3D printing: is it really all that?

It might not be ALL that, but it's most of that, writes the Big Innovation Centre's Spencer Thompson

Many people are extremely excited about 3D printing. The ability to print goods on demand using ‘additive manufacturing’ techniques has led to many technology commentators heralding a new era for manufacturing. Even The Economist has got in on the act, dubbing 3D printing a potential ‘Third industrial revolution’. But is 3D printing the real deal, or is all of this hype overblown? And either way, should government be worrying about 3D printing at a time where it has its plate full?

3D printing is currently the reserve of a group of hard-core hobbyists who design interesting things like plastic ties, as well as other, more worrying objects like the "WIKIWEP A" (a cheap and disposable plastic handgun). Beyond this ‘maker’ subculture, 3D printing is also used by some advanced manufacturers as a quick and easy way to create prototypes of products. As it stands, these two groups are unlikely to cause much widespread disruption to the current global production system, which relies on mass-production and worldwide distribution networks to get goods into the hands of consumers. It will take a lot for a ragtag army of open-source-loving enthusiasts to overturn the ultra-efficient giants of global manufacturing.

But we shouldn’t write off 3D printing just yet. Many transformative technologies were greeted with initial scepticism. A McKinsey report in 1980 advised AT&T that mobile phones would be a niche technology with little widespread impact. Fast-forward three decades and mobile communications have proved genuinely revolutionary, with everything from African agriculture to the mass media transformed by its application. Similarly, 3D printing is unlikely to turn the global economy entirely on its head. Many thought the advent of digital photography and home printing signalled the death of high street camera shops, but consumers still choose to print photos taken on their smartphones and cameras at a shop, preferring the high quality glossy finish to anything they could manage on their low-cost home printer. Sure Kodak recently went bust, but shops like Boots seem to be doing a healthy trade in photo printing, as well as in a whole range of low-cost objects like mugs and posters adorned with images provided by the customer.

It is likely 3D printing will evolve in a similar fashion. 3D printing won’t necessarily destroy the whole global manufacturing industry, but it could take on large chunks of it (up to half of all manufacturing by our reckoning), and it could bring some manufacturing jobs back from the UK. The extent of 3D printing’s proliferation will hinge on whether the local-and-personal world of 3D printing can compete with the mass-produced-and-global world of mass manufacturing. The truth is, we don’t know for sure how this will play out. But we do think it’s more likely to happen in some industries (like toys and pharmaceuticals) than in others (I won’t be boarding a 3D printed plane anytime soon).

However big or small 3D printing turns out to be, it is still pretty exciting. Some hobbyists will print objects at home, but the greatest potential for 3D printing is for retailers to be able to offer personalised, print-on-demand products at the point of sale. It would mean a lot of manufacturing taking place in the UK as opposed to another, lower-cost economy. This could lead to the evolution of a new kind of UK manufacturing industry, centred around the consumer and playing to UK strengths in retail and customer service. And if 3D printing is a complement to, rather than a replacement for mass production, it will be generating new economic activity – otherwise known as growth.

Even this modest assessment of the potential for 3D printing raises some pretty fundamental questions for the government. If a product printed at a shop is faulty, who holds the responsibility? The original designer? The printer? Or the company that supplied the printing materials? And what about the home-printing of handguns? How – or indeed should – we police potentially millions of low-quality home printers to ensure they don’t make dangerous objects?  These are questions of legal policy and would need to be confronted by policymakers if 3D printing is going to go anywhere.

It also has implications for intellectual property laws. Currently, if a company like Apple wishes to use a component in their products developed by another country, such as a microprocessor designed by ARM, they have to engage in lengthy licensing negotiations, agreeing terms and drawing up complicated contracts. If your friendly neighbourhood 3D printer wants to create a customised mobile phone for you, the cost and complexity of licensing the different components may prove prohibitively expensive. Therefore the intellectual property policy system, overseen by the government, may need to be open to a radical re-think in order to facilitate more widespread 3D printing.

We shouldn’t be overly prescriptive in defining what the 3D printing industry will look like, and what the appropriate policy response should be. Instead policymakers need to be alert to the evolution of this new and exciting technology, and ready to remove roadblocks to its growth and adoption. What we definitely don’t want is a repeat of the decade-long copyright wars, where policymakers took years to come to terms with the very idea of digital file-sharing. With 3D printing, the stakes are so much higher, and the vested interests so much more vocal, that we risk even more painful and protracted arguments if we don’t think more seriously about it. By starting to consider the potential implications and opportunities presented by 3D printing now, we stand a much better chance of making the most of the technology, turning it from a niche hobby to much-needed economic growth.

Miniature heads made using a 3D printer. Photograph: S zillayali, CC-BY-SA

Spencer Thompson is economic analyst at IPPR

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.