Cost caps for spurious legal challenges to building cost Britain dear. Ministers must raise them.

27 August, 2023
ConservativeHome, by Henry Hill

One thing I sometimes debate with people who have also gazed into the abyss that is the UK’s planning, housing, and infrastructure crisis is whether or not the fact that it is entirely self-inflicted is grounds for hope or despair.

We’re not a mineral-dependent country whose mines are exhausted, nor an equatorial one whose interior is turning into a desert. Britain could be a much richer country, with plentiful housing, better public transport, cheaper energy, more competitive manufacturing, higher labour mobility, and much more besides, if it just made different choices.

The extent of this was highlighted this week by new research from Britain Remade, which highlighted just how much more expensive it is to get anything done in this country compared to most comparator nations in the West.

Now there are many factors that go into that, and the linked piece is worth reading in full. But a significant one is what John Burns Murdoch of the Financial Times has dubbed the “Nimby tax”: the huge extra costs that get baked into projects via endless rounds of consultations and expensive adjustments (re-routing, extra tunnels, et al) to pander to local interests.

Now, “empowered local communities” is one of those things that politicians like to cheer about, and which sounds at first glance like an axiomatic good.

But it isn’t, unless you believe that the Holy Roman Empire was a good model for government. It means that projects with big net benefits to the country can stand or fall on whether or not they inconvenience a small number of people or a narrow sectional interest; “more homes yes – but not here!”

Our current system hugely over-weights the I’m-all-right-Jack sentiments of so-called “local patriots”, at the expense of imposing huge costs on the rest of the country. That’s not just the actual monetary cost added to projects (it costs five times as much to bury power lines as run them on pylons, for example; much more still to run them under the sea), but the broader burden of being a poorer, less mobile, higher-cost nation.

A particularly egregious instance of this is the Aarhus Convention. Whilst by no means a generally terrible bit of international law, one of its “access to justice” provisions is that the costs of mounting legal challenges on environmental grounds should not be “prohibitively expensive”.

Sounds good right? Vaguely-worded international law so often does. The problem is in the application and the detail. In the UK, the Government interpreted this to mean that costs for legal challenges are capped: at £5,000 for an individual claimant, and at £10,000 for an organisation. (Costs for defendants are set much higher, at £35,000.)

This certainly isn’t prohibitive. In fact, it almost completely de-risks even the most spurious legal challenge to any project. Would-be litigants know in advance exactly how much they need to raise, and in neither case is it a large sum. Few motivated campaigning organisations will fail to raise £10,000, and there are plenty of comfortable people prepared to throw £5,000 at such things – just think of that neighbour who personally hired a London barrister to try and shut the restaurant in the second series of Clarkson’s Farm.

Worse still, as inflation eats away at household and departmental budgets alike, it currently has no impact whatsoever on these legally-enshrined limits. So the worse things get, the better and better a bargain Aarhus offers the litigious NIMBY.

As a result, individuals and organisations with no interest in the broader gains of a project have very little to lose, and are thus free to add months or years to a given project, with all the associated costs – and then plead the costs and delays when calling for it to be scrapped in the next round of consultations.

Happily, this problem has apparently got into the Government’s radar, and the Treasury is reportedly looking seriously at how to combat the problem.

Broadly speaking, there are three options: withdraw from the Aarhus Convention; seek a formal renegotiation of it; or just raise the actual caps.

In happier times, where the Conservatives were confident of winning the next election, the former might have been a goer. As I wrote last month, there is a real democratic question to ask about the extent to which international agreements, once largely confined to international relations and high diplomacy, now overshadow domestic government.

But there is little purpose in doing so now, when Labour would presumably just rejoin it – something to bear in mind when any minister talks about withdrawing from the ECHR.

A renegotiation runs into the same timing problem. It might work, assuming the other parties were agreeable – although as Britain Remade shows, they don’t all have the same problem the UK does when it comes to getting things built. But such a process would almost certainly not bear fruit by the next election.

Which leaves raising the fees. This the Government can definitely do (they are, after all, set down in domestic law), and this option is reportedly being debated at the Treasury.

There is a surely unanswerable case for at least uprating them with inflation (and perhaps setting up a mechanism to do so automatically in future), and certainly leeway for raising them further to try and strike a better balance between access to justice and getting anything done.

The Convention might be big on “environmental democracy”, but lawfare – allowing those with the money and/or expertise to enter the privileged arena of the courts to block projects with much broader benefits – is not democracy.

This leaves two questions. First, how high to the caps need to be raised in order to have an appreciable impact and reduce friction in the system? Poor data collection on how much the current regime has actually cost makes this difficult to judge.

Second, how high could they get before running the serious risk of a judicial review striking down the new limits as prohibitive, and thus contrary to the United Kingdom’s obligations under the Convention? Because, as is generally the case, nice but vague international obligations ultimately translate into substantial discretionary power for judges.