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Artillery Row

Dump the pumps

People are not going to buy a product they don’t like

The government has given up trying to persuade us that heat pumps and electric cars are better than the real thing. Subsidies haven’t worked so it is now time for mandatory quotas. From April next year, boiler manufacturers will be told how many heat pumps they have to sell and will be fined £3,000 for every unit they undershoot the target by.  60,000 heat pumps were installed last year, mostly in new builds. Under the laughably named Clean Heat Market Mechanism, the industry will have to install 60,000 heat pumps in existing homes in year one and the target will rise to 450,000 by year four. Companies such as Worcester Bosch, who know more about the home heating market than politicians do, say that this is totally unrealistic and, treating the fines as a cost of doing business, are increasing the price of their boilers accordingly. 

In January, the zero emission vehicle (ZEV) mandate will come into effect, compelling car manufacturers to ensure that at least 22 per cent of the vehicles they sell are electric. The target will rise every year until it hits 80 per cent in 2030. For every electric car they fail to sell, they will be fined £15,000. With electric vehicles currently making up 16 per cent of the market, there will be a lot of fines.

Say what you like about Soviet apparatchiks but at least they only had production quotas. They didn’t have sales quotas because even they couldn’t force people to buy things. People don’t want heat pumps because they are big and expensive and don’t keep you warm. They don’t want electric cars because they don’t have anywhere to charge them and the national charging infrastructure is inadequate. This may change in the future, but it isn’t going to change very soon. 

In an era in which the ambitions of British politicians are inversely proportional to their abilities, politics is increasingly driven by targets rather than policies. If they had the policies, they wouldn’t need the targets. Since the targets are nearly always unrealistic and usually require millions of people to suddenly change their behaviour, politicians turn to the private sector for help. But the idea that you can set a company a sales quota rests on the soft-headed anti-capitalist delusion that companies decide what people buy. 

It is often said that a certain firm “controls” a certain percentage of a market. It is only when their product goes out of fashion or a rival firm launches a superior version that we see that it has no control at all. A few years ago I had a bit of fun looking at some of the corporations that Naomi Klein said were “powerful” and “omnipresent” in her anti-globalisation bestseller No Logo (2000):

Blockbuster, which Klein said ‘controls 25 per cent of the home-video market’ found that its dominance was no protection when it filed for bankruptcy in 2010 (see also Kodak, which ‘controlled’ 80 per cent of the US photographic film market in the 1990s before filing for bankruptcy in 2012). Among the other firms name-checked in No Logo are Borders (declared bankrupt in 2011), General Motors (filed for bankruptcy in 2009), Benetton (withdrew from 25 countries in 2013), Tommy Hilfiger (lost more than half its market value between 1999 and 2006 before being sold) and Netscape (disbanded in 2003). The Gap clothing chain, which seemed unstoppable when Klein wrote her book, was described as a “struggling retailer” by the New York Times when it announced plans to close a fifth of its US stores in 2011. Fifteen years on, Microsoft no longer has what Klein called a “near monopoly” and few would echo her claim that Apple’s products are “mere filler for the real production: the brand”.

Based on global sales and market recognition, Coca-Cola should be one of the most powerful companies in the world and yet it couldn’t persuade people to buy New Coke in the 1980s. Google “controls” 90 per cent of the world’s search engine traffic, but it couldn’t drive people towards Google Plus which shut down in 2019.   

In 2015, the government — via Public Health England — set the food industry the target of taking 20 per cent of the sugar out of its manufactured food products by 2020. It did not explain how this was to be done or what the sugar was supposed to be replaced with, but it threatened the industry with an advertising ban and other regulations if it didn’t play ball. Although the 20 per cent target was never achievable, there were significant reductions among some categories. The sales weighted average sugar content of yoghurts and fromage frais fell by 13.5 per cent between 2015 and 2020. For breakfast cereals it fell by 14.9 per cent. A 10.1 per cent reduction was achieved for “sweet spreads and sauces” and there was a 7.2 per cent reduction in the average sugar content of ice creams, lollies and sorbets. 

As the final evaluation reported last year, “overall there was a 3.5% reduction in the sales weighted average total sugar per 100g in products sold between baseline (2015) and year 4 (2020)”. Not great, but not nothing. Alas, even this modest “progress” was thwarted by pesky consumers who responded by buying fewer yoghurts, fromage frais and breakfast cereals and instead bought more unreformulated sugary products, including 27 per cent more chocolate. The net result was that “overall there has been a 7.1% increase in the tonnes of sugar sold from the product categories included in the programme between baseline and year 4”.  

The lesson is that you can lead a horse to water but you can’t make it drink. The consumer is sovereign and if consumers don’t want to buy artificially sweetened biscuits, expensive electric vehicles and tepid heat pumps, no amount of advertising and salesmanship is going to make them.

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