we want the cities to be there? We have a housing crisis. There will be trade-offs; we need to be honest about those. What are we willing to do to have economic growth and housing ready for people without damaging the environment? There must be another way, and trade-offs are needed; otherwise, it will take as long as it is taking to build major projects. I have plenty of examples.
Q47 Baroness Andrews: Good morning, gentlemen. I am sorry not to be with you in person. This is a pretty blunt question in relation to everything you have said so far: do you think this is worth it? We have failed to project the same imperative as in 1945 on central funding or a plan for sequencing, as you call it, and we have done things in the wrong order, yet we are lumbered with a big political image of new towns. Would it not be better at this point to say, “We’re just going to build a few additional settlements in key growth areas”, or is that now too late and too politically expensive?
Dr Alexander Budzier: Honestly, you would not make up the numbers. Private sector developers would easily build infill projects, and perhaps densification projects in urban areas, because there are clear profits to be had. That is something the market can sort out if there is a shortage of appropriate rents and prices for housing or other real estate.
The key role of government is not in those kinds of projects. It is about whether we should and can build new towns. Given the need, we are not going to make up the numbers. We know that parts of this building other than this committee talk about social cohesion and such things. Look at places such as Hong Kong, where a lack of housing led to unrest. Once you get two generations who never have the opportunity or even the faint hope of owning, or even renting, a property on their own, that has more negative consequences than high rent and a high cost of living in the long run.
Baroness Andrews: You are saying that this must remain a national and coherent government project, badged as a new towns programme.
Professor Juliano Denicol: Yes. It needs to be a national endeavour, but you need the capabilities and resources to match the ambition. That requires building capability and long-term investment in institutional structures because it needs to be led by the Government. Going back to your question, if we need as many cities as was announced, we do not know the sequencing, the cost or how long it will take. Before an answer to that question could be provided, I would like to see the analysis and data to back, say, seven cities instead of three. Should we prioritise where we have ongoing infrastructure, along the lines of East West Rail, which is already progressing and taking years? If you have to build infrastructure, how many years are you taking to build it first so that you can attract the private sector for housing? There could be an investigation into which ones will have more infrastructure. You could deliver housing but the infrastructure needs to be there first; there is no way round it.
Dr Alexander Budzier: In addition to those arcs and corridors that have been designated, such as Leeds South Bank or Victoria North in Manchester, which already have that existing infrastructure and those kinds of things in place, a new town could tap into things at speed without the long development timeline that is usually required if you have to put in all that infrastructure, create jobs and build the transportation, schools and hospitals that are needed.
Baroness Andrews: That is an interesting alternative model; thank you.
Q48 Lord Bailey of Paddington: You seem to be saying that there needs to be a government body or central mechanism to ensure that this happens. Are you talking about a Minister or a ministry? Is it something that the Deputy Prime Minister could do? Who needs to drive this?
Professor Juliano Denicol: It cannot be your job on a Tuesday morning. You need dedicated capability in an organisation, not just a team of people. You need to establish an entity to manage the portfolio, find synergies across all the towns and deal with the supply chains and markets to create savings, in terms of managing this as a portfolio and having a strategy across the country. For that, you need an agency with the right seniority and people who can go around multiple government departments to bring in the right people to talk about schools, hospitals, transport, water, utilities, the grid, EV, climate change and resilience, which are the multiple sectors you need to address. Without that seniority, this will not happen.
Another question concerns how to set up that organisation. Do we have a methodology to identify the capabilities of that organisation, what it should be doing and how big it should be? One of the big lessons from recent megaprojects is that we are tasking clients, delivery bodies or contracting authorities with a massive task but they do not have the people to deliver. There are thresholds around how you can hire—how much you can pay—and they are managing and outsourcing to consultants, paying 10 times more instead of hiring people in-house. There must be a sensible conversation about the fact that we need a central body, but what should it do and what should its capabilities be? How can we build and stabilise a credible, long-term organisation for 50 or 60 years, and how do you capture the learning from that so that you do not start all over again?
Q49 Baroness Lawrence of Clarendon: Good morning, gentlemen. The Government have stressed that they want exemplary development to be “the norm not the exception”. They said, “The next generation of towns must be well-connected, well-designed, sustainable and attractive places where people want to live and have all the infrastructure, amenities and services necessary to sustain thriving communities”. How will the England where the new towns programme is successfully delivered differ from the England where this has not happened?
Dr Alexander Budzier: I always like these aspirations where the opposite is clearly untrue. Nobody wants to build new housing that is substandard, does not have transport links and so on, so it is a slightly interesting objective; everybody would automatically agree with it because the opposite is completely nonsensical. What would really be different if this came to fruition is that the UK would have in place a system and capability that can build stuff. That will be the differentiator. On the one hand, these outcomes are achievable only if we have, as Juliano said, a production system in place that makes them happen, rather than thinking about them as small interventions that will hopefully come together through whatever forces without any co-ordination.
Professor Juliano Denicol: We also touched on outcomes and benefits. With a systems-led approach, we would have the outcomes if this was delivered successfully. There would be cities, towns and settlements with an identity, a character and people living and belonging there with access to jobs. That would bring the benefits that we aspire to as a society.
We need to talk about the fact that we do not have public data to look at the benefits of investments; NISTA could be building that up. There is a very interesting initiative developed by the IPA, under Nick Smallwood’s leadership, called the Benchmarking Data Service. If that is properly invested in, it would systematically capture the benchmarking on the costs and benefits of major projects in the UK. If we want vision on the outcomes that we want as a society, can we have the data to argue that having a systems approach will unlock value to society? Where is the evidence for that? We do not have the data; we do not track benefits systematically. NISTA is the perfect structural mechanism or agency to engage with government departments, mandate the data that you want on cost and benefits, collect it and build the capability, investing £10 million or £20 million, which is peanuts compared to £725 billion-worth of infrastructure. We paid that for consultants over 10 years. If you build that team with monitoring and capability, you will be able to have a sensible conversation about systemic outcomes and what we want for society. At the moment, we do not have data on the benefits; we talk about outcomes.
Baroness Lawrence of Clarendon: The Government’s ambition is to build 1.5 million homes. Do you think that that is achievable?
Lord Porter of Spalding: Silence is golden.
Dr Alexander Budzier: It is a stretch target.
