Month: December 2024

Sam Bidwell on how we can really revive British industry.

“By the late 19th century, Britain was falling behind the United States and Germany. GDP growth slowed to less than 1% between 1899 and 1914”

People across the political spectrum say that the UK needs an industrial strategy. In fact, it was industrial strategy that killed our industry in the first place – Attlee is more to blame than Thatcher.

According to the popular narrative, British industrial decline started in the 1970s and 1980s, as free trade and neoliberalism shifted us towards a more globalised economy. Today, advocates of industrial strategy argue that Government needs to intervene to redress the balance.

In fact, Britain’s relative industrial decline starts much earlier. By the late 19th century, Britain was falling behind the United States and Germany. GDP growth slowed to less than 1% between 1899 and 1914, while productivity growth fell by two-thirds between 1871 and 1914.

Though it had led the way on industrialisation (more on this later), the UK couldn’t compete with the mass production of the US and Germany. Britain had fewer natural resources and a more skilled workforce, while American firms could rely on cheap resources and cheap labour.

Britain’s relative industrial slowdown was accelerated by the Great Depression. Heavy industry declined by a third between 1929 and 1930, with unemployment doubling from 1 million to 2.5 million. In cities like Glasgow, unemployment rose as high as 30 percent.

“In the Midlands and parts of the south, industry boomed in the 1930s – with specialisms in automobiles and household electrical goods. In 1936, Leicester was actually the second-richest city in Europe”

The decline was particularly acute in the industrial areas of Britain’s Victorian heyday, such as Lancashire, Yorkshire, South Wales, and Scotland. Coal production in Lancashire fell by 43%. Ship production in the north-east of England fell by 90% between 1929 and 1932.

But that didn’t mean that industry was declining everywhere. In the Midlands and parts of the south, industry boomed in the 1930s – with specialisms in automobiles and household electrical goods. In 1936, Leicester was actually the second-richest city in Europe.

It was true that Britain couldn’t compete with the mass production of the US and Germany – but it could lead the way again on high-quality, high-skilled industry. The social effects were incredible – between 1923 and 1937, Birmingham’s workforce grew at double the national rate.

“The Attlee government saw the success of the Midlands as damaging to traditional industrial regions. In 1945, it passed the Distribution of Industry Act”

From 1911-1954, the West Midlands grew its economic output faster than any other region of the country – by the 1960s, Birmingham wages were higher than in London. Nearby Coventry fared similarly – in 1953, it had an unemployment rate of 0.8%. British industry was back.

And then came the industrial strategists. The Attlee government saw the success of the Midlands as damaging to traditional industrial regions. In 1945, it passed the Distribution of Industry Act, which aimed to push development away from ‘congested’ areas like the Midlands.

The Government required that any factory set to be opened or expanded in a ‘congested’ area would be reviewed by the Board of Trade – which would aim to push industrial development back to places like Lancashire and South Wales. The results were predictable – and depressing.

“In 1946, the West Midlands Plan set Birmingham a population target lower than its current population. In 1964, Harold Wilson restricted the development of office space in Birmingham for 20 years”

Of the ‘Industrial Development Certificates’ rejected by the Board of Trade, just 18% actually relocated to declining industrial areas. 49% of refused projects downsized their ambition to avoid government oversight. 31% of projects were scrapped entirely.

For every job re-directed to old industrial areas, several more were prevented. In 1946, the West Midlands Plan set Birmingham a population target lower than its current population. In 1964, Harold Wilson restricted the development of office space in Birmingham for 20 years.

“Forcible relocation of growth, and subsidy for declining industries, left British industry inefficient and uncompetitive”

Industrial strategy also meant subsidising inefficient ‘old’ industries, such as coal and steel, at the expense of new industries, such as cars and household electrical products. The nationalisations of the 1940s and 1960s were designed to preserve old industry at all costs.

Forcible relocation of growth, and subsidy for declining industries, left British industry inefficient and uncompetitive. The burgeoning ‘advanced manufacturing’ boom of the 1930s was killed by the nostalgic, backwards-looking industrial strategy of the late 1940s.

These inefficient and expensive controls were eventually lifted by the Thatcher governments. Yes, British industry did shrink in the 1980s. But if it had been allowed to adapt, improve, and emerge organically in the previous decades, it would have remained competitive.

“we shouldn’t try to decide where industry ought to be based on pre-conceived ideas about where growth “should” happen. Industrialisation completely changed Britain’s economic geography”

If we actually want British industry to succeed, we shouldn’t follow in the footsteps of the 20th century industrial strategists. We should learn from the conditions which birthed British industry in the first place – which actually means less government control, not more.

First, we shouldn’t try to decide where industry ought to be based on pre-conceived ideas about where growth “should” happen. Industrialisation completely changed Britain’s economic geography – cities like Liverpool and Manchester barely existed before the 18th century.

