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British Economic Growth 1856-1973The Post-War Period in Historical Perspective$

R. C. O. Matthews, C. H. Feinstein, and J. Odling-Smee

Print publication date: 1982

Print ISBN-13: 9780198284536

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198284535.001.0001

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(p.581) Appendix G The Age of the Capital Stock

(p.581) Appendix G The Age of the Capital Stock

Source:
British Economic Growth 1856-1973
Publisher:
Oxford University Press

As noted in Chapter 5, average age of the gross fixed capital stock is a function of the assumed lives of the assets and of the rate of growth of investment. The growth of the stock was discussed in Appendix F. The lengths of lives assumed for the principal types of assets are shown in Table G.1.

In principle it is possible to calculate the average age of the gross fixed capital stock when it has been estimated by aggregating capital‐formation series over the assumed service lives of the assets, and this has been done for 1938 and the postwar years. The age distribution of the gross capital stock in manufacturing (excluding textiles) and construction at the ends of 1938, 1948, and 1962 is shown in Table G.2. (A similar age distribution of the stock in the other main sectors of the economy at the end of 1961 is given in Dean 1964: Table 9.) The implied average ages of the stocks at those dates are given in Table G.3.

Table G.1 Assumed Life of Principal Types of Asset, 1856–1973

(Years)

Type of asset

1856–1913

1920–1938

1948–1973

Buildings and Works

Dwellings, public buildings, and railway permanent way

100

100

100

Industrial and commercial buildings

80

80

80

Agricultural buildings and works

50

100

Other buildings and works

60 or 80

60 or 80

63a

Plant, vehicles, ships, etc.

Plant and machinery

30

30

33b

Ships

20 or 30

20

20 or 25

Road vehicles

8

8

10

Source: Dean 1964; Sources and Methods, 1968 UK [20]: 386; Feinstein (forthcoming).

(a) The weighted average (in 1958) of lives of 40, 60, and 75 years assumed for separate categories.

(b) The weighted average (in 1958) of lives of 16, 19, 25, 34, and 50 years assumed for separate types of plant and machinery in manufacturing, construction, and the distributive trades and other services (see Dean 1964: 346). For all plant and machinery the weighted average in 1958 was 30.

(p.582)

Table G.2 Age Distribution of the Gross Fixed Capital Stock in Manufacturing (Excluding Textiles) and Construction, 1938, 1948, and 1962

(Percent)

Period in which capital was invested

Buildings, plant, and machinerya

Plant and machinerya

1938

1948

1962

1938

1948

1962

1850–1859

0.1%

1860–1869

2.6

0.2%

1870–1879

4.6

3.3

1880–1889

3.3

2.1

0.8%

0.6%

1890–1899

7.7

2.7

1.4

7.3

0.3%

1900–1909

10.4

5.3

2.3

8.5

2.3

1910–1919

15.9

7.8

3.1

17.2

5.6

0.9%

1920–1929

26.7

17.2

5.6

29.9

17.1

2.4

1930–1939

28.7

25.5

12.4

36.5

29.9

12.4

1940–1949

35.9

21.8

44.8

24.9

1950–1959

36.7

41.8

1960–1962

15.9

17.6

Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Value of year‐end stock in £ billions at 1958 prices

8.03

11.17

19.81

4.51

6.54

12.60

Source: Dean 1964 and other data.

(a) Excluding vehicles.

Table G.3 Average Age of the Gross Fixed Capital Stock in Manufacturing (Excluding Textiles) and Construction, 1938, 1948, and 1962

(Years)

Year

Buildings, plant, and machinerya

Plant and machinerya

1938

22.8

16.5

1948

20.2

13.8

1962

17.4

13.2

Source: Calculated from Table G.2.

(a) Excluding vehicles.

A similar calculation covering the period 1960–74 is given in Table G.4. These estimates are derived from the latest Central Statistical Office perpetual inventory model (Griffin 1975).

The average age of the manufacturing gross capital stock fell both across World War II and in the early postwar period. As can be seen in Table G.2, 29 percent of the gross fixed stock was over 29 years old in 1938, against only 21 percent in 1948. Similarly, in comparing 1962 with 1948, it can be seen that there was relatively less old capital and relatively more new capital in 1962. The (p.583)

Table G.4 Analysis by Age of the Gross Fixed Capital Stock in Manufacturing, 1960–1974

(Percent)

Age in years

1960

1965

1970

1974

5 or less

23%

24%

24%

22%

6–10

18

19

19

19

11 or more

59

57

57

59

Total

100%

100%

100%

100%

Source: Griffin 1976a: Appendix C.

Note: Gross capital stock here covers all fixed assets.

Table G.5 Classification of Iron and Steel Plant, 1955, 1960, and 1965

Percentage classified as:

Year

Thousands of tons

A

B

C

Unclassified

1955

57,180

32.2%

45.6%

19.3%

2.9%

1960

75,890

49.8

38.3

10.2

1.7

1965

113,165

69.1

22.4

5.7

2.8

Source: Iron and Steel Board 1964: 66.

