Richard Holden: We shouldn’t try to win a spending arms race with Labour in this Budget – which we would lose anyway

1 Mar

Fight Fitness Guru, Consett, Co. Durham

During the last fortnight, the white wasteland of frozen fields has given way to the flora of spring in County Durham.  The thaw in the land of the Prince Bishops is being met with a broader feeling in the towns and villages that spring is on the way.  With 20,000,000 vaccinations done and accelerating, as well as the Prime Minister’s roadmap providing clarity for the future, there is a real feeling that the tide is turning.

This week’s Budget must be another step along that road.  However, with so many competing concerns it will be a difficult balance to strike.  To get it right, it’s going to be essential to zoom out and look to where we want to be in a few years’ time.

Our economy has taken a pounding because of Covid-19.  Three hundred billion pounds in extra spending and support, paying people’s wages through furlough and supporting jobs and businesses has been provided.

Three hundred billion pounds extra: that is wartime levels of additional expenditure. For context, it is more than twice the size of the NHS budget annually. It’s an extra £4,500 for every man woman and child in the UK, or about £12,000 for every income-taxpayer in extra spending: money that’s had to be borrowed.

The support has been colossal and necessary. It has protected businesses and jobs and crucially will enable our economy to bounce back as quickly as it can. But this backing wouldn’t have been possible if the Government hadn’t taken the necessary decisions to keep spending under control during the last few years.

Colloquially, this point is made frequently by my constituents, along the lines of: “I’m glad it was you lot in and not Labour. If they’d been in ,God knows what would have happened.”

Which takes me to the political.  One of the biggest gateways to so-called “Blue Wall” voters switching from Labour to Conservative was Jeremy Corbyn. But this wasn’t just because of the terrorist sympathising and antisemitism. Or Keir Starmer’s policy of betraying democracy over Brexit. It was also because of Labour’s economic credibility.

People stopped listening to Labour’s promises when they became increasingly outlandish.  Remember them? Free broadband for all, give WASPI women £30,000 each, cancel student debt and make university education taxpayer-funded. The list went on – all with no plan to pay for it: it was fantasy economics that lacked basic credibility.

This is where we Conservatives now need to be careful, and why Rishi Sunak needs to tread a fine line. We cannot, nor should we wish to, win an arms race with Labour over who can spend more taxpayers’ cash.

We’ve not spent the long, hard yards of the last decade, undoing the catastrophic position Labour left in 2010, to let that credibility go. The reason we’ve been able to support the country through the global pandemic is because we’d had credible spending plans for the last decade. The reason Labour couldn’t win in 2010 is because Labour believed its own hubris about having ‘abolished boom and bust’ and, to nab a much-loved phrase from George Osborne, “failed to fix the roof while the sun was shining.” And the result was the famous note from Liam Byrne, then Chief Secretary to the Treasury: “there is no money left.”

Given such an analysis of where we are, then: what’s next? The budget must focus on three things:

  • Recovery. Allowing the country, especially our hardest hit sectors to bounce back from Covid – and in doing so avoid a massive spike in unemployment.  This week, I led 68 Conservative backbenchers in writing to the Chancellor about support for pubs (massive employers of young people) via keeping beer duty down. It’s vital that he also allows our high streets breathing space regarding business rates. And for families in constituencies like mine, where for so many a car is essential, fuel duty rises, which Conservatives have found hard against for a decade, need to be avoided.
  • Delivery. Keep building towards our key manifesto commitments on public services: more police, more nurses, crucial infrastructure and deliver on the levelling up promise that was made.
  • Credibility. Long-term economic stability with borrowing under control to allow us to keep our debt – and crucially our debt interest payments – under control.  We can’t just hope that interest rates stay this low forever: they won’t. Only a balanced plan will allow the Government the space to deliver on the first two objectives of recovery and delivery.

It’s a tall order, and the Chancellor needs to be clear, honest, and fair in what he spells out. Those who’ve profited during the pandemic and those with the broadest shoulders should take the lion’s share of slack as we now deal with the consequences of it.

As for Keir “Goldilocks” Starmer – naturally, nothing will be ‘just right’.  But he won’t come up with any other real proposals, either. He’s opposed to anything that will raise revenue, but Labour MPs will doubtless demand more spending.  The party is all over the place, with a front bench hopelessly out of its depth, and a broader one so divided as to the way forward that it’s hardly a surprise Sir Keir is unable to get them to agree on anything but to abstain.

So Labour’s economic credibility will remain in tatters. We need ours to remain strong.

This spring in North West Durham and across the “blue wall”, let’s ensure that the growth we see is built to last. Unsustainable borrowing might be Labour’s answer, but it can’t be ours. Without doubt, at some point, winter will come again.

And when it does, we’ll need to respond to it from a position of strength with flexibility – as we have this time.  The electorate will not forgive us is we don’t ensure long-term credibility. Without it we put both a sustainable recovery from the global Coronavirus pandemic and delivery of our manifesto in jeopardy.

Perhaps the simplest way of putting it on the Budget is: it’s all about economic credibility, stupid. Because come 2024, it certainly will be.

Sanjoy Sen: Smart motorways need improvements. But there’s no getting away from the self-driving revolution.

8 Feb

Sanjoy Sen is a chemical engineer in North Sea oil. He contested Alyn & Deeside in the 2019 general election.

Back in 2017, I spoke of little else than my new set of wheels. First, the smug satisfaction of trading a gas-guzzler for a hybrid. Later, the anguished howls as Sadiq Khan cancelled its Congestion Charge exemption.   

But I never got round to explaining the main reason for swapping. Saving money, cutting emissions and even virtue-signalling all had their attractions. But what really got me motivated was good old-fashioned self-preservation. 

The aged tank was serving me well until it let me down twice in rapid succession. Getting stranded on the motorway on both occasions was no fun but at least I had a (hard) shoulder to cry on. I certainly wouldn’t have fancied the same experience in a “live” lane of a smart motorway, hoping everyone would spot me in time and swerve past. With the M1 getting progressively converted, I resolved to investigate scrappage schemes and find more reliable transport.  

