Jealousy is a mean minded emotion. There is too much of it about in the UK debate. So many participants think the answer to our problems is to find people with more, and take it off them.
Many politicians belong to this school of thought. Councillors usually put up the Council Tax. When the government makes it worthwhile for them to keep the Tax down – or difficult for them to put it up – they usually raid us in other ways. Putting up car parking and other fees and charges is often popular with those who rule locally.
National politicians spent many hours devising new taxes, and seeking to identify ways old taxes can bring in more money.
A country which is too preoccupied with distributing wealth will find it more difficult to create it. The government says it wants to lead an industrial revival. Who are the role models to lead it? Why should they make things here? Will the government start buying more UK made product? Will the successful be praised and rewarded, or will they just face demands to pay more tax?
The UK seems to quite like Richard Branson, and James Dyson. Most other successful business people keep a low profile, fearing the jealousy their incomes may arouse. If government sets a tone of hostility to financial success, it makes a revival of manufacturing a bit more difficult.
If the UK government decides to buy its trains from Germany, and to import cars from around the world, it does not send out a great message that is better made in Britain. If the BBC transports its guests in Mercedes rather than UK made cars, it is not doing its bit for a UK manufacturing revival. I do not imagine for one moment that German Ministers or guests of German broadcasting are chauffered around in Jaguars made in Birmingham. They would naturally go by Mercedes. So do people here.
If the government truly wants a manufacturing revival it needs to get on with helping make it cheaper and better to make things in Britain. The delayed deregulation initiative started with shops, not factories. It semed to reflect continuing preoccupations with distributing the fruits of enterprise rather than concentrating on making the fruits.
When we send overseas aid abroad we often buy products made overseas to send to the recipients. There is no drive in much of the UK to buy British product, to demand British product, to make it easier to make things in the UK or to be proud of those who do make things. Germany has an engineering and manufacturing culture, and buys much of its own product.
The Uk puts dear energy before helping manufacturing. It shows more enthusiasm for big increases in regulation, than trying to find the right balance that yields more sensibly regulated industry here at home. If government really wants a manufacturing led revival, it needs to be a bigger and more informed customer of UK industry instead of buying so much from abroad. It needs to look again at the regulatory regimes and dear energy. It needs to enthuse our schools and Colleges with more passion for manufacturing.
In many countries Ministers have their national flags in their rooms or on display close by. In the UK this is thought to be too nationalistic, to be in bad taste. If any Minister did break the unwritten rule, the flag in his room would probably have “Made in China” on it.
August 27, 2011
Quite so, but the role we are required to play within the EU is exactly that, to provide a market for German and French goods and manufactured items.
On the regulatory front, the EU itself, whilst fulfilling the role awarded to it by our failed politicians, likewise destroys the wealth of the entire Continent, but ensures that German manufactured products are promoted at our expense to the growing consumer markets of Latin America and Asia.
Odd, is it not, that they mainly use our language, historical heritage and remaining resultant international goodwill in thus blighting our national prospects, having already destroyed our manufacturing base and wealth!
August 27, 2011
Good points ,well made.
August 27, 2011
The EU is for the benefit of German manufacturers and the Euro to artificially keep the value of its currency down. It also benefits French and other Eastern European farmers and their infrastructures. English taxpayers just foot the bill. There is NO benefits for the UK at all but our stupid leaders keep on giving away our borrowed money (£13.5 billion for a £40 million trade deficit last year!) to the undemacratic EU (foreigners). They also like giving away borrowed money in foreign aid (£11.5 billion).
Why is it that our leading politicians don’t get it, like Mr Redwood? Because they’ve never had proper jobs or an understanding of how people think and businesses tick outside of the Westminster parallel universe.
They clearly don’t understand patriotism or standing up for the English. It’s actions not words that we await from this Tory led Coalition or they will have lost the mainstream vote. People have realised that under this Government it is more of the same as the last shower. Sorry Mr Redwood but people are waking up to your leaders lack of delivery on their promises or what WE want them to do. EU, Immigration, Foreign Aid, Human Rights Act, public service costs, Quangos, reducing big Government and the deficit etc.
August 28, 2011
I rather suspect that a lot of our politicians know full well what they are doing – toeing the EU line to ensure a nice Brussels job once their term of office is over.
This used to be treason, but is now a Westminster career choice.
August 27, 2011
Agreed, it is very important to revitalise our manufacturing industries.
The question is, how? We are hide-bound by regulations of all sorts, domestic and EU-based, many of which are enforced here but not elsewhere in the EU.
As developing nations with low labour costs take over basic, routine manufacturing processes (how can we compete?) should we not concentrate on top-end, high-intellectual content manufacturing, including pharmaceuticals and bio-engineering?
Many government employees have little idea of how manufacturing works, and some have an instinctive distaste for it. After all it’s often dirty, and the workers are so, well, working class. And entrepreneurs are so often characterised as greedy.
With our natural British reserve we seldom trumpet UK successes. Yesterday I heard on the radio that the UK invented television, the jet engine and computers. Not sure about the computers (are they thinking of Babbage?), but it’s really astonishing how many of the world’s useful inventions have been created in UK. You could add radar and penicillin among a number of others. Tim Berners Lee and the internet too, though some say the US military had a similar system (secret though).
Many of these inventions were made by a bloke working on his own, and in his own time in a shed, often in Scotland. And usually the UK could not capitalise on the inventions, so it’s not surprising that many American think people think America invented all these things. The UK simply appears not to have enough respect for manufacturing among senior echelons of society, and the conditions for start-up companies are quite difficult.
Having said that, UK’s openness has been a major boon for the rest of the world. What would have happened if the UK had not pushed to publish the results of genome research. If the US had got there first their major corporations would have patented it and the world would have been denied free access to major disease-fighting knowledge.
In ‘The Wealth and Poverty of Nations’ David Landes describes the UK’s role in developing international trade in the 18th and 19th centuries, by exporting capital and by the ingenuity and determination of seafarers.
Our role seems to be that of an internationally-despised Lady Bountiful, muddling through while slowly fading away economically. Even our friends in the EU seem to resent British products. UK supermarkets are packed full French produce, yet you will never find Cheddar cheese in France. It took Cadbury’s chocolate about thirty years to have their products actually classified as chocolate in the EU, a not-so subtle trade barrier.
Having said all that, is not competition the name of the game. So many people buy German cars because they don’t break down. The French buy their own cars largely, but they are top quality.
August 27, 2011
Mr.Green, Sorry I would have to correct you regarding german cars breaking down. As a director of one of the largest fleets in Europe until 2007 I can assure you our Ford reliability was better than Mercedes C Class range. Dont take my word for it look at the USA J.D. Power reports.
August 27, 2011
Sorry but you can buy Cheddar in France, it’s not available everywhere, or even all the time, but it definitely makes an appearance, as do British packed tea, marmalade and other odds and sods. Provide a market for it and the French will sell it, the Brits go out of their way to provide a market for the foreign goods, so they sell. Give something a foreign name, increase the price, and watch it go off the shelves.
As for fruit and veg, get out of Europe, stopping our money going to the CAP will result in French goods being realistically priced. The French government recently “ordered” the supermarkets to sell French tomatoes at lower than cost price to stop the Spanish imports outselling them, you won’t find that on the BBC.
August 27, 2011
I’m also told that French farmers have been turning back Spanish food produce at the border or trashing it. Remember our lambs? Not reported on the BBC either!!
