|
Let’s start with a question: if I asked you to think of a place that sums up what’s wrong with Britain, where would you choose? For some people, it’s the City of London: all those bankers who broke the economy just a few years ago and are now back to business as usual - complete, of course, with megabonuses. For others, it might be any Jobcentre or some other place that speaks of poverty of ambition, welfare dependency and all those other terms they use in the Daily Telegraph. For me, there’s a specific place. It’s called River Road and it’s in Barking, in the furthest reaches of East London.
You probably wouldn’t thank me for taking you there: it’s an industrial estate, of the sort we’ve all driven past. Big lorries judder past every couple of minutes. Men mill about in dirty overalls, and boots mucky enough to give a pub landlord a fit of the vapours. But here’s the thing: for an industrial estate, there’s not much actual industry going on.
There’s a business on River Road called Swift Engineering. Fifty years ago, its premises sprawled down one entire side of the road; now it’s on a tiny corner plot, and rents out the rest of the space. Thirty-one people used to work inside; now there’s four. And on the day we turned up there was only one - the manager, John Matheson. His staff are down to a three-day week. We went on a walk round the plant - which didn’t take long. What I chiefly remember was how, crammed into one room, were all these machines, worth hundreds of thousands of pounds. There simply wasn’t the business to turn them on, or to pay for the space they needed.
The site Swift used to occupy is now split with four other firms, all of them one- or two- man bands. We met one, a man called Anthony Harris, who came to the estate thirty-five years ago to train at another firm called Arrow Pipework. The way Anthony told it, he’d just left school at 16 when his dad kicked him out of bed and took him off for an apprenticeship. Only now there’s no Arrow Pipework - and precious few other jobs or training opportunities. Anthony’s eldest son is in his mid-20s and the most he’s ever got is the odd shift at Morrisons. Instead of a career, he’s been treated for depression. This isn’t a dramatic story - it’s a tale of gradual but unyielding decline. As Anthony puts it: ‘When it comes to manufacturing, we might be the end of the line’.
Talk about the loss of industry and people will think of areas like the North East or the Midlands. Truth is, it’s happening all over - as demonstrated by River Road, just ten minutes’ drive from the banks in Canary Wharf. Sometimes something dramatic happens like a local shipyard such as Swan Hunter shutting down - and it gets on the evening news. But most of the time this process - what I think of as the de-industrial revolution - barely gets airtime.
The importance of stories
What I want to talk about here is why this de-industrial revolution is happening and what its consequences have been. And in my view, one major reason is a story.
Most people don’t regard economics as being a narrative discipline. They think it’s all about percentages, spreadsheets, regression analyses. Intellectually respectable, perhaps - but deeply, terminally stodgy. But there’s a whole other aspect of modern economics that’s driven by stories. Think about the dotcom boom - spin the right yarn back then, and you could walk away a multi-millionaire. Or the adoption of the euro by 17 different countries - each telling themselves a tale about who they were and where their future lay.
So what’s the grand narrative in Britain? What’s the big story we tell ourselves about where we’ve been and where we’re heading? One big theme shared by the people in charge of our economy is the need to embrace change. Change is a synonym for progress, the bad is invariably outweighed by the good, and the dream is just around the corner.
And when it comes to discussing the business model for the UK - how this country pays its way in the world and how its people will make a living - we’ve been hearing a similar story from ministers, economists and commentators for the past three decades. Conservative or Labour, Thatcher or Brown, on this big story the tribes are in unison. It’s a simple message, in three parts. One, the old days of heavy, dirty industry are gone for good. The future lies in working with our brains, not our hands. Two, the job of the government in economic policy is simply to get out of the way. Oh, and we need to fling open our markets to trade with other countries - because the British can take on the competition, any competition, and win.
But if economics is a marriage of narratives and numbers, then you might define an economic crisis as when the two get out of sync - when the story that a country tells about itself gets too detached from reality. Sub-prime mortgages were an ingenious way of giving the low-paid a toehold on the housing ladder - until they were shown up as a device for financial chicanery. Greece was part of the Mercedes-owning brotherhood of Europe - until Athens went for a loan and was charged a higher interest rate than you’d get on your credit card. In Britain too, there’s ample evidence after thirty years that the promised rewards of this post-industrial future just haven’t materialised. The narrative simply doesn’t fit the numbers.
But it’s more than just the maths not adding up. That vision of Britain’s metamorphosis from industrial to knowledge economy always lacked something: a good answer to the question of what would happen to the people who worked in the old, supposedly-redundant industries and the parts of the country who relied upon them. And the result has been to turn previously productive classes and regions into mere supplicants.
