Making it easier to build the infrastructure and homes Britain needs is not only essential for economic growth but is also key for employing working people both onsite and across the UK. Getting Britain building again will drive new jobs across the economy from the processing of raw resources all the way through the supply chain to the finished first home for a new family.
Major building projects, whether in energy or housing, employ thousands of people directly and many more across the domestic supply chain. Reforming planning and backing the builders will lead to many more major projects, supporting new jobs and apprenticeships on construction sites and around the country.
Hinkley Point C is one of the largest construction sites in Europe. With up to 5,600 staff on site at any one time and the largest crane in the world, building Britain’s first nuclear power plant in 30 years is a massive undertaking. Yet, the benefits of construction do not stop at the perimeter fence.
Rather, Hinkley Point C brings benefits for workers across Britain with 71,000 jobs being supported by the end of construction. There are over 3,800 British businesses in its supply chain. From Somerset’s Pyne’s Butchers, which increased their staff by 50% to cater for the extra demand, to British Steel providing 3,000 tonnes of steel from its Teesside Beam Mill for the turbine halls, the impact of Hinkley Point C is seen both locally and across the country. Millions of pounds have been spent in each region in the UK, rising to billions in the North West, East of England, London, and the South West.
The new nuclear power station has already trained over 1,300 apprentices, which provide the foundations for a well-paying career in the nuclear industry. More than 8,000 people have received training through the project as well. All of this means a higher skilled workforce that is ready to construct more nuclear plants and vital infrastructure projects.
Imperial Wharf in Hammersmith and Fulham was once a 32 acre contaminated gasworks. After a large urban regeneration project, the site on the River Thames now has 2,707 homes, of which 1,151 are affordable. There’s also 25,000 square metres of commercial space and 14 acres of public open space with a riverside park.
Regeneration of the site was funded by £1 billion of private investment, which created over 350 construction jobs. Over the course of remediation and construction, more than 300 apprentices were trained and the local economy was boosted by £75 million.
But the benefits of construction were not limited just to the immediate site. Economic analysis pointed to £860 million of indirect economic effects for the wider economy and businesses in the supply chain. The regeneration also paid for the majority of costs for a new railway station served by the Overground, improving connectivity in a previously isolated area. S106 payments from the developer also paid for an expansion to the local primary and secondary school.
Industrial Energy Prices
When gas prices spiked as a result of Russia’s illegal and unprovoked invasion, it put enormous strain on households and businesses across Britain. But even before the invasion, Britain’s energy-intensive industries were hit with a massive increase in energy costs. Industrial electricity costs have tripled between 2004 and 2021, as our North Sea resources dwindled and nuclear plants have closed. British businesses pay more for electricity than businesses anywhere else in the world.
In fact, the average British business pays more than 60% more for electricity than its French equivalent. Among very large businesses, the gap is even larger with British firms paying more than twice as much for a kilowatt hour. But that’s nothing compared to the difference between Britain and the US, where American industries pay a massive four times less.
High energy costs have had a devastating impact on UK industry. Whether it’s steel, concrete, ceramics, or chemicals, the high cost of electricity has put British industry at a clear disadvantage internationally. All have seen production levels fall over the long-term, but recent declines have been sharp. The chemicals sector, which employs 100,000 people, has seen an almost two-fifths decline in just a few years. Steel, crucial for both national security and delivering the infrastructure projects our towns and cities need, has faced challenges from high energy costs over the last 20 years.
The long-term survival and growth of these industries depends on investment and more affordable energy, but neither is possible unless the UK upgrades our grid and supports new sources of energy. The Government’s Clean Power Plan is an opportunity to massively expand our homegrown electricity production, meet the needs of our industry, and reduce bills, but it can only be delivered under a reformed planning system. Under the status quo, critical infrastructure projects are delayed by the need to produce extensive environmental assessments, design complex mitigations, and defend against legal challenges. No one questions the need to protect nature and access to justice, but the status quo is failing to deliver. A better system, which funds effective nature restoration and produces environmental assessments that are hundreds, rather than tens of thousands, of pages long, is possible.
To determine how planning reform can make workers’ lives better, Britain Remade have modelled changes to energy and housing policy. For energy this involves two scenarios, the first is a core scenario where planning reform unlocks the investment in electricity infrastructure to deliver 2030 clean power. Britain Remade have also modelled a second ‘Nuclear Stretch Scenario’ where reforms to planning and regulation also cut the cost of building new nuclear power stations.
Both the core and nuclear scenarios meet net zero targets because planning reform unlocks investment into clean energy infrastructure.
Under the core scenario, planning reform unlocks an additional £92 billion of investment by 2030, boosting the economy by £63 billion in Gross Value Added (1.9% of the UK’s GDP in 2023). In the nuclear scenario, planning reform unlocks £65 billion in investment and increases GVA by £44 billion, with the lower figures a result of the extra time that nuclear construction takes.
Investment in new energy infrastructure, in both scenarios, will take time to bring down energy costs, but the benefits in the long-term are large. The counterfactual scenario sees electricity prices slowly falling from £148 per MWh in 2019 to £117 per MWh in 2040 (all in 2019 prices). In our core planning reform scenarios, prices fall to £86 in 2040. That’s a fall of 26%, which will help lower the pressure on working people’s budgets. In the nuclear scenario, prices fall slightly slower due to the time it takes to build nuclear power, but, at £95 per MWh in 2040, prices would still be 17% lower than the counterfactual. By 2050, the nuclear stretch scenario would have the lowest cost of energy at £69 per MWh.
The higher short-term cost of electricity dampens the initial job benefits, but there would still be 10,000 more jobs created under the core scenario by 2030 and 8,000 in the nuclear scenario. As the cost of electricity falls over the 2030s, we expect the number of jobs created to rise to 60,000 in the core scenario and 50,000 in the nuclear one.
Reaching the Government’s housebuilding target
We also conducted economic modelling to determine the impacts of the Government meeting their target to build 370,000 homes in England. Over the last 5 years, England built an average of 210,000 homes per year, so the Government’s reforms will have to lead to an additional 160,000 homes being built. Each home built results in an additional 2.4 jobs across the economy. In total, boosting England’s house building rate to the Government’s 370,000 target would lead to an additional 400,000 jobs and £38 billion in gross value added. While 236,000 of these jobs would be in the direct construction of the new homes, there would also be indirect jobs benefits across the UK, such as 41,000 jobs in wholesale and retail trade and 30,000 in estate agents and other professions.
When these homes are built in the right areas near our productive cities, they can enhance labour mobility. By making it easier to afford a home near well-paying jobs, these homes will also increase worker’s earnings.
Building more homes will improve the Government’s balance sheet. Stamp duty revenues would rise by £3 billion as these additional new homes are sold. As more homes are built, the cost of housing falls, which means the cost of housing benefit paid out will fall as well, saving the Exchequer £700 million.
New homes have lower carbon footprints and it saves enough carbon to justify the construction emissions after 13-27 years. Over a 60 year lifetime, the average new home saves 100 to 140 tCO2. That’s similar to the average emissions from a petrol car over a 60 year period.