The Secret Brexit Benefit

Britain should embrace growth led by manufacturing and exports

Towering columns

At The Critic, Derrick Berthelsen argues that the OBR is ignoring the positive impact of Brexit on reshoring manufacturing and improving productivity.

The academic research we studied earlier is all from a time when manufacturing was being offshored to cheaper locations. When globalisation was in its ascendancy. That is not the case now. Now it is reshoring — defined as the relocation of previously offshored production activities back to the home country — which is in vogue. Not least because of the supply chain disruptions caused by Covid. But academic studies are few and far between, so recent is this phenomenon…

…According to Manufacturing Logistics and IT, 90 per cent of manufacturers in the UK engaged in the reshoring process report successful outcomes. Around a quarter report enhanced value, heightened security and lower costs. According to their polling research “business leaders say AI driven tracking platforms (31 per cent), digitalisation in factories (29 per cent), and data analytics for risk management (29 per cent) — i.e. smart factory capabilities — are enabling the move towards reshoring.”…

…A September 2022 survey by the Chartered Institute of Procurement and Supply reported 45 per cent of companies were planning to move their production back to the UK in response to challenges faced during importing and a consistent increase in shipping costs. An October 2023 survey by Censuswide for Manufacturing Logistics and IT found 58 per cent of manufacturers have started to do so. It is clear that reshoring is happening, and in a very significant way. But what is not yet clear is what effect this will have on productivity. Certainly based on the available evidence it would seem incongruous to assume a productivity decline. 

For The Telegraph, Nick Timothy makes the case for a new economic model that can address the failures of globalisation and dependency on service industries.

Britain is over-exposed and under-prepared for the new world. Many of the theories, assumptions and policies that underpin our economy are bankrupt. Writing for the IMF recently, Sir Angus Deaton, professor of economics at Princeton, reassessed his own beliefs. Business has too much power over workers, he said, free trade had damaged the Western working and middle classes, and immigration does more harm than good.

Few of Sir Angus’s colleagues would be so honest, but we should not stop there. Classical economic theory holds that it does not matter who owns what, nor what is made where. Comparative advantage means countries do what they are good at, and buy what other countries provide. Thus, trade makes us all richer. But this is not the case. First, governments get in the way. Countries like Russia and Iraq – controlled by Iran – can sell us hydrocarbons, but we should not fund our enemies. China was good at manufacturing protective equipment, but blocked its export when Covid first struck. The European Union sought to confiscate vaccines bought by Britain. 

Neither does comparative advantage make everyone better off. If Britain only does the things it is best at – like financial services – and stops doing the things it does less well, the people and places reliant on those abandoned industries suffer. We end up, as economic geography shows us now, with one prosperous but overcrowded corner of the country, with the remainder reliant on fiscal transfers to sustain an acceptable quality of life.

For The Times, David Smith defends the furlough scheme’s success in protecting jobs, being put together at speed, and providing value for money.

Four years ago, we should remember, Britain was facing an unemployment catastrophe. As the economy was about to fall off a cliff, suffering a record 20 per cent slump in gross domestic product in the second quarter of 2020, credible forecasts suggested a rise in the unemployment rate to 10 per cent, 12 per cent or 14 per cent as companies had no option but to lay people off. We could have had an unemployment level of four million, which has never happened before.

The furlough scheme kept unemployment down better than anybody could have hoped. A detailed official assessment by the Treasury and HM Revenue & Customs, published in July last year (a year after Sunak left the Treasury) showed that the scheme had been used by 1.3 million employers and had covered 11.7 million “employments”, or jobs. Without it, according to the evaluation, four million workers would no longer have been in work and a fifth of firms that used it, about a quarter of a million, would have been gone bust. GDP would have been materially lower in 2021 than it turned out to be.

Although the gross cost of the scheme, at £70 billion, was high, the net cost to the public finances was much smaller, at £25 billion, in part because furloughed workers paid tax. There was some fraud, as with other Covid schemes, but this was small in relation to the cost.

At ConservativeHome, Phoebe Arslanagić-Little believes we can close the birth gap and tackle demographic decline.