Lord Porter of Spalding: We missed the target last year and the year before. It is starting off 50% down this year. I am not very clever but I know that, if you do not start a house, you cannot finish it.
The Chair: Prove us wrong.
Dr Alexander Budzier: That begs the question: if this is already lagging behind, targets will not be met by the end of the parliamentary period, so where is the system to carry this forward for the next 10 or 15 years? Where is the single-Minister, or single-party, support for this national issue, which is required to keep it going?
Lord Porter of Spalding: It goes back to what you said about somebody owning the new towns. Nobody in government owns the 1.5 million homes target; the Treasury does not own it and, if the Treasury does not own it, it does not get done. I love MHCLG—it is full of great people—but it is so far down the pecking order in terms of who is important that this ain’t gonna get done. The Government have committed 39 billion quid. That sounds like a good headline, but committing it and spending it are two different things, and there is nobody to push it.
Dr Alexander Budzier: If you think that MHCLG and Homes England are very good at executing these things—
Lord Porter of Spalding: I would not say that Homes England is.
Dr Alexander Budzier: It is okay at executing these things.
Lord Porter of Spalding: It gave over a billion quid back two years ago, and that is a cardinal sin.
Dr Alexander Budzier: Yes, it constantly underspends. It cannot get the money out of the door fast enough because the market capability is not ready. At the same time, it is the execution arm. Once all consenting is in place, these are the people who can execute, but there is no equivalent for policy work to evolve the planning system. There is no simple thing to co-ordinate and organise the planning. All of the upfront things do not have a natural owner across government. We have a thing that can execute, but there is nobody to hold together the planning, the front end and the necessary policy changes to make this happen.
Professor Juliano Denicol: If I could answer your question in a slightly provocative manner—
Baroness Lawrence of Clarendon: Yes, please.
Dr Alexander Budzier: Go on then.
Professor Juliano Denicol: Would we classify 1.5 million homes being delivered with no infrastructure, no place-making and no sense of identity as a success? It goes back to the narrative that we are building: is this a housing effort, or are we also talking about economic growth and being serious about what needs to be done beforehand? What is the equivalent of 1.5 million homes to the infrastructure that is needed? Do we have clarity on that? Not yet.
The Chair: Numerically, do you think that it could be possible if it did that?
Baroness Lawrence of Clarendon: If the infrastructure stuff is not in place, it is going to be very difficult.
Dr Alexander Budzier: Yes, it is a sequencing issue. If you look at Ebbsfleet, the housing was built first and the infrastructure and jobs came second; they needed to be shoehorned in. It is the same story in Northstowe. If the sequencing is not right, you get things that are not seen as successes. You need to build the infrastructure first.
Lord Porter of Spalding: That is one answer, but it is not necessarily everything. How many settlements are there in the UK? Do you know? If you did, you could just divide 1.5 across the existing settlements.
The Chair: That is one arm.
Lord Porter of Spalding: Then the infrastructure is already there.
Q50 Baroness Griffin of Princethorpe: Thank you for being here. I have a quick follow-up question for Juliano first. Does the data collection model that you described profoundly and meaningfully collect social impact? You are saying no. Do we have any model to profoundly collect social impact?
Professor Juliano Denicol: I would encourage the committee to hear from Nick Smallwood on this matter because he was the guiding force behind the Benchmarking Data Service at the IPA, which now sits in NISTA.
We are talking about creating multiple portfolios of projects in government to unlock outcomes, societal benefits and all the nice things that we want and need as a society. If we do not have a way of systematically tracking that, we will constantly keep talking about costs. There is a debate around whether, when we talk about costs, we understand what we are delivering, how the scope will change over 20 years, what built assets we have and how much we are paying for them. It is about understanding whether we are on, under or over budget. It might be that we started with 10 stations but we added so much more value and assets over several electoral cycles in that megaproject that we are delivering much higher scope. Therefore, if you judge against the initial forecast, it might not be true that you are over budget, because you are delivering more items and more scope.
We do not have that visibility. We tend to capture data before investment decisions and project conclusions. We do not seem to capture the scope evolution or who asked for scope changes. Where is this coming from? Is it coming from the sponsors, different government departments or politicians, and how does that affect delivery agencies, such as arm’s-length bodies? If we were to have that granularity at the NISTA level across different categories of projects in the GMPP and associated with the benefits, assuming that £20 million would be the cost—I do not know whether that would be the cost—how much is £20 million as an investment if you have a pipeline of £725 billion? It is 0.002%. This is a no-brainer. There are serious questions around why this has not been done before. It would be a game-changer.
Baroness Griffin of Princethorpe: How can we achieve that?
Professor Juliano Denicol: Fund, invest and dedicate the money, which is cheap as compared to the benefits that you will get across the country. Frankly, it would change the whole planet because other Governments across the world and the OECD would follow. You will then have a much more informed discussion about the costs and benefits of major infrastructure projects and other assets. What is needed is a properly funded team with the analytic capability to do so and to provide you or other parts of society with data and evidence.
Baroness Griffin of Princethorpe: Alexander, do you want to come in on that?
Dr Alexander Budzier: I would add to what you were saying, in terms of impact studies, closing the loop on policy-making and informing future policy, that we have other parts of government. The FCDO does a lot of great post-implementation work. It tracks whether certain foreign aid interventions have changed the host country and whether an intervention was carried out. For some odd reason, we do not do that domestically.
Baroness Griffin of Princethorpe: The cross-departmental message is coming across loud and clear. We need to see what we have.
I was very pleased to hear you talking about sense of place, quality of life, health outcomes, cultural identity, climate resilience and climate change, which are key. It is not about just houses; it is about homes and quality of life for all the people in a town. What mistakes, if any, do you think the Government have made so far in the announcement planning and early delivery of the new towns programme? You have touched on this quite a lot already. What would you have done differently? If there have been errors, what can the Government do to correct their course quickly? We are also very interested, if not today then in written evidence, in where you think there are international examples of good practice—that is, where it has been done right.
Professor Juliano Denicol: I would start with the vision. We touched on that: it is housing versus economic growth. The next thing would be the delivery model. Where is the funding and the sequencing coming from? You need clarity on deliverability: what is the road map and the path to getting infrastructure built for each site? Then, you need a systems-led approach to create the outcomes we are talking about: the place-making, identity and cultural belonging.
