Joseph Dinnage also wrote about the UK’s regional separatists pressuring Andy Burnham to facilitate the dissolution of the nation. He argues that Burnham must fight the urge to turn to constitutional reform as an alternative legacy. The Prime Minister has so far resisted calls from independence parties to reconsider our constitutional settlement. How long his resolve will last is another question entirely.

The Thirlwall Inquiry has finally published it’s findings and recommendation after looking into Lucy Letby’s crimes. Alys Denby says the inquiry is not about a child serial killer but rather a malignancy of another kind: NHS bureaucracy. Staff at the hospital put the institution before the patients it was supposed to serve. Alys argues that the NHS cannot claim to be the ‘envy of the world’.

Elsewhere, we featured Andrew Tettenborn following the House of Lords debate after Reform UK received £72 million from two crypto billionaires. He argues that billionaire donations should be allowed just as financial support from small donations are. We also had Alan Hibben discussing one type of welfare nobody talks about, corporate welfare. The UK does not possess a coherent account of who receives support, through which channels or what any of it achieves. Politically it’s one of the easiest measures to reform but you can’t reform what you can’t measure.

On The Capitalist this week, CapX Editor Marc Sidwell sat down with Liam Halligan, the new Director of the Centre for Policy Studies, to explain why he decided to get more involved in frontline policymaking. He argues that our perilous fiscal position today looks alarmingly similar to the mid-Seventies, when the CPS was founded to break a failing consensus, only two years before that same consensus forced Britain to go to the IMF for a bailout. They also talked about why Britain’s debt interest bill is a moral failure, not just a fiscal one and why Halligan believes the case for free enterprise and limited government must be won all over again.

Oscar Gill-Lewis
Deputy Editor, CapX

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Britain is heading for a 1931-style crisis

George Trefgarne

If you think this summer has been sticky, count yourself lucky you were not in the Cabinet in August and September 1931, in the midst of possibly the worst economic crisis the country has ever faced. It is worth looking at what happened then, because high energy and Government borrowing costs mean a crisis of a similar kind might, unfortunately, be gathering pace now.

If I am in London hardly anyone seems to mention inflation. Outside London, the provinces are obsessed with the price of diesel, petrol, household energy and increasingly, food.

In 1931 there was also a Labour Government, led by Ramsay Macdonald and the matter at hand was that Britain was on the gold standard, fixing the pound at £4.25 per troy ounce. It had returned to this rate after the First World War and the entire Establishment agreed it was vital, desirable, a good thing etc.

The trouble was it was too high. The weakened British economy after the First World War and then the Wall Street Crash could not withstand the demands of keeping the pound effectively pegged too high. The Bank of England had to keep selling gold at that rate, or borrowing money to buy sterling in order to prop it up.

As for the rest of the economy, it meant that manufacturers could not export their products as they were effectively priced too high relative to competitors. The Bank had to hold interest rates excessively high at 4.5%. We were being squeezed to death.

This is very similar to the situation we are currently suffering from. You cannot force a complex modern economy to pivot around a single number. But that is exactly what we are doing today, with the Net Zero legislation forcing us to reduce our carbon emissions to zero by 2050. This is not possible, or at least not without squeezing the life out of us as in 1931. We do not have capacity to cope with a crisis like the closure of the Strait of Hormuz, through which about 7% of the world’s oil and gas is exported.

Group think

In 2019 the entirety of polite society agreed that it was a Jolly Good Thing to put Net Zero into law, including the Bank of England, the Church of England, the BBC, the universities, the financial press, etc, etc. Nigel Lawson, the former chancellor, was by contrast practically banned from the airwaves for suggesting it was a crazy idea.

Last week the Government was forced to pay the highest interest rate for 30 years, at 5.8%, in its latest gilt auction. Andy Burnham’s assertion that ‘national security should not come at the expense of social security’ at Prime Minister’s Questions was also taken badly. It is quite possible the market will seize up altogether and, in which case, not only would Burnham and John Healey be unable to fund their plans, the credit rating of large parts of the private sector would be affected.

Another energy bailout

The received explanation for this state of affairs is that Britain is borrowing too much and this is because public spending is out of control. Furthermore, Liz Truss’s ill-fated mini-Budget seriously damaged investor confidence.

This is baloney. Or at least part baloney.

As big a reason for investors’ concern about Britain is that we are prone to inflation. This inflation is driven by energy and food costs as the Governor of the Bank of England told the Treasury select committee last week.

Will the Bank raise interest rates at its meeting this week? The European Central Bank has already done so. The Office for National Statistics will publish its inflation numbers for August on Wednesday but the really substantial moves in prices were this month, in September. The CPI index for the previous 12 months was running at 2.9% in July, that looks like a distant memory.

Net zero has reduced our ability to produce, import, refine and store sufficient cheap energy by trying to replace fossil fuels with renewable electricity. Electricity anyway only accounts for about a quarter of consumption.

If you simply take diesel, the workhorse fuel used by lorry and tractor drivers and those with outdoor generators, its average price has risen steeply in recent weeks to 185p a litre, heading for the 199p record set in 2022, when Liz Truss accompanied her mini-Budget with a vast household energy bailout. It was the simultaneous combination of the two, not just the proposed tax cuts, which shocked the market. With the latest forecast suggesting an 18% rise in the price cap in January, that is where we are again now.

Mr Burnham might have to provide another bailout of some kind. If you look at the price of oil or natural gas and refined products, they are all going through the roof. President Trump’s war in Iran might be the catalyst, but the underlying reason we have shortages and inadequate capacity of our own in Europe, is Net Zero. We have, for example, closed five refineries in the last few years, which means the remaining four, which mostly produce petrol not diesel, are going like the clappers.

