Three Crises Expose Fragility

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Welcome back to How We Build Britain, a podcast about energy, infrastructure, and industry. I'm Rob Gilbert. If you find this useful, please subscribe wherever you listen to your podcast. For the third time in six years, Britain faces an economic crisis with wide-ranging consequences. First, COVID exposed our dependence on fragile global supply chains. Then, Russia's invasion of Ukraine revealed Europe's reliance on imported fossil fuels. Now, in the Strait of Hormuz, a place many of us would have struggled to put on a map two months ago, a new crisis has emerged that demonstrates both our economy's dependence on distant supply chains and on imported energy. Some of this most recent crisis is geography, some is geology, but most is geopolitics, conducted by people whose interests are not ours. And that, by the way, is also happening for the second time in five years. When the global order fragments, resilience matters. But the impact on the UK is worse because self-reliance is what we've spent decades dismantling. Not by accident, not because anyone wanted to make Britain vulnerable, but because an economic orthodoxy has taken hold. Globalization, low-cost sourcing, and market allocation as unfortunately substitutes for clear national strategy. It told us ownership didn't matter, domestic capability didn't matter, productive capacity could disappear so long as imports stayed cheap. And now repeatedly we're discovering the cost. So the question is this. Three major crises in six years. What haven't we learned? And why does the UK still treat market intervention in the national interest as the last possible resort? I spent 13 years working with government and

Cost Over Value And Resilience

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the private sector on supply chains, manufacturing energy, and critical infrastructure. These are personal reflections, not policy statements, but they're shaped by experience. And in that time, my work has been about three things cost, efficiency, and profit. Rarely have we ever discussed value. Rarely have we discussed resilience. And almost never whether the country we were advising would, in 15 years, still know how to build what it needs. That's the model. Not just in Whitehall, but in boardrooms and advisory firms. Every contract is a cost line to minimize. Every supply chain decision is an arbitrage. Every factory is something to close, consolidate, outsource if the spreadsheet works. And to be fair, that model has driven the unit cost of almost everything to its global minimum, but it hasn't covered the important questions. What do we keep? What do we lose? And what does the country get in return? I've spent 13 years inside that model, and the last few watching it produce at scale exactly the kind of country it was always going to. Rich on paper, dependent in practice, and increasingly unable to build what it needs. We are at a turning point. As I said in the first of the series of this podcast, the energy transition is a once-in-a-generation opportunity to do it differently, to reindustrize, to rebuild the industries that we need, not just now, but for the future. And in order to do that, we have to reflect on the journey that has got us here. For me, that comes with three clear warnings, three different experiences,

Refineries And Steel At Risk

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industries, and examples. The first is our refining capacity and our steel production. Britain had eighteen refineries in the 1970s, twelve in 2000, and today we have four. Grangemouth stopped refining crude last April. Lindsay closed in June. Two refineries gone in the space of months. We now import far more diesel and jet fuel than we produce. Europe's gap is filled by Middle Eastern imports, which is why we are feeling this crisis so acutely. We didn't lose that refining capacity because we stopped needing the fuel. We lost it because we decided someone else should make it. The Scottish Affairs Select Committee called Grangemouth the canary in the coal mine. Because once refining capacity goes, it's gone. And when it's gone, the question isn't whether the market can supply the product. It's what happens when the market is disrupted, as we're seeing right now. And it's not just refining. Last April, the Chinese owners of British Steel threatened to Scunthorpe’s blast furnaces, the last that we have in this country. Parliament had to be recalled on a Saturday to pass emergency legislation. The owners had decided it wasn't economic to keep the plant running. And we discovered in a weekend that we didn't have the right to keep the plant open that made us steal without intervention. That's what foreign ownership of foundational industries looks like. The asset is sold and the buyer optimizes for its interests. And unfortunately, the country finds out too late if those interests are not the same as ours.