Governance would be my number one priority. It is a problem of governance. You do not have the system to govern the new towns programme. You do not have a central agency co-ordinating a portfolio. You do not even know the capabilities at the local level. There is a need for an assessment. I am in favour of delegating more to local corporations and entities dealing with the place, because they will know much better, but without central oversight and the strong guiding mind of government unblocking the issues, the trade-offs and the different agendas of different departments and agencies, you will get nowhere. Governance needs to be sorted first in order to get things going, but it is not there.
There is a lack of clarity. This was reflected in one of your previous points and in the debate on the report. You highlighted governance as one of the main issues. How do you get a grip on this? How do you control it? What is going on? If we start seven different projects and, in 10 years, we have the same conversation and you ask, “Why are you not controlling that?”, who would have the visibility? Where would the data sit in order to control the seven projects? Without that central agency, you will not have it.
Dr Alexander Budzier: I have a similar answer. There is not a single case study that has done it well and which you could copy directly, but you can take different things from different elements. In particular, the Queen Elizabeth Olympic Park, the London Legacy Development Corporation and Milton Keynes were good ideas. They were a blueprint for governance, particularly on the powers that are needed at the local co-operation level. Internationally, the Rive Gauche in Paris, HafenCity in Hamburg—the harbour city—and Copenhagen are really good cases for financing mechanisms. How can you finance the infrastructure need against that? How can you deal better with the land value capture? Some of that comes back to the public purse and finances infrastructure, rather than it just being handed over to private developers.
You can definitely learn how to sequence things: building infrastructure and systems first and housing later. We have seen those struggles in Ebbsfleet and Northstowe, but Bundang in Korea has also struggled. The Dutch and German planning systems, as well as the one in Stockholm, are really good blueprints. Those are good case studies when you are thinking about building that system of delivering this over and over again. I am happy to write all that up and submit it afterwards.
Baroness Griffin of Princethorpe: That would be incredibly helpful, thank you.
Q51 Baroness Barran: As I was listening to you both, I suddenly remembered that, when I was a Minister in the previous Government, there was an infrastructure training day for Ministers, and it never happened. I must have signed up about five times, but there was never enough demand; maybe that is a metaphor for what is going on.
If we think about the long-term nature of new towns and the wider infrastructure, which you have articulated so clearly, it would be helpful to understand what you think needs to be in place to make sure that you can keep the momentum and the buy-in of the local community, the political class and the companies that are providing the work over that long-term cycle. I am reminded of the phrase, “Show me the incentives and I’ll show you the behaviour”. What incentives do we need to put in place to sustain that kind of engagement over time?
Dr Alexander Budzier: It is always said that the 15% of the local population that is against a project can stop something in its tracks against the Government’s will. Equally, it means that, if a small group of local citizens is really behind the project and buying into it, that provides grass-roots support. Establishing that at the local level is required. Make people part of the process. Do not do it to them; do it with them. Make people part of the process of identifying the vision—what place do they want to live in for generations in future?—and then put that in place.
In talking to people for our research on east London, one important thing that came out was ring-fenced, multi-year—decades-long—funding. There were powers that took it out of whatever political wrangling happened between Newham and its neighbours. When I interviewed people for our research, they said, “We had planning powers for 15 years; in hindsight, ideally, we should have had them for 40 years because these things are built slowly”. You are not creating a whole new town from scratch in one day. These things start slowly. You start with some core infrastructure first. If you look at east London now, there are universities, museums, the BBC, arts, more office space, work and so on. That all grew out of, basically, a shopping centre, a bunch of offices and some housing. You do not build a city in a day so it needs that kind of protection, funding-wise as well as politically, for quite a while.
Professor Juliano Denicol: I agree with engagement with the people affected and the people living there. I would highlight the changes in government and the different agendas of whoever comes in after four or five years—or even less than that. In 2020, we did the biggest review of megaproject performance ever published, with more than 6,000 papers considered. It was a piece of work commissioned by PMI, the Project Management Institute. One of the big findings on the causes of poor performance in megaprojects was the political stability, or the stability of organisations, in different political cycles.
It is broader than governance, though. It is about incentives and mechanisms. We know that different Governments will come in, want different things and change policies and scope. If you have a 50-year or 60-year endeavour, these are all given conditions and structural elements. How do you protect what you want, make a decision, move on and deliver it, instead of reassessing and starting and stopping? We see them moving on several fronts. What are the necessary mechanisms to avoid changing to a completely different scope or vision in 10 years’ time? That would be a disaster.
On the benefits, if you have a systematic dataset in the public domain, with the legitimacy of something such as NISTA saying, “We’re delivering the benefits as agreed. Here is the evidence; it is in the public domain and is clear. Why are you changing this?”, whoever is coming up with different ideas will need to justify the extra benefits that are being suggested and will be delivered, as well as what the plan is. At the moment, we are arguing without data. We are flying blind. Whoever comes in can make whatever policy announcements, and you do not have anything to counter.
Dr Alexander Budzier: Then you get the same problem because, as you said, it is in the incentives. Now, you get the hope value. The Government have given no direction on which way they will land on disallowing or not disallowing it. Therefore, you get speculation on the land value, which drives prices up. What was initially planned as, for example, agricultural-use land or brownfield land has already risen in cost; you end up with the incentive scheme we have at the moment, where costs rise. A private developer would come in, argue that the scheme is no longer viable and edge out affordable housing and some of the social infrastructure that was originally planned to be built. So we are ending up with the substandard developments that we see everywhere. How can we put in place a system that can break this game being played all the time?
Baroness Barran: You mentioned in your earlier comments that we need to go from 10-year to 40-year funding, which is a whole discussion in itself. Is there anything structural that one could change in the type of finance that is available in the UK to drive the behaviours that we want to see?
Dr Alexander Budzier: The National Housing Bank—I just had to look up the exact name—gives out loans for 15 years at the moment. That is the floor, rather than the ceiling, of the kind of funding that is involved. It is definitely a step in the right direction. On the other hand, numbers are bandied around, but no firm commitment has been made on how much of this programme will be funded and how it will be repaid. I mentioned earlier that we need to make the funding mechanism clear in order to fix this, because there is no clarity around this at the same time as constructability and environmental impacts are being assessed and publicised. Then let us get on with it.