We are shutting down the North Sea with similar recklessness and have almost no gas storage. This week the Government was expected to at last approve production at the Jackdaw field in the North Sea. But this has reportedly been delayed due to the Holborn and St Pancras by-election, where the Greens are the main challengers to Labour.

Betraying the Left

Back in 1931, the Labour Government fell as it was forced to introduce emergency spending cuts. It was reconstituted as a National Government with the Conservatives but still led by Ramsay MacDonald. He entered Left-wing mythology as a traitor, never to be forgiven. In September, the dilapidated Royal Navy (sound familiar) mutinied in response to pay cuts. An emergency decision was taken by the new Cabinet to ‘temporarily’ suspend the Gold Standard. Incredibly, the crisis eased within a few months as sterling and interest rates fell and Britain recovered from the Great Depression faster than any other advanced nation.

1931 may not be an exact comparison, but if you don’t like it, there are others, like the removal of exchange controls in 1980 or the exit from the Exchange Rate Mechanism in 1992. Both resulted in recovery.

Will Mr Burnham and Mr Healey be forced into a similar emergency suspension of Net Zero and, related, the triple lock on pensions? It is not beyond the realm of possibility. Much will depend on how energy prices, inflation and the gilt market behave in coming weeks.

And if you want more…

– Edgware is not the West Bank (James Ball)

– After 9/11 we chose safety over freedom (Mani Basharzad)

– Why can’t Britain fix its roads? (Eamonn Butler)

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Another reconfiguration of numbers is going to affect the upcoming Budget. When Rachel Reeves left government there was a financial cushion of £23.6 billion. Andy Burnham and John Healey need to do some serious thinking because that has been wiped out leaving them with £8.5bn in headroom. See our Stat of the Day below.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Oscar Gill-Lewis
Deputy Editor, CapX

Today’s Takes

Fresh thinking from CapX

Nobody is trying to copy the NHS

Alys Denby

‘We must ask ourselves what it is about the NHS that leads to such cruelty. I can’t help but feel it has something to do with a model of state control that canonises the institution and dehumanises the patient.’

The Thirlwall report is not really about Lucy Letby’s crimes. It’s about a malignancy of another kind: NHS bureaucracy. Again and again staff at Letby’s hospital put the institution before the patients it was supposed to serve. Not only does our nationalised and heavily centralised health service deflect blame, it is uniquely vulnerable to political attack. Take the response to Palantir’s involvement, despite evidence showing greatly improved outcomes. Read More

Why can't Britain fix its roads?

Eamonn Butler

‘Cones and barriers with nobody working behind them should be regarded as political and economic failure – not a normal Tuesday.’

Potholes and roadworks are beoming more and more common. People are noticing more temporary traffic lights and cones with no workers. In some cases road closures carry on for years but the massive disruption to people’s time – and the emergency services ability to attend an urgent call – goes unaccounted for. Authorities need to incentivise contractors to carry out roadworks as quickly as possible. Read More

Stat of the Day

Best of the Web

Don’t fear the donors

Henry Hill, The Critic

‘It is wise to be wary of people citing nebulous perils to justify very concrete power grabs.’

Should we be worried about Reform’s £72 million donations? Not when you recognise that British political donors tend not to be half as good as the conspiracy-minded imagine at deploying their money effectively. British politics needs to develop institutions that care for the long-term health of a party not ones that cater to the whims of a particular leader and their immediate needs. Read More

Labour's budget fears

Patrick Maguire, The Times

‘Not for the first time, the fate of a Labour government is sliced and diced by the lenders.’

Borrowing costs are now higher than they ever got under Liz Truss and Labour believe they are being “Trussed in slow motion”. The Chancellor keeps emphasising that he and this Government will stay within the same limitations as the last one but so far the bond vigilantes don’t believe him. Read More

Why can't people move to high-wage areas?

Economic Affairs

Stuck in place: how government policy traps workers in low-wage regions

Professor Len Shackleton is an Editorial and Research Fellow at the IEA. This article is based on a talk he gave this week to the Beloff Conference organised by the IEA and the Vinson Centre at the University of Buckingham…

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2 days ago · 8 likes · Institute of Economic Affairs and len shackleton

The Capitalist: Britain needs saving from itself

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– Britain needs to matter somewhere (ConservativeHome)

– Good intentions paved the road to the 2008 crisis (The Daily Economy)

– AI and the Luddites (Econlib)

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Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Corporate welfare is Britain's blind spot

Alan Hibben

‘You cannot reform what you cannot measure, and Britain cannot presently measure corporate welfare in any meaningful way.’

From support for wind farms to assorted tax reliefs, corporate welfare receives far less attention than voter welfare, but it should be easier to cut – if we actually knew the true cost to taxpayers. Until Britain stops administering corporate support as a fog of overlapping schemes, exemptions and tax breaks, nothing will change. Read More

The Bank was right not to follow the Fed

Damian Pudner

‘There’s simply no need to crystallise QE losses today, punishing the taxpayer, especially with the fiscal position so dire.’

The Bank of England chose not to raise rates today, and it was right not to. Some traders have started pricing four or even five rate rises over the next year. Looking at the evidence, that is lunacy: UK broad money is not accelerating. They are pricing an inflationary economy that Britain does not have. Read More

Stat of the Day

Best of the Web

Burnham shifts the blame

James Watt, City AM

‘The best social policy ever invented is a well-paid job. And those jobs are created by businesses, not politicians.’

Andy Burnham says young people not in work, education or training have been let down by ‘the system’. But Labour have spent the last two years raising employer National Insurance and pushing the youth minimum wage up by over a quarter. Burnham now runs the system, and should take responsibility for the consequences. Read More

An entirely expected fraud

John Wills, The Critic

‘Where each social home is a nominal £1m lottery prize, corruption will inevitably happen.’