The serious economic consequences of demographic decline that drove the reaction to research in the Lancet are very real. Longer lifespans and fewer young people means a smaller working-age population, placing great pressure on the state to provide for a costly older population just as revenues fall. There will be other effects: a greyer Britain with fewer young people will also mean less activity of the young, including innovation and entrepreneurship.

Yet the existence of the birth gap should galvanise and invigorate our leaders to meet the demographic challenge. It is a signal that a major step towards solving the demographic challenge is simply to consider how we can make life better and easier for parents and then make those changes. Of course, tangible, positive changes to peoples’ lives might not always be easy to implement, but they are resoundingly within the gift of government. This is tremendous reason for hope – and for political action.

Equally, the birth gap is a riposte to those who claim that a policy response to the UK’s demographic challenge will consist of ‘pressuring’ women into having children. Instead, meeting the challenge means helping women to have the children they already want. We stand on the shoulders of generations of feminists who fought for the social acceptance of childlessness as a valid choice and for the right of a woman to be something other than ‘mother’. That victory is rightly treasured. Yet simultaneously, the majority of women do want to become mothers, and ensuring these women are not locked out of parenthood is important in ensuring they lead the lives they want.

At The Critic, Sam Bidwell busts the myth that the young are uncritical of mass migration and explains how the Right can win over young voters.

Like so much of our political orthodoxy, this narrative bears little relation to reality. In fact, polls consistently show that young people favour less immigration, not more, even if they also recognise the benefits that high-skilled immigration can bring. The latest figures from YouGov show that 43 per cent of 18-24s believe that immigration has been too high over the last 10 years; just 9 per cent think that it has been too low. Amongst those aged 25-49, that gulf is even larger, with 55 per cent saying too high, and 6 per cent saying too low.

Yes, you read that right. Young people really do support lower immigration, even if the crowing of radical university students might lead you to believe otherwise. The great majority of young Britons live outside of insular, socially liberal bubbles in places like London and Brighton, and share little in common with the ranting, raving ideologues who dominate public perception…

…The key to converting this fledgling sentiment into real political upside is twofold. First, continue to demonstrate how mass migration materially worsens their material conditions. Second, make migration scepticism fit within a broader agenda which prizes dynamism, vitality, and progress — including by extolling the benefits of high-quality, high-skilled migration. The latter point is crucial; nascent migration sceptics must have cover to discuss their views without worrying that they’re beginning to sound like their grandparents. In short, we must Make Migration Controls Cool Again.

For The Spectator, Justin Brierley considers how the intellectual turn towards faith and Christianity could lead to a broader spiritual renewal.

If conservative-leaning intellectuals only ‘cosplay’ at Christianity (Tom Holland’s phrase) without really believing it, then this ‘New Theist’ movement will inevitably fade away. Co-opting Christianity in the cause of an anti-woke agenda or in order to fend off radical Islam turns it into a useful political tool, but drains it of any life-giving power. A Christian nationalism of the right will become as pallid and pointless as the Christianity of the progressive left that parrots the latest politically correct talking points.

However, they say God moves in mysterious ways. As a believing Christian, I see signs that he is moving in the minds and hearts of secular intellectuals. Many of them are recognising that secular humanism has failed and, against all their expectations, seem to be on the verge of embracing faith instead. Some have actually become Christians…Significantly, both Ayaan Hirsi Ali and Jordan Hall have mentioned the influence of Tom Holland’s thesis that Christianity is the foundation on which the ethics of the West sits.

Then there’s Holland himself. A few weeks after our church outing, we engaged in a public conversation in which Holland gave the most personal indication yet of his current spiritual trajectory. He related how, while filming a documentary in northern Iraq, he stood horrified at the carnage wrought by Islamic State in a town where men were literally crucified. Seeing crucifixion used for its original purpose opened up an ‘existential abyss’. This was followed by a profound experience in an abandoned church systematically desecrated by Islamic State. Holland says he experienced a ‘thin place’ between heaven and earth as, amongst the rubble, he discovered a smashed picture of the Annunciation – the Virgin Mary being visited by the angel Gabriel.