August 27, 2011
Vivre le free market
August 28, 2011
It’s true many supermarkets now have a small shelf devoted to British products – or rather, products with a British name but not made in Britain, eg HP Sauce – but these shops are in areas with a large British population and the goods are bought mainly by British immigrants who haven’t adjusted.
On a related matter, if you go to any car park (apart from major cities) I can nearly guarantee that fifteen out of twenty cars will be either Renault, Citroen or Peugeot. The French are very patriotic shoppers.
August 27, 2011
The UK should compete as best if can in all areas of business not just manufacturing – we do not have many competitive advantages in manufacturing, out side a few specialist areas. All that is needed is a sensible cheap (non Huhne) energy policy and fewer regulations of almost everything, a functional bank or a system of getting capital to businesses and a government of half its current size.
Then industry will find the areas of business, where we do have a competitive advantage and will exploit them.
Alas Cameron and Clegg do not seem to see it this way. They make noises but nearly all action is backwards as they are both out of touch with the real world.
Look at retirement rules, the new agency worker rules, the gender insurance rules, absurd employment rules and endless government waste and pointless enlargement.
Reply: We could do well in various areas. We still do well at pharmaceutical research and manufacture, at aerospace engineering, at Formula One and other specialist vehicle work, some defence manufacture etc.
August 27, 2011
Could you name one specific absurd employment law without quoting Daily Mail nonsense? I thought not…
August 27, 2011
Almost all of them are pointless and counter productive. They do not even benefit employees, in most cases, and just create pointless work for lawyers and others.
August 27, 2011
The only real protection for employees is the ready availability of another job if they do not like their current one.
August 28, 2011
I would agree with that. Bad employers can ram it. Especially for six quid an hour. Unfortunately not everyone is in that position or could be due to circumstances often beyond their control, so need some sort of protection. Lets abolish child labour laws and see if that one ‘self levels’.
August 27, 2011
In reply to John’s reply:
Problem with all those ‘hi tech’ industries you quote is that they may be ‘high tech’ and ‘high profile’, but they do not, cannot and will not replace heavy manufacturing.
In a nutshell, the place is screwed. Successive governments over the past 30 or 40 years (John – you guys included) have facilitated the hollowing out UK and US manufacturing to the BRICS (China in particular), and hence our existential competitive advantage.
At first, exporting at low-level manufacturing jobs – we get cheap Chinese imported TVs, everybody wins right? But now high end “good” jobs, technology (so they don’t need our high end exports any more). Those guys do not play by the same rules but they do play to win and frankly don’t give a damn about Working Time Directives or Greenhouse Gas targets.
You can argue that the West is different. No. Anybody of any color can be clever. Nobody owes the West a living; the only reason we are where we are is that we industrialised first and developed all the technology first. Not any more. Look at the statistics for the quantities of engineering graduates coming out of Asian countries compared to the West. It isn’t going to be a PPE student that creates a manufacturing company that generates wealth, it is going to be somebody with engineering or science background. And don’t tell me we can survive from services – that just rearranges wealth created by someone else, a zero sum game.
Cheap stuff from China is cheap because they can pay workers less than 10% of what it costs for a similar worker here. Any sane business will (if allowed) migrate to where costs are less. No government policy I can see deals with the ‘externals’ of this, and in some cases actively encourages this with offshore tax deals and profit transfers.
What’s the alternative? Protectionism? Tariffs? I dunno. I think we have already passed the tipping point, frankly, and we had better all learn Mandarin.
BTW – I own my own company and employ 20 people. The rules and regulations imposed are stifling. Please do something about it.
August 27, 2011
I expressed my views about manufacturing two threads back. I really believe we need a combination of serious import duty against Chinese manufactured goods and a policy if you want to sell it in Europe then it should be manufactured in Europe, like Toyota and Nissan do.
This is the only way we can have a sustainable future with a mixed economy and work available for all levels of intellect.
China has no intention of buying manufactured goods from the rest of world, other than to copy the technology.
August 27, 2011
They clearly have no intention of doing anything on regulation they have made things worse so far.
August 30, 2011
The raison d’etre for the financial services industry is to redistribute wealth upwards .
I don’t suppose John saw the irony in the title of this blog when he wrote it .
Quote Bobthefish “Cheap stuff from China is cheap because they can pay workers less than 10% of what it costs for a similar worker here.”
If the materials for a properly engineered piece of machinery makes up 40% of the cost , how can a Chinese product be produced at less than 40% of a quality western product ?
The only explanation is that they are crap .
Parts which should be forged may be cast , worse still with materials which are not ductile . The steel used will not be of the alloy specified in the original design they copied . It won’t be properly heat treated , welds won’t be x-rayed for cracks . The machining tolerances will be lax .
Why do we let such products into our market when they are not as safe to operate as machinery which was produced here 50 years ago ?
Reply: Do not underestimate the Chinese. They make some very good products. They are cheaper because of the economies of scale, high capital productivity and new equipment.
August 30, 2011
You are right that they can and do turn out some very good products .
That is a whole different category and price point from the poorly copied bargain basement kit like pillar drills from mail order and online outlets .
The problem for me is closer to home – persuading companies that they should pay a premium for quality .
August 27, 2011
To reply we could do well in a few selected areas but we have high cost engineers, high “Huhne” energy prices, very restrictive planning and environmental regulations, over regulation of everything, a smallish home market, no proper banks and most of the support suppliers, industry, raw materials and manufacturers needed are in China and the government is clearly against us all the way.
Also the US and EU Patent system and the power of the existing big companies to control competition by hook or by crook or by political “lobbying”.
August 27, 2011
One problem is the Brtish Civil Service which seeks to enforce European regulation in a zealous and fanatical way that the French and Germans do not. This was the problem with the Bombardier contract – Civil Service advice. The Civil Service often gives the impression of being so pro European that its advice subjugates British interests to those of the EU in a way that continental countries would not tolerate.
Secondly there is an anti business feeling amongst almost all sections of the population – successful companies are nearly always denigrated in the press and by much of the population. The benefits system has produced people who either will not work at all for manufacturing wages as they think it is beneath them, or look to work in the public sector. The education system is failing and is not producing engineers etc needed in manafacturing or research.
Lastly comatose competition authorities and Governments have been very slow at keeping businesses in British hands and not allowing them to be bought by foreign ones. This has meant much manufacturing has been exported overseas – idealistic theories about “free trade” are all very well but when most other countries protect their vital industries to some extent, all it has meant is loss of jobs and manufacturing capacity in Britain.
August 27, 2011
Indeed and I see that the anti-business secretary is to inflict the EU agency worker rules just in case we did not have enough government handicaps already.
I also see from a table in the Times yesterday that only about 7% of entrants doing Physics, Chemistry and Biology actually fail to get grade A*,A,B or C. Is this an exam or just a right of passage?
Surely if they want to publish useful results just give the percentile position of the candidate (and perhaps give an overall indication of the entry level ability for that particular exam). Far more informative that this nonsense political grading system.
The table also shows the huge natural difference between the genders at GCSC level in various subjects with men only doing better only at Additional Maths in A*s achieved. The differences in languages is huge. It perhaps suggest that there is too much pure memory regurgitation and not enough actually new thinking required in the exams which – would agree with what I have seen of sample questions.
August 27, 2011
If Cable wants to get growth just ask him to stop using taxes to pay for spreading weed killer all over the business garden every day.
August 27, 2011
“The BBC using Mercedes” – surely not. I assumed they all went by push bike or public transport as they advocate – if pushed cramped in the back of a silly Prius or (judging by their expenses) endless taxis – which of course are not cars at all but part of the “public transport network” and so are politically fine to use.
