An interesting idea, but not one that will take off; it might fit into a conclusion, showing broader understanding:
edconway.substack.com The quest for a better measure of economic progress than GDP has been going on pretty much since GDP was invented, says Ed Conway. Some have suggested life expectancy as an alternative. My suggestion would be to look at the amount of steel a country has. Steel is everywhere. When you travel by train, you are travelling in a steel tube along steel rails using steel escalators and steel lifts to get you to the platform. The more infrastructure you have in your country, the more cars and trains and hospitals and schools, the more steel you have. Simply adding up how much steel there is in use, for which good data exist, and dividing by the number of people, will give you a pretty good sense of how developed that country is. Most developed economies, places such as the UK, US, Japan and most of Europe, have around ten to 15 tonnes of steel per capita. In the UK it’s 13.4. For the US it’s 13.8 and Germany 11.9. China has something like seven. In sub-Saharan Africa, it’s mostly below one. In Mali and Niger, the figure is barely 0.1. “This, to me, is a far more visceral way of explaining development and the gaps between nations than GDP […] And happily, using this metric is far more intuitive (and less prone to things like purchasing-power parity adjustments) than things like GDP per head.”
This article has some good elements for you to consider - should government intervene? Is it operating joined-up policy, or is it pulling in different directions to achieve different objectives? Plenty to mull over:
Britain’s new gigafactory is our entry into the global league of the EV revolution
Rishi Sunak must now ensure cheap power to meet the voracious energy needs of lithium battery plants
It is laying the infrastructure base for a rising industry, akin to building a road or installing fast broadband. It also heads off the risk of punitive tariffs on EV exports to Europe due to local content rules in the Brexit trade deal.
Britain needs 100 gigawatts (GW) of battery capacity by 2030 and double again by 2040. The 40 GW Tata plant in Somerset, and Nissan’s 7.5 GW expansion in Sunderland, take us only a quarter of the way.
Simon Moores, head of Benchmark Minerals Intelligence, told Parliament’s battery hearings that it would require £5bn of state funding to draw in the necessary £15bn of private investment.
“Traditional economic models do not work in this. This is a brand new industrial revolution,” he said.
Without the Tata plant as a downpayment, and the ecosystem that comes with it, the UK would have lost its footing altogether in the global switch to EVs, with little to replace the existing 200,000 jobs in combustion engines and linked supply chains.
“Embedded manufacturing that we have now would drift away, model by model,” said Jeff Pratt from the UK Battery Industrialisation Centre.
The UK slid down the protectionist slope in the 1970s trying to save Coventry’s car industry. The unhappy saga ended in the nationalisation of British Leyland amid strikes, ‘Friday afternoon’ lemons, and a shipwreck of debts.
The British Motor Corporation, Rootes, Standard-Triumph and Vauxhall had together been the world’s biggest exporters of cars as recently as the 1950s. The industry employed 5pc of the UK’s workforce. One can understand why successive governments could not bear to let it wither away.
The carmakers thought Britain’s accession to the European Community would revive export sales by enabling longer production runs. Instead it was the coup de grace. It took fifteen years of hard slog and Japanese reinvention to come back from near death.
The British Leyland error today would be to scrap the UK’s sales ban on petrol and diesel cars in 2030 and try to hang on to the old order, inevitably at some point with public money and in defiance of market forces.
That would be a certain recipe for national economic ruin, quite apart from the immense damage to the UK’s moral reputation.
“Ten years ago it wasn’t clear whether electrification would win or not. Today it is absolutely as clear as death and taxes that the auto industry is going electric,” said Andy Palmer, former chief executive of Aston Martin.
There is no turning the clock back.
Global sales of EVs have risen 58pc over the last year. China is on track to reach eight million in 2023. Sales in Europe have risen 66pc, increasing the EV share from 10.7 to 15.1pc, despite Volkswagen bungling its pricing policy.
New emissions standards in the US are forcing a step-change and so is the $7,500 EV tax credit under the Inflation Reduction Act. The first million EV sales took 60 months, the second took 17 months, the third took six months.
The trajectory is following the classic S-Curve of disruptive technology. The US think tank RMI thinks EV sales will reach 90pc in China and 70pc worldwide by 2030. “It’s exponential, global, and this decade,” it said.
British chemists were pioneers of lithium-ion batteries. The UK had every chance of leading as EVs took off.
