Britain’s Industrial Age Ended this Week – And There is Nothing to Replace It
It was quite a moment. With the simultaneous closure this week of Britain’s last remaining coal-fired power station and steel-making blast furnace, Britain’s once glorious industrial past this week drew to an ignominious close, driven to final destruction by a combination of net zero zealotry and rocketing industrial power costs.
All economies must change and adapt to survive, and ignoring the human cost of these closures, there is undoubtedly a certain poetic eloquence to them.
The country that was first to industrialise, triggering a historically unparalleled great leap forward in living standards, has also become the first major economy in the world to rid itself of coal-fired power and fully embrace a post-industrial future.
OK, so this is admittedly a little bit of an exaggeration. Contrary to popular belief, Britain is still a relatively large manufacturing economy, producing more goods today than it did even at the height of late Victorian industrial prowess.
What’s happened in the meantime is that growth in service-based employment has far outstripped the business of actually making things, reducing manufacturing to less than 10pc of national output.
We’ve also outsourced the bulk of the manufacturing that supports these service industries to others, particularly in recent years to south-east Asia and China.
It’s a remarkable transformation, but one that gives rise to multiple different concerns and questions – not least what comes next and whether it is entirely wise to become so dependent on others for basic needs? Can the UK survive and prosper on services alone?
As I say, Britain still makes a lot of stuff, and is still relatively strong in specialist, high value-added manufactured goods which, for now, even the Chinese struggle to replicate.
The more precise way of looking at this week’s closures is not as the final demise of Britain’s industrial age, but of the fossil fuel powered smoke stack industries that once made up the bulk of our economy.
At the beginning of the 20th century, the UK accounted for nearly half of all the world’s steel production, and even as late as the early 1970s, we were still the number three producer after the US and Germany.
Today, we barely register, with the industry laid waste by a combination of emerging market competition and the parallel decline of domestic, steel-consuming industries such as cars and shipbuilding.
Those industries are nevertheless still very much part of the world economy; modernity couldn’t exist without them, nor could the thriving business and financial services industries where Britain today enjoys its comparative advantage.
Even so, the shift away from mass production of goods has in some regards made economic sense, with the so-called terms of trade moving strongly against physical products towards services.
As the developing world industrialised, it pushed mature, advanced economies struggling to compete on costs out of the picture, but it also caused the price of manufactured goods to plummet relative to services.
In simple value terms, the business of low-margin, highly traded, commodity products is no longer a world you would wish to be a part of. Much better to be in less price sensitive service industries, and use this advantage to buy in the products we no longer produce ourselves from others.
There are, however, two rather major problems with where this takes us. One is that the newer industries make a far from perfect substitute for the old ones, both in terms of skills and geographic location.
The demise of the old industries has left many workers and communities high and dry; they don’t have the know-how or live in the right places to take full advantage of the growth in the digital economy.
The other is that despite the Government’s headlong dash to decarbonise, the economy remains highly dependent on fossil fuels for its energy needs. Whatever the fantasies of Ed Miliband, the Energy Secretary, this will remain the case for long into the future.
Closing down the fossil-fuel powered industries of old earns Brownie points from climate change activists, but it is also making the UK economy ever more reliant on overseas suppliers with little or no regard for the demands of net zero. This dependency is fast turning into a key economic and geopolitical vulnerability, with growing security concerns to match.
If your enemies are Russia and China, you certainly don’t want to be dependent on them. Yet this is where the race to decarbonise is leading us.
Who needs Mr Miliband when the courts seem more than willing to do his work for him in blocking development and production that runs counter to the Government’s green energy goals?
In a landmark ruling last June, the Supreme Court overturned a local authority decision to allow drilling for oil at Horse Hill in Surrey on the grounds that it should have taken into account not just the emissions from the development, but also those generated when its product is consumed.
This has set a precedent that is fast bringing all further oil and gas development to a halt, even where it has already been formally licenced.
Shamefully, the new Government has said it will not defend planned development of Shell’s Jackdaw gasfield in the North Sea, or Equinor’s giant Rosebank oilfield, both of which are being challenged in the courts on similar grounds to Horse Hill.
Even holier than thou little Norway doesn’t go as far as this. Wisely, it has chosen to incentivise development of as much of its remaining North Sea acreage as it can, knowing that there will long be a ready buyer for its output in, of all places, the UK.
Where does this end? If development has to take account of the emissions that its end users might generate, as well as the carbon costs of construction and operating, then scarcely anything would get built at all, including new airport capacity and even housing and data centres.
How is any of this compatible with the Government’s other aim of turbo-charged, investment-led growth? Plainly it is not, yet the march of wind turbine and pylon continues apace, and now that we no longer make any steel ourselves, with a prominent made in China imprint to match.
These are of course complex issues which don’t cleave easily to clear cut answers. But if you are to kiss goodbye to your industrial past, you do at least need to be sure there’s something there to replace it.
We could be more confident of that if decarbonisation was an entirely market driven process, sparked by the discovery of cheaper, readily available, alternative sources of energy.
This is sadly not the case; instead it is a politically directed endeavour that threatens to strip away yet another layer of competitiveness, leaving the country powerless before those who would gladly reduce our economy to a shadow of its former self.