August 27, 2011
“Jealousy is a mean minded emotion” indeed but it is the very basis of the appeal to voters of the Labour Party and the unions. The best response is perhaps consumption taxes on Ferraris and the like rather than excessive income or investment taxes. Also to tackle it head on by making the moral case for a smaller state and leaving people with more of their own money. Sorting out the BBC too to give a sensible middle line rather than the usual politics of envy, green wash and pro an ever larger state and the mad EU agenda.
But Cameron is clearly a BBC think man.
August 27, 2011
I do not think you have any idea of the mind set of the current mob of teachers in the Times Educational Supplement every week. It is not all about encouraging your entrepreneurs at all. Lots and lots on how to manage a classroom and deal with disorder and, yes, violence. Lots of feeble attempts to “make lessons more interesting”. Lots and lots about teacher’s entitlements.
I know there are good teachers out there. But, trammelled by a mind numbing GCSE and A level, they really are not producing the new Richard Bransons. At best, perhaps, the new Maddonna and Wayne Rooney.
August 27, 2011
Personal request, not for the blog:
A hundred years ago, I could have understood QE very easily. In the First World War, governments went off the gold standard and printed more and more money until it lost all its value. OK. No problem.
But today?
I haven’t seen a printed note for ages. I work, like you, on plastic. So does the Stock Exchange. So does the government.
So how is the Bank in control of the quantity of notes it produces? I just do not get it.
Could you please explain what is happening?
Reply: The aim of monetary policy is to control the total of all money, which is mainly deposit and current account money held in banks. The note issue is a small proportion of total money. QE operates by creating more bank account money – private holders of long term bonds sell their b onds in return for money entered as a credit in their bank accounts.
August 27, 2011
Mike, if JR will allow the link, you get an explanation of how money is lent into existence. Chapters 6; 7 and 8 will answer your primary question, but this got me started studying macroeconomics.
http://www.chrismartenson.com/crashcourse/chapter-6-what-money
August 27, 2011
I think the QE process is a little more complicated. Normally, if government has a deficit between expenditure and tax revenues it funds it by borrowing – mainly through issuing gilts. The gilts have to be sold to provide the money.
Under QE, the BoE and DMO indulge in a chain of transactions: the BoE exchanges new electronic cash for gilts that have already been sold. That cash is then used to buy the DMO’s newly issued gilts and given to the government to fund its deficit spending, which reaches the economy via state wage packets, welfare and other government spending from paperclips to Chinooks. The net effect is that banks swap new gilts for old, while the government deficit is funded by new electronic cash.
The charade of transactions is simply so that the BoE isn’t seen to hand over cash directly to government. In theory, the gilts “bought” by the BoE with newly minted electrons might be sold again – but to do so would require finding real buyers on top of the need to find real buyers to fund any other deficit spending. The larger the QE programme the less credible reversing it becomes, other than perhaps as the gilts mature, re-financing with replacement new gilts.
August 27, 2011
Excellent and rousing piece, John.
I recall in 1970s, at a time when trade balances were looked at as a key indicator of a nation’s economic health, the gov’t of Canada (where I grew up) had various consumer campaigns ‘buy canadian’. Proud manufacturers had the flag on all their packaging as did the retailer on the price tag. This is commin practice in USA too.
it seems to be the case today in the UK that ‘country of origin’ is only pushed at the higher end of the organic food market. This seems to be a result of the success of the local produce movement and is widespread for example as we enter the apple season. I am having a hard time thinking what else I could buy that is made here? I could avoid BMW or Mercedes – sure. But no major household item, clothes, toys, bikes, I could entertain myself with UK IP on tv or computer games. Seems pretty tough to do unless I am in the market for weapons – our leading global export business!
Excellent piece though. Fully support the deregulation line and support the view that our dearer energy policy will hasten our de-industrialisation amongst other negative consequences.
August 27, 2011
I forget who said ‘you cannot create wealth by dividing it’
August 27, 2011
Certainly taking wealth from people you clearly know how to make and grow it and giving it to governments to waste and some then on to a section of people (who clearly are not very good at making and growing it) is unlikely to help overall wealth creation.
If you had two children one endlessly drunk and one who runs a successful growing business. Taking half the money of one and giving it to the drunk is not likely to help overall wealth is it? Even less so, if the government wastes half of the money in the transfer process.
August 27, 2011
You constantly believe very wealthy people invest their money in useful things or even invest money themselves and not get banks to do it for them.
August 27, 2011
Wealth people that I know usually do usually invest in sensible things. That is why they are wealthy in the first place. Most of the rich I know (who have say more that £10Million +) or so live rather frugally and invest it well (not always their children or wife’s perhaps) . Their main concern is to invest it well and build up their businesses and look after employees – usually directly and not through banks – who are rather more likely to loose it all as we have seen.
August 28, 2011
In full reserve banking where the bank takes the hit of mal investment this would not be a problem for the economy only the individual micro-bank ( small banks are beautiful).
August 28, 2011
Or loan sharks.
August 27, 2011
What the successful business is a pub?
August 27, 2011
Touche John – Just to point out that the Germans and French are fast to use the EU to force compliant UK minions to accept their products – even the coalition is now justifying the purchase of trains from Siemens, as UK manufacturing shuts down.
August 27, 2011
This is spot on-excellent blog if I may say so. Just a tiny example from my locality-Worcestershire. Not manufcturing but an agricultural example. We grow plums in the County. They are excellent. On Friday at Morrison`s in Malvern not one single English plum was to be had in the store. All were from Spain or Portugal. They have a glut and dumped them on us. I complained and will write to Morrison`s as a (small) shareholder. In other countries there would be protests about this sort of thing…
Reply: Another good example – we do need to help each other by buying from each other in this country.
August 27, 2011
Depressingly correct analysis John. Unfortunately, the governing classes have made sure of secure and generous incomes that do not depend on industry, only the votes of the jealous and disaffected. The ruling incentive is therefore to crush business and entrepreneurs, which they do with thoroughness and enthusiasm.
August 27, 2011
Indeed business and the rich are the meat upon which the parasitic sector feeds – until it has all gone – MPs and the voting system is the only protection and it is not, as we see, really working at all.
August 27, 2011
Absolutely right on every count. Why are people so anti free market and anti manufacturing in this country?
August 28, 2011
Because socialism and “BBC think” has taken over and indoctrinated them not to think any more for themselves.
August 27, 2011
Report January 2010 from the National Equality Panel states that Britain is among the most unequal societies in the developed world, with the highest rate of poverty in western Europe. Looks as if we haven’t done a very good job of redistributing wealth!
August 27, 2011
I expressed my views about manufacturing two threads back. I think the government buying trains from Germany sends out the completely wrong message, both to the world in that German trains are better and that the government is really insincere about making things in Britain.
As I said before I think the NHS is large enough to insist that its buying requirements are manufactured in Britain.
Much as one admires James Dyson his decision to retain only the intellectual jobs in Britain and manufacture overseas is bad. Manufacturing provides interesting and worthwhile jobs to less academic individuals.
Sadly the only area which is seeing large investment is in the manufacture of wind turbine masts and components.
August 27, 2011
You got there just before I did. It is almost a good article but why mention Dyson, the man who called for English jobs days before locating manufacturing to China.
The other point is that the EU is not a free trade area, it is protectionist, which is why so many big companies pimp for it.
Free trade is and always will be best but the current administration do not like it, like the EU they favour corporatism with all the ills that brings.
