Supply chains and interruptions to output

During the prolonged wrangles over Brexit we were beset with false claims that supply chains would be disrupted  by moving to a Free Trade or WTO based future arrangement  between the UK and the rest of the EU. Some of us pointed out the long and complex supply chains of industries like the car industry already included substantial supplies from non EU sources which worked fine despite coming from outside the single market.

Today we see supply chains badly disrupted in some cases both within the EU single market and from outside it by the impact of government policies followed around the world to deal with the virus. It is curious we do not hear incessantly and regularly from those who used to  be worried about these things, now there is something to worry about.

There is first of all the interruptions to supply from abroad in to the UK because the supplier has been instructed by their national government to cease production as part of a plan to impede the spread of the virus. There are then the interruptions to supply that come from a foreign government placing an export ban on essential goods in short supply, as the Germans did on certain supplies needed for virus treatment. This is on top of the US moves to impose tariffs and bans on countries that the President regards as a  threat to national security. The USA is seeking to stop allies from buying from some Chinese technology providers, and is imposing strict sanctions on Iran, for example.

Some argue that this means we have now seen peak globalisation. There are  various good reasons to encourage more domestic production. It cuts travel  miles for products and components. It cuts the risks to supply lines from geopolitical events in various countries. It adds more value in your own country. The economic argument against is that based on the theory of free trade and specialisation. If each place or country specialises in a few things that it  becomes very good at and reaps economies of scale in  , total world real income should be maximised. That argument works well when most or all governments believe it and promote it, but comes under pressure when countries cheat. Mr Trump’s argument with the Chinese is over just that. He thinks they cheat on technology, currency level, state aids  and other matters.

The UK is discovering that it cannot rely on China and Germany for some  imports at a time of virus crisis.   The UK private sector is showing considerable flexibility, with Distilleries offering hand gel, engineering businesses offering ventilators and textile companies running up personal protection clothing. The main constraint on our flexibility seems to be occasional delays in the public sector testing and approving what the new producers can deliver. We need to get better at this flexibility when we cannot always rely on abroad to supply the things we really need. We also need to cut the food miles and make sure our fishing and  farming system encourages a higher proportion of home grown and home caught produce.




Green transport

I have sent in my views on the need for an early return to work along with strict safeguarding for all people at serious risk from the disease, and my views on actions needed to reduce the rise in unemployment and termination of businesses in the meantime. Today I wish to turn to another issue.

The government has just produced a document entitled “Decarbonising transport –  Setting the challenge”. It shows  how on current policies transport will  still be a major source of carbon dioxide in 2050 when the government wishes to  be carbon neutral. The Paper recommends six big actions to shift the carbon dioxide curve more decisively downwards.

It says we “need to accelerate the modal shift to public and active transport”, decarbonise deliveries ,make the  UK a hub for green transport technology, toughen regulations to decarbonise road transport, develop placed based strategies that get cars off the roads, and reduce the global carbon dioxide output of ships and aviation.

One of its most amusing charts is the one telling us just how much carbon dioxide  journeys by plane or car entail. It tells us that if we journey to Edinburgh from London by plane we will cause the emission of 144kg of carbon dioxide. If we go by petrol car it falls to 120 kg and diesel car to 115 kg. However, if we walk or go by bike it assures us it will mean no carbon dioxide at all.

They cannot seriously think that walking or cycling to Edinburgh is an option for most of us. The Paper is short on specifics, and recognises that there will need to be new technologies and new greener fuels for old technologies if they are to get anywhere near the zero carbon dioxide target by 2050.

They remind us that cars account for 77% of  miles travelled, buses 4% and trains 9%. They anticipate a 35% increase in distance travelled by car by 2050, bus distances staying the same and rail going up by 60%.  They also assume a 70% increase in van use  but only a 7% increase in heavy goods vehicles, which is a strange variation.

I would be interested in your thoughts on how feasible net zero for transport  is by 2050, and what changes could deliver it.  




Following up needs for improved government responses

Today I joined the Cabinet Office call where MPs can reinforce the issues they are highlighting for constituents and urge the government to resolve the problems.

I repeated my regular requests for better and speedier  treatment for the self employed and small businesses prevented from earning a living by the controls. I was told the Chancellor is making an improved set of proposals today.

I urged the government to respond positively to the Speaker’s proposals for a virtual Parliament to meet, offering  more opportunity for MPs to cross examine Ministers on progress and policy. I will follow up with the Leader of the Commons.

I asked about the numbers and requested regular publication of how many beds there are available in hospitals and how many net new admissions there are day  by day. I asked for an early sample testing of the population to find out how many people have the virus currently and/ or to find out how many people have now gained some immunity to it. We need population wide figures if the government is  going to manage the totals.




Helping small business and the self employed

I am going to have another go at getting the government to speed up and widen the eligibility for its schemes of help for small businesses and the self employed. I am receiving numerous very worrying emails from people whose incomes have been stopped  who do not  qualify for assistance.

  1. The government needs to include owner Directors of small companies who rely on the income and maybe dividends of their business to pay their living costs.
  2. It needs to raise the earnings ceiling on the self employed scheme
  3. It needs to include people who have set up businesses that is their sole means of financial support more recently
  4. It needs to aim for an early payout, not sometime in June.
  5. It needs to offer downloadable simple forms now that permit people to apply for money on  a self certified basis, with adjustments made later in the year. These should be made through the tax system with the payments made as a kind of negative tax against claims based on  no income

The government also needs to speed up the applications and decisions on the furlough scheme for business. Otherwise more companies will conclude they have to  make people  redundant to  save costs.

The commercial banks need to rethink their demands for detailed business plans and cashflow forecasts, and  for personal guarantees, for what is bridging finance for enterprises that have been forced in to temporary closure so producing no revenue. The interest rates charged should also be realistic compared to the commercial banks’ very low financing costs with official rates around zero.




We Don’t Believe You – Why Populists and the Establishment See the World Differently

I was recently interviewed on the Politics and Polemics podcast about my book ‘We Don’t Believe You: Why Populists and the Establishment See the World Differently’.

The podcast is available to listen to here.