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#economicsfest: How can we build a better future?

Climate change, geopolitical tensions and new technologies are shaping many of the big challenges we face – from sourcing essential materials to building new homes and infrastructure. But they are also a springboard for new ideas and potential solutions for the next generation.

It is difficult to forget about the pandemic, the biggest squeeze on spending power in 70 years, war in Europe and conflict in the Middle East. But for the final day of this year’s Bristol Festival of Economics, these topics were put on one side in lieu of an even more intimidating question: what’s next?

In discussions last Thursday, panellists explored the future of our raw materials supply chains as we push towards net-zero emissions of the greenhouses gases that cause global warming, how we can build the public infrastructure we need and fix our crisis of affordable housing, and how to improve the outlook for today’s children – ‘Generation Alpha’.

The challenges posed by climate change, ageing populations and geopolitical tensions are overwhelming. But they are also a springboard for new ideas. Panellists explored the changes we need to make now to forge a better future.

Material world

Economics sometimes seems divorced from the real world. The bedrock of our economic future lies not in theories but in raw materials, argued Ed Conway, economics editor at Sky News and author of Material World: A Substantial Story of Our Past and Future. In conversation with BBC World Service presenter Anu Anand, he indicated how essential it is for us to understand commodities, the supply chains through which they are extracted and distributed, and their mind-boggling centrality to our daily lives.

Conway outlined the importance of six key materials: sand, salt, iron, oil, copper and lithium. Each have uses far beyond how we immediately think of them.

The internet, for example, might feel like an intangible concept. In reality, it is a material network of fibre-optic cables made from glass. The internet, in other words, is built quite literally on sand. ‘There is something physical behind all of the ethereal things that we do’, Conway observed.

Salt is vital for making a vast array of chemicals. Iron is the building block of schools, hospitals and public transport systems. Copper is essential in the world’s electricity network, while lithium is the fundamental component in batteries. Oil is not just fuel but the means of making plastic and fertilisers. This means, effectively, that we eat it, Conway pointed out: ‘You might have eaten oil for breakfast.’

Conway and Anand discussed the world’s ultimate Catch-22. The use and extraction of these raw materials was the beginning of climate change. But many of them are also at the heart of our transition to net zero.

‘We are moving to a new frontier at the moment’, Conway explained. As the world pivots away from oil and towards clean energy – use of fossil fuels will peak by 2030, according to the International Energy Agency – we will need vastly more copper and lithium, as well as cobalt and nickel.

The world has enough of these materials, but extracting them is destructive. Conway described a copper mine in Chile that is so deep it would swallow Dubai’s Burj Khalifa tower. To shift to a world powered by renewable energy production, we will need three more of these mines every year, he said. 

Of course, the alternative would be worse. Conway concluded that the key will be to find ways to maintain these supply chains without leaving communities and countries feeling dispossessed.

An audience member had another suggestion: is the solution not recycling? While the opportunities are massive, much of the technology, particularly for rare earth metals, is only in its infancy, Conway noted. He made a startling point: ‘We have got thousands of years of experience of mining. We only have a few years of experience of recycling.’

Brunel and bribery

Once we have the raw materials, we still face major problems turning iron, oil and sand into railway lines, the electricity grid and gigafactories. These challenges were the focus of a panel discussion, chaired by Conway, examining the potentially enormous infrastructure task of getting to net zero.

Nothing exemplifies the difficulties more than the scrapping of the second leg of HS2. The planned high-speed rail line was supposed to link London with Birmingham and Manchester. But prime minister Rishi Sunak mothballed the bulk of it in October 2023 after the costs spiralled out of control.

Has it always been so hard? The planning system was actually worse in the days of the Victorian engineer Isambard Kingdom Brunel, according to Chris Colvin, associate director at the Centre for Economics, Policy and History at Queen’s University Belfast. To construct the Great Western Railway, Brunel had to get an act passed through parliament.

But Brunel had a trick up his sleeve: ‘Basically, they needed to bribe a whole lot of MPs’, Colvin remarked.

Today, developers do not need acts of parliament, but they are grappling with a bigger democracy, less available land for development and far more stakeholders.

A key problem in the planning process today is trust, observed Zoe Metcalfe, client director for local and central government in Britain for multinational engineering firm Atkins. Communities object to proposals for new developments because they do not have good faith that they will see the benefits. Government flip-flopping on projects and regulation also means that businesses are reluctant to plan and invest.

Funding for projects has also got harder. In Brunel’s time, municipalities could raise their own debt through bonds, Colvin explained. ‘The corporate debt market was more sophisticated in 1911 than today.’ 