August 27, 2011
Quite right to bang the drum.
From your post yesterday, the most obvious way to reverse our deficit would be to put more of our workless and low productivity folk into manufacturing for export and imprt replacement. Yet we are still shedding manufacturing jobs to Eastern Europe, and bringing Eastern Europeans in to do other jobs.
As with the previous Labour Government, this one is still hemming us in with regulations and costs which are unnecessary. Look at the agency workers’ directive and tell us how this improves our competitiveness, please? It just wastes management time with having to prove this that and the other to temps and agencies. It will probably lead to a decrease in temp agency business, as employers try to squeeze more out of their existing workers rather than take on a temp who might cause trouble after 12 weeks. Alternatively, there will be a 12-week churning of temps, again wasting more management time. Law of unintended consequences in full force.
August 27, 2011
Many companies have groups of workers fired and rehired every three months they do not have any employment rights whilst at the same time wondering why there is no loyalty from the workforce. Loyalty? Then they got ya.
August 27, 2011
Exactly the pointless expensive result of daft employment laws.
August 28, 2011
Name on specific daft employment law without quoting the Daily Mail. You cannot as we all know.
August 28, 2011
Is not “all of them” specific enough?
August 29, 2011
Unworkable fantasy.
August 27, 2011
Cameron could make a start by sacking the useless Cable and appointing John Redwood as Business Secretary. As well as providing some much needed energy and support for manufacturing and business development in the UK, he also has far more idea about what needs doing to sort out the country’s finances. Sorry, John, with such credentials I think that you will be left on the backbenches!
Reply: I did Shadow DTI (business) for a long period. That role does not allow you to sort out the nation’s finances. The Chancellor would not be amused if the Business Secretary tried to! It is not a job I seek or am likely to be offered.
August 27, 2011
The pity is that your talents are wasted by your exclusion from the cabinet. The only consolation for your readers is that you are able to give us your daily opinions without fear of losing your job.
August 27, 2011
It’s all about negotiating/transposing EU Directives these days in there.
August 27, 2011
Then there’s the new Enterprise Zone idea. Good for manufacturing, because business rates (a major disincentive for us to expand our space) are to be reduced. So, we are currently competing with manufacturers overseas (including the EU)who pay less for their property and no business rates.
However…………
“Discounts are limited by EU state aid law, up to a de minimis threshold of €200,000 over a rolling three-year period, the equivalent of approximately £55,000 per year. The relevant local authority will be required to ensure that businesses do not receive greater levels of support. Each business will receive discounts for five years from the start of its occupancy in the Zone, providing it enters the Zone by April 2015.”
Right. So the EU is preventing the Gov. reducing taxes here which aren’t evenly applied anyway throughout the EU. They really don’t want us making things here, do they?
August 27, 2011
I think the whole of Britain should be treated as an Enterprise Zone. And stuff the EU.
August 27, 2011
And a tax haven too with an income tax cap of say £100K PA. Anyone who pays that has surely paid enough for his bi-weekly bin collection.
August 27, 2011
The sad fact is that engineering does not pay well. If you train to become a Doctor or Dentist then you can expect £60,000 per year quite early on in your career. Engineers can only expect half that if they are lucky.
Take myself I spent 6 years doing an apprenticeship and getting a degree in mechanical engineering. I have electrical engineering qualification. I worked in manufacturing and helped establish a tyre factory in Ladysmith SA (that’s doing well now). At the age of 40 I moved over to electronic design and programming at all levels. Yet I never really achieved even national average wage.
Was I any good, a couple of years ago designed some complicated boards using the latest micro processors for an large international corporation involved in television studio equipment. They thought the £300 per day I charged rather high, I was ripping them off.
Reply: Some engineers join engineering consultancies and often get paid much more, hiring themselves back to manufacturing by the day. Some run venture capital driven businesses and can make large sums from having a stake in the business.
August 27, 2011
Indeed some engineers do very well but they, rightly, lack the unfair legal “union” protection accorded to say Laws or Medicine. They also have to compete on a world stage against Indian and Chinese engineers.
I would still advise my children (for financial rewards) to perhaps stick to Financial and Tax engineering – as Cameron is still clearly wedded to an absurdly high destructive and complex tax system alas.
August 27, 2011
I would however advise engineering and science for a general sense of satisfaction, a good understanding of the world as it is and for its general benefit to society though.
It is often said (usually on the BBC) that scientists are bad at communication. In my experience they are rather good communicators though often using fewer, but more precise words.
They do however realise that the typical, BBC think person, probably is unable to understand very much of what they say or do anyway however they express it.
Also that you cannot give simple answers to silly simple BBC TV type questions. Such as is a walking greener than taking a car? The answer here is usually no – which might lead to the producer choking on his tea.
August 27, 2011
Just think next year, when digital changeover is complete, the BBC could become a subscription only service. No more enforced license fee.
Lets start lobbying now.
August 27, 2011
The BBC is too powerful to be attacked and anyway Cameron is in line with their arty, left wing, big state, pro green wash and EU politics.
August 27, 2011
Not being ripped off, though this is maybe what they told you. The real reason was they saw you where making money and in many engineering companies only the higher management are allowed to do this. Another attitude is that as you are there anyway you should do any work no matter how difficult and complicated it is even their work! Any money will always, like free beer, be available tomorrow. “I’ll get back to you” Basically they see it as their game where no one else is allowed to play and should be grateful for the work, as there is many others who are. Cheers Gov. Cough! Hack! Many think I just make these things up because of ‘jelousy’ LOL!
August 27, 2011
An excellent Post John
Perhaps we have forgotten that most skilled people in manufacturing came through the polytechnic, day release, sandwich course, type apprenticeship system.
Yes of course we had people from University too, but not in large numbers.
We had millions with practical skills, with a practical mind, who knew how things worked, and by just looking at a component, could tell you if it would fail or not, and where it would most likely break.
We had many more millions who were semi skilled (skilled in a narrow field) who were taught usually in house where they worked.
Most of this manufacturing exerience has now retired, their knowledge lost, not even available to train, or pass that knowledge to others.
We have instead became a nation of BOX SHIFTERS.
Why: Because manufacturing was regarded by generations of Politicians as BLUE COLLER, manual work, in which you ended up as a last resort if you could not get a proper WHITE COLLER job. They forgot that these blue coller workers sustained us during the war effort by building ships, tanks, aircraft and arms.
So the politicians scrapped the polytechnics, scrapped apprenticeships, and instead suggested that students were better off at University, no matter what subject they studied.
Manufacturing needs substantial continuing investment in plant and machinery, but it could never sell its capacity or its goods (it was poor at marketing in those days) for enough money to keep up with the investment it needed to sustain itself, thus wages became lower (other than in the car and Aircraft industry) so its skilled workers, including myself, left the industry to find other ways of earning a few bob.
Having moved on from Manufacturing to BOX SHIFTING, we are now in the third stage, that of trading other peoples money. The rewards are high, win, draw, or lose, and the skill required and used by many, is questionable to say the least.
Yes of course there is a place for Financial services (run well), also for box shifters, but the real added value is in manufacturing.
No it will never use the same vast numbers of people that used to work in the industry as automation has taken over some of hose more repetitive jobs, but we need a mix of commerce in this country, and box shifting, flipping burgers, and trading others money simply (worthy so these skills are) is not enough.
We need to educate, not for educations sake, but for work.
For decades politicians of all colours have messed with the education system until now for many, it is simply busted and of no use.