This is a national story - of industrial decay presented as economic modernisation, of whole swathes of the country going backward and being assured this is progress.
Three versions of the de-industrial revolution
Over the past thirty years, there’s been three main versions of the de-industrial revolution. There’s the Thatcher argument; followed by the Blair vision; and finally the Cameron update. I’ll come back to Cameron and the future towards the end, but let’s start with Thatcher.
When she took over in 1979, the world was going through its second big oil shock, inflation had shot up and the government finances were in a mess. And as far as correcting the critical weakness of British economy and industry went, the Thatcherites had a clear answer. In a word: competition. In 1974, Keith Joseph - the man Margaret Thatcher described as her closest political friend - delivered a speech, a section of which was titled ‘Growth means Change’. Joseph’s argument ran thus: British industry was ‘overmanned’ with ‘too low earnings and too little profit and too little investment’. The answer lay in shedding factory workers, which would make industry leaner and stronger and free up labour for new businesses. ‘This is growth’, Joseph said. ‘Whether the new work is in industry, commerce or services, public or private … The working population must choose between narrow illusory job security in one place propped up by public funds or the real job security based on a prosperous dynamic economy.’
Nowadays, the smart thing to say about Thatcherism is that it was heavily improvised - that Joseph and Thatcher and the rest defined their ideology only after the first term. But reading that speech, made five years before Thatcher even moved into Number 10, what jumps out is how consistent the argument was: manufacturing, and the people who worked in it, had to be hacked down to size as a matter of economic necessity.
And they presided over just that process. Indeed, they encouraged it: with scorched-earth austerity that put many companies flat out of business; with privatisations and by throwing open markets to competition; and with an economic policy increasingly geared towards a housing boom and the City of London. Nearly one in four of all manufacturing jobs disappeared within Thatcher’s first term alone.
And despite Joseph’s promises, the middle-aged engineers who were laid off didn’t go off to become software engineers - they were tossed on the scrap heap.
Compare that with Tony Blair. Because it’s with him that the argument for moving from industry to services shifts from being framed as one of dire necessity to being a vision about Britain’s place in the world. Blair, Brown, Mandelson: the architects of New Labour were convinced that the future lay in what they called the knowledge economy. Pretty soon after becoming trade secretary, Mandelson was off to Silicon Valley, declaring it his ‘inspiration’. And when dotcom fever was at its peak, Gordon Brown promised that the UK would be e-commerce capital of the world within three years. Again, the theme was simple: most of what could be manufactured could be manufactured cheaper elsewhere. The future lay in coming up with the ideas, the designs, and most of all the brands.
The great irony is that all this techno-utopianism came from men who would struggle to order a book off Amazon. Alistair Campbell tells a story about how Tony Blair got his first-ever mobile phone after stepping down as prime minister in 2007. His first text to Campbell read: ‘This is amazing, you can send words on a phone’.
Had they known a bit more about technology, Blair and Brown would surely not have found it so glamorous. But as it was they had plenty of advisers and consultants and thinktankers to help them stay cutting edge. There were government white papers on how ideas had replaced things as the motor of economic growth - try telling that to the factory owners of Guangdong. Much breath was wasted on talk about video gaming and all the industries that would replace the old ones. Where once the British had sold cars and ships to the rest of the world, now it could flog its culture and tourism – and Lara Croft.
One of the most interesting walk-on roles in this era was played by an American academic called Richard Florida. His big thing was that the successful regions of the future would be driven by young people living in the city centre - what he called the ‘creative class’. And there was an even more elite group that he called the ‘super-creative core’. It was always a pretty flawed argument: ask Florida who was in his ‘super-creative core’ and he’d name IT support staff and all sorts of occupations that didn’t actually sound all that groovy. And the other thing that really sticks out about Florida is how he fences off creative work. You’re either a knowledge worker or a factory worker - as if the stuff done by other people didn’t require brains. Which just doesn’t stack up.
Alan Reece recently took me on a tour of one of his factories over in Walker. Now, Alan went to Cambridge, got a doctorate and lectured in agricultural engineering at Newcastle University before setting up his engineering companies. Yet in the very early days, he’d made a mistake in a design that had to be pointed out to him by a subordinate who lacked these high-flying qualifications. Well, when Alan was told about this error he pulled himself up to his full six-foot plus and towered over the oily rag bearing bad news and said, ‘Look here, my man, there can’t be a mistake. I’ve got a doctorate in engineering and this gentleman’s checked my drawing and he’s got a first-class honours’. Things got a bit heated - until finally, the Geordie worker pulls this primitive trigonometry calculator out of his overalls.