Sky News found that a London woman paid a £1,500 bribe to move up the social housing waiting list. It should surprise nobody. A central London tenancy is worth some £35,000 a year and the officer handing it out earns barely £30,000. With allocations opaque and housing associations outside FOI, corruption is the predictable result. Read More

Candour as an operating model

The Effective State

When British institutions won’t tell the truth

The Countess of Chester Hospital had a policy called “Speak Out Safely”. It was intended to protect staff who raised concerns about patient safety. Yet Lady Justice Thirlwall’s just-published report found that this policy was not used to protect the doctors raising concerns about Lucy Letby. The promise of protection existed. The protection did not…

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3 days ago · 2 likes · Prf Nada Kakabadse

The Capitalist: Britain needs saving from itself

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And if you want more...

– Britain’s £2 trillion capital gap (2030 Prosperity Alliance)

– The battle for the future of space (The Daily Economy)

– Making economics humane again (Law and Liberty)

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Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

After 9/11 we chose safety over freedom

Mani Basharzad

‘In the modern world, people do not lose their liberty through the invasion of an emperor from a neighbouring country, but through the subtle surrender of their own freedom in exchange for a little more safety.’

Days after 9/11, the 10-year US Treasury yield was 4.68%. Now it’s breaking 5%. High spending paid for by high debt has become the new normal. Gordon Brown once wanted British debt capped at 40% of GDP; it is nearing 95%, with Italy at 138.9%. That is the price of a hyper-protective state where a quarter of adults believe they are disabled. Read More

Billionaire donors are good for democracy

Andrew Tettenborn

‘If you want to ensure effective political input comes from those likely to be motivated by genuine and passionate belief in a political ideal, it’s the individual plutocrat every time.’

Labour peers want to cap political donations and retrospectively confiscate the £72m Reform received from two crypto billionaires. Behind it sits an assumption: that many small donations are the only legitimate way to fund a party. Why should that be the only model? Parties beholden to no subscriber base can afford radical ideas. Voters can judge for themselves. Read More

The Capitalist: Britain needs saving from itself

What does the fight for free markets look like in 2026 – and how can Britain escape its high-debt, high-tax, low-growth doom loop?

Liam Halligan, the new Director of the Centre for Policy Studies – and so now in charge of CapX as well – joined me on The Capitalist to explain why he decided to get more involved in frontline policymaking.

He argues that our perilous fiscal position today looks alarmingly similar to the mid-Seventies, when the CPS was founded to break a failing consensus, only two years before that same consensus forced Britain to go to the IMF for a bailout. Fifty years later, he says, the case for free enterprise and limited government must be won all over again.

We discussed why Britain’s debt interest bill is a moral failure, not just a fiscal one; why he thinks the market will not fund upfront tax cuts, however much he wants them; and why he blames his own trade – economics journalism – for leaving the public unequipped to hold politicians to account.

Best of the Web

Public control, private blame

Christopher Snowdon, The Critic

‘In Britain… companies remain mostly in private hands while levers of competition, such as advertising and pricing, are treated with growing contempt and are increasingly regulated.’

Andy Burnham says he wants public control, not public ownership – and his Chancellor John Healey is making similar noises about a ‘strategic state’. The result is a capitalist command economy: firms left in private hands but given so many targets, mandates and price controls that they become agents of the state, bearing the blame while politicians keep the power. Read More

Slowing AI won't slow the disruption

Ryan Bourne, The Times 🔒

‘There are thus scenarios where countries get substantially richer but it feels like a major recession for its professional class. And Britain looks sensitive to these effects.’

Dario Amodei’s proposed slowdown in frontier AI won’t mute the technology’s economic effects. AI-powered growth depends on business adoption, which still has a long way to go. With two-thirds of British jobs highly exposed, we could grow much richer as a country while many graduates struggle to adjust – a recipe for a politically explosive future. Read More

Rejoining the EU won't fix British AI

The Progress Post

Post Haste: Rejoining the EU won’t fix British AI

This is Post Haste, our home for swift thoughts, responsive takes, and first attempts at solving problems. The views expressed are those of the authors, and not necessarily endorsed by the Centre for British Progress. Want to write for us? Email editor@britishprogress.org…

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4 days ago · 11 likes · Martha Dacombe

Stat of the Day

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And if you want more...

– 200,000 jobs have already been lost under Labour (City AM)

– Britain’s water industry needs fixing, not nationalising (ConservativeHome)

– The case for climate realism (Engelsberg Ideas)

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‘I genuinely believe we are one major geopolitical shock away from a proper meltdown. And it’s an ugly contest at this point between us and France.’

What does the fight for free markets look like in 2026 – and how can Britain escape its high-debt, high-tax, low-growth doom loop?

Liam Halligan, the new Director of the Centre for Policy Studies – and so now in charge of CapX as well – joined me on The Capitalist to explain why he decided to get more involved in frontline policymaking.

He argues that our perilous fiscal position today looks alarmingly similar to the mid-Seventies, when the CPS was founded to break a failing consensus, only two years before that same consensus forced Britain to go to the IMF for a bailout. Fifty years later, he says, the case for free enterprise and limited government must be won all over again.

We discussed why Britain’s debt interest bill is a moral failure, not just a fiscal one; why he thinks the market will not fund upfront tax cuts, however much he wants them; and why he blames his own trade – economics journalism – for leaving the public unequipped to hold politicians to account.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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Why lead the Centre for Policy Studies now?:

‘It’s not an easy time to become the Director of the CPS if you want a quiet life. I think it’s a very interesting time to become Director of the CPS, and it’s precisely because of the bind our country is in that I decided to get more heavily involved in frontline policymaking – because I genuinely believe this is a once in a generation moment. This isn’t 1997 or 1998, as many people thought it would be, when Starmer won that huge majority. We’re 1974, 1975. We are literally on a fiscal cliff edge. The government is increasingly dysfunctional. The state is far too big. Vested interests are clogging up the economy, the country’s stagnating, there’s a growing sense on the international stage that the UK is diminishing. And I genuinely believe that Britain needs saving from itself at this point.’