People were able to move to where economic opportunity emerged – and the we didn’t try to direct that growth. Today, that means liberalising our housing market – allowing housing supply to emerge where people want to live, not where the Government thinks that they should live.

“Our current regulatory environment punishes companies that trial new products here, with lengthy processes of consultation, review, and assessment. Instead, we should be removing regulatory blockers”

Second, we should embrace and encourage investment in innovation. The Industrial Revolution was driven by investment in new technologies designed to reduce dependence on high-cost labour – such as Watt’s steam engine, which could do the work of 21 manual labourers.

Our current regulatory environment punishes companies that trial new products here, with lengthy processes of consultation, review, and assessment. Instead, we should be removing regulatory blockers – and reducing tax on innovative firms in cutting-edge fields.

Third, we should make it easier to build the infrastructure that powers industrial growth. In 1846 alone, Parliament approved around 9,500 miles of private railway construction, the equivalent of 63 HS2s. We must relax planning rules around major infrastructure projects.

Fourth, we must address energy costs. The Industrial Revolution was powered by cheap coal – low energy costs kept industry competitive. Today, the UK has the highest industrial energy costs in the developed world – killing businesses in energy-intensive sectors such as steel.

“The Industrial Revolution was powered by cheap coal – low energy costs kept industry competitive. Today, the UK has the highest industrial energy costs in the developed world”

This also has enormous implications for our ability to host AI infrastructure, which is similarly energy-intensive. If it wants British industry to compete, the Government should make energy cheap – particularly by bringing down construction costs for nuclear energy.

Finally, we should not try to direct the economy based on what we think industry “should look like”. We should not be picking winners – whether sectors, businesses, or regions of the country. This will be expensive, and it won’t work – as 20th century industrial decline shows.

Reproduced with kind permission of Sam Bidwell, Director of the Next Generation Centre at the Adam Smith Institute, Associate Fellow at the Henry Jackson Society, although views are his own.  Sam can be found on X/Twitter, on Substack, and can be contacted at [email protected].  This article was originally published as a X/Twitter Thread at https://x.com/sam_bidwell/status/1859560533608874311

Sam Bidwell on how capitalism built Manchester.

“In c. 79AD, a Roman fort was constructed on the banks of the River Medlock, the first settlement in modern Manchester. The area remained largely depopulated and impoverished throughout the medieval period”

I\n 1700, Manchester was an obscure village of fewer than 10,000 people – by 1900, it was a metropolis, the world’s first industrial city.  Its remarkable growth is testament to the power of trade, industry, and British ingenuity.

For most of its early history, Manchester was entirely unremarkable. In c. 79AD, a Roman fort was constructed on the banks of the River Medlock, the first settlement in modern Manchester. The area remained largely depopulated and impoverished throughout the medieval period. The one exception to this trend came in 1363, when a small community of Flemish weavers, from modern-day Belgium, settled in Manchester. These weavers helped to establish Manchester as a local centre for textile production – which would one day power the city’s growth.

Under Queen Elizabeth I (1553-1603), the Crown began supporting the English wool trade. The Queen’s support for the trade was so fervent that, from the 1570s until the 1590s, Englishmen were required to wear woollen caps to church on Sunday, in order to support the industry.  With its existing tradition of textile production, Manchester benefitted from this support – and began exporting cloth to Europe, via London. Nevertheless, it was still an obscure Lancashire village – paling in comparison to its counterparts in neighbouring Yorkshire.

During the English Civil War (1642-1651), Manchester was a hotbed of support for the Parliament. On the Restoration of the Monarchy in 1660, Manchester lost Parliamentary representation, as a reprisal for its support for Cromwell. No MP was to sit for Manchester until 1832. And so, without any local government or representation in Parliament, Manchester looked set to fade into obscurity as a textiles-oriented market town. In the 1720s, Daniel Defoe described Manchester as “the greatest mere village in England”. But change was afoot.

“With its history of textile production, Manchester was well-placed to turn these raw imports into high-quality material exports. It also had ideal geography, with canals connecting the city”

By the early 18th century, Britain was in the midst of a revolution. Developments in agricultural technology meant that more food was being produced than ever before – with fewer people needed to work in farming. As a result, more people moved to the country’s urban centres. At the same time, Britain’s trade with the outside world was expanding rapidly – including in places such as India. This meant that the country had more access to new raw materials than ever before – and more markets for the export of consumer goods. Enter Manchester.

With its history of textile production, Manchester was well-placed to turn these raw imports into high-quality material exports. It also had ideal geography, with canals connecting the city to the port at Liverpool, and to the coalfields of Lancashire. 