Claire Pearce, director of planning and economic development at Salamanca Group, offered some hope. She leads a portfolio of large-scale projects, including Gravity – a 616-acre zone in Somerset, the site of what will be Britain’s biggest electric car battery factory.

The land had sat unused for more than a decade and was heavily contaminated. Now, the development of the site will bring 7,500 jobs to the region. ‘People will generally accept short-term impact if they can see the long-term vision’, Pearce declared.

The key to getting community support for major projects is to get this vision right and communicate it properly, she added. In other words, focus on how young local people will be able to get apprenticeships, and where residents will be able to rent affordable homes.

Generation Alpha

Children born between 2010 and 2025 make up Generation Alpha. Worldwide, there will be two billion of them, the largest generation in history. Eshe Nelson, economics and business reporter at the New York Times, led a panel exploring the outlook for this group, who will live through the brunt of the climate crisis.

The world of work will be dramatically different for this generation. Robots and artificial intelligence (AI) will transform employment – but quite how hangs in the balance, said Sarah O’Connor, columnist at the Financial Times.

She told a story about an American warehouse worker whose working life is entirely controlled by an AI called Jennifer. Enhancing productivity can be dehumanising, O’Connor warned. On the flipside, technology can also make workplaces less hazardous. She also described how miners in Sweden now operate robots from chairs in an underground control room. There is a fine line between utopia and dystopia.

Britain’s ageing population means that Generation Alpha also faces enormous economic strain, said Michael McMahon, professor of economics at the University of Oxford and a lead editor of the Economics Observatory. Older people are living longer. Fewer people are having children. ‘We have a pension system that is completely unsustainable with our current projected demographics’, McMahon stated.

A key point for discussion was how we can move away from short-termist policy. ‘We have political systems that tend to bring us to a point of defer, defer, defer – and then you have to do something drastic’, McMahon cautioned.

One audience member described how having Covid-19 affected her school years, being failed by mental health services, and now facing fears of Rishi Sunak’s rowing back on net-zero goals. ‘We are helpless as a generation’, she declared.

Paul Lindley, founder of baby food producer Ella’s Kitchen and author of Raising the Nation: How to Build a Better World for Our Children (and Everyone Else), offered a series of policy solutions.

Lindley called for the government to instate a dedicated minister to interrogate policies in terms of what they mean for children. Young people should automatically be put on the voting register when they get their National Insurance number, he added: this would improve voter turnout and encourage politicians to care more. Governments could also give cash incentives for good parenting, Lindley suggested. 

On thinking outside the box, O’Connor had an even more radical proposal: ‘The weight that your vote carries should be proportional to how many years of life expectancy you have left.’

House rules

Housing, and the national shortage of it, flows into all aspects of our economy. Yet it does not seem to be a priority for policy-makers. After Sunak’s latest reshuffle, we have our 16th housing minister in 13 years. Earlier this year, housebuilding targets became advisory rather than mandatory.

A panel chaired by Carol Lewis, property editor at The Times and The Sunday Times, explored the depth of the problem and ways to fix it.

Britain’s housing crisis is not just a housing problem but a climate problem and a health problem, said Ed Atkins, senior lecturer at the University of Bristol. People living in cold and poorly ventilated homes get sick. Poorly insulated properties use more energy.

There is also a toll on productivity when people are unable to move for work, noted economist Kate Barker, who conducted the Barker Review of Housing Supply nearly 20 years ago. In the 2010s, Britain built around 170,000 homes per year, 40,000 less than the number of new households created each year, according to Office for National Statistics projections. ‘What happened was that 70,000 more young people between 20 and 34 have been living at home with their parents’, Barker explained.

Many solutions proposed by politicians, such as self-build or office conversions, are simply tinkering at the edges, observed Henry Overman, research director of the Centre for Economic Performance at the London School of Economics. Demand-side policies, such as the Help to Buy equity loan scheme, fuel price growth without solving the root of the problem, he added.

The real fix is to build more houses, Overman concluded. As with infrastructure, such action hinges on planning. This is at the heart of Labour’s leadership bid. Sir Keir Starmer has pledged to ‘bulldoze’ the planning system.

Overman argued that Starmer’s approach is correct on two out of three of its main pillars: plans to build a new generation of new towns will be scuppered because of the question of how much money to give to landowners. But, Overman concluded, the Labour leader’s plans to reinstate incentives for councils to deliver on local plans and his aim to unlock building on the green belt could shift the dial.

All eyes will be on the upcoming general election.

Author: Melissa Lawford (The Telegraph)
Image: SerrNovik on iStock
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