Labour's Growth Plans?

Although Labour's budget has started to rebalance the inequalities between rich and poor neighbourhoods, public and private sectors, and male and female pay structures, their strategy for growth has yet to be set out. This is becoming increasingly important because it is unlikely that Kier Starmer will win a second term as PM without achieving significant growth: he has idenitified it as the single most important factor in his plans, but it will not be able to deliver itself. So how do Labour hope to achieve it? Most people would probably agree that growth will come from the use of information technology to drive increases in productivity. But few have recognised that this just creates an additional inequality, between high-tech and low-tech users. So unless a regulatory mechanism is written into Labour's plans, growth is likely to be based on one group of society exploiting another, in the same way it always has been.

SUPPLY CHAINS

The single most important factor in the slump we saw during Covid was a breakdown in global supply chains. This was due to a popular high-tech concept called 'Lean Six Sigma'. This attempted to reduce waste and increase profit margins by treating the hugely complex and international supply chains as one long conveyor belt. This was only made possible by information technology. When one product was sold to a customer at one end, another product was automatically ordered from suppliers at the other end. This reduced the need for any expensive storage capacity in between, making the whole process maximally efficient, thereby increasing profit margins.

For a while this system worked perfectly, but when Covid hit, smaller parts of the supply chain began to break down. They had very little spare capacity with which to flex to meet gaps in the supply and demand for materials and labour. This led to a catastrophic collapse of the conveyor belt as a whole. My theory is that 'building back better' has meant organisations have attempted to reduce the risks involved in resourcing their components internationally, by resourcing them from suppliers closer to home. This may have reduced the risks of the chains breaking again, but has meant that labour costs, and therefore the cost of products to the consumer, have remained relatively high. This is because manual labour in the high-tech EU and UK economies is relatively expensive. So the profit margins for many parts of the manufacturing process that used to be outsourced to lower wage, lower-tech, economies around the world, have been squeezed.

This change in global manufacturing practices is nowhere more obvious than the automotive industry. During the pandemic, no-one needed a new car. The reduction in demand was balanced by a parallel break down in the supply chain, so the net effect on pricing was that cost of purchasing a new vehicle remained about the same. However, the reduction in volume of new cars passing into the second hand car market led to demand for second hand cars outstripping the supply. The price for purchasing a second hand vehicle then rose steadily, by an estimated +30% year on year, from 2019. In addition, replacement parts were harder to source, so the cost of repairs increased to extortionate levels. Many people reverted to using public transport, which created problems for the aging public transport networks. The virus spread quickly across commuters who were largely employed in low-tech sectors. So it can be seen that huge inequalities began to emerge in the death rates of the high-tech and low-tech transportation sectors and their associated workforces. Now, it just so happens that cars are the biggest export of the EU and UK's the high-tech automotive industries. America's biggest export is the petrol that fuels our cars, and China's is the electrical products that go into making them, so the GDP of all the major economies in the world were interlinked in this same supply chain. 

Now, a second blow to the UK economy emerges. Recent figures suggest that while the EU's was able to adapt its Lean Six Sigma supply chains to source more of its parts from an internal market the UK has not been able to keep up. This was probably because of Brexit and the fact that we have basically just isolated ourselves from all our nearest trading partners. So the first thing the UK government will now have to do is fix its supply chains and this is not going to be easy. Unless the EU suddenly has a reverse of its policy on the internal market, it is unlikely to allow any of its member states to do deals with the UK independently. Thus, UKGDP looks like it is going nowhere very fast, and that Brexit has well and truly sunk the UK economy.

DEFENCE INDUSTRY

So this is where the defence industry comes in. The UK has developed its defensive capabilities around trade. It knows better than anyone else that trade is not possible without securing the passage of goods by force, if necessary. The EU pays NATO for these services, but the Trump administration is likely to demand more and deliver less. Thus the UK has a unique position in NATO due to the 'special relationship' it has with the US, and the strategic position it has for the trading routes in and out of Europe. For example, whereas Ireland is not a member of NATO it still benefits massively from all the protections that NATO offers the EU as a whole, including those afforded it by the UK's continuing presence in Northern Ireland. 

So there is potential for the UK to use its unique position within NATO as a bargaining chip to secure a better deal with the EU on trade. This would be based on it increasing its commitment to the defence industry, through the R&D it already shares with the US and EU. NATO has always been very active in the R&D. It is interested in all sorts of scalable healthcare products and industries. The pandemic showed how agile the UK is as a world leader in the conversion of genomic intelligence into world-beating pharmaceutical products, with Pfizer and Astra-Zenica leading the pack in these fields. 

It may therefore be in the EU's and UK's interests to create a super-national defence industry that is similar to the one that the US had during the Cold War. That is where the nation state commissioned innovation from the private sector, but because the private sector was not tied to any particular nation state, it was able to adjust more easily to innovations, and was more efficient that the Soviet Union in keeping costs down. And if a super-national industry like this was looking for a place to base itself, for legal and ethical business purposes, then nowhere could be better placed than Northern Ireland, from a geo-political and military point of view. 

HUMAN CAPITAL

The pandemic proved the worth of many areas of the economy that had been under-valued for many years before. Genomics, for instance, is just one branch of Human Capital management and exploitation. With greater knowledge of the interaction between genes and environment on the horizon, this is likely to be a hihgh growth area. In addition, the hierarchical structure of a centralised NHS, in association with its local Higher Education, Public Health and Adult Social Care partners, makes it perfectly placed for investment in R&D that has scalable potential. 

