Helm Talks - energy climate infrastructure & more

• Five reasons why growth is so elusive

  Why is it that this government, and its predecessors, find economic growth so hard to attain? In the UK, growth remains stubbornly low for a number of reasons, and these are not the ones that the government is currently blaming. First, governments avoid hard choices and spread resources too thinly. As Tony Blair said to me many years ago, politicians prefer to have "and" over "or" – in his case, nuclear and renewables. Political instinct favours doing “everything” to please all parts of politicians’ constituencies, but this dilutes investment and prevents large-scale, coordinated programmes. Instead of comprehensive strategies like those seen in China or France, the UK pursues piecemeal, case-by-case projects, resulting in high costs and inefficiencies, such as probably the most expensive nuclear plants in the world (at c. £12 billion per gigawatt). Without focused, long-term infrastructure programmes, growth cannot accelerate. Beyond this, structural issues compound the problem. Western economies, especially the UK, prioritise consumption over production, rely heavily on welfare spending, and maintain incentive systems that discourage work. High taxes and borrowing further stifle growth, while domestic savings – critical for funding investment – are minimal. Unlike post-war economic miracles in Germany, Japan and China, driven by savings and production, the UK depends on foreign capital and supply chains, leaving its economy vulnerable. A fundamental shift towards production, supported by domestic savings and programme-driven investment, is a prerequisite for sustainable growth.

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  15:26

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• The real lessons from COP30

  There are five major lessons from COP30. They are not the ones the climate community has highlighted, but they really matter and will shape the post-COP30 climate change negotiations. First up is the realisation that it is no longer a European (and UK) game. The shifts in world political and economic power for the first time sidelined the Europeans. There was no UK “climate change leadership” to be taken seriously. It is India, China, Russia and the US that pulled the strings, whether present or not. Second, no major oil and gas producer or coal-burning nation wants to stop. Brazil set the tone: it announced that it wants to be the world’s fourth-largest oil producer, with drilling to start in the mouth of the Amazon. Third, no one wants to cut their carbon consumption, personally or nationally. The Brazilian carbon footprint includes the flights, the new road through the rainforest, the cruise liners for accommodation, as well as the commitment to its own fossil fuels. Fourth, the real action was on the bottom-up trade issues, notably the carbon border adjustment mechanism (CBAM) and the emerging coalition of the willing with the extension of carbon pricing. The fifth lesson is that the temperature is going to go on rising: 30 COPs so far haven’t made a dent in the carbon concentration in the atmosphere, and another 30 COPs probably won’t.

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• The great capital maintenance failure

  As the Chancellor gears up to deliver the Autumn Budget next week, let’s look behind the headlines at the reality of what is going on with the UK’s economy and lack of growth. Despite what the current government argues (not very different from the previous incumbents), the UK’s economic stagnation is not so much due to a lack of new infrastructure projects or excessive regulation, but rather the chronic failure to maintain existing assets. Essential networks—such as railways, roads, water systems, and mobile connectivity—are in poor condition, creating inefficiencies and costs that ripple through the economy. Instead of prioritising glamorous projects like HS2, the focus should be on ensuring that current systems actually work. Well-maintained infrastructure provides resilience and reduces the disproportionate costs of failures, making it a cornerstone for productivity and growth. This is not a technical challenge but a matter of political priorities and regulatory focus. Current fiscal rules and political incentives distort spending decisions. The government re-labels maintenance as “investment” to justify borrowing, shifting costs to future generations and encouraging flashy enhancements over essential upkeep. True maintenance should be funded on a pay-as-you-go basis through current bills, ensuring intergenerational fairness and system reliability. Capital maintenance comes first, second, and third, with new projects only after existing infrastructure is robust.

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• Locking in permanently high costs for British energy

  British energy policy, once heralded as a pathway to cheap, secure and decarbonised power, has instead resulted in some of the highest energy costs globally. Despite the optimism of Ed Miliband and before him, Boris Johnson, Britain’s energy system is heavily dependent on foreign supply chains, finance and ownership. The shift to intermittent renewables like wind and solar has doubled infrastructure needs, while long-term contracts lock in elevated prices until at least 2045. Offshore wind, particularly in Scotland, suffers from grid constraints, leading to payments for unused generation. The government’s approach to nuclear, with its “let’s try one and see if it works” perspective, rather than a fully fledged nuclear programme, has followed an inefficient and costly path, further entrenching high costs. This trajectory poses serious risks to the UK economy. Energy-intensive industries are closing, and few new ones are emerging, as high energy prices deter investment. Britain’s apparent success in reducing carbon emissions masks a growing reliance on imported carbon-intensive goods. Without radical policy reform – renegotiating contracts, restructuring pricing, and rethinking energy strategy – Britain faces a future of permanently high energy costs and diminished industrial competitiveness. What is needed now is not our politicians flying off to yet another COP, this time in Brazil (with access by a new road cut through the Amazon rainforest), but honesty and humility in global climate discussions, urging leaders to learn from Britain’s missteps rather than emulate them.

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• Why is UK infrastructure so expensive?

  The UK’s infrastructure costs are amongst the highest globally, making ambitious projects—like new nuclear plants, HS2, and airport expansions—extremely expensive. Hinkley and Sizewell nuclear stations together may end up costing more than the original full costs of HS2, and a new Heathrow runway could reach £40 billion. Even basic upgrades, like sewage tanks and reservoirs, are far pricier than elsewhere. While some projects, such as the Elizabeth Line and Thames Tideway, have been delivered efficiently, these are rare exceptions. The main drivers of high costs are higher costs of capital (due to high interest rates and inflation), low labour productivity, and fragmented project delivery. The UK often builds infrastructure as isolated projects rather than as part of coordinated programmes, which prevents investment in supply chains and skills. France’s programme of nuclear power stations building in the 1980s is an example of how things could be done. Unlike countries that use the state’s balance sheet or commit to long-term programmes, the UK’s piecemeal approach keeps costs high, discourages investors, and limits what can actually be delivered. Without smarter regulation and better planning, these high costs will continue to hold back progress.

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  13:53

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