The government and teachers need to get real with discipline and enthusiasm to encourage all to progress, cut out the political correctness, and for those who want to rock the boat and stop those who want to learn, take them out of class and put them together and try and change their mindset for the better.
August 27, 2011
You are right. Much of that knowhow and experience has gone, probably for good, along with much of the equipment they used which has long since been shipped to countries East. Now, of course, much of the process technology has developed beyond recognition and certainly beyond the capacity of this country. That applies whether that capacity is defined as the knowledge and skills base or the financial capacity or the tax and regulatory framework needed to sustain it. It will require a revolution in thinking and action by the political class to change this. There is no sign of such a revolution.
August 30, 2011
The political class do not understand manufacturing .
They can only contemplate short time scales and expect results to be instant like flicking a switch .
Concepts like continuous investment are beyond them .
Any attempt they make to intervene is likely to make matters worse .
Right from Victorian times the establishment and professionals distrusted people the trades and attached a stigma to being in industry .
August 27, 2011
Mr.Redwood, I have often thought of writing a book about the demise of UK industry but so many others have done such a fine job I never bothered. Government has played its part in the decline for sure but the single biggest reason was lack of reliability and an almost total lack of client care. From a small beginning however I believe Britain is on the ‘mend’, despite politicians, council bureaucrats etc. and would just quote Triumph, Norton and Mclaren as examples in my own field of expertise. With a government that cared we could add hundred’s more. Maybe one day with your help.
August 27, 2011
Demise of the British motorcycle industry. Failure to invest and innovate whilst refusing to recognise the threat of the cheap, silly and often nasty Japanese bikes. The final nail was driven in with the introduction of the Honda 750 Four in 1969. By 1974 Britain would never catch up. All modern Japanese superbikes can be traced back to this point in history. The epitaph of the once five hundred registered British motorcycle manufactures should be. ‘They where mens machines.’ It could easily have been so different.
August 27, 2011
Unlikely. In 1970 there were c800 yen to £1. The yen was seriously undervalued, like the Chinese renminbi today. Floating fx rates came in c1976. By 1980 the yen:£ rate was c500:1. In between times there were the three day week and UK inflation at over c10% in the 1770-80 period. No one in their right mind would invest in that environment.
The plausible strategy for the UK motor cycle industry in 1970 would have been to relocate abroad to survive. The alternative, to stay in the UK, meant failure. Some UK industries did just this, clothing manufacturers are an example. I came across several during this period. They survived by relocating abroad.
August 28, 2011
Yen. Yang. Whatever. The usual blaming the weather excuses.
The main culprit was the management not the unions. The wages in the industry where high so there was little reason to strike. They simply seemed fixed on milking the business as much as possible without too much thought about the future. By the time they decided to do something it was to late. When One of the Marketing Directors during a BSA-Triumph Board meeting, whose job was to keep up to date with what the competition was doing, threw a bombshell “Honda is going to introduce a four cylinder 750cc machine next year”. The Board responded with a stunned silence which betrayed both disbelief and panic. This was on top of the smaller bikes being little more than the butt of jokes. The ultra lightweight market was clamouring for 50cc mopeds, and companies like Puch, Zundapp and NSU were making millions of them in new factories. The 125 – 250 market was booming with shiny new factories in Italy and Germany catering for these customers. Further east still, Honda was exporting a range of bikes, from the brilliant C50 Cub, still in production now, to the startlingly quick, but ill-handling 250cc CB72 which was a match for some British 500s. Yamaha and Suzuki were starting to export, and Kawasaki was thinking about it. Capital was not lacking, as the industry was giving very good profits and, being a critical export sector the government was more than ready to allow favorable taxation. Shareholders seemed to content themselves with reaping the dividends and paid no attention until it was far too late. When the cash cow had run dry it was simply left to die in the the middle of the field.
August 30, 2011
Do you think they even contemplated making a 3 or 4 cylinder machine with overhead cam(s) and die cast crank cases ?
Would they have had the technical expertise to execute it ?
Could they have done it at a price even close to the Japanese or on a par with the Italians/Germans ?
August 27, 2011
Mr Green I totally agree with Geoff not Hoon.In the years 1980 to 2008 I was in South Africa
I had one Bmw 735i it twice blew a cylinder head gasket ,requiring a second mortgage on the house to pay for the repair,I also had a Ford Fairmont built in Australia ‘The best car I have ever owned, among at the last count 59.IF you ever need it a replacement COMPLETE engine
costs less to do than the cylinder head and associated work on a BMW ,and I never ever had to despite me doing over 100000 Kms in it,the man I sold it to got an absolute bargain and 3 years later is still driving a faultless very well specified car today,he was a friend of my son in law who has just had to replace a 3 series,the third one in 9 years,I mercilessly rebuke my S/L as I call him,in every phone call,because he had the chance to buy the car off me [at a father in law’s price in 2008] and not doing so has cost him at least R100,000
August 27, 2011
Quite so – to summarise since 1997 we have been run by a bunch of idiots.
August 28, 2011
Are you seriously suggetsing that Norman Lamont wasn’t (foolish-ed)?
August 27, 2011
John did not Harold Wilson bleat on about redistributing wealth in the 1964 election and afterwards,also did not Dennis Healey threaten to TAX THE RICH TILL THEIR PIPS SQUEAK,the exodus of Sir gordon White,Tom Jones ,Engelbert Humperdink ,Rod Stewart,
Michael Caine and too many others to mention was sparked by that,at WHAT cost to the exchequer over many many years thereafter.I once met Tom Jones during this time and we had a long chat,his words to me were “I refuse to go on stage and sing ONE song for ME and
the OTHER NINE for the government” ENOUGH SAID I THINK
August 27, 2011
With some people, no matter how much money you give them they’ll always be back a week later with outstretched hands asking for more. They will never become self reliant while generous handouts are freely available.
Why are we surprised that there is no economic growth when we punish productivity and reward laziness??
August 27, 2011
It is all a massive muddle. Why should the UK government buy British if the product is not as good as the competition? If the Germans make better trains why not take advantage in much the same way as we might buy domestic power tools made in Germany in preference to those made in the UK.
Where is the mentor for UK manufacturers when our own politicians and the Bank of England believe that weakening the exchange rate is the answer to improving exports? This is a cue for all to believe that cheapness is the answer when it is clearly not so.
The answer to becoming a strong economy is to have a strong export led sector and a strong currency and the way to achieve this as the Germans, Americans and Japanese have demonstrated is to export high quality goods. Expensive they may be but if the quality is there so will there be buyers.
There really is little the government should be doing to assist exporters other than by making itself much much smaller and getting rid of much of the regulation. Lower taxes might make taking risks more attractive once again and getting rid of the overpriced assets sitting in the state banks might help a lot but making British goods cheaper is really getting the wrong message across.
Reply: Somea UK products are great – I do not think the train contract was a matter of quality of product.
August 27, 2011
I agree that the cheapening of the currency (and along with it British brands) is at high risk of focussing on cheapness. Indeed the Price WaterhouseCoopers Apil 2009 report ‘The Future of UKManufacturing’ noted;
“We may now be entering a prolonged period of sterling weakness. If that proves the case, then firms should take the opportunity to push for productivity improvements as dramatic as those achieved over the past decade. The aim should be to take a clear productivity lead in their core competencies, and not merely benefit from the lower cost environment generated by a falling currency.”