Debt interest is out of control:

‘The fact that we’re spending 120 billion quid on debt interest – how many nurses and teachers and doctors could you employ for that money? How many hospitals could you build? And it’s dead money, because it’s just going to our creditors. Many of them overseas creditors. It’s not even going to UK-based institutions or UK-based savers in the main, who would then recycle that money back into our own economy. It’s going overseas. It’s undermining our exchange rate. It’s making us very, very vulnerable, as the phrase goes, to the kindness of strangers.’

The ghosts of 1976:

‘I’ve been saying it for a couple of years now, even before Starmer came in – I was writing that the ghosts of 1976 are going to haunt this government. I genuinely believe we are one major geopolitical shock away from a proper meltdown. And it’s an ugly contest at this point, I would say, between us and France.’

Why tax cuts can’t come first:

‘My view is that the Laffer Curve is completely real. Of course it is. You can see it happening already. Look what’s happened to CGT. Look what’s happened to the tax take from independent schools. Look what’s happened to cigarettes. Look at the energy profits levy – the annual total from that’s gone from like £10 billion to £2 billion, as North Sea activity’s been crushed by taxation, not by geological constraints. So the Laffer Curve is real, but the Laffer Curve also involves a J curve. Until the tax cut sticks and people believe it and start hiring more people, start acting on the lower tax, that tax cut will cost you money – and the markets have to finance that, at least for a short period of time… Of course we need to lower tax. But we’re in a situation now where the public finances are so weak, and successive governments of all colours have so fiscally mismanaged this country, that I don’t think the market will fund upfront tax cuts. So you have to have the fiscal consolidation first.’

The media’s failure:

‘I’m outraged at how the media, during my career, have systematically underestimated what ordinary people can understand and want to know about complex ideas, not least surrounding the economy, finance and business. My generation of so-called specialist broadcasters has completely failed the public. And the fact that the public isn’t helped to understand these things means that politicians think they don’t have to address them – which leads to increasingly irresponsible policymaking.’

Why big business likes more regulation:

‘Even more of the growth upfront, I would say, comes from policy moves that don’t cost money – which is lower regulation. But to lower regulation takes a lot of guts, because there are a lot of vested interests that want the regulation. A lot of our big businesses want regulation, because it stops small businesses having a go and it keeps their competitors at bay. Some big business organisations, industry lobby groups that I could mention, exist entirely to maintain regulation where it is, and maybe even increase it on their terms, to protect their market share. Sometimes being pro free markets doesn’t mean being pro big business. It means entirely the opposite.’

What makes him optimistic:

‘Our people. We have incredible people. I’ll always feel that about the UK. I’m from an immigrant family. I have that kind of gratitude of an immigrant… Britain is an incredible place to live, to work, to come from, to be part of and to help shape and influence. We are respected around the world. We’re known for fair dealing, good ideas, energy, great sense of humour, bad weather. Decent food these days – it’s getting better. But joking aside, we need to rebuild our confidence. I think we have lost our confidence in recent years, and a lot of that loss has come from the existence and the knock-on effects of a state that is now entirely out of control.’

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It’s not like it was some kind of secret. Still, if you believe that, they have an autumn Budget stuffed with tax rises to sell you.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Burnham must resist breaking up the nation

Joseph Dinnage

‘Though the Prime Minister is a devolution enthusiast, he has so far resisted calls from independence parties to reconsider our constitutional settlement. How long his resolve will last is another question entirely.’

The leaders of the devolved administrations have signed an agreement to pressure Andy Burnham into facilitating the dissolution of the nation. They believe their future lies with the EU. Rejecting the centuries-old union for a Brussels superstate is certainly a novel approach to independence. Read More

Why are politicians taxing our legacies?

Laveen Ladharam

‘If Kemi Badenoch and the Conservatives choose to scrap inheritance tax, they should be praised.’

Inheritance tax punishes people for building things and wanting to leave a legacy. It’s also riddled with loopholes including an exemption for gifts to political parties. It sends a message that your children are less worthy of your toil, tears and sweat than politicians. Kemi Badenoch should be praised if she scraps it as promised. Read More

Stat of the Day

Best of the Web

Britain’s public sector wage spiral

Michael Simmons, The Spectator

‘Unions put pressure on the government because of the cost of living, Labour grants pay rises, the cycle continues and a dwindling private sector picks up the bill’

Britain’s public sector is in a spiral, an upwards one. Pay increased by 6.3% in the public sector in the last quarter compared with 2.9% in the private sector. Public sector jobs are becoming more lucrative and entitlements more generous, all funded by a dwindling private sector. Read More

Power to the people

Sam Richards, The Critic

‘At Britain Remade, we reviewed every nuclear power station built since 2000. Hinkley was the world’s most expensive.’

Why is Britain so bad at building nuclear power stations? Hinkley Point C was approved 10 years ago today but is still years from completion, and £17 billion over budget. If Burnham wants to return power to the people, No 10 North isn’t enough – he needs to let ministers overrule the quangos getting in the way. Read More

AI isn't slowing down, says Tyler Cowen

The Free Press

Tyler Cowen: The AI Slowdown Is Not What It Seems

When is a slowdown not a slowdown, or perhaps even an acceleration…

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6 days ago · 75 likes · 90 comments · Tyler Cowen

The Capitalist: our debt is a security threat

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And if you want more...

– Why can’t the Remainers just move on (ConservativeHome)

– We’re pricing tourists out of London (City AM)

– Could ancient smallpox return? (The Conversation)

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Tim Dier wrote for CapX in April about the lessons from Madrid and Sweden on how scrapping the death tax can help convince wealth-creators that an economy is open for business.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Britain is heading for a 1931-style crisis

George Trefgarne

‘You cannot force a complex modern economy to pivot around a single number. But that is exactly what we are doing today, with the Net Zero legislation forcing us to reduce our carbon emissions to zero by 2050.’