By early 2020, there had been 38 fatalities on UK smart motorways. But it’s important to relate this figure to a baseline. Sadly, there are fatalities on all motorways so the first question is whether smarts are safer (or not) than conventionals. But scientific analysis is one thing. Public perception is also highly relevant. This matters when we reflect on how transportation is going. 

According to the stats in the Department for Transport Stocktake and Action Plan, smart motorways are slightly safer overall than conventional ones. That’s said to be because spreading traffic over more lanes and adjusting speed limits to conditions improves driver behaviour, thus reducing moving collisions.  

But what is going badly wrong is the rise in static collisions involving broken-down vehicles. The allegedly smart systems don’t always spot the obstacle (i.e. you) in a “live” lane. And even if they do, they rely on every single road user rapidly bearing down on the stationary object (again, you) and taking evasive action. Worst of all, there’s often no safe means of escape for vehicle occupants before rescue arrives.

Following a 2019 fatal accident in South Yorkshire, the coroner called for an enquiry into smart motorway safety. The local Police and Crime Commissioner has called for their ban as has Claire Mercer, wife of one of the victims. Tellingly, Mercer considers the jailing of the Polish lorry driver who hit her husband’s car as the wrong outcome. And following another South Yorkshire crash, the coroner indicated Highways England may face manslaughter charges

One of these days, when cars are all smart, we can safely have smart motorways. (More on that in a moment.) In the interim, the Government needs a clear plan to reduce accidents and restore trust. 

Right now, there are three types of UK smart motorway. Controlled Motorways (CM) retain the traditional permanent hard shoulder but have a variable speed limit. It’s the other two that raise most concerns: in All-Lane Running (ALR) motorways, the hard shoulder is permanently “live” while, more confusingly, in Dynamic Hard Shoulder Running (DHS) motorways it sometimes is and sometimes isn’t. It’s a (minor) step in the right direction that DHSs are being turned into ALRs.  

Few of us get to pick where to break down but in some cases (e.g. a puncture) it is possible to limp along to the next refuge area. The Stocktake calls for these every three-quarters of a mile but we might need more still in places. And they need to get a bit longer so you can accelerate off them safely to prevent the type of accident already seen. Plus better monitoring to detect stationary vehicles, both via technology and increased patrols.  

But the fundamental question is not whether we can make smart motorways safer (we can) or whether we can eliminate accidents altogether (we can’t): it’s do we actually need them? The short-term and the long-term answers could differ. 

The Stocktake notes motorway traffic has increased by 23 per cent since 2000 and contends smart motorways have helped absorb this. But, like most transport infrastructure, motorways are sized for rush-hour demand. With work patterns set to permanently alter post Covid, that peak potentially flattens. With, say, 20 per cent fewer office workers commuting (analogous to working from home one day per week), that translates into a significant reduction. So, with reduced road use a possibility, we could re-examine our traffic projections. On some motorways, we might discover we don’t need to drive in the hard shoulder, after all. 

Further down the line (but not much further), however, transportation is on the cusp of a revolution. Within a decade, vehicles are not only set to go electric, they’ll also become highly autonomous. Yes, some might write all that off as unrealistic, “woke” nonsense but even the quickest search on what real-world car companies are actually up to suggests otherwise. And when vehicles become smart (and can automatically respond to hazards), smart motorways finally make sense.  

Although UK motorways are among the safest in the world, the traditional hard shoulder has never been without its risks. Such facts are little consolation to those affected by smart motorway tragedies, however. If we’re going to retain public confidence, we need to see improvements. Let’s not lose sight of the big picture: post-Covid traffic patterns are set to change things but nothing like as much as the self-driving revolution will. 

Ted Christie-Miller: Everything must change if Britain is to hit its Net Zero target. How are we going to manage it?

5 Jan

Ted Christie-Miller is a Senior Researcher at Onward and is leading the Getting to zero research programme.

The existential necessity of reducing our carbon emissions, and the level of cross-party consensus in Westminster, can sometimes obscure how hard it is going to be to get there. This is a policy that will require drastic changes to human behaviour, industrial processes and the homes we live in. We need a more grown up conversation about getting to zero.

Politicians, understandably, tend to emphasise the opportunities. The Prime Minister’s Ten Point Plan and last month’s Energy White Paper painted an exciting vision of a jobs-rich, cutting-edge future that could benefit Britain’s lagging regions. Voters largely agree: YouGov recently found that a majority of all age groups, regions, genders, party voters and both sides of the Brexit vote want to see Britain leading the world on climate action. Environmentalism is no longer woke metropolitanism but good politics. On the campaign trail last year in Workington, I witnessed a hustings dominated by small nuclear reactors and offshore wind.

But despite the consensus on climate, the sheer scale of the challenge is underappreciated. Over the next 30 years everything needs to change: the food we eat, the cars we drive and the way we heat our homes. As Onward uncovered last year, we need to treble the number of plumbers just to have the capacity to change out old boilers and quintuple the rate of energy efficiency improvements to insulate our housing stock. We also need to build more than 500 electric vehicle charging points a day, according to the Society of Motor Manufacturers and Traders.

As with all industrial transformations, the costs will not be evenly spread across the country. As new Onward research out today finds, the regions which have lagged most in recent decades stand to be hardest hit: 42 per cent of jobs in the East Midlands are in high emitting industries, 41 per cent in the West Midlands, and 38 per cent in Yorkshire and the Humber and the North West – compared to just 23 per cent in London and 34 per cent in the South East. In total, more than half (52 per cent) of high emitting jobs are located in the North, Midlands and Scotland. The risks of this turning into another North-South divide are acute.

Despite this, much of the existing spending on net zero programmes is going to more prosperous regions. New analysis from Zap Map shows that London and the South East received 45 per cent of new charger capacity in the past year. There are 63 public chargers per 100,000 people in the capital, more than double the average of the rest of the UK. Given the reliance on cars outside of London, and the high levels of public transport investment in the capital, this feels back to front. The Department for Transport itself estimates that people are 27 per cent more likely to have a car if they live in the West Midlands or the North West than in London.