Baroness Barran: You then have a solid base from which to move forward.
Lord Porter of Spalding: Those comments reflect urban extension, not new towns. By its nature, a new town has no community to talk to, so you cannot bring a community with you. I grew up in Stevenage. I loved it, but, if you asked any of the 10,000 people who lived in Stevenage whether they wanted a new town stuck to it as an adjunct, they would have all said no. So the Government rightly said, “We are moving a bunch of people out of east London. They need to go somewhere. It’s called Stevenage, whether you like it or not”. Sometimes, you have to do it to people regardless of what they want. Urban extension is a different matter because you have a community to consult and work with, and, hopefully, you can convince it that this is the right thing because it is where their kids will move to. A proper new town is not that.
Dr Alexander Budzier: The recent reforms to the planning Bill and so on did not address the fact that you might have a master plan and a local plan but they are not legally binding. If you look at the Netherlands or Germany, they are legally binding. Basically, consent for a scheme that falls under the master plan is automatically granted as an administrative process. You might have a local development plan and say, “Let’s do a Stevenage that looks like this”, then, suddenly, every single scheme—the hospital, the train station, the bus stops and so on—goes through a local consenting process. You then get a lot of people saying, “Well, that’s the field where I like to walk my dog. I do not want a train station there”. You end up with these problems.
If you have a master, regional or local plan in other countries, it is automatically consented. If the scheme conforms to whatever planning conditions are attached to it, it is an administrative procedure. It does not require local participation in the consenting process. It does not require another committee. It does not require another debate about whether this bit should now be there. Let us have debates when the plan needs to change but not about individual projects that could be pre-approved.
Q52 Lord Ravensdale: My question is about megaprojects. We all know that successive UK Governments have really struggled with delivery and getting large infrastructure built. Juliano, you mentioned the example of Hinkley earlier. I actually work in the nuclear industry so that resonates with me. I would be interested in your thoughts. What is the most significant reason that Governments have struggled to deliver these kinds of projects? How might some of those barriers be overcome for the new towns programme?
Professor Juliano Denicol: I will go back to this study that we published in 2020, which is now one of the most cited papers in the history of PMI’s scientific journal, the Project Management journal. The brief that we received from PMI—a professional association with almost 1 million members globally—was essentially to develop a methodology to systematically capture the problems and solutions. I can share the papers and findings later but I will highlight one of the six themes that we found.
We found six themes, 18 main causes and 54 solutions. We made a deliberate decision to have three times more solutions than problems because out of the 6,000 papers that we reviewed it was very pessimistic. Nobody was offering a solution. This is one reason the paper exploded in the media and so on. Strategy, governance and procurement go to one of the themes and to my point of connecting the delivery model with the structural elements of the system to actually be the client and set the rules of the game. If we do not have that connected with procurement and the appropriate management of the market and the supply chain, it is not going to happen later.
Let us unpack this question of strategy, governance and procurement. We touched on the political cycles and I am not going to repeat that. Political interference and the policy delivery gap are some of the main causes of failure. I will give you a few examples. Imagine something such as Crossrail Ltd or HS2 Ltd. The delivery body—an arm’s-length body—has world-class capability. I dispute the comment that the people are incompetent; we have a talented world-class industry of major project professionals in this country and they go all over the world. It is a systemic structural problem. If you take people working in arm’s-length bodies, they have delivery expertise. Then you have to deal with the institutional system, the sponsors, government departments and different politicians coming in every five years.
What happens when there is a request to change the scope or to add another item in that ongoing project? There might be an analysis by the delivery agency, which will say, “This is not deliverable; it will cost you a fortune”. You might have top-down decision-making saying, “Just do it anyway”. If the NAO was to do an ex post review and find who asked for scope changes, where is that registered? Can we actually track down the scope changes and the impact that that had on cost?
A clear recommendation would be a governance mechanism that once we have decided, consulted extensively, done all the stakeholder engagement and environmental considerations, which is not up for debate, and have a hybrid Bill in place, you cannot have 8,000 consents needed after a hybrid Bill. You need to get on and deliver the job. There must be a change in the structure if we are to deliver projects at the speed and pace that we need. In terms of political interference and tracking, there might be good reasons for changing the scope and adding more value but that needs to be transparent. Scope changes is the main cause for me.
Lord Ravensdale: What about the planning and regulatory system itself? You mentioned earlier the 20,000 pages of the Hinkley consent and the 40,000 pages of the Sizewell consent. As an example you have this piling up of environmental regulations and the judicial review. What about the underlying legal system that we are dealing with in terms of planning?
Professor Juliano Denicol: We need to be careful here because this is a very sensitive topic and we want to protect the environment. We want to give people a voice when we are considering a project that will affect them. This is not sustainable. In order to move forward with a project, sometimes you need to concede too much to different stakeholders. Then you end up with the compounding effects of conceding too much’ then you have a hybrid Bill and that is law. You need to deliver the bat tunnel on HS2 because you conceded that. You might not like it but it is law. People are just delivering what was agreed.
The question is the sense of proportionality and gold plating. We want all those things. We want to protect all the bats all the time. What is the cost of that decision? Do we know? That will need to be delivered later. Now there is this debate of maybe we do not get the proportionality right for £150 million and £300,000 per bat.
Lord Ravensdale: You mentioned trade-offs earlier. Alexander, what are your thoughts?
Dr Alexander Budzier: I am not fully with Juliano on this one. I know the environment and engaging people are important. At the moment when we are looking at these big projects and there are two big issues. First, everybody is terrorised by the fear of the judicial review process. Therefore, you get immensely gold-plated environmental impact assessments and planning that basically does not help deliver anything but gets produced. Crossrail was the largest Bill and HS2 was the largest hybrid Bill ever entered; now it is Sizewell C. It is just insane what is happening because they like to gold-plate things to avoid judicial review. That is a system problem not an environmental protection problem.
Secondly, nobody can say no. I always think a good case in point is London Euston station, where nobody was in power to say no. Everybody just put planning obligation on planning obligation. Camden Council wanted this, Network Rail wanted this, TfL wanted this and the taxi drivers wanted that. There was nobody structurally in a position to say, “No, you can’t have that”. Once HS2 basically said yes to everything because there was nobody to say no, the costs went up from £4 billion to £9 billion and it became unaffordable.