It’s covered in crap, so he has to spit on the display. But he does the calculation - and he’s right. And, as Alan says, nowadays that man would be a cert to get a first-class degree of his own. But in Florida’s taxonomy he’s a mere grunt.
Running through a lot of the knowledge economy talk is a carelessness about people that often slips into contempt. For the Labour governments from 1997 on, the choice facing workers in this entrepreneurial, innovative, young country was very simple - they either brained up, or got written off.
Blair and Brown would help youngsters with the learning part, by vastly expanding higher education; but they had little to offer the middle-aged man whose carplant had just shut down. As for the areas that had just seen their economy disappear down the plughole, they had to reinvent themselves, as new cultural centres. The smart ones launched regeneration projects, the smartest ones – like Gateshead – managed to do a good job of them.
Now what I’m not trying to paint is a picture in which industrial managers and workers are traduced by silky Westminster types. There’s a lot to be said about how rotten British bosses and investors are. One of the workers at Alan Reece’s firm told me how the previous owners used to treat employees like dirt. Every time the workforce went on strike, which was often, one of the Pearsons would buy a new Rolls Royce Silver Cloud and drive through the picket line, waving two fingers at his own staff.
No, the real charge against Blair and Brown is that, rather than focus on the problem of uncommitted and underperforming managers and shareholders, they ran off after a fantasy.
But they weren’t the only ones to promulgating the gospel of the knowledge industries: there was a whole industry devoted to it. Just flick through the publications of the local regional development agency, One North East. There’s lots of documents with titles like: Towards an E-region. But there’s just one on manufacturing. There is, however, a discussion paper called ‘The North East: Bohemian or Behemoth?’. It mentions a pensioners’ day centre on the western outskirts of Newcastle, where young and old can chat ‘on the complexities of digital art’. And there’s a scheme in Durham that helps young people ‘avoid the temptations of crime by encouraging them to take up fishing’. Worthy initiatives, no doubt, but what has this got to do with regional development? All becomes clear with the RDA’s discussion of how it can can keep ‘bright, innovative people, with transferable skills’ in the area. So that’s what it’s about: attracting the super-creatives. The leaflet, it won’t surprise you to learn, was produced for a visit to the North East by ‘creativity guru’ Richard Florida.
Just as with Blair and Brown, there’s the unmistakable sense of people who’ve had the tutorials, or been on the awaydays, but still haven’t got the hang of the terminology.
The results
Let’s review the wreckage. When Thatcher came to power, manufacturing accounted for almost 30 per cent of Britain’s national income and employed 6.8 million people. By the time Brown left Downing Street in May 2010, it was down to just over 11 per cent of the economy and a workforce of 2.5 million. Now, for the sake of fairness let me make two caveats. First, manufacturing is partly a productivity game: the point is you get more machines in, so you employ fewer staff on a particular task - the idea being that they can do something else instead. Second, other countries have stepped back a bit from manufacturing - all those new Labour-isms about the competitive threat from China and India were not just babble. But by any standards the numbers you’ve just heard represent a collapse. As the government itself admits, no other major economy has been through our scale of deindustrialisation.
In 1979 Britain had nearly as many manufacturing workers as Germany; by the time of the financial crisis, Germany’s manufacturing workforce was two and a half times the size of ours. Other countries haven’t sought to shed their industries but have tried to protect them. The Germans and French have kept their big domestic brandnames - the Mercedes and Mieles, the Renaults and Peugeots - and with them their supply chains of smaller manufacturers and partners. In Britain there’s been no such industrial husbandry, with the result that we have few big manufacturers left - but a profusion of bitpart makers. Think about River Road and its row of one-and two-man bands. Is that a bad thing? I would say yes. Bad economically, bad industrially and terrible socially and culturally.
The economic problem with this strategy can be summed up in one word: Greece. Not my comparison, but the one that was made to me by locals last time I was up here. Hang on, I thought: Britain’s nothing like Greece! Nevertheless, I saw their point. Because the loss of manufacturing means Britain no longer pays its way in the world. Last year, we bought £97bn more in goods from other countries than we sold to them - the biggest shortfall since 1980. The traditional view of the deindustrialists in Whitehall has been that this doesn’t matter: that we could make good the gap by borrowing more and selling our assets to foreigners. But there are problems with relying on foreigners for hard cash - they can simply refuse to extend it to you. If you want proof, just ask George Papandreou.