In 1931 Britain tied itself to a fixed rate on the gold standard. The problem was it was too high and pushed the economy to its limits. When we came off the gold standard we recovered from the Great Depression faster than any other advanced nation. Andy Burnham should take note. Today, Net Zero is squeezing the economy to death in much the same way – suspending it may be the only way out. Read More

Edgware is not the West Bank

James Ball

‘That this has escalated to the stage where people see parallels between that and the situation in the West Bank perhaps says something about the collective mindset of Nimbyism at the moment.’

Local Nimbys opposing the development claim it’s undemocratic. But given it has approval from the Mayor of London, they must be defining democracy as ‘me and my friends getting the outcome that we wanted’. Read More

Stat of the Day

Best of the Web

Labour won’t cut welfare without a crisis

Roger Bootle, The Telegraph 🔒

‘Interestingly, there is quite a record of crises occurring in September.’

Wednesday is the 34th anniversary of Black Wednesday, which in the end worked out surprisingly well. Will we see another autumn crisis? Today, the danger sits in the gilt market, with debt at 95% of GDP. A bond-market shock would be traumatic, but it may be the only thing that forces John Healey to cut welfare. Read More

🎧The jobs tax is costing Britain

James Price

AI bosses want to slow down. Trump doesn't

Sean Thomas, The Spectator

‘None of it proves imminent superintelligence. But it is the sound of something ominous.’

Dario Amodei's Saturday essay urging the AI industry to slow down drew quick agreement from Elon Musk and Sam Altman, and a sharp retort from David Sacks about building a cartel by law. But the decision may no longer rest with the labs. Trump has declared ‘whoever wins AI wins’ and currently the Americans are ahead. Read More

The Capitalist 🎧

Our debt is now a national security threat

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And if you want more...

– Do people prefer traditional architecture? (Works in Progress)

– Labour shouldn’t undo Gove’s success (Substack)

– Sweden has stopped apologising for capitalism (The Critic)

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Why Labour are a bigger threat to jobs than AI

James Price

The Victorian economist William Stanley Jevons was clearly a worrier. When, in 1863, the Tyneside arms-maker Sir William Armstrong calculated that Britain’s coal would run out in 212 years, Jevons checked the sums. Armstrong had assumed the country’s appetite for coal grew by the same tonnage every year. But it actually grew by the same percentage. At that rate, the coal would run short, Jevons feared, within a century. In 1865 he published ‘The Coal Question’ to say so.

John Stuart Mill, an MP as well as a philosopher, raised this stark issue in the House of Commons and proposed, as a precaution, paying down the national debt (imagine such a novel idea being proposed today).

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Jevons’s name survives for a phenomenon he noticed whilst studying this use of coal. James Watt’s brilliant and revolutionary steam engine burned far less coal than the Newcomen engine that had preceded it. But because this huge increase in efficiency was so enormous, rather than using less coal, Britain burned far more of it because the scale of efficiency improvements increased the usefulness of the machine by so much.

‘It is wholly a confusion of ideas,’ Jevons wrote, ‘to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.’ This became known as the Jevons Paradox. Now, swap coal for AI compute and you can start to understand the modern AI economy.

When a piece of work can be done much more cheaply and quickly, the incentives are there to do much more work. Hence The Economist’s count last week of a million American jobs created by AI against 200,000 layoffs blamed on it.

All the doomsters and gloomsters who predicted mass job losses have, in the USA at least, been disproven. The Nobel economist Wassily Leontief predicted in 1983 that computers would see humans go the way of the horse after the tractor.

It is true that ‘computer’ was a job title before it was a machine. The knocker-upper, rattling a wooden pole against bedroom windows for a few pence a week, was still at work in the industrial north in the early 1970s. The lamplighter, the switchboard girl and the whole typing pool went the same way.

Of course some jobs have been lost to AI, and more will, but people seem determined to forget the principles of Schumpeterian creative destruction that have held sway for so long.

An exception, for the moment at least, as has so often recently been the case, is Britain. Jobs here have gone without the boom. Youth unemployment is 16.2%, up from 14.3% a year ago, and the euphemistically titled NEETs, young people not in education, employment, or training, passed a million this spring for the first time since 2013.

But no frontier lab did that. Terrible left-wing policies did. First, the former Chancellor Rachel Reeves raised employer National Insurance to 15% and cut the point at which employers start paying NICs on an employee’s earnings. This has been branded by critics as a £25 billion jobs tax.

Second, she cut rates relief for shops and pubs. And the result? The hospitality sector alone shed 89,000 jobs in the 10 months after Reeves’s first Budget. As we are still some way off robots pouring pints or waiting on tables, these job losses are squarely the fault of Labour. Then came the Employment Rights Act, which gives employees more rights from day one and will make every hire harder to undo from January.

I don’t need to explain the other macro causes of the economic weakness that is further exacerbating Britain’s job losses to a CapX audience, like the tax burden or industrial electricity prices that are the highest in the developed world. Suffice to say that the only thing more power-hungry than AI is, of course, leftist politicians themselves.

The way in which their damaging economic interventions beget more damaging interventions would seem familiar to a worrier like Jevons and his famous paradox. The big question is whether the new Chancellor, John Healey, can break the cycle, or whether he too will claim more power to meddle and cost Britain even more jobs. If so, let’s pray that one of those job losses will be his own.

James Price is a senior fellow at the Adam Smith Institute and a columnist for CapX.

Harry Phibbs also addressed the clothing retailer Next’s partial victory on appeal over its right to keep paying warehouse workers differently to sales consultants. He argues that while this is good news, the legal wrangling continues and the decision still leaves too much power in the hands of tribunals to make rulings that fly in the face of economic common sense. We need politicians with the courage to change the law on equal value pay.