The new BritishVolt gigafactory in Blyth announced last month demonstrates the potential for net zero to be a net positive. Whether it’s offshore wind in the North Sea, carbon capture clusters in the Humber or electric vehicle manufacturing in the North East, there are a sea of economic opportunities to come over the next three decades. But we cannot kid ourselves that this will be a seamless transition, and for many workers the journey from a carbon emitting job to green industry will be tough. If politicians are going to take voters with them, we need to be honest about the trade offs and develop policies to help those who stand to lose out.

This is why the Government’s combined agendas of net zero and levelling up are so crucial. If the synergies of the two missions can be found and the policy is creative, thoughtful and practical, the Government does not have to choose between the two. Net zero can and must be the key to unlock regional growth in the UK and a prosperous future for all of us.

The Deal in Detail 4) The environment and energy

31 Dec

Benedict McAleenan is a Senior Adviser to Policy Exchange’s Energy & Environment Unit. Ed Birkett is a Senior Research Fellow at Policy Exchange.

If you listen to much of the anti-Brexit rhetoric, you’d think that the EU was the sole driver of environmental progress in the UK and its only protector. Given half a chance, the UK would apparently repeal every environmental and climate change policy it could find. Given the UK’s cross-party support for environmental protection and for Net Zero, this risk was always theoretical.

The deal includes substantial provisions on the environment and on climate change as part of the ‘Level Playing Field’ and associated ‘non-regression’ clauses, which will require both the UK and the EU to uphold existing protections.

On energy, the deal introduces new mechanisms for the UK and the EU to cooperate on nuclear power, natural gas and electricity. The deal also looks forward to future cooperation on cross-border energy projects in the North Sea, which, as we’ve previously written, holds the key to a Net Zero economy. It also suggests an intention to cooperate on carbon pricing and hints at a linked Emissions Trading System. On both energy and the environment, this deal is a sensible starting point for longer-term cooperation.

Protecting the environment

On fishing, the big negotiation points were about the business of fishing fleets, not sustainability. So once the fisheries transition period ends the UK will be responsible for managing the sustainability of its own resources. Now that we understand how fisheries will operate with regard to our European neighbours, the UK Government should recommit to its sustainability pledges. This should include the sustainability of ‘shared stocks’, i.e. fish that swim across borders, so we’ll need to collaborate closely with the EU on marine standards.

The level playing field rules allow both sides to diverge on environmental standards. Throughout the Brexit debate, the EU has often been painted as a gold standard while the UK has been presented as quite the opposite. That isn’t accurate: The UK exceeds the EU on a number of protections, from climate policy to animal welfare. Diverging from the EU’s farm policies, for example, will be a major boon for the UK’s environmental wellbeing.

However, membership of the EU provided important environmental oversight. This has helped to address the tragedy of the commons which can arise from more local political trade-offs. The Environment Act aims to fill this void with an Office for Environmental Protection (OEP), which will replace EU institutions in scrutinising environmental protections.

The Deal’s ‘rebalancing’ mechanism (part of its level playing field provisions) will provide some checks on top of the OEP, but these will be limited. By allowing both sides the chance to impose tariffs (among other things) if the other loosens environmental checks, it may help to prevent backsliding. However, the provisions only relate to how the changes affect trade and investments. That is, if a loosening of regulations can’t be explicitly shown to impact trade, then they won’t come under the remit of the Deal. So, the onus is back on British politicians, the OEP, civil society and voters to ensure the environment is protected. That’s perfectly reasonable within the terms of a trade deal between sovereign nations.

Of course, the UK and the EU have different legal philosophies that govern the evolution of law and regulation. The EU’s French-style precautionary approach jars with the British ‘common law’ tradition. How they will manage divergence is still to be seen.

There’s also a question over devolved administrations. Environmental protections are mostly devolved to the Scottish, Welsh and Northern Irish administrations, so the UK government can’t easily prevent the Welsh, for example, from relaxing environmental rules and potentially affecting trade.

Cooperation on energy and climate

When it comes to energy, the UK and the EU have a lot to gain from cooperation, so it’s not surprising that the deal includes substantial provisions in these areas. The benefits of close cooperation will continue to grow. One area where the Deal is ambitious is cooperation on renewable energy projects, particularly in the North Sea. There’s massive potential for low-carbon energy projects in the North Sea, including offshore wind and offshore electricity grids.

By 2050, offshore wind capacity in the UK’s part of the North Sea is likely to increase tenfold. Both sides have recognised that, to make the most of the North Sea, they need to work together on offshore wind projects and offshore electricity grids.

When it’s windy in the UK, we can export our excess electricity to Norway, Denmark, the Netherlands, Belgium and France. Whereas on cold, still days, we will increasingly import electricity from the continent. This mutual cooperation directly reduces electricity bills by making the most of cheap renewable energy when it’s available.

From January 2021, Great Britain will no longer have access to the automated ‘market coupling’ system that improves the efficiency of trading electricity. However, the deal aims to develop a new system for trading electricity by 2022. In the meantime, electricity bills are likely to rise in both the UK and the EU. Any cost rises will be manageable, but the biggest effect could be felt by customers in Ireland and Northern Ireland, because the Single Electricity Market (which covers ROI and NI) is small and only interconnected to Great Britain.

The Deal also leaves open the possibility of cooperation on carbon pricing. For now, the UK is setting up its own Emission Trading Scheme (ETS) to replace the EU ETS. Longer-term, the UK and the EU could link these Emissions Trading Schemes, as Switzerland has done with the EU. As we’ve previously written, the UK and the EU should also explore cooperation on carbon border pricing, which is critical to decarbonising heavy industry without offshoring manufacturing jobs to countries with higher carbon emissions.