At this point, I should come clean and say that I’ve got no great sentimental attachment to factories or even to making things. I’m not hankering after a recreation of those black and white Hovis ads. I’m not even much cop at DIY. But it’s plain that what’s replaced manufacturing hasn’t been any better - and is often considerably worse. In the North East, for example, manufacturing jobs have nearly halved since 1997 alone - one of the biggest drops anywhere in the country.
And what’s come along in its place? The simple answer is: not a lot. Drive along Wallsend, which used to be a hub of shipbuilding in Britain, and it’s now just barren. And the figures confirm this. During the period from when Tony Blair took power to now, the private sector has created fewer jobs in the North East than the number of people made redundant.
So the state has had to fill in. It’s done that in two ways: either by paying welfare, so that over one in six of all residents is on some form of out of work benefit; or by creating jobs in education, health and government. Nothing wrong with those roles, but they aren’t the shiny, creative, private-sector employment promised by Blair. If you want to see those, walk a few minutes from Newcastle train station to the site of the old Scottish and Newcastle brewery. What’s replaced it is something called Science City, which was meant to be a home for high-tech new businesses. But all you can see there right now is some fancy student accommodation and a load of barren ground. The point is that the North East is not some exceptional failure while the rest of the country surges ahead. On the contrary, it’s the norm.
The Centre for Research on Socio-Cultural Change (Cresc), based at Manchester University, have been digging into where the new jobs came from over the past decade. What they’ve found is that in the Midlands, the North, Wales and Scotland between 1998 and 2007, the bulk of the new jobs came from the state, covering up for the weakness of the private sector. It’s only really in London and the South – where banking and its related industries are concentrated – that the private sector took on lots of new workers. We’re always told that the past decade was a massive boom. But looking back it seems less a golden age, than a plastic one.
And that’s as true in the North East as anywhere else. Just look at the Newcastle Journal list of the 200 biggest companies in the region. Recently I looked at the top 10 for 2006, to get an idea of what the region had looked like in the boom. In the top 10, there was Nissan, which is part-Japanese and part French - owned, in fact, by formerly state-run Renault. There were three companies that do what the state used to do - a water utility and two public-transport companies. And what’s left are a couple of housebuilding firms - Bellway and Barratt’s - and at no 1, Northern Rock - which is to say the bubble economy, in miniature.
I ran this list by Andy Pike, who’s a professor at Newcastle University, and asked him who would have been on the list thirty years ago. Among the candidates he reeled off: Swan Hunter, Vickers, Parsons, Rolls Royce, Scottish and Newcastle, Northern Engineering Industry … Nearly all solid manufacturing names. The smaller new industries that have sprung up in the North East are not especially impressive either. The region is now in with a good shout to be call centre capital of Britain, which probably isn’t a title anyone wants. You do get the odd hi-tech cottage industry - I’m thinking of something like the video games firms in Middlesbrough. That’s good quality work. But it’s small scale and never likely to employ more than a few IT graduates. Not the workers laid off by manufacturing - and probably not their kids.
And this is the story all over the country. In 2005, MG Rover shut its plant at Longbridge in the West Midlands, with the loss of 6,300 jobs. These were among some of the most skilled workers in Britain: if anyone was going to bounce back, they were. Three academics tracked what happened to three hundred of them. They interviewed them regularly for three years after the factory was shut down. It’s one of the most revealing bits of academic research into the human costs of deindustrialisation. What they found was that the Longbridge staff did bounce back - as much as they could. About 90 per cent of them went and got another job, the vast majority permanent. Quite a lot retrained and some went into the service sector. In other words, they did everything the government told them to. Only now, these tremendously skilful workers at a prestige employer - what you might call the aristocracy of labour, if you were that way inclined - were earning an average of £5,640 less every year than they had at MG Rover. And a quarter of the people interviewed admitted to suffering financial difficulties, to now living off their savings and the like. Which I think sums up how the de-industrial revolution has cut adrift an entire class. Skilled blue-collar workers may not have had university degrees but their work was technical, demanding and - thanks to the trade union representation you got in much of the old industry- well paid and with decent terms and conditions.
Think back to Anthony Harris, who I mentioned at the start of this piece. He left school at 16, got an apprenticeship and trained to a high level of skills. Now consider his son, who’s looking at routine, low paid, and often insecure work in a supermarket or the admin part of the public sector. How is that better?