Wonky thinking

For The American System on Substack, David Cowan looks at the life and career of Joseph Chamberlain in Radical Joe: A New Conservative Program. Chamberlain was a highly influential political entrepreneur, establishing a creed based on industrial strength, social reform, and national influence that continues to resonate today.

Chamberlain showed great concern for the wellbeing as well as the productivity of his employees. He saw the social consequences of industrialization firsthand in Birmingham, such as poor sanitation and dire housing conditions, and hoped to ease the class tensions it produced. This took Chamberlain into public life when he joined the Liberal Party and founded the National Education League in 1869. In an era of democratic change, many Liberals believed the state had a responsibility to improve the education and moral character of the newly enfranchised. Chamberlain’s favored solution was universal, publicly funded, and non-denominational education. Liberal opinion, still rooted in the laissez-faire doctrine of David Ricardo and John Stuart Mill, was largely divided in its attitude toward such schemes. But Chamberlain continued to push for ambitious social reform that could empower the British middle and working classes.

Elected Mayor of Birmingham in 1873, and stepping back from the family business, Chamberlain put his ideas to the test. He introduced “municipal socialism”, taking water and gas into public ownership, which helped provide the city with much needed revenue. Slums were cleared and replaced with decent housing. Birmingham city center was transformed by the creation of Corporation Street as the main thoroughfare. Partnership between local government, local business, and the local community made Birmingham a shining example of civic excellence. Later Chamberlain would help found the University of Birmingham and become its first Chancellor, pushing for practical learning alongside traditional subjects. This legacy is, sadly, a far cry from the current state of Birmingham where the local council was recently declared bankrupt, reflecting years of mismanagement and poor leadership.

After entering Parliament in 1876, Chamberlain hoped to take these ideas to the national level and reshape the Liberal Party. With his youthful appearance and charisma, armed with an orchid in his jacket lapel and a distinctive monocle, Chamberlain had a powerful personal appeal. Building up his local powerbase by establishing the Birmingham Liberal Association and then the National Liberal Federation, Chamberlain also led a grassroots movement for reform, marking a significant innovation in a country still adjusting to the arrival of mass democracy. By 1885, he was able to launch the “Unauthorised Programme”, a policy platform containing a number of radical proposals, building on the milestone social reforms of Benjamin Disraeli, such as local government expansion, free education, land reform, and progressive taxation. Chamberlain earned the affectionate nickname “Radical Joe” from his supporters but terrified the aristocratic classes, Liberal and Conservative alike, with his ideas for social change. This all made Chamberlain an unlikely source of inspiration for the British Right.

What made Chamberlain leave the Liberals and join forces with the Conservatives was the issue of Irish Home Rule. He opposed the Prime Minister William Gladstone’s proposal to devolve power to an Irish Parliament separate from Westminster, which would undermine the constitutional integrity of the Union. Chamberlain and other “Liberal Unionists” rebelled against Gladstone and worked with the Conservatives to block his Irish Home Rule legislation. After supporting the Conservative government in 1886, the Liberal Unionists would join them in coalition in 1895. In 1912, the two parties would formally merge to create today’s Conservative and Unionist Party. Birmingham provided a bloc of Unionist MPs, excluding Gladstonian Liberals, lasting well into the twentieth century. Unionism soon evolved beyond simply opposing Irish Home Rule. It came to represent a commitment to a national compact between all classes and regions.

In an interview on YouTube with The Winston Marshall Show, Ed Husain discussed the origins of Islamism, the history of Islam in Britain, and how to resolve the tensions between Muslims, Christians, and Jews.

Book of the week

We recommend The righteous mind: why good people are divided by politics and religion by Jonathan Haidt. The author investigates the origins of morality and the urgent need for human beings to work together despite holding different points of view on fundamental issues.

People don’t adopt their ideologies at random, or by soaking up whatever ideas are around them. People whose genes gave them brains that get a special pleasure from novelty, variety, and diversity, while simultaneously being less sensitive to signs of threat, are predisposed (but not predestined) to become liberals. They tend to develop certain “characteristic adaptations” and “life narratives” that make them resonate—unconsciously and intuitively—with the grand narratives told by political movements on the left (such as the liberal progress narrative). People whose genes give them brains with the opposite settings are predisposed, for the same reasons, to resonate with the grand narratives of the right (such as the Reagan narrative).