But somewhere between 2017 and early 2023, the British government dropped the ball. It pushed through the most aggressive fossil car ban in the OECD bloc without taking steps to secure strategic minerals as China launched a global land grab, and without nurturing the EV supply chain.
“We laid down the law but we have not followed through with what UK industry needs to do to get there,” said Jeremy Wrathall, founder of Cornish Lithium.
Westminster seemed to think business could do it all alone. The EU and the US made the same mistake, but twigged earlier to the danger.
The Tata deal comes in the nick of time and starts to close the gap. It is also a shot in the arm for a much-maligned UK economy that is not doing as badly as the global nomenklatura proclaims.
In January, EV exports to Europe will require 50-60pc of local or EU content for batteries to avoid tariffs. The terms will tighten further in 2027.
Neither side is ready but Brussels is still playing tough, calculating that it is sufficiently far ahead with 30 gigafactory projects (some will fail) that it could peel away Britain’s EV industry in much the same way as it has tried to peel away chunks of the City.
The Tata deal levels the playing field.
Furthermore, it disproves the defeatist myth that the UK is too small to compete with the alleged hand-outs of the EU’s green deal.
The Commission does not have real money, and whatever it has must be spread across 27 states. The vast headline sums are aspirational, mostly reliant on national governments and on leveraging private investment.
The UK has the advanced chemical and engineering companies, and top-notch universities, needed to sustain a world-class EV industry. The British Geological Survey says it has Europe’s biggest lithium deposit near St Austell.
Cornish Lithium thinks it can extract large amounts of lithium from geothermal brine with a zero carbon footprint and at competitive cost.
Lithium start-ups are sprouting up in the north. They may struggle to match the costs of Chilean lithium from the Atacama – mostly locked up already in long-term contracts with Asian buyers – but they could eliminate the geopolitical supply risk.
The missing link is cheap power. Lithium battery plants have voracious energy needs. “It is our greatest competitive disadvantage,” said Konstanze Scharring from the UK car lobby (SMMT).
It ought to be an urgent national priority to roll out cheap wind power as fast as possible, each watt replacing a watt of imported gas.
Yet the Government’s overshore expansion has hit a wall. Some 5 GW of agreed wind farms are blocked because the Chancellor imposed a 45pc windfall tax on renewable companies just as they were struggling with a 30-40pc surge in turbine costs.
Vattenfall this week cancelled the 1.3 GW Norfolk Boreas array. “It simply doesn’t make sense to continue the project,” said chief executive Anna Borg
Unlike the oil and gas industry, wind companies were denied a tax deduction against fresh investment. Which bright spark in the Treasury thought it a good idea to reduce the future supply of energy in the middle of an energy crisis?
Rishi Sunak has redeemed himself this week with the Tata coup. At least the UK has a fighting chance of saving its car industry. Now he must convince the world that he has a credible plan to slash energy costs. Without cheap power he can kiss goodbye to everything else.
The idea of charging drivers according to when and how much they drive is an old idea, but one that is newly urgent given the collapse in fuel duties as we switch to electric cars. Simon Wilson reports
MAYOR SADIQ KHAN: A POLITICAL HEADACHE
WHAT’S THE ISSUE?
The energy transition means that the question of road pricing can no longer be ducked. According to calculations by the Office for Budgetary Responsibility (OBR), published last week, the government is set to lose £13bn a year in revenue by 2030, and double that as combustion engines disappear altogether. After all, if nobody’s buying petrol and diesel, they’re not paying tax on it. So in a net-zero future in which our roads are full of electric vehicles (EVs), the risk for the government is that the revenue raised from drivers will head towards zero too. Chancellor Jeremy Hunt recently announced that EVs registered from April 2025 will no longer be exempt from road tax (“vehicle excise duty”, or VED). But VED is a far smaller earner for the Treasury than fuel tax, which accounts for about half the pump price of every litre of petrol, and raises a massive 4% of government receipts.
WHAT’S ROAD PRICING?
Rather than charging tax on fuel, a road-pricing system levies a charge on motorists according to how far they drive. It can also take into account what they’re driving, where they’re driving, and when they’re driving – charging more for bigger vehicles, or busier roads, or peak times, for example. The idea, from an economic point of view, is that traffic congestion should be seen as a cost like any other – and nor is it the only cost driving imposes on others. Every journey we make increases congestion, local pollution, and the risk of accidents for other people. A pricing scheme that charges more to travel at the peak times and on popular roads would encourage drivers making less pressing journeys to avoid busy periods – just like on the railways. London’s congestion charge, and its Ultra Low Emission Zone (the expansion of which is currently causing political headaches for Labour mayor Sadiq Khan), are basic forms of road charging that rely on camera infrastructure. But technological advances, including in-car telematics and GPS tracking, now make a much more universal scheme feasible, according to proponents.