As figures show that AI has created a million american jobs compared to the 200,000 job losses blamed on it, James Price writes on why Britain isn’t seeing a similar boost. In fact, our NEETs crisis shows no sign of slowing down. That’s not the fault of any frontier lab – it’s down to Labour’s terrible left-wing policies.

Elsewhere, following Javier Milei’s recent claim to the Falkland Islands, we featured John Penrose on how to prevent more long-shot territorial claims. He proposes that the UK invites its Overseas Territories to become full members of the UK like Scotland and Wales, complete with Westminster MPs. We also had Janet Bufton discussing the US-Canada trade war, following the massive support Canadian counter-tariffs received. Most Canadians are willing to pay some price, for some time, simply as an act of defiance.

On The Capitalist this week, CapX Editor Marc Sidwell sat down with Daniel Hannan to discuss the British economy. The peer and new Director General of the IEA made the case that in an increasingly dangerous world, Britain’s economic weakness is a vulnerability we can no longer afford. They also talked about why the electorate’s demand for spending deserves as much blame as any politician and how Hannan plans to bring the free-market case to a new generation.

Oscar Gill-Lewis
Deputy Editor, CapX

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Burnham has chosen to feed the welfare monster

Ross Clark

There is a standard response from any Chancellor or Prime Minister asked questions about government finances: ‘I am not going to write the Budget in front of you’. And neither should they. The Budget is a potentially market-moving financial event. The figures it contains have to add up, make sense. The measures have to be presented as a package; if bits of it leak out they may tell a very different story to the one which the Chancellor is trying to narrate. We saw the damage last year when the classic ‘sources close to Rachel Reeves’ started to leak her intentions, destroying economic confidence as markets were forced to contemplate what seemed like every conceivable tax rise under the sun.

Why, then, did Andy Burnham tell the Commons this week ‘national security can’t come at the expense of social security’? He later tried to backtrack, claiming that he is, after all, committed to reducing the welfare bill – one day. But he has undermined his own Chancellor by laying down the rules six weeks before the Budget is due to be presented.

It now seems inevitable that Burnham is not going to allow a single penny to be trimmed from welfare in this Budget. This perhaps should not be surprising, given that Keir Starmer and Reeves seemed to find it politically unacceptable to cut anything from welfare. I never did have a great deal of confidence that Reeves would bring control to the public finances: her ‘securonomics’ came across as pure blather. Yet the moment of realisation for me came the day in July 2025 when Starmer backtracked on his government’s very modest proposal to trim £5 billion from Personal Independence Payments (PIP); the day when Reeves was seen sobbing on the green benches. If Labour backbenchers would not allow the government to see through even those modest cuts, Starmer saw there was no way that they were going to allow any meaningful reforms.

Burnham seems to have come to the same conclusion: it is not politically possible for him to cut the welfare bill, or even to contain it. This voracious monster will be allowed to grow uncontrollably so long as Labour remain in office. Self-diagnosed ADHD sufferers will continue to drive their Motability cars, the mildly anxious and depressed will continue to be able to sign themselves off as unfit for work for the foreseeable future. And all because Labour MPs see it as their saintly duty to resist any welfare cuts.

John Healey is now in an impossible position. He cannot fail to come up with a plan to increase defence spending. He resigned as defence secretary in June precisely because Starmer had not satisfied his demands for more money. Healey is now in charge of the money himself; he will look utterly ridiculous if he does not deliver a much beefed-up defence budget. But how can he do that if his boss will not allow him to shave a penny off welfare? Here is a very stark figure. Between 2025/26 and 2029/30, without a change in benefits policy, the OBR has forecast that on current policy the welfare budget will increase from £334bn to near £400bn a year. That £66bn a year increase is £6bn a year more than the Government spent on defence in 2024/25. The tragedy is that it wouldn’t take much in terms of welfare cuts to provide a very meaningful increase in defence spending. But if you are not prepared to shave a penny off benefits, not only are you going to fail to fund defence properly, you have little hope ever of balancing the public books.

Some more basic figures: welfare accounts for around a third of all public spending. If you want to close the deficit – £133bn last year – it is going to be extremely difficult, nigh impossible, to do it without touching the welfare budget. You could cut out transport or defence altogether and still not come close to eliminating the deficit.

But then opposition parties, too, are tying one arm behind their backs in promising to retain the triple lock on pensions. The state pension consumes just under half of the welfare budget. The triple lock, which guarantees to increase pensions every year in line with the Consumer Prices Index, average earnings or 2.5%, whichever is greatest, has already added an extra £15bn a year to public spending relative to if pensions had simply increased in line with average earnings.

If public finances are to be brought back under control there are going to have to be no sacred cows. There are going to have to be cuts in every quarter, pensions, PIPs and all. ‘The price of liberty is eternal vigilance,’ goes a saying often, but mistakenly, attributed to Thomas Jefferson. To adapt it, the price of having a welfare state is eternal vigilance of the cost. No political party at present seems willing fully to acknowledge that.

‘Britain is Bust: the coming sovereign debt crisis and what it will mean for you’ by Ross Clark is published this week by Forum Press.

And if you want more…

– Oasis should make Andy Burnham more pro-freedom (Ted Grainger)

– Was Thatcher really a neoliberal? (James Vitali)

– Why Argentina claims Las Malvinas (Dominic Hilton)

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We’ll be back on Monday.

The retail, hospitality and construction sectors have not fared so well. One of Britain’s largest housing developers, Berkeley, warned the Labour Government it may not make enough money to start new projects. It certainly won’t reassure the public that the Government will be able to meet their housebuilding targets. This will also be a big issue for the new Mayor of London, where Berkeley primarily operates.