Raw goods could be imported to Manchester, processed, and then sent elsewhere for sale. The city began to boom, growing from 9,000 people in 1717 to 25,000 people in 1773. In 1781, Richard Arkwright opened the first steam-powered textile mill in the city.  Throughout this period, Manchester and the surrounding towns in Lancashire were responsible for processing 32% of cotton produced globally. And the need to sell finished textile goods prompted the creation of new transport infrastructure, which connected the city to the world.

In 1761, the world’s first industrial canal opened, connecting Manchester to the coalfields at Worsley. In 1824, one of the world’s first public bus services opened in Manchester. And in 1830, the world’s first passenger railway connected Liverpool to Manchester. Canals and railways transported Manchester textiles to the port of Liverpool, allowing them to be exported. Meanwhile buses and trams enabled the city’s workforce to reach their workplaces. By 1930, Manchester Corporation Tramways operated the 3rd largest tramway in the UK.

The city also came to be known as a commercial hub, with warehouses and markets springing up across the city. In 1815, Manchester had 1,819 distinct warehouses, housing both raw materials and goods for sale. Many of these warehouses still dominate the city’s skyline today.

The jewel in Manchester’s crown was the Cotton Exchange, first opened in 1727. This vast building was the beating commercial heart of the city, a site for the sale of textiles and the financing of new industrial businesses. In 1851, it was granted the “Royal Exchange” title. In 1867, the Royal Exchange was rebuilt, with funding provided by a consortium of notable Manchester industrialists. The Exchange which still stands today began construction in 1867, and was finished in 1921 – financed, start to finish, by private donors.

“Manchester became the hub of the Anti-Corn Law League in 1839, which argued for the removal of protectionist tariffs on food”

More than almost any other city in Britain, Manchester’s urban landscape was shaped by industry, trade, and private finance. This wasn’t just the product of textile wealth. This building, on Mosley Street, was built in 1880, to house the Manchester and Salford Bank.

The city didn’t just benefit from trade liberalisation – it exported it, too. Manchester was a hub of 19th century economic liberalism. Prominent advocates of free trade, such as Richard Cobden and John Bright, were based in the city. Indeed, Manchester became the hub of the Anti-Corn Law League in 1839, which argued for the removal of protectionist tariffs on food. The Corn Laws were eventually repealed in 1846 by Conservative Prime Minister Robert Peel, partly thanks to the League’s campaigning.

“It’s also testament to the ways in which private sector growth can improve public space and enhance civil society. The city’s University, for example, was founded as a private institute”

As Manchester develops today, it’s worth remembering how the city came to exist in the first place. From obscure market town to global metropolis, Manchester’s growth was powered by building, growth, and private industry. Manchester exists because of business and capitalism. It’s also testament to the ways in which private sector growth can improve public space and enhance civil society. The city’s University, for example, was founded as a private institute in 1824, and expanded in 1846 on the basis of a bequest from textile merchant John Owens.

Rather than rejecting development, we should recognise the opportunities that change can bring. Just as our ancestors pursued growth and change, so should we. Our cities used to some of the greatest in the world – they can be again

Reproduced with kind permission of Sam Bidwell, Director of the Next Generation Centre at the Adam Smith Institute, Associate Fellow at the Henry Jackson Society, although views are his own.  Sam can be found on X/Twitter, on Substack, and can be contacted at [email protected].  This article was originally published as a X/Twitter Thread at https://x.com/sam_bidwell/status/1869051764848373776?s=46’

“Englishman Jethro Tull developed a horse-drawn seed drill, which allowed seeds to be sowed in neat rows Tull’s drill laid the foundations for modern mechanised agriculture”

Few other countries can boast such a proud legacy of innovation and invention – for centuries, we have led the way on the development of new technologies. Some of the world-changing innovations birthed here in Britain.

In 1668, Englishman Sir Isaac Newton built the world’s first reflecting telescope Newton’s discovery was based on his understanding of prisms and optics. It allowed scientists to develop a sophisticated theory of colour, and paved the way for the modern telescope.

In 1701, Englishman Jethro Tull developed a horse-drawn seed drill, which allowed seeds to be sowed in neat rows Tull’s drill laid the foundations for modern mechanised agriculture, allowing farmers to plant more crops with fewer men – which increased productivity steeply.

In 1761, Englishman John Harrison invented the marine chronometer, a device which allowed sailors to accurately calculate longitude while at sea Harrison’s chronometer revolutionised navigation, and made long-distance sea travel much safer.

In 1764, James Hargreaves invented the ‘spinning jenny’, a textiles-weaving frame The spinning jenny allowed workers to produce cloth on an industrial scale, producing 8 times as much as an individual worker. This laid the foundations for industrial mass-production.

In 1776, Scotsman James Watt launched a new design for a steam engine Watt’s design built on earlier steam engines – but was far more efficient, both in terms of power produced and fuel consumption. Watt’s engine powered the industrial expansion of the 19th century.

