The British economy is “not working”. Here are 2 key reasons.

In rural Cambridgeshire, a British semiconductor start-up was ready to expand beyond its laboratory and open a manufacturing base. But the company’s ambitions came with unexpected costs to bring enough electricity to the new site. The potential bill? A million pounds.

The Paragraf company manufactures chips based on graphene, an ultra-thin carbon. Its devices can be used to check electric vehicle batteries for defects to prevent fires, or to operate in quantum computers. After acquiring the site in 2023, Paragraf plans to increase its weekly manufacturing capacities from tens of thousands of devices to millions.

But the cost of increasing electricity supplies to the site, the result of years of underinvestment in Britain’s electricity network, is diverting money – and time – from recruitment and procurement of equipment, said Simon Thomas, managing director of Paragraf.

“Our biggest advantage when you’re a company like us is how quickly you can scale,” he said. Delays “not only affect what you can do now, but also your future success,” he added. “It’s extremely frustrating.”

Nationwide, complaints about lack of investment in Britain reach crescendo after more than a decade low economic growth and stagnant wages.

There is a “prevailing feeling that things are not working” in the economy, said Raoul Ruparel, director of the Center for Growth at the Boston Consulting Group and a former special adviser to the British government. This includes a lack of affordable housing, weak public services including transport, and long hospital waiting times.

With the economy expected to stagnate this year, two ideas to revive it have emerged: speeding up the upgrade of the electricity grid and making it easier to obtain planning approval for new construction. Analysts and lawmakers hope these initiatives can unlock infrastructure investment, reduce carbon emissions and generate much-needed productivity growth.

The problem is significant: over the past five years, the number of applications for connection to the electricity grid – many of which concern the production and storage of solar energy – has increased tenfold, with waiting times of up to 15 years. Restricted underinvestment the flow of cheap energy from Scottish wind farms to population centers in England and worsening delays for those with high energy needs, such as laboratories and factories. Laws that give local planning authorities considerable power are blamed for Britain’s housing shortage and blocking the construction of pylons needed to transport electricity from offshore wind farms. Residents’ objections to noisy construction and landscape changes are a stumbling block.

Planning and network connections are the very foundations on which everything else rests, Ruparel said. A functional grid that provides reliable, low-cost energy and a planning system that allows the construction of all types of infrastructure are “fundamental to having a productive economy and a more efficient economy,” he added.

Network planning and connections, eleven relatively specialized interests, have taken on dominant importance. At the opposition Labor Party’s annual conference this autumn, party leader Keir Starmer promised to “bulldoze” Britain’s “restrictive” planning system and get the electricity grid running “much faster” if he wins the race for Prime Minister in the legislative elections. next general election, expected in 2024. Network planning and reforms were two of the most crucial changes in the latest budget update to revive growth, said Jeremy Hunt, the chancellor of the Exchequer.

At Paragraf, which spun out of the University of Cambridge six years ago, “we want to move faster than some of the infrastructure allows us to,” said Natasha Conway, the chipmaker’s research director.

The company, which has about 120 employees, makes sensors used to measure magnetic fields. Attracted by the CHIPS Act, which provides subsidies to semiconductor manufacturers, it had been considered increasing its production in the United States. But ultimately Mr Thomas chose to stay in Britain and set up a domestic manufacturing business.

“Graphene was isolated and invented here in the UK,” he said. “Are we just going to let all the value go elsewhere?

But getting enough electricity hasn’t been easy.

After months of searching for a site with the electricity they needed, Mr. Thomas said, he settled on a warehouse 10 miles from the lab that would need an electrical upgrade. Rather than wait for an upgrade organized by the local council, the company decided to pay a network manager to install a connection to the main network. This solution will allow work to start sooner but will incur costs amounting to £1 million ($1.27 million), including the price of upgrades to the first laboratory, the company said. Paragraf expects initial production to begin by the second half of 2024, approximately a year and a half after securing the site.

In November, the government announced measures to speed up plan approval for major projects and prevent NIMBY-ism. These measures would, among other things, give communities financial advantages for approving grid infrastructure projects in their area and disrupt the first-come, first-served queue for grid connections to remove projects blocked.

These projects have been well received by the National Infrastructure Commission, which advises the government. Most of the reforms are drawn from the commission’s own recommendations, but the group wants the government to go further in compensating people when major projects such as housing estates or power transmission facilities are built nearby.

The country must overcome its “desire to maintain a chocolate box image of Britain, which is nice for tourists who come to admire the picturesque old villages”, said John Armitt, chairman of the commission. “There must be more to Britain in the future than this.”

The failure to deliver major projects – such as the government’s decision in October to scrap a key part of a planned high-speed rail line, citing delays and overspending – is affecting “investors’ views on whether the UK may or may not be an interesting place.” to come,” Mr. Armitt said.

And Britain needs more investment: the commission estimates at least £70bn a year in the 2030s, up from the average of around £55bn a year over the last decade.

The British government notably put off investors by changing planning measures in 2015 and tightening them further in 2018. so a single objection could upend a planning application – effectively banning onshore wind power in England. John Fairlie was a consultant in the wind industry at the time.

Mr. Fairlie is currently Managing Director of AWGroup, a land development and renewable energy company which recently has commissioned an onshore wind turbine in Bedfordshire, eastern England, which will produce enough electricity to power 2,500 homes. Due to planning restrictions and grid connection delays, the project took seven years to complete.

In recent months, “the policy has changed, but it hasn’t changed enough,” Mr. Fairlie said.

The wind turbine, which was in the planning stages due to tightening rules, was able to obtain approval in 2017. Since then, the main source of delay has been obtaining a grid connection. Advances in wind energy technology allowed the company to install a more powerful turbine, which required a greater connection to the grid. “It takes a long time to get there,” Mr Fairlie said.

Over the coming year, the turbine will be used to directly power an electric vehicle charging station, and the company plans more projects in which it will build housing estates powered directly by local renewable energy sources, avoiding thus the network congested by delays.

As Britain seeks to emerge from a long period of slow growth and lost productivity, while meeting its carbon emissions reduction targets, businesses, economists and other experts say the government must urgently engage in these reforms.

“There’s a lot of recognition” of the problems, Mr. Armitt said. “We have big ambitions,” but we are not translating them into action, he added, which is particularly concerning when it comes to net-zero targets.

What is “increasingly becoming the fear of many people is that we have set ourselves difficult goals,” he said, “and while we are about 10 years away, well, it’s too easy to throw the pot into oblivion. road.”