Meanwhile Andy Burnham is under pressure for apparently delaying the decision to bring the Jackdaw gas field online until after the Holborn and St Pancras by-election. Continuing the long run of slow and confusing decision-making around the North Sea isn’t going to bring bills down.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Oscar Gill-Lewis
Deputy Editor, CapX

Today’s Takes

Fresh thinking from CapX

Burnham has chosen to feed the welfare monster

Ross Clark

‘If you are not prepared to shave a penny off benefits, not only are you going to fail to fund defence properly, you have little hope ever of balancing the public books.’

Andy Burnham said that he won’t sacrifice welfare spending for national security spending. He has tried to backtrack from that statement since but it shows where his priorities really lie. With the Budget approaching, it also leaves his Chancellor in a bind. John Healey resigned his post under Keir Starmer over insufficient defence spending. But finding new money for defence without cutting the welfare bill is a non-starter. Read More

Why our Overseas Territories must join the UK

John Penrose

‘Rather than being embarrassed by embers of empire, Ministers should fan this post-imperial afterglow into a roaring, modern flame.’

Countries like Argentina and Spain are keeping a close eye on Britain’s Overseas Territories. Whenever they smell weakness from our government they are ready to leap in. We need to offer our territories the opportunity to fully become a part of the UK with voting rights and their own MPs. Read More

Stat of the Day

Best of the Web

Britain is growing. Will Healey mess it up?

Michael Simmons, The Spectator

‘It has been this government’s MO for any tax rises to fall hardest on businesses.’

Despite many forecasts suggesting another month of zero growth, the economy grew by 0.4% overall in July. The growth was led mainly by AI-related and professional services, which were able to cancel out weaker figures in other sectors. Chancellor John Healey needs to be careful not to stop this unexpected growth in its tracks. Read More

Miliband is back in Labour’s driving seat

Patrick Maguire, The Times 🔒

‘At the top of government the striking irony of recent events has been noted: Starmer was supposed to be the foreign policy prime minister, and Burnham his domestic corrective.’

It is no secret that Ed Miliband wanted to be chancellor. But even in his current position he is helping this Government to define itself. His use of moralistic language in his impassioned speech sanctioning Israeli settlers on the West Bank is something we would have never seen under Keir Starmer. It may be performative and self-defeating, but he is still setting Labour’s agenda. Read More

Ministers need to take more risks

Stephen Webb

Wallenstein's Camp

HAS ANDY BURNHAM PUT THE LAWYERS BACK IN THEIR BOX?

Keir Starmer’s whole career epitomised progressive internationalism’s long march through the institutions. From a firebrand activist to Director of Public Prosecutions and into politics all the way into Downing Street. This was a man who despised politics, famously preferring Davos to Westminster. He seemed to have no idea what he wanted to achieve, or …

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9 days ago · 5 likes · Stephen Webb

The Capitalist: our debt is now a national security threat

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– Bono’s hard-won lesson about poverty (The Daily Economy)

– Our future will be built on the shoulders of data centres (Centre Write)

– Quotas won’t solve inequality (UnHerd)

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We'll be back on Sunday, with the Weekly Briefing.

For a very different diagnosis of what Britain’s economy needs, see Liam Halligan’s piece below. The incoming Director of the Centre for Policy Studies argues the fight for a smaller state is more vital than ever – and the first order of business is our out-of-control spending.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Labour are a bigger threat to jobs than AI

James Price

‘The only thing more power-hungry than AI is, of course, leftist politicians themselves.’

Economist William Stanley Jevons noticed that making a technology more efficient means people will use it a lot more, rather than less — his example was coal and the steam engine. The same holds for AI. In the US, AI has created a million jobs to the 200,000 job losses it gets blamed for. Britain is an outlier because Labour made hiring more expensive and firing harder. Read More

What Britain gets wrong about Argentina

Dominic Hilton

‘Argentina can adore Britain while believing passionately that Britain occupies part of its national territory. To British minds, these positions may seem incompatible. Argentines appear to manage them without difficulty.’

Javier Milei’s latest assertion of Argentina’s claim to ‘Las Malvinas’, the Falklands, sounds like a sudden escalation to British ears. From Buenos Aires it sounds entirely familiar. Milei has only turned up the volume: the claim itself – and the deep emotion behind it – is part of the fabric of Argentine daily life, alongside an abiding Anglophilia. Read More

Stat of the Day

Best of the Web

How to shrink the state

Liam Halligan, ConservativeHome

‘For quite a few years now, any economic success we have had in Britain has been despite rather than because of government policies.’

For the incoming Director of the Centre for Policy Studies, the size of the state is now imperilling our financial stability. Yet escaping the high-debt, high-tax, low-growth doom loop cannot begin with tax cuts: with debt service costs high and markets fraught, ‘unfunded’ cuts risk a bond crisis. Spending control must come first. Read More

A class unit won't create jobs

Joseph Dinnage, City AM

‘Inviting the white working class to perform in the Olympics of victimhood will do neither them nor the rest of Britain any good.’

Bridget Phillipson is expected to create a new unit that puts social class on the same level as race, sex and disability. Poor outcomes for Britain’s white working classes are real enough. But the Government, having made hiring so expensive, shouldn’t distort the labour market in their favour – it should get out of their way. Read More

Matt Ridley: no one can predict what AI will do

Economic Affairs

Why does nobody see new technology coming?

Matt Ridley is a science writer and a former member of the House of Lords…

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10 days ago · 10 likes · 1 comment · Institute of Economic Affairs and Matt Ridley

The Capitalist: our debt is a security threat

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And if you want more...

– How hard is it to build in Hackney? (Substack)

– 9/11 didn’t change the course of history (Project Syndicate)

– The return of moonshot capitalism (Financial Times 🔒)

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We'll be back tomorrow.