On electric vehicles, the UK and the EU have agreed transitional arrangements that will make it easier for EVs manufactured in the UK to qualify for tariff-free exports to the EU. This is a sensible step that will give UK car manufacturers more time to build up their supply chains for EVs, including battery “gigafactories”.

Under this deal, the UK Government regains control over regulation of emissions from vehicles. This will give the Government more freedom to go further and faster on the rollout of Electric Vehicles, including the ability to legislate to ban the sale of new petrol and diesel cars by 2030, which was announced as part of the Prime Minister’s ten-point plan for a Green Industrial Revolution. We have previously written about how a California-style Zero-Emission Vehicle Mandate (‘ZEV Mandate’) can reduce the cost of the transition to zero-emission vehicles powered by electricity or hydrogen. Under a ZEV Mandate, manufacturers would be required to sell an increasing proportion of electric and hydrogen vehicles each year. Next year’s Green Paper on the petrol and diesel phase-out is the perfect opportunity for the Government to introduce a ZEV mandate and show how we can use new-found regulatory freedom to boost both the environment and industry.

In summary, it’s a good deal, but there’s still work to be done to develop collaborative partnerships on energy systems and environmental protection. From liberal energy markets to legislating on net zero, both parties have been close for decades. The key now is to implement these provisions as smoothly as possible so that we can continue to trade with increasingly sustainable industries on both sides.

This is the fourth in a series of pieces from Policy Exchange looking at specific issues that arise from the Brexit trade deal.

Ryan Bourne: First, Covid-19 lockdowns. Next, climate change ones – rationed car use, no red meat. Coming soon to a country near you?

9 Dec

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

We are at the beginning of the end. Provided vaccines prove as efficacious as trial results indicate, and absent unobserved side effects, the rollout to vulnerable groups should reduce Covid-19 death risks substantially and rapidly.

Inoculations down through the priority list will then put us within reach of a herd immunity robust to ordinary behaviour. Life, it seems, could be “back to normal” by the spring or summer of next year.

I’ve never been a “V-shaper” Panglossian on the economy. You can’t switch economic life on and off without causing permanent damage. But there is nevertheless reason to be optimistic of a robust recovery next year. What is more uncertain are the longer-term consequences of this experience on our collective psyche and politics.

American economists Julian Kozlowski, Laura Veldkamp, and Venky Venkateswaran have warned of a depressive “scarring” effect, as we use the experience to revise our assumptions on the probabilities of major shocks. If we collectively infer that tail-end risks such as global pandemics are larger, then investments become less attractive.

Think alone about the willingness of entrepreneurs to go into the travel, hospitality or leisure industries after this. Then think of the effect of the risk of having to pivot to home working again, generalised across other sectors.

Alongside that are the impacts on the role of the state. Economic historian Robert Higgs’ work has highlighted how crises generate a ratchet of government power. Wars, depressions, and emergencies see powers centralised, before receding again.

But the state never quite falls back to the same size and scope as before. After the Coronavirus, we will see more taxpayer funds for virus-related public health, vaccination research, and the subsidisation of PPE production capacity. Government will also be met with demands to maintain Covid-level welfare benefits and industry-specific stimulus as a tool for future downturns, a la Eat Out to Help Out.

Lockdowns are the obvious area where these two effects could come together most damagingly. Highly crude shutdowns had a strong logic in Spring, given the high uncertainty about the prevalence and risks of the virus, and with Italy highlighting the dangers of overburdened hospitals.

More recent national measures reflect instead an ongoing policy failure to institute better control of Covid-19, but may nevertheless have passed a cost-benefit test given the arrival of vaccines (a case that the Government did not adequately prove).

Whatever your position on the desirability or consequences of lockdowns in this particular crisis, however, it’s clear that suspending economic and social liberties today brings with it the temptation for politicians to utilise such powers again – and for businesses and individuals to suspect that they could.

Given the way that politicians throw around terms such as “emergency” or “epidemic,” it is not an intellectual leap to imagine future leaders demanding similar measures for other ambitions. And therein lies a source of economic discontent—an incalculable drag or doubt for a generation.

Already, the economist Mariana Mazzucato has pitched the idea of “climate lockdowns,” should governments not deliver the green revolution she desires. In the service of mitigating the “climate emergency,” the “state would limit private-vehicle use, ban consumption of red meat, and impose energy-saving measures, while fossil-fuel companies would have to stop drilling.”

Of course, we can avoid all that, she says, if we are willing to “reorient our energy system around renewable energy” and “evict fossil-fuel interests and short-termism from business, finance, and politics”—the goals Mazzucato wants to achieve with her threats warning of what might be needed otherwise.

Now, it might seem far-fetched to imagine a world where one could face fines or jail time for driving too much, or eating steak frites. But before this year, one could have said the same about meeting four households on Christmas Day, or not eating at least a scotch egg with your pint.

Madeleine Grant worries about how the example of this pandemic might normalise health surveillance or screening for colds or flu. But it’s the everyday lifestyle regulations that have been truly novel – including the forced closure of certain businesses and the bans on gatherings. The threat of repeats predicated on the ends justifying the means is what we should be most attentive to.

To mitigate this temptation requires a reaffirmation of the legitimate justifications for government interventions. From an economic perspective, there is a defensible consequentialist claim that governments should act where huge, dangerous externalities result from collective action problems. Yet in doing so they have a duty to both prove the case and to account for these externalities in the least harmful way possible, only reaching for the most extreme measures when the consequences of inaction are grave or imminent.

The climate lockdowns idea is so pernicious not just because the imminent threat is absent. The reasoning presumes that governments should go beyond accounting for the externality, say through carbon taxes or emissions trading schemes, instead using the “emergency” to justify actively ignoring market conceptions of value, threatening vast restrictions on how you live your life unless the planners’ vision of the world is achieved. Mazzucato’s argument is not just about reducing CO2, in other words, but about using the threat of lockdowns to push for abandoning consumer-led markets entirely.