I hope productivity has not been lost sight of, it is easy to judge the relative decline of manufacturing against services as problematic (and I am not denying there are problems) but I think a large proportion has been made up of services ( – generalisation I know – ) not making the productivity gains that have been made by manufacturing. Obviously there have been stunning gains in logistics; cross-docking, milk-rounds, tracking etc., but the service gains in general have perhaps not been so great.
I also sometimes feel dismay that the UK often expresses a preference to science/engineering/product innovation and is less appreciative of process innovation. I suggest (but very happy to be wrong) this might contribute to a devalutaion of process engineers who not only have intrinsic value, but can bridge that divide between ‘managers’ and ‘engineers’ that the UK artificially creates, each looking down on hte other, even though each can be individually brilliant.
August 27, 2011
On a pedantic note, I think jealousy and envy are being confused. The phrases “jealous wife” and Freud’s “penis envy” are mnemonic ways to remember; a jealous wife is a woman who already has a husband and is intolerant of rivalry, she isn’t envious of other women that have husbands.
August 27, 2011
It is government costs and paperwork which wreck small businesses trying to expand.
A husband, wife and son team I know run a small business with a couple of employees.
The wife spends one day a week dealing with suppliers, ordering and paying bills, etc, and four days a week dealing with government departments. As she says, she has to read every piece of paper they send her in case it happens to be relevant to their business and if she misses something they could be in trouble.
Is it reasonable for the state to expect something like a fifth of the firms resources to be spent on dealing with government demands?
August 27, 2011
You have generally expressed views which I have held for decades. But on one small point about the carriage acquisition from Siemens rather than Bombardier, surely a significant factor that goes unsaid is that the original purchase conditions, implemented by the last government, [lower case ‘g’ intentional] were to ensure yet more off balance sheet expenditure by asking the suppliers to fund the purchase, thus leaving UK taxpayers to pick up the bill for the next 30 years! Disgraceful, to put it mildly. It was obvious from the outset that Siemens had a better credit rating, and the result was a foregone conclusion, given the 30 year term.
August 27, 2011
Brian
Your explanation is exactly as is my understanding, it had nothing to do with quality, or even price, it was all about Siemens being able to finance the whole project for 30 years whereas Bombadier could not.
Another stroke of off balance sheet purchasing, conditions implimented by that genius called Mr G Brown.
What I cannot understand is why this Government does not let this sort of information out to the General Public easily.
Its simple, Bombadier did not get the contract because they could not give us Hire Purchase payment terms over 30 years, Siemens could.
August 28, 2011
Alan, Give me an hour inside RBS or Lloyds (part state owned) and I will sort out the finance package for the trains no problem. Several multi millionaires in the UK were ordinary working folk before they climbed on the (excuse the pun) gravy train called rolling stock and train finance. Some UK diesel loco’s to my knowledge have been financed and refinanced three times since our friendly banks became involved. I personally do not believe it if we are told lack of finance is the reason for Bombardier not getting the order. More like a spineless civil servant or two.
August 29, 2011
Geoff
“More like a spinless civil servant or two”
More like thousands, and add to that some Politicians who cannot think for themselves.
As I unerstood it Geoff the exact terms of payment were written into the tender documents, seimens bid for it according to tender documents, all the rest did not.
Also as I understood it EU law (yes that problem again) meant that contract had to go to the successful bidder otherwise huge penulty payments ould have to be made.
So blame Labour for inserting this payment clause into the tender documents in the first place.
Again another prime example of Politicians and the civil service being out negotiated by commercial enterprise, just as they were with the carrier project, where it would have been more expensive to cancel than to build.
August 27, 2011
Were our Ministers to have the Union Flag in their offices, I suspect most of them would have it upside down.
August 27, 2011
It puzzles me why our “balance of payments” (ie the value of our exports versus our imports figure) has gone in a few decades from being a very important economic indicator to being thought as unimportant and is now rarely mentioned.
I can remember Prime Ministers and Chancellors being given a terrible grilling on TV by Robin Day and other journalists after poor balance of payments figures were announced and newspapers making it their front page headline story.
I also remember manufacturing industry directors getting MBE’s and OBE’s and even knighthoods for “services to exports”
There was the “Queens award for exports” and a Government promoted “Buy British” drive.
Surely, we cannot carry on running a huge deficit on our balance of payments long term, or am I failing to understand modern world economics?
Reply: You are right. The b alance of payments remains important. Mr Brown spun otherwise once he was in office, but used to think it important when he was in opposition.
August 27, 2011
Certainly the MBEs, CBEs, Knighthoods and the like nearly all seem to go to entirely the wrong people. People who toe the BBC line, lefty academics, exaggerators of global warming, pro EU non democratic domination, work for the state all their lives, are in the public eye (like actors, TV presenters, lefty pop stars or sports people) or people who do something daft and dangerous like climbing to the top of K2 on one leg or sailing round the world on a space hopper or similar.
Only very rarely do they go to top scientists, engineers and real business people with intelligent independent thoughts or anyone who do not agree with BBC think.
August 27, 2011
and directors of the CBI.
August 27, 2011
Dare I say it, also some Political Party fund raisers
August 27, 2011
Surely not – Cash for Honours never!
August 27, 2011
Sir Alan Sugar, Sir Clive Sinclair, Sir Malcolm Rifkind, Baroness Thatcher, Sir Edward Heath, Sir Norman Fowler. How many do you want? Set me a challenge?
August 28, 2011
Public sector
Not sure what you mean by your examples.
One inventor, one large Party fund donator, and four politicians.
August 27, 2011
Manufacture fell out of favour in the UK years ago, as a general rule, although there are notable exceptions to that rule.
My view the very best graduates in the UK don’t tend to enter manufacturing, but go into law, medicine the sciences.
Then the best engineering graduates often become fund managers or accountants.
In Germany there is an impressive infrastructure of engineering excellence and apprenticeships.
Once the UK loses touch with its manufacturing rivals, catching up again becomes very difficult as the infrastructures aren’t there anymore.
Industry needs to become fashionable again, promoted by government. We as a nation apply a different set of rules to farmers – all of the UK hill farms would go if it wasn’t for government subsidies.
We are loading industry with increased energy costs that are avoidable.
August 27, 2011
Rolls Royce no longer runs a school for aitcraft engineers. When the current expertese is gone so will that industry also die. It will be absorbed by other manufacturers.
August 27, 2011
It was Bernard Cribbens who had the last word on the usefulness of government, with a song called ‘Hole in the Ground’.
The singer is digging a round hole in the ground and a man in a bowler hat comes by:
‘Don’t dig there but dig it elsewhere. Your digging it round and it ought to be square ….’
The final verse is also about the erstwhile hole in the ground.
‘ It’s not there now, the ground’s all flat
And beneath it is the bloke in the bowler hat.
That’s that.’
Well worth a re-release.
August 27, 2011
You are correct that more encouragement should be given to manufacturing, but change will be neither easy, or more worringly, quick.
Britsh manufacturing has been declining since before WW2. To take up your point about Germany , during that war Germany was, because of productive and innovative capacity massively ahead of us in terms of innovation in weapons development.
We won because of Churchill’s superb leadership in 1940 , our unbending belief our democratic values, the English Channel (militarily relevant in those days ), our ability to attract allies (and Hitler’s ability to make enemies ), and the fact that Germany’s innovative ablities did not produce atomic weapons before the Allies did .
It would be great if Governments “Bought British” , but do the products exist, and at a quality /price that would win an open tender ?
Otherwise the argument would appear later (as it some cases it appears now ) about the amount of public money that could have been saved (and removed from the omnipresent deficit/public expenditure that you correctly frequently discuss).
