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Why the Government should lobotomise its ‘Treasury Brain’
No other advanced economy has sold off so much vital national infrastructure
We should give credit where it’s due: throughout its Covid debacle, the Government’s done one thing very well indeed. Its concerted, well-managed and innovative programme of vaccine research has vastly outpaced our erstwhile European partners, holding out the prospect that, if we get this right, we can be one of the first Western economies to forge a path out of the crisis.
But there’s a flaw, and it’s a major one: as the EU’s threats to confiscate our vaccine consignments from Astra-Zeneca’s continental warehouses show, by being dependent on the open market for vital supplies, the nation’s security is placed at risk. Outbidding competitors and signing contracts early may work in a normal situation, but in a period of major crisis even the largest transnational corporation can be brought to heel by a government exercising its sovereign power.
Looked at this way, the UK is worse off than most countries. No other advanced economy has sold off so much of its vital national infrastructure, and no other political system has dared to leave its people so at the mercy of events beyond its control. By doing so, successive British governments have, over the past 40-year car boot sale of our industrial patrimony, placed the entire nation’s survival at risk. And it could be even worse. As Nick Timothy noted on Twitter, in 2015 the then-chancellor George Osborne refused to get involved when Pfizer tried to buy Astra-Zeneca, waving away concerns about Britain’s vital strategic needs.
That has to change, now. As we enter a period of international turbulence greater than anything experienced in any of our lifetimes, the age of the unfettered free market is over. Britain needs an industrial policy geared towards the nation’s survival, where the nation retains control of essential strategic industries and assets. Moreover, the state must retain the capability to direct and boost production in a time of crisis.
One underreported project, the UK Vaccines Manufacturing and Innovation Centre (or VMIC) is an excellent start. It promises to provide Britain with a genuinely innovative and strategic capacity to research and produce vaccines for the waves of pandemics heading our way thanks to an age of global travel. But it’s not enough. As Declamare (a must-follow Twitter analyst) observes, the £141m granted to VMIC by the Treasury to speed up its launch is a pitiful amount compared to the vast sums spent on dealing with the virus’s baneful effects. It is an absurd case of penny-pinching in the middle of our greatest crisis since the war.
Declamare notes, the Treasury funding to VMIC is:
The government needs to shake itself free of its self-defeating “Treasury Brain” worldview and start funding vital Biotech infrastructure like VMIC properly, getting it up and running sooner and getting the nation out of this crisis faster. VMIC should be the start of the urgent re-shoring of vital strategic infrastructure under state control: too many of our fellow Britons are already dead because our state sold off all its capacity to keep us safe, and that number’s rising every day. We must never let a government put us in this position again.
I appreciate this will be considered off the wall bonkers as an opinion, but there are only two arenas that really matter in the 21st century, that the government must ensure true independence in: tech and biotech. The rest is just meh. I mean the tech and biotech with which this country secures itself. And by independence I mean the sea, not a few muddy rivers – everything from chips to systems, full chains from design to create, in all aspects of hardware and software, computers, communication devices, operating systems, databases, cloud infrastructures etc. The minute you buy black boxes from third parties, where you don’t know what the software, hardware or firmware does, no matter how seemingly benign, you are vulnerable. Potentially catastrophically.
Food?
Food, Energy, etc. are secondary – supply chains for everything like that now depend on tech and tech infrastructure. If the tech goes, everything goes. In business IT around Y2K there used to be a kind of ‘myth of return’, that if the IT went (and DR failed) a business could operate manually for a while. That was false even then, and we are way past that now. Any country could fall back to a ‘back to basics’ stance if forced into that – but that country would become wide open to predation. For a technologically equipped hostile power the contest would be a cakewalk.
Agree that the UK needs an industrial policy. The question is, can it get people to buy into that policy when Big Business is considered to be evil? I have worked in industry for 45 years and I have seen a few disasters in that time.
1) The first was joining the EU. I admit that joining was a boost for the Finance ‘industry’ in the south-east of England but almost everywhere else suffered. Germany was better organised and was central to the market for most goods. In the UK anywhere away from the south-east was too far away from our only container port, Felixstowe. So, raw materials had to be trucked from the east coast to northern England and Wales and products had to be trucked back to Felixstowe before distribution. In a competitive market, this extra cost was the last straw. Since we joined the EU, the difference in prosperity between the South-east and the North and West has become enormous.
2) Any idea of heavy industry today is going to run straight into the environmental lobby. It’s no use having a policy if every move takes 10 years to get through because everybody loses interest. There are many interpretations of the word, ‘environment’ and people use whichever interpretation suits their ideas. Shall we say the environment with a small ‘e’ might be my personal environment, whereas with a capital ‘E’ means the environment of the world. As soon as any local proposals come along, everybody is against them because they don’t personally want the hassle.
3) Allow me to move onto Wales, which is my area. I know of at least four really good schemes which could have employed several thousands of people, which didn’t get off the ground because governments lacked the will to push them forward. In our world every single person has to have a say. It is like a committee meeting of 40 million people. The talking never ends. Think of the years of discussion surrounding the extra runway at Heathrow.
Minor industries employing 10-20 people are the thing of today but don’t expect them to help us in a big way.
I am being very negative but I don’t think that any government will come up with an industrial policy unless there is a reason to push ahead without a long discussion – like a war.
Good analysis, but one of the major problems is the short electoral cycle. If there are votes in opposing a major project, the opposition will oppose it, even if just a few years before they were in favour. The government then takes fright, and kicks the can down the road. It’s why we’ve probably spent more on studies, reviews, and reassessments of Heathrow than it would have cost to expand it.