We have seen this type of thinking proliferate during this crisis. Last week, Jenny Kleeman wrote for the Guardian about lab-grown meat, which many see as a useful pathway to reducing the environmental impact of farming and the ethical concerns many have with meat consumption. Rather than embrace these innovations as a way to work with consumer preferences to reduce the impacts of meat eating, Kleeman simply declared it would be preferable if we “simply stopped eating meat, or ate it far less often.” Her inspiration? The sacrifices of the Coronavirus in showing the massive behavioural changes we are “able to make” in extremis.

As we exit this crisis, we must not forget that underpinning a healthy market economy is the idea of the sovereign consumer, who knows what he or she wants, and whose welfare is enhanced by acting on those preferences. The bar for curbing activities that bring us joy or happiness should be very high indeed. And to the extent that economic or social problems do require government interventions, they should work with the preferences of consumers, not treat them with contempt, lest the economic welfare costs spiral.

Lockdowns were a panic button reaction to an acute emergency. Their re-use was a signal of the government’s dismal failure to mitigate the virus in less costly ways. But we must quell talk of them becoming a model for solving future economic and social challenges, or else the expectation of them could itself be economically corrupting today.

Sanjoy Sen: How can the Government accelerate a cleaner, more efficient future for transport?

10 Sep

Sanjoy Sen is a chemical engineer in North Sea oil. He contested Alyn & Deeside in the 2019 general election.

“It’s a bit like saying we’re banning the sale of steam engines by 2040″. So responded Aston University’s David Bailey to the axing of “conventional” (i.e. petrol and diesel) new car sales. As green alternatives improve and prices fall, which they both are at last, today’s vehicles will become obsolete long before any government deadline.

On the face of it, the road to zero-emission transport ought to be straightforward. Anything too big to lug around massive batteries (lorries, buses) works fine as a hydrogen fuel-cell vehicle (FCV). Small stuff (private cars) are well-suited to becoming electric vehicles (EVs). And intermediates (taxis, delivery vans) could be either.

That, of course, overlooks myriad “where” issues: where to source the hydrogen and electricity, where to obtain battery metals, where to plug in. And that’s just one future scenario: the automotive industry is feeling highly uncertain with autonomous (self-driving) technology set to ultimately consign driving and car ownership to history. Furthermore, Covid-19 might fundamentally alter travel patterns, with greater flexibility replacing rush-hour madness.

Here in ConHome last month, Ruth Edwards MP proposed bringing forward the cut-off to 2030 whilst accelerating electric vehicle (EV) roll-out. Although I can’t violently disagree with that, EVs still aren’t an option for everyone yet. Meanwhile, others who could switch remain confused about technology and are wary of legislation changes. So, in the absence of a clear roadmap, how best might the Government help transportation to support the economy – and the environment?

Short-term: all about EVs?

Last year, I made some tentative EV queries. At one leading manufacturer, the UK’s annual allocation had long been snapped up on-line. At another, the dealer had plenty more customers than cars. Whilst I chose to hang back, EVs are fast becoming a practical, affordable proposition for many: it’s supply that can’t keep up until battery production ramps up and new models hit the market.

An increased purchase grant or scrappage scheme would offer manufacturers a much-needed short-term boost. But, as per Norway, could these become largely subsidies for the well-off? There’s only one thing I might contest in Edwards’ article: even Jeremy Clarkson isn’t berating EVs any more, it’s the dearth of plug-in facilities that infuriates him. To tackle the public’s fundamental concerns, government support might be better directed towards the charging network. (And, for that matter, energy storage.)

For many, however, EV prices and charging headaches remain a deterrent for now. But commuting on a small battery backed-up by a petrol engine whenever required might offer a near-seamless transition. So, rather than focussing solely on EVs, let’s see the Government recognise the value of plug-in hybrids and support these also.

But the biggest short-term improvement in urban air quality might be via an early switch towards zero-emission public transportation. Whilst the Government has provided urgent sector support during the current crisis, the Bus Service Operators Grant (BSOG) still favours diesels over FCVs and EVs: an obvious candidate for review.

What does the long-term future look like?

Environmental concerns and new technology put transportation into a state of flux long before Covid-19 did. And no-one seems more uncertain than the automotive industry itself. In Germany, Mercedes-Benz abandoned hydrogen cars just as deadly rival BMW announced its own FCV. Over in Japan, Toyota has long backed hybrids allowing Nissan to forge ahead in EVs, including Sunderland’s top-selling Leaf. Whilst in the States, GM’s Volt competitively-priced plug-in hybrid flopped (Vauxhall Ampera to us) – yet the public just can’t enough of upstart Tesla’s super-pricey EVs.

But there is growing acceptance that autonomous technology will prove a game-changer. Responding to the threat of sector entrants Google and Uber, Volkswagen’s vision of the future is a self-driving, shared-use ‘pod’, summoned up via an app. (So the next time you hear “I’m never buying an EV” or “you won’t catch me driving one of those plug-in things”, you’re probably listening to an enlightened futurist, not a frustrated Luddite.) This is a reality government needs to contend with in years to come, not decades.

Self-driving is often seen in a purely urban context but its opportunities could go much further. In rural areas, bus operators often ditch lightly-used routes uneconomic for a large, manned vehicle. Here, the Government might encourage early adoption of autonomous mini-buses operating in response to real-time demand: the Industrial Strategy Challenge Fund is a welcome first step in this field. As well as a lifeline for the elderly and the socially-isolated, as we work from home in remote locations or commute at different times, it’s economies with flexible transportation that will emerge the strongest post-Covid.

And what shouldn’t the Government do?

Gone are the days when you could freely drive any vehicle down any street at any time. But let’s not make the future any more complicated than it needs to be. In addition to addressing infrastructure bottlenecks and supporting new technology, the smartest thing the Government can do is not confuse or antagonise motorists.

ConHome regulars will recall my satisfaction at trading an ageing gas-guzzler for an eco-friendly hybrid – quickly followed by indignation at the withdrawal of its Congestion Charge exemption. Clobbering folks nudged into doing the right thing might prove highly counter-productive, creating uncertainty and provoking resentment. Similarly, the Scottish government’s Workplace Parking Levy (a hastily thought-out concession to the Greens) penalises those lacking a public transport alternative, whilst in itself doesn’t reduce emissions.