PPE Failure And Supply Chains

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The second warning we got was COVID. At the start of 2020, the UK, one of the world's largest economies, had no domestic capacity to produce clinical grade PPE. The NHS spent £15 billion on PPE in 2020 and 2021. At normal prices, it would have cost a fraction of that. Instead, unfortunately, 8.7 billion pounds of value was written down or written off. A measure of what happens when, in a crisis, a country does not have enough domestic capacity to make what it needs at scale. That wasn't just a procurement scandal. It was the cost of discovering in an emergency that we no longer had the capacity to make basic protective equipment. COVID was a supply chain crisis. It showed what happened when a country assumes cheap global availability is the same as resilience. The third warning was Ukraine. In February 2022, we said we'd been naive that Europe had built a strategic dependency on Russian gas and called it cheap energy. That we'd never again be at the mercy of someone else's pipeline. And there has been huge progress. Before the invasion, the EU got 40% of its gas from Russia. That share has fallen dramatically. Russian pipeline gas is no longer central to Europe's supply. But Russian LNG has kept entering

Ukraine And Britain’s Gas Exposure

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Europe for the years after the invasion. A full phase out is only now becoming law. And as Russian supply fell, Europe became more dependent on American LNG. In Britain, we've been diversifying our energy mix at pace and made real progress. We now have new nuclear projects. We have offshore wind that is driving the clean energy transition, and we're pushing out onshore wind and solar at pace. But all of those still come with the underpinning dependence on natural gas as our price-setting mechanism and as the principal means of heating homes in the UK. A striking number is that Britain has around 12 days of gas storage. In the winter, that drops to seven and a half days. Germany has roughly 89, France 103, and the Netherlands 123. In 2022, we promised we'd never again be at the mercy of someone else's pipeline. Four years on, we have new pipelines, new tankers, new flags on the side of them, and as unfortunately as being proved by the Iran and the Strait of Hormuz, the same dependency painted a different colour. So,

Global Minimum Cost Is Strategy

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three warnings, three crises, one pattern. The pattern isn't that we haven't done anything. The British state has committed billions to industrial energy transformation, Seizuell Sea, the offshore wind, hydrogen, grid infrastructure, you name it, we're doing it. It isn't a country that stopped trying. It's a country that's spending tens of billions on the most steel-intensive, chemical-intensive, engineering intensive transformation in living memory. And yet, our manufacturing share of GDP is not moving. It's still half of what it was in 1990. So why are we losing capability faster than we're building it? Because we've built an institutional apparatus designed to drive the unit cost of every megawatt, mile of cable, and ton of steel to its global minimum. And we've called it efficiency. But the global minimum cost isn't neutral. The global minimum cost of a solar panel is shaped by a supply chain where China controls 80 to 90% of manufacturing. The global minimum cost of a battery cell is shaped by a supply chain where China dominates lithium ion production. The global minimum cost of a rare earth magnet is shaped by a market where China controls almost all the processing, 96% based on some statistics. And those positions aren't theoretical. Last year, export controls on critical minerals showed how quickly industrial dominance becomes geopolitical leverage. The global minimum cost isn't just market efficiency, it's strategy. Other countries have strategies. China, the US, Japan, Korea, France, and Germany have all spent decades in one form or the other protecting their industrial races. Britain? Too often we've had a procurement process. When we run auctions or procurements on price alone, we're not just choosing how much infrastructure to build, we're choosing whose factories build it. This isn't an argument for protectionism. Britain will always trade. But the question is whether we trade from capability or from dependence. Right now, too often,

