The UK’s industrial and logistics businesses keep the country running but the lack of land and available power along with planning constraints and delays are all preventing growth.
We heard from one of our partners, Rob Champion, who is Head of Industrial & Logistics, why he believes Labour needs to upgrade the country’s industrial infrastructure and enable the delivery of employment development through further planning reform to meet its growth targets.
Industrial and logistics at all scales should be at the front and centre of Labour’s growth objectives in relation to planning and development because of its importance in powering the economy rather than just focusing on housebuilding.
Statistics released by the British Property Federation highlight that the industrial and logistics industry adds over £137.5bn to the economy, which is the equivalent of 7% of Gross Value Added, and that the sector supports one in 12 jobs across the country as well as contributing another £7bn indirectly to local communities through the planning system.
While it is positive to see that freight and logistics along with laboratories, gigafactories and data centres have been identified as key uses requiring appropriate strategic sites in the new draft National Planning Policy Framework (NPPF), the Government needs to place even greater weight on the delivery of best in class commercial space at all scales as part of the plan to stimulate economic growth and ensure the UK becomes a world leader in technology, manufacturing and logistics.
Allied to that, there needs to be robust infrastructure with sufficient capacity along with clear, deliverable and ambitious planning policies.
It is important the new Government tasks local authorities with focusing on the employment-generating uses of appropriate sites when making strategic planning decisions.
In the context of delivering more housing, the added benefit of developing industrial infrastructure, including data centres and gigafactories, will provide high-quality jobs for people that live nearby. This does however need to be carefully considered with new employment supply being delivered in locations that genuinely work for businesses. These should be close to key transport nodes where easy and sustainable links can be achieved to high-population areas.
The biggest issue however is power – or the lack of it. The transmission and distribution network operators are struggling to deliver power to large projects – it was taking around 14 years until the Conservative Government introduced The Transmission Acceleration Action Plan which seeks to halve the end-to-end build time of electricity transmission network infrastructure, from 14 to seven years.
To meet the growing demand from businesses and, in turn, boost the economy, it is going to be vital for Labour to crack this conundrum which itself is, in part, connected with the issues associated with planning and strategic decision making, otherwise this blocker will continue to stifle growth.
Before the pandemic, The World Economic Forum’s Global Competitiveness Report 2019 found that the UK was ranked 36th in the world for the quality of our road infrastructure, 36th for the efficiency of our air transport, 31st for the efficiency of our railways and 46th for the quality of our electricity supply.
Currently, around 200 gigawatts-worth of electricity projects are in the queue for a grid connection.
Each project in the queue is a potential investment and jobs that are not able to come online, but consultation is taking place as part of The Great Grid Update which would be the largest overhaul of the grid in generations, with new infrastructure across England and Wales to help the UK meet its net zero ambitions, reduce its reliance on fossil fuels and contribute to lower energy bills over the long-term.
But currently, delays in accessing power and the uncertainty about future availability are preventing businesses from expanding.
Between April and September 2020, the average wait time for connection to the UK’s electricity network after application was 15 months. Between October 2022 to March 2023, the average wait time had increased to 51 months. For connections in the North of England, it was 75 months!
The UK has more requests for electricity connection stuck in the queue than any country in Europe. We are falling behind our targets for industrial infrastructure and net zero – the root cause is that the UK’s electricity grid has been expanding too slowly.
The Climate Change Committee has a target for the UK to more than double its electricity grid capacity by 2035, but if we continue at the rate of growth in grid capacity between 2012 and 2022, the target won’t be reached until 2084.
There are also statistics which show that the amount of additional power required by artificial intelligence (AI), compared to our current way of working with online operating systems, will be four times higher in terms of data storage requirements.
The direction of travel means more power is required to live in a world where AI is used so much more and that means we’re going to need to increase our power capabilities. This will need resolving as we move towards a low carbon economy as gas and other fossil fuels are phased out.
The industrial and logistics industry is increasingly looking to the electric market and the importance of new developments being located where there is access to power is absolutely crucial.
We are now seeing that while location remains vital to developers when they are selecting sites, having access to power may, in certain cases, override the usual ‘prime prime’ location characteristics. This could result in locations traditionally referred to as secondary in industrial and logistics terms receiving substantial investment as businesses align themselves with a suitable power supply.
Another vital aspect of Labour’s draft NPPF is the acknowledgement of the important role that ‘Grey Belt’ land can play in delivering vital residential, commercial and other development, particularly where it no longer serves the Green Belt purpose for which it was originally intended. This has been a welcome announcement because it could unlock some really well-connected sites and see a reduction in the reliance on green field (as distinct to Green Belt) land which may otherwise have greater public benefit for food production or biodiversity enhancement.
Resolving the problems of the planning system is clearly high on Labour’s to-do list because it is and has been a huge barrier to progress.
Recruiting 300 new planning officers will help to determine planning applications more quickly but I’m not sure how easy that will be to achieve in practice, and we need to revert to a presumption in favour of development rather than against it so that stalled applications in suitable locations can move forward. This requires a national mandate which is genuinely implementable.
Incentivising local authorities to get on with assessing applications is going to be important because a major application should take 13 weeks to determine, but currently, they seem to be taking at least six to nine months, if not significantly more, so there is a constant backlog. There are no easy to access ‘teeth’ in the system to hold local authorities to account over their timescales of delivery and so applicants are generally being forced to accept the delays which are, in the main, blamed on a lack of resources. The draft NPPF does not appear to seek to tackle this issue specifically.
The UK continues to see demand from innovative and progressive companies who are requiring best- in- class industrial, logistics and laboratory facilities with high energy efficiency credentials and the best working environments for their employees.
The UK market has some of the world’s best developers of commercial real estate who are and have been for some time at the forefront of building design and focused on continual improvement.
Collectively, these vital players in the UK economy are being constrained due to systemic failure and I encourage the new Government to be bold in their policy- making and, crucially, listen to our industry to gain reasoned insight into how best to facilitate change and, in turn, enhance the attractiveness and productivity of the UK.