No-one can predict precisely how the future of transportation is going to pan out. But it’s critical for the Government to consult consumers, industry and experts alike before taking the big decisions. The consequences for getting it wrong are significant. Remember, diesels were once touted as the clean future. And why rolling out smart motorways before the advent of smart vehicles was never going to end well.

Neil O’Brien: The next algorithm disaster – coming to a Conservative constituency near you. This time, it’s housing growth.

24 Aug

Neil O’Brien is MP for Harborough.

Algorithms have been in the news, not for good reasons. One lesson from the A-levels row is that principles which seem reasonable can lead to outcomes you don’t expect. Another algorithm’s coming down the tracks: the new formula for how many houses must be built in different places. There are few with higher stakes.

I wrote about the housing White Paper in my last column: it proposes not just to change the methodology for assessing housing need, but also to make a standard methodology compulsory for the first time. In other words, if we don’t like the results of the new algorithm, we’ll have blocked off the emergency exits.

The new algorithm is set out here. It’s not particularly easy to read. For example, one of many factors is set out in bullet point 30:

Adjustment Factor = [( Local affordability factor t = 0 – 4 4) x 0.25) + (Local affordability ratio t = 0 – Local affordability ratio t = 10) x 0.25] +1 Where t = 0 is current yearr and t = -10 is 10 years back.

Clear enough for you?

I thought it might be a while before we saw what the new algorithm would produce in practice. But Lichfields, the planning consultancy, has translated the algorithm into what it would mean for local authorities.

The numbers that the formula spits out can be compared to the number of homes actually being delivered over recent years, or to the numbers in the current (optional) national formula. Whichever way you look at it, it’s controversial.

I’ve long argued we should concentrate more development in inner urban areas, for various reasons I’ll come back to below.  But this algorithm doesn’t do that – at least not outside London.  In the capital, the algorithm would indeed increase numbers substantially.

But in the rest of England the formula takes the numbers down in labour-run urban areas, while taking them dramatically up in shire and suburban areas which tend to be conservative controlled.

Overall, the algorithm proposes a south-centric model of growth for Britain (with some growth in the midlands).

If we compare the algorithm to recent delivery, the South East has been delivering just over 39,000 homes a year, and will be expected to increase that to just over 61,000, a 57 per cent increase. The East of England would see a 43 per cent increase, the East Midlands a 33 per cent increase, the West Midlands a 25 per cent increase and the South West a 24 per cent increase.

For the North East, North West and Yorkshire, the numbers the algorithm proposes are lower overall than the numbers delivered over recent years. But as with A-levels, the devil’s in the detail.

The really controversial changes are within regions, where the algorithm suggests jacking up numbers for shires, while taking them down in urban areas. Comparing the existing national formula to the proposal, we can see this for most large cities.

The number for Birmingham comes down 15 per cent, while the rest of the West Midlands goes up 52 per cent.

Numbers for Leicester go down 35 per cent. The rest of Leicestershire goes up 105 per cent.

Nottingham goes down 22 per cent, the rest of Nottinghamshire goes up 48 per cent.

Southampton goes down 17 per cent, Portsmouth down 15 per cent and Basingstoke down 23 per cent, but the rest of Hampshire would go up 39 per cent.

Wealthy Bristol would see some growth (5 per cent) but much lower than the rest of Gloucester, Somerset and Wiltshire (47 per cent).

It’s the same story up north. Leeds down 14 per cent, Sheffield down 19 per cent, and Bradford down 29 per cent. But the East Riding up 34 per cent, North Yorkshire up 80 per cent, and North East Lincolnshire up 123 per cent.

In the north west the core cities of Manchester (-37 per cent) and Liverpool (-26 per cent) see huge falls, while the areas around them shoot up. In Greater Manchester, for example, the growth is shifted to the blue suburbs and shires. Outer parts go up: Wigan up 10 per cent, Bury, up 12 per cent, and Rochdale up 97 per cent. And areas to the south and north of the conurbation up much further: Cheshire up 108 per cent, while Blackburn, Hyndburn, Burnley and the Ribble Valley together go up 149 per cent.

But it isn’t just that the numbers in the new formula are lower than the old formula for urban areas. In many cases the new formula suggests a lower number than their recent rate of delivery. This is true of Sheffield (12 per cent below actual delivery), Leeds (16 per cent), Bradford (23 per cent), the entire North East (28 per cent), Nottingham (30 per cent), Manchester, (31 per cent), Leicester, (32 per cent) and Liverpool (59 per cent). The new formula seems to assume we are going to level down our cities, not level up.

It’s true that there’s another step between the Housing Need Assessment which this algorithm produces and the final housing target, which can be reduced a bit to account for delivery constraints like greenbelt.

But if we go with this algorithm unamended, outside London most Conservative MPs will be seeing large increases in the housing targets for their constituencies, while many Labour MPs see their local targets reduced. Is this what we want?

Leaving aside the politics, I think not. Compared to the rest of Europe, the UK has much less dense cities.

Places like Dundee, Glasgow, Liverpool, Sunderland, Birkenhead, Hull and Newcastle all had smaller populations in 2017 than 1981, while places like Birmingham and Manchester weren’t much bigger. Our cities have untapped potential, many went through a period of shrinkage and have space, and there are health and environmental reasons to prefer urban growth too.

In dense urban areas, people are more likely to walk or cycle – and in the UK, people in cities walk twice as far as those in villages each year. This reduces public transport costs and improves health.

Denser cities can sustain better public transport and so cut car congestion and time spent travelling. As well as reducing pollution from transport, denser cities reduce energy use and pollution because flats and terraced homes are much more energy efficient.

I’m not sure the draft algorithm is even doing what Ministers wanted it to. The document in which it is set out says that “the Government has heard powerful representations that the current formula underestimates demand for housing in the growing cities in the Northern Powerhouse by being based on historic trends.”

