A generation ago, when Asia’s leading tiger economies were places like South Korea or Singapore, India was the region’s teenage disappointment. Everyone agreed it had huge potential but it seemed stuck in life’s slow lane. The ‘Hindu rate of growth’ was a byword for handwringing and frustration, rather than the awe and admiration we take for granted today.
What changed? A decade-long programme of economic reforms in the 1990s which, amongst other things, tore up India’s stifling Licence Raj system of upfront permits, approvals and signoffs from scores of bureaucrats before businesses were allowed to start work on anything. If you wanted to build a factory, start a company or launch a new product there’d be the Indian equivalent of a bloke from the council with a peaked cap and a clipboard who had to give permission before you could get started. And then dozens more just like him after that. India still has plenty of red tape, but getting rid of these armies of blockers destroyed the dams that had been holding back India’s entrepreneurial energy and dynamism, unleashing tidal waves of growth that are still powering the country’s extraordinary economic success today.
There are multi-year waiting lists for electricity grid connections, and new road schemes or housing developments spend years grinding slowly and expensively through legal appeals
Modern Britain’s growth sclerosis looks horribly similar. Swap Mumbai for Manchester or Bangalore for Birmingham, and try building a house or an office or a factory wherever your finger lands on the map. Or a reservoir, a data centre or a warehouse. In every case you’ll need lots and lots of eye-wateringly expensive and time-consuming upfront permissions before you’re allowed to stick a single spade in the ground. And your problems won’t stop there, because once you’ve – finally – got started on site, there will be dozens more consent conditions, reviews and performance indicators which all have different reporting requirements, formats and deadlines as well. The licence raj didn’t die with India’s economic reforms: it just moved to Britain instead.
It means the UK has become one of the slowest and most expensive places in the world to make or build anything. Approving the Lower Thames Crossing has cost over £1.2 billion before a single bucket of concrete has been poured. Heathrow’s third runway has been in limbo for 20 years. There are multi-year waiting lists for electricity grid connections, and new road schemes or housing developments spend years grinding slowly and expensively through legal appeals.
How do we tear down Britain’s versions of the dams that used to hold back India’s entrepreneurial energy and dynamism? The first step is to replace all those individual, site-by-site upfront permissions with clearly-defined, democratically approved standards for everything from environmental quality to safety and architectural styles as well. Every new project would know what it had to deliver in advance, compliance would be independently measured after work was complete, and providing the standards were met they would be guaranteed legal sign-off without any ifs or buts. And by the same yardstick, any that didn’t achieve the preset standards would be closed until they did.
This new approach would keep all the environmental and safety standards we have today, but allow people to deliver them faster, more creatively and more cheaply instead. It would slash the costs, delays and risks before projects can start, and abolish almost all the mid-project compliance bureaucracy as well. It would transform UK housebuilding, save millions of pounds and years of delays for business premises and infrastructure projects, and put Britain’s regulators and quangos on a crash diet too.
Switching from upfront site-by-site permissions to predefined standards would destroy another of the dams holding back Britain’s growth too. At present, different quangos and regulators force companies, charities and public bodies to spend more on saving or improving the lives of relatively common wildlife species than on human patients being treated in the NHS. Others require taxpayers to spend more on protecting the life of someone employed in a nuclear power plant than on the same person when they use a busy road on the way home from work. Switching to predefined standards would make it easier to compare these costs and iron out two-tier inconsistencies to save more human and animal lives for less money.
The last much-needed reform should be judicial reviews, which currently add years of delays, risks and expense, and which encourage officials to take shelter in the safety of following processes rather than delivering fast-paced, on-budget outcomes and results. The answer is to trim it back so courts still decide if public bodies have broken laws or exceeded their official powers, while returning responsibility for holding their performance to account to democratically elected representatives instead.
Britain doesn’t have to be stuck in life’s slow lane. India transformed itself with these kinds of reforms a generation ago, and now we must dynamite the dams that are holding us back to do the same. Europe may not have tiger economies, but perhaps a British lion could fill the gap.
This article is the latest in the fortnightly ‘Small State Conservative’ series of policy proposals for CapX from John Penrose and the Small State Initiative.
If you like this idea, you’ll find more details, soundbites and rebuttals about it under Ending Britain’s License Raj in the Policy Thumbnail section of our website
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