WHO’S IN FAVOUR?
A wide range of voices, from motoring organisations to the Green party, have long been in favour of road pricing. The Institute for Fiscal Studies has been calling for road pricing since 2012, in a study funded by the RAC Foundation. A 2022 report by the centrist Social Market Foundation concluded that road pricing was the fairest and most efficient way of replacing fuel duty – as did a 2023 report by the centre-right Centre for Policy Studies. In early 2022, the House of Commons cross-party transport select committee published its own report calling for a transition to road pricing. But their findings got no backing, and little engagement, from the government. For many politicians, road pricing remains the tax that dare not speak its name.
“FOR MANY POLITICIANS, ROAD PRICING REMAINS THE TAX THAT DARE NOT SPEAK ITS NAME”
WHY’S THAT?
Because they’re frightened of spooking voters. The first British PM to fret about excessive congestion and order an inquiry into the practicalities of a road-pricing scheme was Harold Macmillan in the early 1960s. But with an election looming in 1964, the resulting Smeed report was kicked into the long grass for fear of angering motorists. Four decades later, in 2006, the Blair government announced that the UK would be the first country to adopt a nationwide system of road pricing and promised it would be “fiscally neutral”. It said large-scale trials would be in place by 2008-2009, going fully national by 2016. It promised a graduated scale of charges (from 2.4p on a country road at night, to £1.34 on the M25 at rush hour) with satellite tracking deployed to record every vehicle’s movement. But the whole thing got nixed by a backlash. Almost two million people signed a petition against it, and Blair’s own MPs rebelled to stop it.
SO WHAT’S CHANGED?
The economics of the energy transition and the looming fiscal black hole make road pricing a much more urgent question, and there’s evidence from opinion polls that public attitudes have shifted. Similar schemes in Australia and Singapore show that it can be done. Using a combination of in-car telematics and automatic number-plate recognition, a nationwide scheme would allow all tolls, congestion charges and emissions charges to be rolled into one system, argues Ross Clark in The Spectator. Motorists could be sent a monthly bill. There could be one set of charges that’s easy to understand, for example with the network divided into five classes of road, each with its own tariff.
WILL DRIVERS ACCEPT IT?
Privacy concerns would be a big issue, say Dillon Smith and Tom Clougherty, the authors of the Centre for Policy Studies report, “The Future of Driving”. They argue for a phased and gradual approach, rather than a big-bang reform, in which pay-as-you-drive road pricing applies initially only to zero-emissions vehicles (ZEVs). Each vehicle would be assigned a per-mile rate, based on weight, with charges collected monthly by direct debit. But they suggest a range of technological solutions that take account of different attitudes towards privacy, from the low-tech (submitting your mileage manually), and mid-tech (on-board black box) to high-tech (GPS tracking). To allay concerns about fairness, they propose a “free mileage allowance” for every driver based on where they live (people in remote areas, with little public transport, get bigger allowances). And they argue for greater hypothecation – linking revenues to specific spending – to win over the public.
IS IT GOING TO HAPPEN?
It won’t be easy, says Dom Lacey in City AM. The most pressing challenge is the sheer size of the infrastructure needed to process payment. Another, politically sensitive, issue is data privacy. Many drivers might accept the need for an overhaul of taxes, but balk at the idea of having all their journeys tracked. A third caveat is the question of jurisdiction, oversight and co-ordination across the various national, devolved and local authorities responsible for the UK’s roads. But “none of this is insurmountable” – and, importantly, there’s no alternative. It’s time to “accept that road pricing is the best – indeed only – option for closing the funding gap created by the end of current motoring taxes”.
We use technology in work more than ever before, but it isn't making us more productive
By Jonty Bloom
Business reporter
We are often told that we are in the midst of a technological revolution.
That business and the world of work continue to be transformed and improved by computers, the internet, the increased speed of communication, data processing, robotics, and now - artificial intelligence.
There is only one small problem with all this - none of it seems to show up in the economic data. If all this technology really is making us all work faster and better, there is precious little evidence.