However, weaknesses have been exposed in its data storage, data sharing, and data security architectures that need to be worked out, probably at the level of the new Integrated Primary Care Hubs. That is, if the public sector will be able to take full advantage of the private investment in R&D that is now available in the synergy between Big Data, Artificial Intelligence and Large Language Models. For example, a local authority could set the expectation that a drone will be able to deliver a defibrilator anywhere within its geographical area within five minutes of a 999 call being received. It would be up to private providers to compete for the contract, but up to public services to run it.

This could help prepare the ground for more innovative social housing, that could be purpose-built by the private sector to meet commisioning objectives set out by local public services. They might, for instance offer telemedicine services to retirees, with remote sensing capabilities, through state-of-the-art infrastructure, that would be agreed for individual tenancies, that may or may not attract public funding, following the appropriate needs led assessment. 

The facilities would have to meet local standards of quality and inter-operability, so an element of licencing woud have to be involved. But the model for these sorts of facilities already exists, and could easily be extended to many different demographics, many who are currently unable to secure even the most insecure types of tenancy in the current housing market, providing some certainty and return on investment, for landlords and tenants alike.   

The NHS also needs to provide more assurances to local businesses that workers will receive an appropriate occupational health service at the point of need, regardless of ability to pay. This would be alligned with DWP benefits and would be aimed at reducing the number of unemployed who become inactive. This number increased dramatically during Covid and has remained very high. Demographic factors are significant, and may require a public health approach to accommodating the needs of different cultures, in order to improve access to health. For example, blood testing for Vitamin D levels among immigrants, testing for male and female hormone levels at specific age points, and analysing MRIs for white matter lesions for anyone suffering concussion, should be reviewed by NICE for their contribution to quality adjusted life years. 

In addition, anyone who contributes their own personal and provate data to a givernment run public health programmes should be able to get an estimate of their life expectancy in return, through an app delivered by their GP. This will help establish the sort of risk-reward calculations that healthcare professions need to embed in their patients, and help patients can be empowered to take control of their healthcare plans for themselves. It should also help stimulate the private healthcare prividers to provide a suite of psychological and physiological assessments that can be fedback to the GP for R&D purposes.

ENVIRONMENTAL ASSETS

Advances made in the health and social care sector through R&D needs to feed into an information revolution in other sectors. Evidence already exists in the energy, mining and agricultural sectors that more and better knowledge infrastructures can make them more competitive, scalable, and profitable. Unfortunately, these industries are currently extremely exposed to exploitation by financial services which is a high-tech industry that has no interest whatsoever in promoting UKGDP or reducing the gap between them and more low-tech economies. Government could help small and medium sized businesses to access the same Big Data, Artificial Intelligence, and Large Language Model resources that the multi-national conglomerates do. This should facilitate more routes from cottage industry to mass market, and provide some assurances regarding risks to investment capital. 

Recent history in Lithium Mining, Electric Vehicles, Fertilisers, and Flooding show that the more exposed the UK comes to global forces outside of its control, the more adaptable it has to become. The need for us all to 'Think Global & Act Local' is demonstrated by organisations like the 'Farming Forum' operting at the grassroots of international collaboratives like the 'Agricultural Market Information System'. These platforms prove the value that information sharing amongst competitors has to all businesses within a sector, in terms of: sourcing raw materials, predicting trends, setting prices, managing waste, sharing knowledge, and collective bargaining. Government have attempted to plug some of the barriers to scalability through websites like www.custom-declarations.uk. But more could be done with this data. If the information revolution is about anything, it is about government providing the environmental conditions for individual aspirations to grow and accumulate wealth. 

At the heart of this information revolution is an investment in human capital. This means new technology will likely be deplyed in exploiting human capital. But we must not repeat the mistakes of the past where exploitation means depriving individuals of their liberties and whole communities of their identities. Our public services have only survived because of the contributions our Commonwealth partners have made to them. And because of their contributions, our public services have become hot-spots for the creation of new forms of cultural and identity capital. We should be ready now to export some of that learning to the rest of the world. 

The easiest way to do that is through knowledge transfer and cultural exchange activities for our Commonwealth students. Once they have graduated from a UK Higher Education Institutions they should be offered an opportunity to work on an International Development Programme of their choosing, in return for having their student loans paid off. Only in this way will we be able to repay the debts of the past, and continue to look forward to their help in the future. It is in the interests of the Commonwealth that we work together to create these new markets, markets within which the information revolution can continue to grow.    

CONCLUSIONS

There is plenty to be optimistic about when it comes to the UK's growth prospects. It may take strong leadership to see it through, but a vision and set of values is already in place by which we can plot a course through some of the most difficult obstacles we face in the current economic climate. We must build an infrastructure that can accelarate the information revolution, that creates a feedback loop between the UK Government and every Commonwealth Citizen, if we are going to be able to participate in the global economy in the way that we want to. New technologies make this possible, but implementing the lessons we have learned from our not-too-distant past is the only way we will be able to make it real. We are on the threshold of a new age, with unknown potentials and dangers, but with good planning, some trust, and a commitment to each other, I am sure we can all pull through. A Happy Thanksgiving to all!