There’s something to be said for fixed terms of government, say four years as in the USA
On the eve of WWI, Winston Churchill bought a controlling stake in the struggling Anglo-Persian Oil (later renamed to British Petroleum) on behalf of the UK government, because he wanted to guarantee supplies, to secure national stretegic interests rather than make a profit. The very same British Petroleum that Margret Thatcher re-privatised in the 1980s. EU level playing field rules would prevent any EU nation from doing what Churchill did. Which I guess is the convoluted point – if no EU nation can get a jump on the others, they are less likely to attempt to roll the tanks in on their neighbours.
Which of course, leaves China and the US rubbing their hands with glee in anticipation.
COVID-19 has shown that “national security” in the widest sense of that term needs to be re-examined and an appropriate policy drawn up. However selling off the national infrastructure is not the issue. Railway lines and power stations cannot be packed up and carted offshore by hostile corporations or foreign governments. Short of military submission a nation state is sovereign in its own territory and can do whatever is necessary to ensure its security. Infrastructure assets can be seized and in times of national emergency the British workforce of that infrastructure is unlikely to down tools in support of the hostile foreign entity.
No, the national security concerns are to do with supply. A detailed study will need to be done but the kind of “assets” that need to be secured can be glimpsed by asking the question “what might bring the country to its knees if we had to go without for say 3 months?” Not cars, not avocados, not even toilet paper (though I would make the case for the soft variety!). It is basic food stuffs; wheat, potatoes, fruit, vegetables, salad and meat. It is energy; oil and gas. It is medical supplies; equipment, consumables, drugs and vaccine. Casting the net wider, it is the supply of raw materials and components for the continuation of activities that form a substantial part of the economy (historically vital but less so now because of our largely service based economy).
These are the assets that need to be secured and to do so is not as difficult as it has been regarded historically. Scientific and technological advances should make it possible for even these crowded islands to produce enough basic foodstuffs to feed the population. The “greening” of our economy almost incidentally brings with it energy security . The case for self sufficiency in medical supplies has more than been made and will be demanded by voters. The supply of raw materials and components is more problematic but appropriate policies in this area would help create a much needed true long term international strategy.
Because UK governments have such a fine track record in selecting and backing successful business?
Problem is there are few votes in long term financial planning. When North Sea Oil appeared the Uk should have set up a sovereign wealth fund and taken long term investment strategies.
But explaining why income tax was the same to a voter -despite oil revenues- would have been a hard sell. So the politicians used the Oil money to pay benefits and day to day costs.
The big problem is universities. By the times graduates emerge they have been fed a diet of Business is wicked and the State is benign . We must start to teach grown up thinking – not fifth form marxism in our centres of learning.
Aris Roussinos in referring to a 2019 edition of New Statesman “How Britain Was Sold” says:
“No other advanced economy has sold off so much of its vital national infrastructure, and no other political system has dared to leave its people so at the mercy of events beyond its control.”
We need to ask: who among the British have benefited most from this sell off? An ageing Harold Macmillan criticised the Thatherites for “selling the family silver” and was subsequently smeared as yesterday’s man, out of touch with the modern world.
Have the windfalls from all those privatisations and the revenues from North Sea oil been squandered to prop up our costly welfare state?
Have the private sell-offs (to those globalist spivs who deal with major corporations the way property developers deal with homes) simply provided easy money and a quick escape route for talentless Brits who couldn’t hack it in the demanding and competitive world of manufacturing?
One of the selling points of the EU is that industry can be placed in the most efficient geography for the benefit of the whole. However, that means whole industrial sectors are extinguished in uncompetitive areas. So called “big business” has no interest in maintaining inefficiency as it impacts profits. Consequently they will always argue for no borders and cheap locations. One of the underlying trends in modern politics is the resurgence of Nationalism which has arisen to push back against the gutting of domestic industries for multinational profits. However, it is difficult to remain competitive against cheaper locations without Government intervention within a industrial strategy. That is why the EU is keen to stop UK Government subsidising industries. Every action has a reaction and life is the balance between them.
So what the author is saying is just give (throw?) away huge amounts of money to an organisation founded by Oxford University , Imperial College London and London School for Tropical Medicine without any understanding of its cost base or accountability. A quick look at their website and I would question the need for a “Design & Image Consultant” (no doubt highly paid) in the development of vaccines. So what else will the money be squandered on other than lining the pockets of overpaid executives, academics and academia? Unaccountability = inefficiency, waste and corruption. Do organisations such as this ever publish audited accounts
The trouble is that governments are hopeless at running industries, or even knowing which industries to try to run. As a wise old civil servant remarked to me a few years ago: “Sovereigns are not commercial.” The more pertinent question is why British private investors are so reluctant to take risks investing in the real world.
Good grief! U.K. State to take control of commanding heights of the economy??? You must be joking. Take U.K. North Sea oil and gas – fully developed entirely by private capital – and returned well in excess of £340 billion in production and corporation taxes alone to HMRC. What did our politicians do with that colossal fortune??You think a State monopoly could have done better?? Time to grow up and smell the coffee.
Consider the plight of our under resourced, over stretched, under performing, overly bureaucratic state monopoly of a health service. We need to complement it’s essential
Core functions – but not from the tax base, which is too small, but by opening gates to private industry to grow and compete ( and hence reduce the strain on NHS). Grow the cake for goodness sake don’t shrink it through ridiculous talk of nationalisation.
Works really well in the USA does it not?? 2.7 times per capita Health expenditure, and yet worse health outcomes re WHO standards, eg infant mortality, life expectancy! Amazingly neoclassic economics does not always work in the market, and sometimes social enterprises do work-all the NHS needs is enough money to get up to the EU average (but not the US average!) and it will work very well for all (not just the rich).
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