In many of our megaprojects at the moment we do not have a system that actually says, “No, sorry, that’s not going to be feasible”. We cannot have these debates of whether we can find a better way of allocating the benefits and disbenefits and what would be appropriate. Our planning system—particularly if it is government funded—focuses on, “Please say yes to everything and just throw the money at it”.
Lord Ravensdale: Coming back to that point in the question about how the new towns programme avoids some of these pitfalls, does that come down to better governance or something else?
Dr Alexander Budzier: I like Juliano’s paper about the six ingredients; there is one about planning and thinking slow and then acting fast. At Oxford when we train and engage with the SROs and project directors across government, as Juliano said, they are all highly capable and motivated up to their eyeballs. There is no lack of those kinds of things. They are often operating in a system that does not let them do their job very well, particularly when we are thinking it is not just the front end where we are underinvesting. Some 10% to 20% of total project costs should go in a planning phase and successful projects. We can see that. There is enough data on this.
Equally, during the execution we need a large enough body on the client side to do that because things will come up. When we looked at some numbers recently, for every £20 million we want to spend we need one person full-time in the client’s team. That can be a government employee, somebody who is hired in from an engineering company or whatever. That is the size of the team that needs to look after these big projects. There are just too many constraints in place around RDEL and CDEL numbers in the Government to actually just create an organisation where that happens. Many projects are run basically by a single person with a spreadsheet in the Treasury’s basement because there are just no people.
Baroness Andrews: I just want to pursue that; it is a huge point I am afraid, but I am sure it is a quick answer. The problems that we are facing in getting the balance right between all the negotiations and the evolution of our regulatory system, whether it is heritage protections, environmental protections or whatever, and government being able to say, “We have to have this and therefore we as the Government can afford to be and must be draconian,” must be faced by every country. What is it that makes this country different? Are there countries that have a better, more effective balance and have gone through these processes like us, or are we so fundamentally, culturally and politically different that there is nothing we can learn from other countries?
Dr Alexander Budzier: We can learn something about sequencing. If we look at China, it is a very different country. We are all looking at China as the country where when central government says something it happens the next day—this idea of infinite power to execute big projects. Once you look into that, that is actually not true. In China they sequence the politics differently; everything starts at the local level. Once the local level has bought into a project it goes to the regional level and then slowly goes up until it finally reaches Beijing.
At that point in time, consent, political support and political power have been stacked up behind a big project for years in advance. The bridge between Hong Kong, Macau and Zhuhai took 15 to 20 years to arrange. Finally, the central Government announced it and construction began the next day. We do it differently in our system: we announce things and then the politics, planning and consenting start. We also start construction 15 years later; it is just a different way of sequencing the politics in this process.
Baroness Andrews: If we had the Chinese system, would you get a project such as new towns that involves starting with 12 potentially different sites? How do we get to the point where the balance is right but the central direction is effective?
Dr Alexander Budzier: With regional and even national master plans this is what is going to happen, which is then binding unless it is a change to the plan. Those are consulted on, have the local participation and environmental consideration and get Natural England and English Heritage, et cetera, in place to provide input. Once the plan is done, everything else is grandfathered in in terms of individual schemes unless the plan changes. Again, a bit like China, they are two very different cases and regimes—whether we like them or not—but the problem is sequencing, not democratic participation.
Professor Juliano Denicol: I have a slightly different view on this. Almost all the papers that you see published in infrastructure project management journals and scientific literature will have boundary conditions and limitations that you need to acknowledge the institutional system in place before making any comparisons. To argue that China can be used as an example, we need to be very careful in terms of the structures in place. Certainly, it is delivering a lot. The questions are: what do we want as a society, how do we deliver projects, and how do we treat the process and bring people along as participation?
The key consideration is missing; we are arguing for all the right things but we cannot have them all. We cannot afford to have all the nice things that each different person, agency and organisation is supporting with their agenda. The conversation that seems to be missing in the planning definition is to define what you will do before you start constructing; that is a no-brainer. Equally, can we have a sensible conversation about cost? It would be fantastic if we could have all these things but can we afford them? I do not think that conversation is happening.
Q53 Lord Bailey of Paddington: Do you think the country is capable of delivering the new towns programme in a reasonable time and to a reasonable budget? What do you think are the most significant barriers? Anybody who has done any kind of development in this country recognises that too many people can stop it. The reason you get no development in London is that you can spend thousands or millions of pounds doing something, then two people at the committee can just say, “Now we’ve changed our minds”. Are we even capable of delivering any big projects? HS2 is an example that we are not. That is just a personal view.
Professor Juliano Denicol: Academics often have problems with the word “reasonable” because what you mean by reasonable time and reasonable cost need to be defined. Let us go with that for the moment. I do not think it is a problem of individual skills. We have a lack of skills; we need more. There is a report from the NAO this morning that I received in an email that I need to read. Actually, we have to invest in skills and unlock organisations in the construction industry to invest in their own employees at all levels.
We are certainly seeing that they are not investing. There are no mechanisms for them to invest in training the next leadership of these major programmes. We have the MBA in major infrastructure delivery at UCL. In engaging with the markets, we have thousands of talented people who want to do it but the companies do not have a talent proposition in place to sponsor them. There must be incentives across all levels—I am highlighting just one example—if we want to unlock more skills. The margins are not there and the companies need to invest, so what can government do to unlock the gap of skills and investment?
To your question on what is stopping us, I do not think it is a question of individual skills and people. We have the people; they are super talented. It is the system. How do you develop the system to be in place so that they can perform? You have multiple world-class people in HS2 who are delivering high performance, but they can do only so much at the individual and organisational level because they need to comply with the system. Even if you wanted to go further and do something different you cannot do that. It is a systemic problem.
In my mind you need to be very clear on the capabilities that you need at all levels. Before saying we want HS2 Ltd to be doing this, the DfT to be doing that and the supply chain to be doing that, do we know whether they can? Do you know whether you have the market and the supply chain to do that? Where is the evidence to make the decision of who should be doing that? Once you make a decision you need to empower people to be paid. The rationale is that you will bring top talent and you cannot pay them and you cannot have the capacity.
We have examples of projects where you possibly had a number of people on the client side to handle five interfaces. Your procurement strategy—for whatever reasons—turned out that you now have almost 40 tier 1 interfaces and you still have five people inside to deal with that. It is a question of organisational design and how you recruit and retain the talent. You need people to be in charge of each of those interfaces or there will be opportunistic behaviours and commercial games played with the market.