Once people join a political team, they get ensnared in its moral matrix. They see confirmation of their grand narrative everywhere, and it’s difficult—perhaps impossible—to convince them that they are wrong if you argue with them from outside of their matrix. I suggested that liberals might have even more difficulty understanding conservatives than the other way around, because liberals often have difficulty understanding how the Loyalty, Authority, and Sanctity foundations have anything to do with morality. In particular, liberals often have difficulty seeing moral capital, which I defined as the resources that sustain a moral community.

I suggested that liberals and conservatives are like yin and yang—both are “necessary elements of a healthy state of political life,” as John Stuart Mill put it. Liberals are experts in care; they are better able to see the victims of existing social arrangements, and they continually push us to update those arrangements and invent new ones. As Robert F. Kennedy said: “There are those that look at things the way they are, and ask why? I dream of things that never were, and ask why not?” I showed how this moral matrix leads liberals to make two points that are (in my opinion) profoundly important for the health of a society: (1) governments can and should restrain corporate superorganisms, and (2) some big problems really can be solved by regulation.

I explained how libertarians (who sacralize liberty) and social conservatives (who sacralize certain institutions and traditions) provide a crucial counterweight to the liberal reform movements that have been so influential in America and Europe since the early twentieth century. I said that libertarians are right that markets are miraculous (at least when their externalities and other failures can be addressed), and I said that social conservatives are right that you don’t usually help the bees by destroying the hive.

Finally, I said that the increasing Manichaeism of American political life is not something we can address by signing pledges and resolving to be nicer. Our politics will become more civil when we find ways to change the procedures for electing politicians and the institutions and environments within which they interact.

Morality binds and blinds. It binds us into ideological teams that fight each other as though the fate of the world depended on our side winning each battle. It blinds us to the fact that each team is composed of good people who have something important to say.

Quick links

The number of illegal migrants crossing the Channel in the first three months of 2024 was 23% higher than at the same point in the previous year.

Senior politicians were targeted by a Chinese cyberattack as part of a long-term strategy for state interference in British democracy.

The UK population grew by 7.5% in just ten years, according to ONS figures.

The New Conservatives group of MPs called on the government to introduce automatic jail sentences for prolific offenders.

The Centre for Migration Control claimed the Office for Budget Responsibility has “vastly overstated” the £6 billion tax contribution from future migrants.

French schools have been placed under armed guard due to 130 Islamist terrorist threats, including videos of beheadings.

BBC Director-General, Tim Davie, will launch a consultation on means-testing the licence fee and ending prosecutions for non-payment.

The payroll employment of non-EU nationals has increased by 1.3 million since January 2021…

…but the UK is also experiencing the largest growth in economic inactivity due to ill health since the 1990s.

In the four months since the October 7 attack, 66 medical professionals have been referred to the General Medical Council for antisemitism.

The UK’s energy production has fallen by two-thirds since 2000, turning the country from a net exporter to net importer of energy.

Dr Ghassan Abu Sittah has been praised by the media for his work as a surgeon in Gaza despite his support for Islamist extremism.

The Care & Quality Commission granted permission to a new private clinic to refer sixteen year old patients for cross sex-hormone treatment.

Andy Haldane, former Bank of England Chief Economist, claimed that the fiscal rules adopted by Jeremy Hunt and Rachel Reeves are “self-defeating on their own terms”.

Churches have been cautioned by the Home Office against involvement in asylum claims due to the role of a Baptist minister in the Abdul Ezedi case.

A study revealed that Britons pay more than any other OECD country to live in homes that are older, smaller, and poorer quality.

Lobbyists succeeded in pressuring the government to water down its reforms to leasehold ground rents.

Research found that foreign state companies own 45% of UK offshore wind capacity.

An independent review into social cohesion and democratic resilience by Dame Sarah Khan has been published.

The independent Congressional Budget Office reported that the United States’ $26.2 trillion debt risks a collapse in market confidence.