Skills Gaps And Aging Workforce

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we're choosing dependence. And the orthodoxy of cost didn't arrive alone. It came with a story we've told ourselves for a generation that ambition pointed away from the factory gate. Apprenticeship starts at the lowest levels have fallen sharply. Entry-level technical roots have weakened. Too many young people without degrees lack structured pathways into skilled work. And across engineering and manufacturing, the workforce is aging. One in five UK engineers are at or near retirement. Britain made a quiet promise to its young people. Get the degree, leave the shop floor, move away from the factory, your life will be better. We've kept the first half of that promise. Whether we deliver on the second is the choice we have in front of us. So what do we need to do differently? We need to change how the system thinks about the energy transition. Right now, it's treated as separate problems. Clean power, grid, ports, planning, finance, skills. Each is important, but each is happening largely in isolation. And that's a problem. In fact, the energy transition is the largest industrial demand signal Britain has seen in decades. And if you've listened to earlier episodes of this podcast, you will know that that is something I have repeated multiple times. We build a new offshore wind farm. The question can't just be whether the price we pay for the electricity is as low as it can be. It must also

Use Net Zero To Rebuild

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be what does this project do for the industrial base around it? Does it create orders for a factory? Does it help a cable plant expand? Does it give a training provider confidence to open a new course? That's the lens that we have been missing. And it starts with clarity about what Britain actually needs. Because the truth is, if we can use our demand, if we can use our leading position in the energy transition to create confidence in a market and build capability, in time, we will be able to export that around the world. And that export potential is critical because it's about sustainability. It's about ensuring that the factories that we build using our energy transition exist while we support others in their energy transition. And it's part of the way that we deliver the consensus that is so clearly fragmenting around the energy transition and net zero. Simply put, if a town lives with a disruption of national infrastructure, they should see visible benefit in return. It doesn't need the state to intervene in every single project, but it requires public institutions to coordinate. To make sure demand, infrastructure, finance, skills, and supply chains point in the same direction. Markets are shaped one way or the other by auctions, by regulation. The choice isn't between intervention and no intervention. It's whether the intervention is deliberate enough to build capability. So this episode is three warnings, but also one opportunity. The energy transition can rebuild the capabilities that crises have already exposed us missing. It can make us cleaner, it can make us more secure, more productive, more resilient and more capable. But it won't happen automatically. It will only happen if we choose to make it happen. So the ask of this trilogy to anyone shaping what gets built, bought, or allowed to close is simpler than policy. Let's stop calling deindustrialization modernization. Let's stop

Procure For Capability And Value

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treating market intervention in the national interest as a last resort. When every crisis of the past six years has shown it's one of the first things a serious country must do. Let's stop running procurement as if cost is the only thing that matters. When every low cost contract is a choice about who we will be. And let's start doing something harder. Let's start treating demand as a national asset. Let's start treating procurement as an industrial tool. Let's start treating public finance as a way to build future capability, not just rescue things that are failing. And let's start treating the energy transition as a growth strategy for the places that built the first industrial revolution and deserve a stake in the next. Because there is another way. We're doing the energy transition for the right reasons. Climate science is settled. The geopolitical case has been made. But the transition must deliver industrially. Not as an afterthought, not as a footnote, as a central purpose of how we spend that money. And it doesn't mean making everything here. We can't. It doesn't mean stopping trade because we won't. It doesn't mean turning every contract into a subsidy. It means putting national interest back on the priority list. It means asking what capabilities Britain needs to retain, rebuild, or grow. It means recognizing that the energy transition isn't just an environmental project. It's an industrial project, a resilience project, a national security project. A choice and a chance to rebuild the productive base of the country. The factories, the engineers, the foundational industries. It won't always be the cheapest, but it may well be the best value. And it will align with our values more than a transition built on someone else's subsidies, coal-fired electricity, and labour standards that we wouldn't accept here. We're spending the money, and we've decided as a country to embark on this journey. The question is what we get in return. We can spend it as buyers or we can spend it as builders. We can procure on cost and value. We can decide as a matter of national interest that the country paying the bills should also build more of the things. Or we can keep going as we are, spending the money, losing the capability, and watching from a position of dependence when the next strait closes, the next supply chain cracks, or the next refinery goes cold. This is how we build Britain. Thank you for listening.