Lord Bailey of Paddington: Can I focus on the capability to deal with this? You have talked about systemic problems and failure, but do we have a system that can generate the finance source and the organisational structure? I sit on the London Assembly and one of the key things about the Olympic Park was that they actually had the levers to pull and the power to do something. Do we have a system that can deliver a long-term financing source and contracting and grandfathering rights around new towns? How do we place new towns beyond the tinkering of the incoming Government? Something that happened in City Hall was that when the mayor could not tinker in something he then ignored it, which was worse in many cases. How can we build a system that can set something going for the long term and then be successful in and of itself?
Dr Alexander Budzier: It goes back to the earlier point that there is not a single point of accountability or co-ordinating mechanism, particularly around the front end. To the capability point, your own previous reports highlighted a lack of capability, particularly in planning, and that is even before we come into execution as a key issue there. With the financing side of things, the National Housing Bank has announced a target of £50 billion but that is general.
There is no equivalent announcement for the new towns so far but there is a general housing intervention. What does that mean for the new towns? It is definitely something that you could think about. In the past it has worked on Milton Keynes and terminal 5. Those are old projects but we used to be able to deliver that. Our capability to do so has probably atrophied a little over time.
There was also something there about how we capture the value. It is not just the social/economic benefits but simply land value captures given to the private sector and it just goes into that without a mechanism to then use that to borrow against or defer payments. For instance, in France, the national railway company hands over disused brownfield sites to the Government for development into housing and does not want payment immediately. It wants payment once that housing is established and earns rent. That is a simple way to finance things between one government body and another.
For us here in the UK, one of the biggest problems is how to capture the land value. How the public sector and government better capture the land value is a key element that would unblock so much funding, and it would need a policy intervention to do that.
Lord Bailey of Paddington: Lastly, something that struck me about the inquiry is that all the people who have given us evidence have known what the problem is in their given area. This morning’s discourse has led me to believe that we need someone of authority on any particular thing. Do we need the Prime Minister to say, “This is my plan and I am going to lead it and unblock those things”, or can you set up a mechanism that can just do it without that political leadership from the very top?
Dr Alexander Budzier: Does anything ever happen without accountability?
Professor Juliano Denicol: You need the organisation and Cabinet-level support. Do you have a Minister in charge of this? Without a team, an organisation and properly resourced capability over 50 or 60 years, as I said, it cannot be your Tuesday morning job. It needs a full-time dedicated delivery unit to be in charge of this programme and own it. Where would you go in 20 years to ask for data and benefits and who is in charge? You cannot go to different sites.
Q54 Lord Cameron of Dillington: You have been making references to other projects, both at home and abroad. I was wondering whether you could pick two or three particular examples, probably from abroad, that could apply to us that have really worked and talk about why they have worked and how you could apply the reasons they work to our system, which, as we have already discussed, is probably inadequate.
Dr Alexander Budzier: There are a couple of cases to learn from. There is not one case that we would say, “Let’s all be a bit more like Singapore. There is an interesting financing mechanism in Singapore. Maybe we can learn from that. Let’s all be about the planning processes that are more spatially oriented in continental Europe. Let’s do a little of that”. It is not one case fits all but there are definitely some elements here with powers, capability building and building an organisation. What we can actually say is, “Look, there’s something that can be done and can be replicated”.
As I said earlier, I am happy to share my long list to show that these things can be done at speed. In Freiburg, Germany, they built a new town extension with local participation against a fixed deadline tied to an electoral cycle. These things do not necessarily have to take a longer time. You can also have different decision rules to increase the quality. If you look at Hamburg, decisions are not made based on who is best placed to extract the most rent out of the land that has now been made available but who builds something that is pretty and useful, even if it is not the most economic side of things. There is a question of how this works.
To the earlier point, something that I find quite frightening and where the politics is going at the moment is in the element of devolution. We are just talking here about the need for a central governing body, while the rest of the Government are thinking, “Let’s have less of those things”. I am from Oxford. We are pretty good at fixing potholes but many local councils cannot even do that. The more we put things such as planning of these very big schemes into local hands, where is the capability? Where is the capability at scale everywhere in the country that it is needed? That is something we have not really solved.
Lord Cameron of Dillington: Juliano, do you have any good projects that could help us?
Professor Juliano Denicol: If I respond in generalising the question, we did a recent review of more than 10,000 papers, which was published. The key question was how do we scientifically design a new organisation to be in charge of these major infrastructure projects? It seems to be the case that it is always, “What did we do last time? Let’s replicate and add a few things”. What is the science behind it? What are the management theories that you should consider and the trade-offs required? This paper was awarded Paper of the Year by the Association for Project Management. The PhD researcher, Dr Carolina Zani, was awarded Doctorate of the Year this year by the APM as well.
To make a long story short, in 10,000 papers the generic pattern is if you are not clear, what are the capabilities? Do they sit inside or outside and do we have enough people? Can we afford them? Can we hire and retain them? The next question is: how does that organisation evolve over time? That is not static. That was another big failure from the 10,000 papers literature. We tend to design things and understand that once we put things in place, that is it. If you were to evolve that organisation that you are putting in charge of the town’s programme over 50 or 60 years, who is accountable for making that happen? Is there a group? Is it with HR or the chief people officer? Where is the governance around that? When do you do that? Is there clarity? If you do not do that and do not transition the people without the expertise out of the organisation, you might be delivering a railway systems project with tunnelers and vice versa. There is a lot of mismatch in terms of whether we have an organisation that is fit for purpose.
One example is if you go back to 2017 when Mark Thurston took leadership as CEO of HS2 Ltd—there are multiple presentations from Mark on this—the main question from government was: “Can you develop an organisation capable of delivering the complexity levels that this project is observing?” The programme that Mark led with board-level sponsorship and a capability programme was one of the best that we saw in a study that we investigated. We need to start decomposing projects and understanding the areas that we did well so that we can learn, repeat and evolve. Why was that helpful? Why was that good? You had a clear system of what the capabilities were. There was a list of 25 capabilities or areas and they measured—imagine that—the maturity that you had inside the organisation and the gap. Then you have a plan in place to be capable or mature enough in that particular area and you can demonstrate that. We need that discipline on where the evidence is that you are capable as an organisation at all levels. As Alex said, I have my doubts that local level would have the capacity or the number of people. Let us stop there.