But the algorithm seems to do the exact opposite.

There may be technical reasons why things aren’t working out: there’s lots of ways to measure affordability… differences between residence-based and workplace-based income measures… there were certain caps in the old model, population projections have changed and so on.

However, the bigger issue is this.

There’s no “objective” way of calculating how many homes are “needed” in an area. While there are ways of carving up the numbers that are seen as more or less fair, ultimately a vision is required.

Projections of population growth are circular: the projected population growth for the farmland between Bletchley and Stony Stratford would’ve been pretty low before we built Milton Keynes there.

Likewise the forecast for the derelict Docklands of the early 1980s. While there are real economic constraints, the future need not resemble the past.

Though it took a huge effort, Germany raised East Germans from 40 per cent to just 14 per cent per cent below the national average income since reunification. That’s levelling up.

Do we want to continue to concentrate growth in the South East? Do we want European-style denser cities, or for them to sprawl out a bit more? An algorithm can help deliver a vision: but it’s not the same as one.

Ruth Edwards: It’s time to accelerate the roll out of electric vehicles

22 Aug

Ruth Edwards is the Member of Parliament for Rushcliffe.

The first electric car was built 130 years ago and could travel at the heady speed of 14mph. For a time, it looked like there would be a VHS-Betamax style battle royale between electric cars and the internal combustion engine (ICE), but the high cost, low top speed, and short range of early electric vehicles handed victory to the chugging petrol alternative.

We now know this came at a considerable human and environmental cost. Alongside contributing to an increase in global temperatures and climate change, air pollution is a huge danger to public health, contributing to 36,000 premature deaths in the UK every year.

The transport industry is the biggest single contributor to the UK’s green house gas emissions, with petrol and diesel vehicles accounting for 90 per cent of the sector’s emissions. Moving to electric vehicles is vital to protect our environment and our health.

It will also help our public finances. In 2017, health conditions caused by air pollution were estimated to cost the NHS £157m; this is expected to rise to as much as £18.6 billion by 2035 if action isn’t taken.

The Government is making big investments in electric vehicles, for example the announcement in this year’s budget of £500m for a nation-wide charging network.
However, to truly shift into top gear we must go further.

Over the course of this Parliament, we will build at least a million new homes. It’s vital these include EV charging points or, where this is not possible, that developers fund on-street charging schemes. This is over a thousand pounds cheaper than retrofitting them once ICE cars are phased out. There is also the question of car parks and motorway service stations. Supermarkets and large retail parks should make more of their spaces electric by default and should be incentivised by the Government to do so.

Even before coronavirus, the job market had started to undergo huge change as new technologies in automation, data analytics, and mobile connectivity begin to revolutionise work and the skills required.

Investing in the roll-out of electric vehicles and associated infrastructure provides an opportunity for the UK to get ahead by creating Green Apprenticeships in areas such as battery technology. We should also set up Zero Carbon Academies, in strategic sites across the country, where the government is looking to increase investment and opportunities for local communities. Ministers should also incentivise private sector investment in the EV supply chain, building on precedent set through the Charging Infrastructure Investment Fund.

Finally, we should take heed of Parkinson’s Law that work expands to fill the time available, and move the target for phasing out ICE vehicles forward from 2035 to 2030, the date recommended by the Committee on Climate Change. The car industry has been hit hard by COVID-19. As the sector recovers, it needs to look forward rather than returning to an obsolete model. This is a unique opportunity to leap ahead of expectations. Doing so will be in line with consumer demand. In the UK new petrol and diesel registrations have fallen by more than 60 per cent on the previous year, but demand for electric vehicles was up 21.5 per cent on May 2019.

The argument that this transition is somehow too fast is both defeatist and simply wrong. The pandemic has shown us how much we can achieve in a short time if we need to do so. As recently as a decade ago, electric cars were viewed very much as rather niche and something of a joke. Who can forget the time Jeremy Clarkson spent decrying electric vehicles and laughing at their range and price tag? With the latest offerings from Tesla, Nissan, Honda, Jaguar and others, no-one is laughing now.

After more than a century on the road, our automotive industry is overdue for an MOT. It will need radical rewiring of infrastructure and a completely new engine – and this time, let’s go electric.

Richard Holden: Three opportunities that open for us in an Australian trade deal

20 Jul

Maddisons Coffee Shop, Front Street, Consett

On Saturday, I did my sixth “Lockdown Litterpick”, around the beautiful Bollihope Common. A group of us bagged up five bin bags full of cans, bottles, pizza boxes and the general detritus that had been dumped in one the most beautiful spots in my constituency.

While chatting to my Association Chairman as the rubbish was collected, one of the volunteers revealed that she had emigrated from Canada to marry a Brit almost 40 years ago. Later that afternoon, I spoke with an old friend who had worked with me when I was a Special Adviser, before getting married and returning ‘down under’ to work for the Australian Government.

And later that afternoon still, on my way to my constituency office, I listened with interest to Times Radio as one of their correspondents gave an update on the New Zealand election – where the newly-elected National Party leader, Judith Collins, seems to be clipping the wings of Jacinda Ardern in an election that had until a couple of weeks ago looked as though it was shaping up to be a Labour landslide.

I mention these things because they to remind us that the ties that bind the United Kingdom with Canada, Australia and especially New Zealand are incredibly strong. Yes, they’re linguistic and historic, but they’re also based on families and friendships, and shared mature democratic systems of government underpinned by the rule of law.

As has been seen in recent years in both Australia and the United Kingdom, our Parliaments are more powerful than their premiers and the people aren’t afraid of switching out either if they’re not getting what they want. While Britain has spent the last few decades concerned over and trying to reform the nature of our relationship with the EU (which in 1980 made up 30 per cent of global GDP, but has shrunk to just under 15 per cent today) our CANZUK allies have been reaching out into the world.