Note: Data relate to plant in operation in 1955 and 1960 and plant expected to be in operation in 1965. The categories are defined as follows. Category A: First‐class large‐scale modern plant in a good location. Most of the plants in this category would have been built or extensively reconstructed in the previous 15 years, but it includes older plant that is still of modern design (e.g. continuous wide‐strip mills and continuous billet mills). Category B: Efficient though older plant that is likely to be useful for many years, and smaller‐scale modern plant. Category C: Old plant that might be capable of some years of useful life in conditions of high demand but is otherwise of doubtful viability. Unclassified: Mainly alloy and special steelmakers.

main explanation for these changes in average age is that levels of capital accumulation in manufacturing industry were higher across World War II and after 1948 than they had been before 1938. From 1960 to 1974 (Table G.4) there was practically no change in the age composition of the stock of capital.

The estimates of the average age of the capital stock given in Table G.3. relate to the gross capital stock concept used in this study, and hence are largely dependent on the exact assumptions made about the average lives of particular assets and the instant scrapping at the end of these lives. Very little direct information on the age of the capital in use is available, but there are three surveys that provide useful statistics.

The first of these relates to the plant used for iron making, the production of crude steel, and the various finishing processes in the iron and steel industry in the postwar period, and is summarized in Table G.5. It is evident that there was a major improvement in the quality of the plant: by 1965 more than two‐thirds was classified as first class and modern, compared with only one‐third ten years earlier. (p.584)

Table G.6 Age of Machine Tools in 1961

Percentage aged

Category

Thousands of tools

Less than 10 years

10–20 years

21 years or more

Machine tools

Mechanical engineering

397.8

40%

36%

24%

Electrical engineering

191.4

46

33

21

Shipbuilding and marine engineering

41.2

13

42

45

Motor vehicle manufacturing

204.8

43

40

17

Aircraft manufacturing

60.8

53

30

17

Other metal industries

337.7

44

33

23

Total

1,233.7

41%

37%

22%

Ancillary equipment (all industries)

250.7

58

31

11

Total

1,484.4

44%

36%

20%

Source: Metalworking Production 1961.

The second survey relates to the number of metal‐cutting and metal‐forming tools and ancillary items (such as heating and welding equipment or industrial trucks) owned by various industries in 1961, and is summarized in Table G.6. The results are broadly consistent with figures in Dean 1964: Table 6, which show 50 percent for the proportion at the end of 1961 of the gross stock of plant and machinery in the metal‐using industries acquired after 1948. But the census shows a rather lower proportion for the 10‐to‐20‐year‐old category (covering mainly the war years) and a higher proportion for equipment more than 20 years old: 20 percent for machine tools of pre‐1941 vintage compared with Dean's estimate of 10 percent for plant and machinery of pre‐1938 vintage. It may be, therefore, that Dean's series slightly overstates the rate of scrapping of old equipment. The survey does not permit any comparison of the change in age composition over time, but it is relevant perhaps to note here an estimate in Metalworking Production that a 1960 vintage machine tool was about 40 percent more productive than one of 1950 vintage.

A third set of statistics covers electricity generating plant and is particularly useful in that it also shows how the capacity (and thus the efficiency) of the sets has increased over the years (Table G.7). As of March 31, 1949, 14 percent of the installed capacity was under 5 years old and 53 percent under 15 years, and the average capacity per set in these two age groups was just over 30 MW. By March 31, 1960, the plant was more modern relatively, in the sense that 34 percent was less than 5 years old and 66 percent less than 15 years old; and it was also more efficient absolutely with an average capacity per set of 15 years or less of 50 MW. (p.585)

Table G.7 Age Distribution and Capacity Rating of Steam‐Driven Generating Sets, 1949 and 1960

Continuous maximum rating of installed capacity (MW)

Totals

Period in which installed

Less than 4

4 and under 8

8 and under 16

16 and under 32

32 and under 64

64 and over

No. of sets

Capacity in MW

Percent of capacity

As of March 31, 1949

1899–1913

64

1

65

50

1914–1923

121

58

32

15

226

1,270

10%

1924–1933

134

80

91

72

18

4

399

4,700

37

1934–1943

10

8

9

94

34

4

159

4,980

39

1944–1949

1

3

38

15

57

1,850

14

Total

329

148

135

219

67

8

906

12,850

100%

As of March 31, 1960

Before 1925

64

33

25

8

130

743

3

1925–1934

68

45

67

52

21

4

257

3,587

13

1935–1944

5

8

9

85

41

4

152

4,870

18

1945–1954

3

3

2

53

137

6

204

8,802

32

1955–1960

3

30

83

41

157

9,436

34

Total

140

89

106

228

282

55

900

27,438

100%

Source: British Electric Authority 1949; Central Electricity Generating Board 1960.