You can’t dig yourself out of a hole

You can’t dig yourself out of a hole

You can’t dig yourself out of a hole

As the UK returned to lockdown this month, growth forecasts were rapidly slashed. December’s forecasts for Q1 of a few points of growth now look hopelessly optimistic.

With schools closed, the political debate returned to the merits of providing free broadband for all. Labour MPs who campaigned for the policy under Corbyn took to Twitter to suggest that the idea didn’t seem so silly now.

Of course, the idea of providing free broadband to those who need it was never silly. The arguments for it are only enhanced by the closing of schools. On the simple principle of providing some basic level of opportunity (I won’t pretend it is an equal opportunity) to all kids across the country, digital access is now an essential. But this is not what Labour proposed. Instead they planned to create a public operator by nationalising BT. This would have destroyed the rest of our telecoms sector or forced the government to pay to also buy that out.

I’m not against nationalisation. In fact I think there is probably a good argument for a national fibre provider serving domestic customers. You only want to rip the roads up once to put the infrastructure in, and the return on investment will be slow for many parts of the country. This is exactly the sort of long term infrastructure project that national funds are ideally suited for. Likewise the national grid and much public transport, places where returns are slow and competition is all but impossible.

But while our telecoms sector has its issues (we ranked 25th out of 29 for value worldwide in 2020), within the constraints within which it operates (the cost of ripping up roads and the taxes levied on fibre not least amongst them), it is fairly competitive and cheap by international standards. Nationalising it, with all the disruption and losses that would cause, would not seem to be a sensible way of addressing the issue of broadband provision. Sinking public money into the infrastructure but allowing the market to compete on provision seems like a more sensible step – especially if matched with a combination of usage rates and suitable (and suitably targeted and enforced) tax rises to recoup the investment over the long term.

The todo list

Broadband access though is only one of the socioeconomic issues we will have to tackle in 2021. The economic outlook is now incredibly bleak, with Brexit only amplifying the effects of COVID and no ‘sunlit uplands’ in sight. We are going to see a lot of people struggling this year under the burden of job losses, childcare, bereavement, isolation, and more. We should be taking steps today that address these issues in a holistic fashion rather than the sticking-plaster approach (and – at best – appallingly lax procurement) that we have seen so far.

What this cannot look like is another round of austerity. Both the IMF and the OECD now advocate continued stimulus spending through the downturn, as many have advocated long before. Austerity didn’t work before and in the current situation, it would be catastrophic.

Instead we need a structured programme of investment that resets our expectations for the role of the state in modern life after forty years of its withdrawal.

This isn’t advocating for communism as some would say. It’s about recognising that there are things the state can – and must – do, without which we all fail. We fail each other and business fails as well. As Mariana Mazzucato argued in The Entrepreneurial State, it is government investment that paves the way for much corporate success. Even if you don’t buy Mazzucato’s analysis or her prescriptions (as many on the right don’t), it’s clear to everyone that there are things that markets just won’t do. Places where there are no profit but that we nonetheless need to do if we are to retain a productive, coherent society, unless you truly believe in a laissez faire state.

Where should this investment be focused? Here are just a few areas.

Housing

The argument that we need to build more houses is somewhat unsophisticated. Houses last a long time. The population is likely to start shrinking within the next 40 years, if not sooner. Building new homes is potentially carbon intensive. And the housing stock we have suffers from incredibly poor energy performance. We need more homes, but what do those homes look like and who should we be building them for? How should we address the poor utilisation of the homes we do have, and their lack of fitness for a nation that will increasingly be working from home and facing periods of home schooling? For people whose employment future looks increasingly uncertain?

I think it’s likely that the British obsession with home ownership over the last century will reverse. A hundred years ago over 80% of us rented and we’re slowly headed back in that direction. One leader in the property industry said to me recently that a rental product for people later in life would make the most sense but because of our obsession with home ownership, no-one wants it. Instead we have many people isolated in oversized houses, away from amenities both cultural and practical. People early in their careers are increasingly open to moving around. They are less likely to own a car and have fewer possessions over all. Moving between flats or even countries (Brexit notwithstanding) is relatively straightforward – especially as we are likely to remain single later in our lives.

We should be investing public money in making our housing stock fit for purpose. Building where it is required, but also retrofitting and incentivising right-sizing.

Public Health

‘Prevention is better than cure’ is such an obvious truism, and yet because of our warped attitudes to risk, it is a hard approach to pursue consistently – either as individuals or in government. But look at the successes where we have pursued this line: the number of fire incidents halved since the turn of the century thanks to a focus on prevention. The number of smokers has fallen dramatically in the last decade thanks to co-ordinated public health campaigns, from over 20% in 2011 to 14% in 2019.

We need to keep pursuing campaigns like this in order to address the coming challenges of our ageing population. Quite apart from the human benefits of a population living longer, healthier lives, we need to address public health issues both mental and physical if our economy is not going to be stricken as the population shrinks and ages in the second half of the century, otherwise the costs of care and medical treatment might be just too much – especially with the prospect of future pandemics.

Obesity, mental health, air pollution, domestic violence. All of these need addressing.

Energy

Our energy infrastructure is ageing and is ill-suited to the changing nature of energy generation and the possibilities for storage. I don’t see evidence that the industry is motivated or financed to transform the distribution infrastructure as we move away from domestic gas and towards a world of electric boilers, EVs, solar generation and battery storage. This is an ideal scenario for government investment: a large scale and expensive infrastructure project with long term returns.  We could lead the world in re-engineering our national grid for a cleaner age.

 

Of course there are many more areas we could and should invest in: public transport, education, research, climate mitigation. I make no claims to the prioritisation of these issue. I just aim to point out that there are strong candidates for the investment of public money in the years ahead that will reap long term benefits, improving lives and shoring up the economy in the long term, while giving it a boost in the near term. Cuts and tax rises won’t work now. You can’t dig yourself out of a hole.

Nationalising our telecoms industry may not be a good idea. But there are plenty of good ideas out there.

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This article is by Tom Cheesewright. This post forms part of the Future of Humanity series. For more posts on this subject, visit the Future of Humanity page.

Tom Cheesewright

https://tomcheesewright.com/futurist-speaker

Futurist speaker Tom Cheesewright is one of the UK's leading commentators on technology and tomorrow. Tom has worked with a huge range of organisations across a variety of markets, to help them to see a clear vision of tomorrow, share that vision and respond with agility. Tom draws on his experience to create original, compelling talks that are keyed to the experience of the audience but which surprise and shock with unexpected facts and examples.

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