Lord Cameron of Dillington: From what you are saying I get the impression that the Government have lost their ambition on all this. Your example of Holland and Germany making these projects legally binding sounds like a really good project. Maybe we ought to have all the political discussion, as we do over converting a parliamentary Bill into an Act. I am just wondering whether all Governments lose their ambition and so these projects just wind down. How do we keep that spirit of ambition going?
Dr Alexander Budzier: It is about building a system that survives once attention goes elsewhere. In researching these things, I deeply admire how universal credit was executed, for instance. The key strategy was there after all that happened in the beginning to make the project as boring as possible. Neil Couling—who was then the project lead on this—did a great job of making the project boring and getting on with the job of delivering.
There is something there about how we can make these projects so boring that they do not constantly end up in the press and the media. How can we build the capability—a body, a system—that basically moves on, does the execution of things after it has been started and does not constantly require that reinjection of political good will, attract media attention, get pulled this way and that way and experience a lot of friction? It is all about how we can build a system that is actually built on the foundations that it will deliver, even when political interest is moving sideways or waning. Then these megaprojects survive; otherwise, they just get wound up.
Professor Juliano Denicol: I will go back to my point on the data. NISTA is the UK’s centre of excellence in infrastructure. It is arguably one of the best agencies in the world and is recognised everywhere I go. If you go to the OECD, there are multiple countries around the table and they constantly come back to what the UK is doing. It is a centre of gravity. However, we as a society need to equip it with the tools and the data to have an informed debate beyond superficial narratives that do not really look at the benefits or what is being delivered in terms of the scope.
If we were to have that data set it would be a powerful tool to argue for value creation and the societal aspirations that we want. NISTA could have much more legitimacy to decide certain actions, informed by a public database on costs and benefits. It would go a long way and potentially cut out some questions and the very open system that we have of people challenging the decisions if that was indeed transparent and in the public domain.
Q55 Baroness Miller of Chilthorne Domer: My question is really to ask you to summarise where we have got to. You have mentioned land value capture several times so we will take that as a given. I would like to go back to the comments you have both made—Dr Budzier made it in his example of China—about the importance of building from the local up. At different times you both said there just is not the capability at a local level to do that. Given where the Government are with their devolution programme, or intentions and ambitions, what would be your recommendation to move in that direction? If you have one last recommendation beyond that, what is it?
Dr Alexander Budzier: Capabilities can be built and strengthened. Humans can learn, surprisingly. In Oxford we train and educate the SROs and PDs of the GMPP projects. There are fewer of them now. A lot of the digital stuff went into departmental boards for major projects. With devolution a lot will move out into the local areas. Where is that similar, whether it is through a unified programme or the Civil Service academy or something like that? Where is the capability building that actually does that at scale across the country? That would be my big question around these things. One important element of that is to build that capability out everywhere else around the country. It is as simple as that.
Professor Juliano Denicol: I would agree with that. That goes back to my point about unlocking skills and individuals that we need in terms of capacity for the industry at all levels. That alone will not solve the problem. You need organisations and that is a new design. We need skills, competences, individual level, organisational capabilities and firm level construct. How do you design an organisation with the processes that if you put the best talent that we have in this country inside the organisation, they will be able to perform and deliver world-class assets and outcomes? That is a different question.
Whatever the flavour of the year is—devolution or centralisation—where is the evidence that your vision and strategy, if implemented, can deliver at the local or central level? Did you assess the organisations that they have? What are the current levels of capabilities? If you do not have the capabilities and you want them to deliver, what is the plan? Publish the road map to build that capability inside the organisation. How are you going to recruit hundreds or thousands of people who you need to deliver that? Is there a plan or is it just an ambition?
It goes back—again—to the announcement of 1.5 million homes. Where is the evidence? We need to be much more scientific and rigorous in decisions in social sciences, management and leadership. We are in several other areas of civil engineering in terms of health and safety, standards and so on, but we do not seem to have that discipline in terms of: where is the analysis? Have you seen the analysis? We have plenty of reports published with 70 to 90 top people, CEOs and so on, interviewed. Then you have a list of 10 recommendations. It begs the question of how they arrived at the 10 recommendations. Where are the scientific analytical coding and the patterns that you will have from 90 interviews? You have 90 transcripts in front of you. How did you go from that to the recommendations and the patterns? That data analysis needs to be way more rigorous to inform decisions. That would be my recommendation.
Dr Alexander Budzier: Let me pull that back. One more thing is around a sense of whether there should be some sort of central co-ordinating mechanism. What we have learned by comparing, for instance, Crossrail with the Thames Tideway Tunnel is that Crossrail builds 14 different things but every single thing was special and unique. Without a co-ordinating body—whether devolved or not—of the execution around these seven towns and future new towns, there would not be any learning between these different sites.
It is about capability building but also ongoing learning and evolution of the programme that needs to be sitting somewhere in one body because without that single accountability for learning it will not happen. That is what we see. When we are looking at successful, big programmes—megaprojects in their own right—it is all about that accountability to improve the performance year on year.
Baroness Miller of Chilthorne Domer: Refreshingly, we have got through the morning without mentioning AI, which of course is very important in terms of learning. AI is not going to come up with something you mentioned, Alexander, which is the ability to say no and equally the ability to say yes. Can you comment on whether all the data analysis and learning are going to happen in a much speedier way anyway?
Dr Alexander Budzier: That would probably support some of our analyses but it always goes back to a beautiful piece of very angry research that was published in 1973 by two architects and urban planners named Rittel and Webber which referred to “wicked problems”. In 1974 they had a conference where they had computers big enough that they thought they could plan the perfect town. They wrote a very angry paper and said, “No, you can’t”, because the problem statement was not even clear. What do you want out of a town? That does not have a single answer. Stakeholders cannot be satisfied. Sometimes it is just about minimising the average dissatisfaction, as somebody from government sold me the other day as a project title objective.
There are these things that do not have a solution. Technology is not going to build the perfect town, align all the stakeholders behind a plan or deal with politics. I do not think AI is going to make a big change around that. The tricky issues are still there.