In 1798, Englishman Edward Jenner pioneered the concept of the vaccine, producing an effective smallpox vaccination In Jenner’s time, smallpox killed around 10% of the global population. Jenner’s work has probably saved more lives than the work of any other individual.

In 1804, Cornishman Richard Trevithick invented the first working steam locomotive, which he tested in Merthyr Tydfil, Wales Trevithick’s locomotive was later improved upon by Robert Stephenson. Stephenson’s 1829 ‘Rocket’ formed the basis of the modern steam locomotive.

In 1807, Scotsman Alexander Forsyth pioneered the process of ‘percussion ignition’, the basis for modern firearms Forsyth’s work allowed weaponry to progress from the flintlock mechanisms of the 18th century – resulting in faster-firing and more effective guns.

In 1824, Englishman Joseph Aspdin patented the process of modern cement-mixing Aspdin’s patent made it far easier to build at-scale. His initial process was later improved upon by his son, William Aspdin, who created a product more akin to today’s ‘Portland cement’.

In 1841, Scotsman Alexander Bain patented the first ever electric clock Bain’s electrical clock enabled more accurate timekeeping – as, unlike older models, his clock did not require consistent adjustment. Bain also worked on an early fax machine, from 1843 to 1846.

In 1876, Scotsman Alexander Graham Bell received a patent for the first modern telephone On 10th March 1876, the first intelligible telephone call was made. On 10th August 1876, Bell made the first long-distance call, from Brantford, Ontario to Paris, Ontario.

“Welshman Edgar Purnell Hooley patented tarmac Hooley’s design combined tar and macadam, a paving material invented in the 1820s by Scotsman John McAdam. Today, about 70% of the world’s paved roads are made of tarmac”

In 1878, Englishman Joseph Swan produced the first successful lightbulb Swan’s bulbs were the first used to illuminate homes and public buildings – including London’s Savoy Theatre, in 1881. Swan was also responsible for producing early electric safety lamps for miners.

In 1902, Welshman Edgar Purnell Hooley patented tarmac Hooley’s design combined tar and macadam, a paving material invented in the 1820s by Scotsman John McAdam. Today, about 70% of the world’s paved roads are made of tarmac.

In 1928, penicillin was discovered by Scotsman Alexander Fleming Penicillin was the world’s first antibiotic, and was critical in the development of modern anti-bacterial medicine. An estimated 500 million lives have been saved by Fleming’s invention.

In 1926, the first working television was invented by Scotsman John Logie Baird Baird also achieved the first trans-Atlantic TV transmission in 1928, and the first colour TV in 1944. Baird’s work was also instrumental in the development of modern fibre-optics.

In 1930, Englishman Frank Whittle invented the first modern jet engine, patenting his design in 1932 Whittle was an RAF pilot officer, with a knack for engineering. His engine first flew in 1941 – and would go on to revolutionise air travel.

“Englishman Tim Berners-Lee developed the World Wide Web While WWW was not the first ‘internet’, it did allow the internet to go global”

In 1943, a team of British codebreakers designed the ‘Colossus’ computer, the world’s first programmable digital computer Colossus was initially designed a codebreaking tool – but it would serve as the foundation for modern computing in the post-war years.

In 1952, British aviation firm de Havilland flew the world’s first commercial jet liner, the Comet The Comet had first flown in 1949, but debuted commercially three years later. This marked a new era in civil aviation, and birthed modern air travel.

And in 1989, Englishman Tim Berners-Lee developed the World Wide Web While WWW was not the first ‘internet’, it did allow the internet to go global. Today, around 5.3 billion people use the internet, a development which has totally revolutionised how we live and work.

“Our energy policy makes it impossible to develop energy-intensive industries like AI. Our regulatory policy stifles innovation and creativity”

For literally centuries, the British have been at the cutting-edge of innovation and technology. From modern transportation to modern medicine, the British built the world that we live in today. Given the quality of our human capital, we should still be leading the way…

…but thanks to policy, we risk falling behind. Our planning system makes it impossible to build anything, including new lab space. Our energy policy makes it impossible to develop energy-intensive industries like AI. Our regulatory policy stifles innovation and creativity.

Many of the great innovations in this thread would have been impossible to develop today. Most importantly, we shouldn’t shy away from technological progress. Our greatness was largely the result of our willingness to embrace and advance change, innovation, and modernity.

If we want to be great again, we must embrace the future – and allow the natural quality of our people to flourish. That means less regulation, cheaper energy, and more enthusiasm for change. We’ve built the modern world before – and we can do it again

Reproduced with kind permission of Sam Bidwell, Director of the Next Generation Centre at the Adam Smith Institute, Associate Fellow at the Henry Jackson Society, although views are his own.  Sam can be found on X/Twitter, on Substack, and can be contacted at [email protected].  This article was originally published as a X/Twitter Thread at https://x.com/sam_bidwell/status/1867562871347196172.