August 27, 2011
We won because Hitler went East to early and lost control of the fronts. Had Hitler held back on Russia and focused on Europe he could have won with ease. We could have had the EU 80 years ago!!!
August 27, 2011
There are too many lawyers in Britain. They have caused ‘elf ‘n’ safety culture, political correctness and the Human Rights Act free for all (except the taxpayer)
Lawyers are over represented in Parliament. The ones on hire charge too much – the telephone books are full of them so why hasn’t supply-and-demand driven down their fees ?
A no-win-no-fee lawyer can still get rich despite half of his work being fruitless.
These are the people wrecking Britain.
Close down half of the law schools and turn them into technical colleges and universities of engineering.
August 27, 2011
Its because of the law of “Corporate Responsibility”. That caused Boris to shut the tidal flow and created the massive H&S madness. Its to prevent the top nobs being prosecuted. A top nob can go to prison if an underling has an accident. You can imagine the reaction.
August 27, 2011
Well, I call it envy, and think the politics of envy is an apt phrase. Highly corrosive and a factor in the recent rioting. Greed is also unpleasant, but it least it tends to motivate people to do something and make money – envy just means people don’t understand why they haven’t got the same things. The view that if someone has a lot, every one else by definition has less. Not understanding that generally more can be created. I agree it is a great pity you’re not in the Cabinet.
August 27, 2011
Ah yes! The politics of envy which came to the fore so strongly when Parliamentary Allowance which became Parliamentary Expenses so enervated so many.
August 27, 2011
The examples you give, ie councillors grabbing, aren’t redistribution in the socialist sense of more going to the poor but simply of more goi8ng to councillors and their apperatchiks.
This is not unuusual. The alleged condern for redistributing to “the most vulnerable in society” usually conceals a bit of redistribution towards government workers, of whom vulnerability does not seem an obvious characterisitic. eg that “social services” director who walked away with hundreds of thousands in compensation because people got annoyed with her at letting the totally vulnerable Baby P die.
August 27, 2011
The wish to buy British can at times pose a dilemma. Take for example my current situation. I need to transport my BBC and EU loving civil service behind to Australia in December. Looking on the internet for a flight offers numerous options but suffice to say that Air China will get me there and back on my chosen dates for £780, roughly half the cost of our national carrier. Seriously, I cannot afford patrotism at that price. The patriotic premium is too high. Likewise I invest in shares in my private pension via a range of mutual funds. I want to invest in UK companies but all the advice is to invest globally and especially in emerging economies. Unpatriotic, self interested or just common sense? What would my fellow contributors do?
August 27, 2011
It is common sense to invest globally and in emerging markets. You can do this via UK companies which earn a substantial part of their revenues in global/emerging markets. GSK and Diageo are two examples. ARM technology is another, though it is now too expensive and therefore now risky. It is what I do and have done for the past several years with the funds I invest directly. Money invested in the UK, which includes EIS and VCT investments, have been losers for me.
August 27, 2011
The British Civil Service is admired throughout the world as actually is the BBC. Little does the world really know that these two enemies within are the root cause of all that is rotten in Britain. Cut both of the cancers out. Scrap the BBC and let the state do nothing other than defend the realm and keep the peace at home. We may continue to be admired, maybe not, but who cares?
August 27, 2011
The third European war is being fought with money. Who will win this time?.
August 27, 2011
Dear Mr Redwood, as doubtless other commentators have said the current administration does not appear genuinely interested in working for Britain and its people. Mr Cameron’s primary concern seems to be copying the performance of Mr Blair , going anywhere and doing anything other than spending time putting into action solutions to resolve our own issues. While cutting a dash on the world stage by misusing our money may appeal to him, as it did to Mr Blair, it does not to most of us.
I think to be fair one can conclude that government still has no real desire to expand our industrial base by tackling the over regulation that strangles much of it. The primary reason for this of course relates to Britains subservience to the EU, a body whose idiotic ideas are sapping the the conomic vitality out of Europe as whole.
You may understand this as do other MP’s, but collectively the House constitutes a feeble body whose members are blatantly reluctant to represent their own constituents wider interests by holding the Executive to account. What is worse I see this remaining the case until the wider population make their opinions felt in the only what that will bring government to listen, that is through the use of violence. Why must it come to that!!!!!!
Reply: The use of violence would be a criminal offence and dealt with accordingly. The UK electorate can make their views known and often do – individual voters may not like the results but that is democracy. I would still rather live in a society making bad decisions but with peaceful means of trying to change them, than degenerate into might is right. Violence is wrong and would make things worse.
August 27, 2011
The Governments job is to act as stewards of the economy and the country. Its job is not to tax everyone into the ground. It should seek to reduce taxes and not constantly put taxes up. This applies to both central and local government. Confiscatory taxes as envisaged by the Coalition are unnaceptable. Many in the cabinet are cushioned against life’s hardships with their salaries and wealth. No one seems to have any business experience or sense. Taxes do not affect them. Their government cars paid for out of our taxes gives them a false perspective on life for the majority.
The scandalous pay outs to Quangos highlighted in the Daily Mail ilustrates how little thought is given to tax payers money. An elite serving an elite.
The government seems to be intent on divorcing itself from the rest of the country and will lead to its expulsion at the next election as I fear it has now gone too far for any credibilty to be gained before the next election. Stupidity of the highest order! Constant lies and U turns. No longer believable. Boys endeavouring to do a man’s job!
August 27, 2011
Unfortunately Mr Redwood, the Conservatives seem happy to be lead by the EU loving LibDems. The first step is for YOU and like minded MP’s to stop the order for trains going to Siemens and leaving the UK. Thousands will be put out of work in Bombardier in Derby. Having worked in international business for 30 years I watch every day as EU governments bend the rules to ensure their own businesses stay afloat….but does the UK? No…..its just not cricket old chap.
The DECC climate legislation is killing manufacturing and families imposing massive costs on energy bills. Again YOU can do something with other MP’s of which I’m sure there are many.
August 27, 2011
The purchases from abroad are not just manufactured goods it includes services as well. These are often forced upon us when we don’t want them. A major problem in this area is call centres. Why should I struggle trying to understand someone from the Indian subcontinent who equally has difficulty in understanding me for a service which could equally well be provided in this country. This also causes me to pay for telephone calls which are protracted by these difficulties.
Local councils and other public bodies should be prevented from using call centres which are abroad and private companies disuaded.
In calculating the costs of obtaining goods or services from abroad public bodies should be made to take into account the loss of various taxes like national insurance to the British Exchequer. We need the government to tilt the awarding of contracts as much as possible within EU rules towards the UK. A set of rules setting out what can be done should be an urgent priority for the government.
August 28, 2011
Jealousy is an interesting debate. I would suggest a psychological, sociological and philosophical analysis is more helpful politically than an economic one to determine a clearer world view and better policies.
Starting with the term Jealousy. I would suggest it would be uselful to distinguish between jealousy and envy. In popular culture the two terms are used interchangeably. However jealousy tends to refer to the threat of a role (sometimes thing) to be taken / for example romantic jealousy for a rival. Whilst envy refers to wanting a thing or attribute of another / for example wealth.
Using this distinction between jealousy = role and envy = attribute then this can be translated at a political level to jealousy to mean wanting wealthy people’s roles, such as “class war” where as envy means wanting their wealth.
