Why can't we build the grands projets we need?
We ought to try asking the frogs
CHRISTOPHER FIL DES
The French have a name for them: grands projets. It does not exactly translate into English, and that goes for the projects as well. A visiting team from SNCF. which runs the French railways, was once asked to explain this. How had they got their new line from the Channel Tunnel to Paris up and running when the line from the tunnel to London was no more than some dots on a map? The visitors' answer was simple: `Aha, we have a saying in France: when we drain the pond, we do not consult the frogs.' Years later, they were surprised to find that the cost of building the line across Kent (now due to open in 2003) was inflated by special provisions, not only for frogs, but for dormice, voles and badgers. What form of destructive wildlife, they must now ask, has got into the plans for rebuilding and renewing Britain's other railways? This was as grand as a project could be, its cost cheerfully pencilled in at £68 billion over ten years. Ten years on, it would no doubt have cost more, but we shall never find out. The financial foundations prepared for it have cracked beneath the strain. All those expensive new Virgin trains which can lean over on bends and were supposed to whizz north out of Euston at 140 mph — the trains are now arriving but the track will not be there to meet them. All the signs are that this part of the project is being scaled down or put back. . . . As so many chancellors have discovered, the quickest way to cut spending is to rub out a dotted line on a map. This is a long story, and its recurrent theme is the grands projets we need and our recurrent inability to handle them.
Lost in thought
THERE is nothing too grand about a new airport terminal — nothing, that is, except the time that we spend in wondering whether to build it. The public inquiry into the plans for Terminal 5 at Heathrow ran on for three years and nine months, the inspector took two years to write his report and now the government is lost in thought. In less time, Hong Kong built itself a new airport. Our last airport runway was Manchester's second and, that apart, none has been built for decades. Our first tollfinanced motorway is due to open in 2004: the Birmingham Northern Relief Road or Spaghetti Junction Bypass. The French discovered long ago that tolls could pay for motorways and would encourage the operating companies to clear the cones away and keep the traffic flowing. Next on their list for privatisation is the Autoroute du Sud. London Underground scrimped on the rest of the network to put its shirt on the Jubilee Line — over time, over budget, still not up to speed, but at least it provided a link to another great British project: the Dome.
Planning blight
VANITY projects are always likely to misfire. Money, management and motives become hopelessly entangled in them. After the Dome, we have had the same trouble with national stadiums. Projects undertaken for their side-effects (such as building on wasteland or regenerating East London) are apt to be side-tracked by them. Our planning regime can be relied on to make things more difficult. Lineally descended from the Town and Country Planning Act of half a century ago, it is the last survivor of the postwar world in which the gentleman in Whitehall was expected to plan everything and really did (so we were told) know best. No aspiring planner has ever got promotion for waving anything through. Delay is built into the system and cost is built into delay.
Danger money
ALL these are self-imposed handicaps, but what grands projets must have is investment to match them, and the commonplace view is that we in this country are not very good at it. The state always has more immediate claims on its purse, and as for private investment, the City is blamed for not looking beyond the end of its nose. Harold Wilson, when he stepped down as prime minister, was asked to say whether the City had let industry down. He was persuaded to acquit it on the evidence of the North Sea oilfield. This was a huge project, with novel technology, inherently risky and needing years to pay off — but privately financed, because the investors could see a return which would be in line with their risks. Even Railtrack had its day in the sun and its place among our hundred biggest companies, but its balance-sheet could not carry the weight of investment that was heaped upon it. Stephen Byers wants to replace Railtrack with a not-for-profit corporation — not for investment, either? What we need is a corporation designed to invest in grands projets and to be up to their weight.
Bridge that gap
THERE is a precedent at the other end of the scale. The Industrial and Commercial Finance Corporation (now known as 3i) was set up to finance companies too small to come to market. It bridged what was seen as a gap in the system: the Macmillan Gap, it was called, after the judge whose inquiry discovered it. The Bank of England launched ICFC, the High Street banks unwillingly backed it, and it went on to make fortunes for them. The new corporation — GPFC, perhaps — would bridge a gap of its own in the system. No project would be too big or too difficult for it, but it would judge every deal it was asked to finance on the balance of risk and reward. It could not afford to be led astray by vanity or to finance some minister's pet scheme — not if it wanted to raise the next round of money. The resources of the market are unlimited and so is the ingenuity of the City's financial engineers, and on such a prospectus GPFC could ask for all it needed.
Sir Edward and I
I CALL on Sir Edward George, on the Bank of England's behalf, to launch our new corporation and to set it to bridge the George Gap. I had thought of involving my railway correspondent, I.K. Gricer, but he is still in a state of shock after the Railtrack disaster, and wants to finance the reinstallation of water-troughs on the Great Western main line, thus paving the way for the return of steam traction. Some projects are grander than others. Sir Edward and I would get on with our own, and we would feel free to consult the frogs. After all, we might learn from them.
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