Professor Juliano Denicol: For the consideration of this revolution that we are observing I would argue in terms of the flexibility that you might need to have built in these cities early on to accommodate technological shifts.
Q56 The Chair: Perhaps I could ask two very quick questions before we wrap up. In the conversation we have talked about HS2 and Hinkley. Last week we talked about reservoirs and from memory we have not built any for 30 years. The next one we are going to build will take at least 10 years. Is this a uniquely English thing that we are so slow and limp? If so, why? Professor Denicol, you mentioned what we talked about in our previous report. Why are the Government not gripping it? It is not unique to this Government but if it is going on for so long, why can people not step up to the plate and get on with it? Notwithstanding the fact that you praise those that are working in this field—NISTA and various others—why is it not being sorted?
Professor Juliano Denicol: That is a complicated, multifaceted question that I could probably take 45 minutes to answer. If I could summarise something that is not really possible to, what do I think is different in this country compared with others? We want many things as a society in terms of sophistication and doing the right things. We established processes and structures to do so and that has an impact and a cost on the system that delivers major projects.
In terms of the trade-offs, if we use the bat tunnel case on HS2, I dare to say that before you knew the cost of that bat tunnel on HS2, everybody agreed and you would not find anyone against building the bat tunnel to protect the bats on HS2. Once you knew the cost, that became a problem of proportionality: could or should we be spending that money elsewhere on more interesting outcomes?
This is a system problem. The conversation that is missing is that we have ambitions and requirements and we put structures in place to do the right thing but we need to have a sensible conversation on the speed it takes to do all the right things and whether that can be concurrently done or is sequential. That is impacting the infrastructure provision, the well-being of people and economic growth.
If you want to be real that you need infrastructure, how do you cut time out of this process? What are you willing to give up? What are the trade-offs? All these structures are good things but they can be compounding. If you do not have a place with the authority to have a sensible conversation to remove or have trade-offs it just keeps adding on. You go from 10,000 pages on Hinkley Point C to 70,000 or 80,000 pages on the Crossrail, Sizewell and HS2 Bills. Where does it stop? There must be some hard decisions. They will not be easy but that is the nature of trade-offs, is it not?
Dr Alexander Budzier: To moderate that answer a little, we have done research and our database now holds more than 23,000 capital projects from around the world. We crunched the data for the NIC before it became NISTA a while ago and looked into whether it is more expensive to build something in the UK; it is not particularly. There is no clear pattern for that. Does it take longer? Not particularly.
We looked at the same set of data for the European Commission because it is still not finished with its TEN-T regional integration, which is the big transportation infrastructure such as Rail Baltica, the Gotthard Tunnel and those kinds of things. There are projects that were announced in the early 2000s that have not even finished planning yet. We should not fall into the uniqueness trap: that even if it feels slow we are not uniquely slow compared with any other system in the world, unfortunately. But it is a global problem. There are lots of clever people around the globe with all the same issues so we might find some new solutions.
The Chair: Let me ask one very quick question going back to new towns. Notwithstanding what you say about it being crucial to achieve the 1.5 million, do you think we should just bite the bullet on this programme now? Is it really worth it? Have we missed the boat to some extent? To be more positive, perhaps, how do you put optimism back into this programme now?
Professor Juliano Denicol: We need to move out of the biases analysis and if we are pessimists or optimists and so on. I would like to see the evidence. Should we stop? Should we go ahead? Clearly, there were some fundamentals that were not there in terms of announcing, clearly communicating what it is and the structures we have in place.
To respond in a very simplistic manner, I do not think it is right without the data to inform the decision. Where is the evidence? Clearly, we need homes, places and new settlements with identity. That is not up for debate. I would like to see evidence and analysis of the priorities—affordability and sequencing—before you come to the conclusion to kill the whole programme, go ahead with three out of seven or whatever. What is informing that rather than rhetoric and policy-making?
The Chair: I am not saying we should; I am just asking. There are alternatives; as Lord Porter would say, you can just focus on the expanded settlements. New towns in themselves are only 10,000, which is small. I know the Government will say the hope is to get bigger but there are lots of smaller developments that are just shy of 10,000. Should we throw everything into them?
Dr Alexander Budzier: But we have to think about the impact it would have. When phase 2 of HS2 got cancelled—it was very close to actually having Royal Consent and so on—that led to a massive deficit of trust. We were talking about this. There is little capability and nobody trusts the Government that once they make an announcement they are not going to cancel that. Never ever before had that happened. Therefore, nobody in the industry wants to invest in capabilities. Saying that this will be cancelled now will have exactly the same effect of people saying, “Well, why did I hire all these apprentices then? I believed the Government”, and there will be a trust deficit again. That is not the thing. If you had to restart it, would you necessarily come up with a different selection of different towns?
Lord Porter of Spalding: Yes, because we would have captured the land first and then decided where they were going. We would have gone, “Right, we are cunningly buying all those fields as the state and then we’re going to put some houses on it and we’ve captured the land value”.
Q57 Lord Bassam of Brighton: I have been reflecting on what has been said over the last couple of hours or so. That post-war new towns expansion was genius but it was not just new towns; it was expanded to urban areas to hit the targets of whatever it was, 350,000 new homes a year, for a protracted period. It took 10 to 15 years. Perhaps we are being a bit pessimistic ourselves in approaching this issue. Is it that we are missing a magic ingredient, which is definitive leadership? You guys have mentioned leadership quite a bit this morning. I sometimes think that there is a want for critical leadership which will be realistic about our objectives and secure the end but maybe over a longer timeframe.
Dr Alexander Budzier: We are missing ownership and leadership. At the moment nobody owns this end to end so where would that leadership come from?
Lord Bassam of Brighton: Do you have to establish a consensus to get there, political or not?
Professor Juliano Denicol: You need to distinguish leadership at the individual level. The critical reflection is if you identify the leaders and the best managing directors, CEOs, directors, and so on, and put them into a system where they cannot perform, that is no use. It is a question of establishing the institutional leaderships and organisations as well as bringing the people. Those are two different things. If I could say something about previous reports, there are expressions on central oversight, government leadership and multiple denominations of the same challenge but no clear stratification of what it is.
The Chair: You will be pleased to know that that is the end of the session. A massive thanks from us all here. This has been a great session in itself but also a great wrap-up of this module. We appreciate your time today and thank you once again for being with us.
