On the eve of the industrial revolution, among the most adored of the English heroes was John Metcalf, aka Blind Jack, who could traverse Britain’s boggy roads faster than a carriage, despite being blind as a bat. The fish seller, fiddler and road builder – who had been ravaged by childhood smallpox – once even raced the MP for Berwick-upon-Tweed, Colonel Liddell, from Covent Garden to Wetherby, and won. Each night, the Colonel would ride into one of the resting stops studded along the trail only to find Blind Jack supping on ale. Jack became the humorous symbol of backwards Britain. His body was buried in rural Yorkshire, atop the bands of coal outcrop that would soon transform the country’s fortunes.
The moral of the story: folk theories about a nation’s flaws are often as captivating as they are completely besides the point. What held Britain back in the early 19th century was not its clay-clogged roads but its failure to tap the abundant raw energy that lurked beneath them. Luckily, a smattering of entrepreneurs understood the potential for Britain to turn things around, if only it could harness steam technology to extract coal and mechanise labour production. For years they tinkered away at the conundrum. Then James Watt’s steam engine delivered a breakthrough. Britain became the world’s first superpower.
Once again the world is on the cusp of a revolution, albeit this time marked by a shift from mechanised labour to artificial intelligence. And true to form, as it distracts itself with stories about its “fatal flaw”, Britain is completely missing the point.
This week, the Chancellor is finalising her plans to relax the fiscal rules. She intends to revive our economic fortunes with an infrastructure spending blitz, investing heavily in road and rail.
Her actions chime with conventional wisdom that “Britain can’t build anything anymore”. They also align with a shift in economic orthodoxy. While economists have cooled on the idea that tax cuts turbocharge growth, the theory that we can build our way out of our hole is growing on them. Trendy American “New Economics” – which champions the use of state levers to engineer investment booms – has found its way from the corridors of Harvard to the glass cloisters of the London School of Economics.
The Labour frontbench is adamant their plan is not only bomb-proof but powerful enough to blast the Tories into irrelevance. Ministers insist their spending plans have robust “guardrails” to prevent a Truss-style meltdown. These include a taskforce to tap City bankers for business advice on big projects. They also sense that top economists may not scrutinise their plans with the same rigour as those of Truss. The political theory is that once they pull the Budget off, their core message can be hammered home. Namely, that the Right are wreckers and only the Left can deliver growth.
And yet as the more far-sighted of Conservative shadow ministers have clocked, it is only a matter of time before Labour’s “utterly mental” plans, to quote one former Tory minister, crumble. As it takes more than a decade for large projects to pay off, the idea that Reeves’s plans will feed into GDP by the end of the parliament is for the birds. They may even have an adverse impact in the short run, once you consider the likely overspend and disruption to business. Some Tories are hopeful that Labour is possibly overplaying its hand, putting a raft of projects set in motion by the last government on hold while pursuing alternatives. These include the decision to pause the Lower Thames Crossing which, though unpopular, would have given Labour the chance to get spades in the ground.
What is good news for the Tories is bad news for Britain. Although Labour will likely avoid a Truss-style implosion, it is putting the country on a shaky path. If Reeves goes on a borrowing binge and the economy doesn’t gain, we are stuffed.
If only Reeves would replace a few of those Treasury economists with a couple of good historians. Because here’s the intriguing thing: when Britain became the home of the industrial revolution, it was in a pickle that is curiously similar to the one we face now. In wake of the Napoleonic Wars, the country was struggling under historically high taxes and national debt of more than 200 per cent of GDP. As with now, wages were stagnant and the wealthy had stopped investing in the real economy, gaining fatter rates of return by snapping up gilts. There were two game-changers: cheap energy and innovation.
As the world braces for an AI shift, Britain should worry that Big Tech firms are building mega data centres in Scandinavia rather than here. This is not down to our failure to build faster rail links between London and Birmingham: it is because the cost of energy here is quadruple that in Sweden. Labour’s green energy plans, which will leave Britain facing intermittency issues and ignore the potential of nuclear and fracking, are squandering the country’s fading hopes to lead the pack.
Labour’s indifference to social mobility is equally problematic. In the industrial revolution, Britain’s innovations were driven by non-elites who possessed above average levels of curiosity and intelligence, and didn’t mind getting their hands dirty. This rule still stands in the computer age of software tweaks and iterative design. Google founder Larry Page hailed from a family of GM car mechanics; the greatest of the computer science pioneers, Douglas Engelbart was a farm boy-turned-army radar technician. Labour’s loathing of grammar schools, passionless attitude towards apprenticeships and nonchalance about finally sapping the spirits of small business owners already squeezed by red tape and taxes could cost us dear.
Still, let’s not despair just yet. The Tories are starting to see the light. As the shadow science minister put it to me: “In the 21st century, when we think about game-changing infrastructure, it’s the base-load power, it’s computers, it’s data centres. Fiddling with the speed limit of trains is just a backwards way of looking at the UK’s problem.” Eureka, they’ve got it. Perhaps there is also a rash of brilliant techies out there who are on the cusp of a grand breakthrough, as the Westminster bubble babbles about the northern leg of HS2. We can only hope.