The post-industrial city
And think about the cost to the places that used to be home to all this now rotting industry. Here we are in Tyneside, integral to the history of the industrial revolution, built on industrialisation. There’s Newcastle University - founded by the arms-maker William Armstrong - the local tech colleges, which used to provide training to factory staff on day release, the lit and phil, the mining and engineers institutes, the social clubs. Tristram Hunt, historian of Victorian cities, has talked about how industrial areas created cultures on the back of trade - and here is a brilliant example of that.
But as Hunt goes on to say: ‘Today it is the other way around. Instead of culture springing from the inner workings of our cities, we see it as a way to make our cities work’. Cue people like Richard Florida. Cue Manhattan style loft conversions and regeneration blandscapes designed to make cities look like anywhere else - expressly so they can pull in people from anywhere else. And cue excitable tourism marketing offices talking about how South Shore Road, just outside the Sage in Gateshead, is the ‘hippest street in Britain’ - as apparently voted on the internet.
What Newcastle and other cities have been offered by de-industrialisation doesn’t build on any of their traditions. To go back to Hunt’s point, these are areas whose entire culture is a productive one; they are rooted in making things and selling them. What Thatcher and especially Blair effectively asked them to do was to change their cultures to being consumerist - to buying things instead, often on tick.
So you get a giant shopping centre like Liverpool One describing itself as the largest urban regeneration project in Europe. You get American economists arguing that free trade may have reduced salaries for blue-collar workers in the West - but they can now buy cheaper Chinese imports. In other words, you may have lost your factory workshop - but at least you’ve got a pound shop.
If you’re employed in the service sector - or more to the point are a politician who reckons services are Britain’s future - there might seem nothing wrong with all of that. But the net result is to undermine whatever economic or political clout the old industrial regions and classes had, by making them dependent on central government for jobs and welfare. What the de-industrial revolution has left us with is whole swathes of the country that have been turned into supplicants of Westminster.
David Cameron has talked about rebalancing the economy, the March of the Makers. And it’s difficult to disagree with the argument that the Tories put about - that Britain’s economy is lopsided, dependent on the City and the housing bubble. But I don’t see the policies to match the talk. Like many in Westminster, Cameron senses something is up, but isn’t sure exactly what - let alone what to do about it. Instead, we get the same prescription as under Thatcher - that if you cut back on public spending, private spending will inevitably grow. We get the disastrous decision to give train contracts to German factories rather than to workers in Derby. We even get the heir to Blair talking in New Labourish terms about ‘the high-growth, highly-innovative companies of the future’ and paying tribute to - who else? - Richard Florida. When it comes to manufacturing, Cameron sounds much more radical than he is.
Suggestions
I had thought of ending this talk with a laundry list of possible initiatives. Like directing the banks that the taxpayers now own to lend more and more cheaply to businesses operating outside London and the South East. Like commissioning more big infrastructure north of the Watford Gap. Cutting taxes for companies that produce more and employ more people in this country. I’d also suggest kicking away the Westminster adherence to ever freer trade. We could start by insisting that more public-sector commissioning is from British manufacturers. Why should the NHS get its wheelchairs or pacemakers from American firms? But this isn’t the right forum for policy wonkery. So let me end with one last pitch. After all I’ve said, some of you may still be wondering why I’ve picked out industrial estates as the spot where Britain’s got it wrong, rather than its banks or its Jobcentres.
The answer is because manufacturing is the place where those two debates cross. If you’re worried about financial recklessness, and raging inequality, then you want a more mixed economy. If you’re worried about jobs then manufacturing is about the best source I can think of for volume employment with decent wages.
Other debates are also haunted by the spectre of what we’ve done to our industrial areas. Politicians blah on about localism with barely a thought about how to restore the independence of our local economies. Pundits bemoan the loss of community spirit without mentioning that we’ve put a wrecking ball through many communities.
Let me leave you with another mental exercise, this one in two parts. First, forget Thatcher and Blair and think back to Anthony Harris. What justification can you offer him and his son, and the millions like them, who’ve seen their worlds torn apart over the past three decades? And what do you think the consequences will be if we can’t find a replacement for what they’ve lost.
This article is from issue 50 of the journal Soundings and is available online exclusively at NLP.
This is an edited version of a lecture given for BBC Radio 3 at the Sage, Gateshead on 6 November 2011.
Aditya Chakrabortty is economics leader writer for The Guardian.
http://www.newleftproject.org/index.php/site/article_comments/the_de_industrial_revolution
|