Interestingly an alternative view is that jealousy means not wanting something taken away (like a role or lover) whilst envy means wanting to take something. If this is applied to politics then the left want to take away tax and the wealthy are actually jealous that the left will take their wealth. I find this interesting because it gives me an insight that the left believe they have a right to others money and may actually feel the wealthy are jealous that the left can take their money as tax.
August 28, 2011
The Garden Shed.
This could be almost anything from a simple, lightweight timber thing littered with potting compost and gardening tools to a stylish, energy efficient home office, the latter becoming more popular here in the UK for a variety of reasons. But it’s the second of these that will serve to illustrate my point in this little storey.
At the end of the day, this stylish, energy efficient home office is comprised of no more than the materials it’s made from and the labour to assemble them. Once this has accomplished the owner can tele-work from home, persue a start-up business or invent a new jet engine.
So far, so good. But let’s get back to the shed itself for a moment: it’s comprised of
labour and materials and those elements have a base-cost. The finished shed may or may not have a value greater or lower than that cost depending on the circumstances of its owner. But that value does not affect its base cost. Once the base cost has been paid the shed becomes capital—and like all capital goods its value can either be maintained, enhanced or squandered. So whilst value may vary with time, usefullness and ownership, that value is not affected by original base-cost (though it may be affected by replacement cost). The lower the base cost of creating the useful capital, the sooner it can pay for itself. The sooner it pays for itself, the sooner it produces a surplus useful to society.
It follows, then, that it would be helpful to society to ensure that the base costs of
procuring the garden shed should be as accessible as possible. You’d think that’s what we’re doing. But we’re not.
It’s entirely possible to procure your new, styish, energy efficient and potentially useful home-office/start-up base by either buying the materials and assembling them yourself (if you have the skills) or employing the services of a competant builder to assemble them. (NB Any competant builder could build the thing with nothing more than a sketch) Sometimes this does happen, but I suspect not very often.
It’s far more likely that the sparkling new home-office (or games/hobby room or
whatever) will be procured by going to a building company or specialist for the full
service. And that’s where the relationship between base-cost and value goes awry.
Base-cost becomes base-cost PLUS but adds nothing to resultant value: the shed is
still a shed, still comprised of materials and labour. This is not the fault of the building company or specialist supplying the finished shed. The Plus element is imposed by externalities: taxes on labour (circa. 25% of payroll—I don’t mean income tax); VAT on the whole, a whopping addition to the total; often planning permission costs (where application fees are but a small fraction of the costs of plans), particularly since October 2008 when the last government introduced a more restrictive regime (in the guise of a more liberal one—thanks for that, Caroline Flint); reasonable margins (profits) for the building firm along with their overheads etc..After all this the shed is still a shed and hopefully still a nursery for that new jet engine.
In the case of our shed, the problem is that the PLUS element of the base-cost-PLUS is far too high: it’s not just, say, 10% or 12%; it could easily amount to base-cost plus 200% or more. And that’s a serious problem, not least because the bill for bringing the shed (capital) into existance must still always be paid and the money (resources) has to come from somewhere. But when only one third of the resources consumed to create the capital actually goes into the net capital outcome, the useful surplus is at best delayed and at worst never materialises at all: the original capital has not been allocated efficiently. Prosperity is foregone or achieved too slowly to contribute sufficiently to inequality reduction and general well being.
Of course, society is far more complex than a garden shed but amidst all this
complexity we seem too often to forget that a shed is still just a shed and that it will
need a roof on it before our latter day Whittles can weave their magic. When society—including directly the state with payroll taxes in particular—imposes too much PLUS on base-cost it penalises effort rather than taxes success: re-distribution takes place before there’s anything to re-distribute.
If we don’t improve the efficiency with which we allocate capital then our competitors will.
Lastly, we need many, many garden sheds to create the large enough pool for the odd one to yield the ingenious. And before we can have more garden sheds we need gardens to put them in—proper houses with proper gardens, not the crammed-in, stacked-up ‘people storage units’ our dysfunctional planning system has descended into providing on relatively scarce green space in our towns and cities whilst ignoring relatively abundant green space outside them in the name of environmentalism and preservation.
We Brits have a unique emotional relationship with our garden sheds and I think that we ignore this at our peril (even the Mayor on London felt the need for one on his Georgian terrace balcony). New home planning consents fell by a staggering 26% over the last 12 months and are set to fall further still when the Localism Bill’s provisions fully kick in. At this rate a garden shed is just about all young people can hope for—except there won’t be enough of those either.
I’m going to go and lie down now–in my garden shed.
August 29, 2011
Change the industrial anti-pollution regulations
Make it mandatory to be in the least 5% polluting factories in the world FOR THAT PARTICULAR PROCESS
Stop this nonsense where the UK imposes the most expensive anti-pollution measures on the planet which only forces production to move to countries with no anti-pollution regulations
September 3, 2011
We will make sure it is next to your house Iain.
August 29, 2011
Excellent points, but how to solve the problem? For example “Who are the role models to lead it? ”
When I was a boy the role models that got me interested in STEM and eventually a career in software systems engineering weren’t business people, but the, mostly nameless, engineers responsible for much of the technology. It was the Apollo programme, jump jets, fuel cells, Concorde, computers. There was almost too much choice of technology based careers in the UK. Our inventiveness was supported in the press and celebrated on the TV in Tomorrow’s World while the BBC micro introduced the nation to personal computing. The key point is there was a critical mass of activities, industries and ideas that encouraged and supported all sorts of industry.
Now the only thing celebrated in the national media are shallow celebrities and footballers.
The likes of Sugar or Branson may be successful but, much as I like the latter’s buccaneering style, I don’t think they represent ideal role models if you want to encourage engineers, scientists and technologists. Dyson’s persistence is certainly a characteristic to be lauded but the decision to outsource manufacturing doesn’t help at all if you want to bring more of that process back to the UK.
I am also not convinced that HS2 or nuclear power stations excite the imagination or the desire to be involved quite like space shots and aircraft did. Enabling a senior civil servant to be able to get from Birmingham to London 30 minutes quicker by train doesn’t quite light my fires, I doubt it would many other people either, we need to find other means to reignite interest in science, technology and engineering achievements.
Perhaps some financiers could redeem themselves by sponsoring some X prizes in various areas, inter-school and inter-college competitions like robot wars, man powered flight etc. The government could place requirements on Universities to re-introduce adult education courses and provide space and facilities for technical learning and experimenting involving the public such as hackerspaces and fablabs. Universities should hubs of innovation, hot beds of activity by the community. Instead they are run by accountants who are busy ditching fundemental sciences and engineering in favour of multimedia studies and teaching people how to trade shares and derivatives!
Whatever is done don’t try and do it through one-tracked policy to be applied throughout the country, allow different things to be tried in different places. Provide an infrastructure that allows and encourages ideas to be shared but protected.
The last thing you want is politicians or civil servants prescribing industry or research areas. For the most part they neither understand the technologies nor the process of innovation, nor do the majority of business people do for that matter.
If the country wants to regain its industrial might then it needs to take some chances, try new ways of doing things and new ways to beat the competition, not old ways of enabling and empowering our competitors. We need to celebrate achievements of substance rather than the shallow posturing of Big Brother contestants. Encourage people to be inventive and innovative on a small scale, set challenging goals and it will translate into large scale success – why not a technology and engineering Olympics for example?
August 30, 2011
John,
Agree 100%. However whilst we have two loopy socialists in charge of Business & Energy + the worst excuse for a Conservative PM since Heath and a deputy PM who is an EU traitor. I would say that the light at the end of the tunnel is quite small and distant!