I am very aware of how much with the grain some of these thoughts are in traditional conservative circles. But it’s increasingly clear to me that the opportunities presented by closer bonds with our Commonwealth allies are not some nostalgic pipe dream, but instead absolutely central to our future global ambitions, as well as the fillip our post-Coronavirus economy will need.

Our trade deal with Australia looks a though it might be one of the most comprehensive of the ones currently on the table, and there are three aspects of it that I’d like to flag.

First, Australia currently has a 20 per cent tariff on imports of luxury cars. Like the UK, the country is also right-hand drive. With our Range Rovers, Aston Martins and other top marques, surely this must be top target for negotiations.

Second, we’re much more understanding of Australians who want to come and work in the UK than the other way around. As we end our open borders with the EU and look at our Australian-style points-based immigration system, more mutual measures with our cousins in this regard must be a basis of future agreements.

Finally, Canada, Australia and New Zealand are all very developed service sector economies, but even our biggest companies are dwarfed by those of our American cousins. By opening our services sectors up to each other, we’ll drive competition, lower prices, increase productivity and, crucially, enable the formation of global firms with the diversity and reach across the globe.

That’s not to mention the new security integrations between our counties as the power structures of the globe tip towards the Pacific more generally and in which Canada, New Zealand and Australia all have a massive stake. We should be looking to leverage our foreign, defence and international assistance policies more generally on these security and international arrangements, as well as looking to build closer ties with an old ally of manufacturing in the North East of England – Japan.

China’s recent actions towards Hong Kong, the Pacific island nations, the South China Sea and, domestically, to its ethnic minority populations should give us all pause for thought. At the forefront of the minds of our allies across Asia and the Pacific is Chinese outward expansionism, control and internal repression

For Britain, out into the world is our call now. The tectonic plates of geo-politics have shifted to the Pacific; away from Europe to the wider globe. The world, not just the continent, is where Britain is at home. Now we’ve got to make the most of the opportunities on our global doorstep – and that starts with building our relationships with our old allies facing a new world on the Pacific rim.

Alan Mak: A new tech scrappage scheme will boost productivity

2 Jul

Alan Mak is MP for Havant and Founder of the APPG on the Fourth Industrial Revolution.

In the aftermath of the 2008 financial crash, governments around the world including those of Japan, Germany and the US responded to calls to help struggling car manufacturers by introducing popular scrappage schemes. After new car registrations declined by 30 per cent in the UK in the first quarter of 2009, the schemes saw demand bounce back, while dirty, polluting old cars were consigned to the scrapheap.

Now there is media speculation about a new car scrappage scheme – drivers will be given up to £6,000 to swap their petrol or diesel cars for electric ones – designed to provide a shot in the arm for the UK electric car manufacturing sector in the wake of Coronavirus.

Yet focus should also be given to how the Government could launch a similar scheme to help factories and businesses investing in the latest technology. We must use this period of recovery to press the fast-forward button on helping our businesses to improve their performance by adopting new technologies quickly, accelerating processes that would have otherwise taken many years into a much shorter period.

Just as the Government ushered a brand-new fleet of cars onto our roads a decade ago, a new scrappage scheme should be introduced for old and obsolete IT, tech and machinery. By particularly focusing on the adoption of robotics, it would achieve the dual ambitions of boosting productivity, and giving our businesses the cutting edge in international markets post-Brexit.

More British firms need to follow in the footsteps of innovators such as Ocado, who have created one of the most advanced automated warehouses in the world. Ocado’s newest fulfilment centre uses automation to pick 200 items per hour of labour time using its hive system – far outstripping traditional supermarket competitors.

As the Fourth Industrial Revolution accelerates, for British manufacturers and suppliers to keep up with international competitors, they must upgrade the machinery and software that is powering the workplace.

Yet automation and the adoption of new technology is an area where the UK needs to improve if we are to boost the nation’s productivity and economic growth after Coronavirus. Research published by the International Federation of Robotics shows that the UK has a robot density of 71 units per 10,000 employees – below the world average of 74 units – ranking us 22nd globally. Europe’s most automated country, Germany, has more than 300 units per 10,000 employees.

Whilst the critics will always fear job losses from automation, as we recover from Coronavirus, we can create high-wage employment through robotics. I’ve visited factories, such as Harwin’s manufacturing site near my own constituency of Havant, that have successful re-trained factory workers as high-skilled robot operators. We must rebut trade union leaders and others holding back change and hindering the adoption of new technology.

Just as a car scrappage scheme was brought in to safeguard the car manufacturing industry and protect demand in its vast supply chain, a tech scrappage scheme also has the potential to boost the fast-growing UK tech and robotics sector. Businesses that could benefit include Tharsus, the Blyth-based robotics company that supplies Ocado’s automated warehouse, which is now one of Europe’s fastest growing technology firms.

While individual businesses know the products that are right for them, a tech scrappage scheme can and should promote world class British engineering and high-end manufacturing by creating more demand.

Every UK business could benefit from upgrading technology and IT, but key to the success of the car scrappage scheme was incentivising people into the new car market by making them more affordable. To be eligible, the car had to be at least ten years old and many of those taking part in the scheme would never before have bought a new car. The same must be implemented for a tech scrappage scheme. The Government needs to target the least productive SMEs that have never before invested substantially into the latest robotics, software, automation or information technology.

Research published last year based on a survey of 2000 business owners showed that 46 per cent of small business owners believe technology is more important to their business than people. Just as we incentivised car owners into the market, a new scrappage scheme will give SMEs the confidence to make the tech upgrades their businesses need.

There would be environmental gains too. Just as polluting cars were taken off the road through scrappage, businesses would have the opportunity to replace diesel-fuelled machinery with cleaner and more energy efficient alternatives.

As our country bounces back from Coronavirus, and the focus shifts from health emergency to economic recovery, the Government must continue to focus on not only supporting businesses in the short term but arming our businesses to be ready for the long term impact of the Fourth Industrial Revolution.

Our economic recovery must be both green and digital – a scrappage scheme for IT, tech and machinery achieves both goals.

This is the third in a three-part series on how to boost our economy after Coronavirus.