It is a similar picture in most other Western nations. In the US, productivity growth between 1995 and 2005 was 3.1%, but it then fell to 1.4% from 2005 to 2019.
IMAGE SOURCE,GETTY IMAGES
Image caption,
Computer processing has never been faster, but are we using it to do non-work things?
It feels like we are continuing to go through a huge period of innovation and technological advancement, but at the same time, productivity has slowed to a crawl. How can you explain this apparent paradox?
It might be that we are all just using the technology to avoid doing work. Such as endlessly messaging friends on Whatsapp, watching videos on YouTube, arguing angrily on Twitter, or simply mindlessly surfing the internet.
Or there might, of course, be bigger underlying factors.
Productivity is something economists look at very closely. And while it is a complicated issue, with the 2008 financial crisis and current high inflation having a negative impact, there are said to be two main explanations for why technology is not boosting productivity.
The first is that we are just not measuring the impact of technology properly. The second is that economic revolutions tend to be rather slow-burning affairs. And therefore, technological change is happening, but it just might be decades before we see the full benefits.
Dame Diane Coyle is the Bennett professor of public policy at the University of Cambridge, and a recognised expert on how we measure productivity.
"There is nothing that doesn't use digital now, but it is difficult to see what is going on because none of this is visible in the statistics. We just don't collect the data in ways that would help us understand what is happening."
IMAGE SOURCE,DIANE COYLE
Image caption,
Dame Diane Coyle argues that we aren't properly measuring the impact of technology
For example, a company that used to invest in its own computer servers and IT department might now outsource both to an overseas, cloud-based provider.
The firm doing the outsourcing gets the best software, updated all the time, and it is reliable and cheap.
But in terms of how we measure the size of the economy, this efficient move makes the company look smaller not larger. And it is no longer seen to be investing in that area of its IT infrastructure, which would have previously been measured as part of its economic growth.
Dame Diane has an example from the 19th Century's industrial revolution that illustrates how productivity can be missed from statistics.
"I have a wonderful 1885 yearbook of statistics for the UK, it is 120 pages long, of which almost all is about agriculture, and there are 12 pages on mines and railways and cotton mills," she says.
This was at the very height of the industrial revolution, the time of so-called "dark satanic mills", yet 90% of the data gathered was about an old, increasingly less important sector of the economy, and just 10% on what we now see as the one of the most important economic changes in world history.
"The way we see the economy is through the lens of how it used to be in the past, not how it is today," is how Dame Diane puts it.
New Tech Economy is a series exploring how technological innovation is set to shape the new emerging economic landscape.
The other argument is that the current technological revolution is happening, but just more slowly than we expect.
Nick Crafts is emeritus professor of economic history at the University of Sussex Business School. He points out that the huge sea changes in economic performance we tend to think of as having happened almost overnight, actually took decades, and the same may well be happening how.
"James Watt's steam engine was patented in 1769," he says. "Yet the first serious commercial railway, the Liverpool to Manchester line only opened in 1830, and the core of the railway network was built by 1850. That was 80 years after the patent."
IMAGE SOURCE,GETTY IMAGES
Image caption,
James Watt's first steam engine, pictured, was patented 61 years before the first commercial railway line
You can see the same pattern in the use of electricity. The time from Edison's first public use of the light bulb in 1879, to the electrification of whole countries and the replacement of steam power in manufacturing was at least 40 years.
In fact, we might be in a similar hiatus at the moment, something like when the world was between the peak of steam power and the full development of electricity.
But the country and the businesses that can make the best and fastest use of new technology are going to win the productivity race. This, as it was with steam and electricity, seems to come down not to the technology itself but to how well you can use it, adapt it, and exploit it - in short how skilled you are.
Dame Diane sees this happening already. "There is a lot of evidence now that whatever kind of company it is, there is a growing divergence between those that can use the technology well and those that can't.
"It seems to be that if you have highly-skilled people, you have a lot of data and you know how to use the sophisticated software, and you can change your processes, so that people can use the information, your productivity is going through the roof.
"But in the same sector of the economy there are other companies that just can't do that."
The technology is seemingly not the problem, and in some respects it is not the solution either. High productivity growth will come only to those that learn how to use it best.
Britain’s new gigafactory is our entry into the global league of the EV revolution
Rishi Sunak must now ensure cheap power to meet the voracious energy needs of lithium battery plants