Meanwhile, you may think London’s housing crisis is bad now – but just wait. The boss of developer Ballymore says it is building half of what it did a decade ago, and that the real crisis will hit from next year, as new-build completions start to fall off a cliff. We told you so…

And with oil back above $100, UK gas prices have reached a 4-year high, putting households at risk of higher energy bills next year. Food prices are also on the way back up – see our Stat of the Day. Burnham is going to need more than upbeat TikTok videos to deal with all of this.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Was Thatcher really a neoliberal?

James Vitali

‘Thatcher believed deeply in communities, and in the personal obligations that extend beyond the pursuit of one’s own desires.’

Margaret Thatcher is often accused by Andy Burnham of taking Britain down the wrong path 40 years ago with neoliberalism. In reality she favoured wide ownership of property, especially homes and shares, as well as individual responsibility. Conservatives are returning to these ideas in order to counter the Left's top-down vision of society. Read More

The Right can care about the climate without Net Zero

Ted Newson

‘Previously, some on the Right have been too quick to dismiss any talk of climate change, while others have been sucked into using terms such as ‘apocalypse’ to describe what is happening. Both are as bad as each other.’

Public concern for the climate is still high but support for Net Zero is in decline. The Right has an opportunity to present a policy platform for the environment that is pragmatic and respects individual freedom. Critics say the Right is blasé about climate change but it is possible to take the threat seriously while avoiding statist policies. Read More

The Capitalist: our debt is a security threat

Is Britain’s own debt now as dangerous as any foreign rival? This week on The Capitalist, I spoke to Daniel Hannan, the writer, peer and former MEP who has just taken over as Director General of the Institute of Economic Affairs – Britain’s original free-market think tank – at a moment when state spending sits at 46% of GDP.

He made the case that in an increasingly dangerous world, Britain’s economic weakness is a vulnerability we can no longer afford. With debt at £3 trillion and history suggesting our power abroad has always rested as much on deeper, cheaper capital markets as fighting spirit, he argues our stretched public finances risk emboldening our geopolitical foes.

We also discussed how lockdown broke the public’s understanding of what ‘the economy’ even means, why the electorate’s demand for spending deserves as much blame as any politician and how he plans to bring the free-market case to a new generation.

Best of the Web

Britain needs more billionaires

Luke Johnson, The Telegraph 🔒

‘I would argue that almost all the resentment expressed against billionaires is fuelled by envy.’

The British public don’t object to highly-paid actors and footballers, but billionaires appear to be fair game. Such criticism – and the punitive tax policies that follow – is a mistake, as seen with the departure this week of hedge fund founder Chris Rokos to Greece. Countries with more billionaires are better off – demonising them is self-defeating. Read More

Don't join the Army

Robert Lyman, The Critic

‘Veterans who served under one set of rules are now being told that those rules may no longer be sufficient protection against further legal action.’

The Government is set to repeal legislation dealing with the legacy of the Troubles. This will expose servicemen and women to renewed legal jeopardy. No soldier has a licence to act outside the law, but this breaks the bond of trust between those who serve and the politicians who send them into harm’s way. Read More

How to raise money for defence

Jeremy Hunt

Thoughts from Jeremy Hunt

How to raise money for defence without more damaging taxes

John Healey’s first Budget on 28 October looks particularly nightmarish. It isn’t just that the Iran war has pushed up bond yields, potentially costing up to half the £21.7 billion headroom left behind by Rachel Reeves. But new governments mean new priorities. His own is defence, where he publicly called on Sir Keir Starmer to raise spending to 3% of GD…

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11 days ago · 6 likes · 1 comment · Jeremy Hunt

Stat of the Day

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And if you want more...

– Can the Right learn to love modernism? (Engelsberg Ideas)

– How the private sector rebuilt Ground Zero (City Journal)

– The rise and fall of Beefeater (The Spectator)

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‘The single biggest threat to our security is our debt level.’

Is Britain’s own debt now as dangerous as any foreign rival? This week on The Capitalist, I spoke to Daniel Hannan, the writer, peer and former MEP who has just taken over as Director General of the Institute of Economic Affairs – Britain’s original free-market think tank – at a moment when state spending sits at 46% of GDP.

He made the case that in an increasingly dangerous world, Britain’s economic weakness is a vulnerability we can no longer afford. With debt at £3 trillion and history suggesting our power abroad has always rested as much on deeper, cheaper capital markets as fighting spirit, he argues our stretched public finances risk emboldening our geopolitical foes.

We also discussed how lockdown broke the public’s understanding of what ‘the economy’ even means, why the electorate’s demand for spending deserves as much blame as any politician and how he plans to bring the free-market case to a new generation.

Below, you’ll find some short excerpts from our conversation.

Marc Sidwell
Editor, CapX

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Why the economy is so misunderstood:

‘I think I was the first newspaper columnist to come out against the lockdowns in print, and I have never been so unpopular. And this is not online comments – this is neighbours of mine, people I knew at school, real flesh-and-blood people: “Why are you trying to kill my granny?” The phrase people kept using is, “you’re putting the economy before lives”, which made me realise that people do not mean what I mean by the economy. They’re not using that word to mean the system of voluntary transactions through which we pursue happiness and fulfilment. They understand it as some disembodied, numinous entity that churns out ingots of gold for Tory donors, or something, and is unrelated to them. Of course, the idea of “economy before lives” is as absurd as the idea of “people before profits” – how can you have profits without people? That’s when I realised just how bad the general level of understanding of economics is.’

Debt is our biggest security risk:

‘We’ve generally been quite good at wars – and one of the reasons we’re resented around the world is because we tend to be quite successful in them. But why? Was it just the fighting spirit of our men, impressive as that is? I don’t think it can have been only that. We were generally able to defeat countries with bigger populations and greater resources than ours because we had a technological edge, and because we were better at mobilising capital. If you take the 300 years up until the end of the Cold War – from 1689, when we entered the Nine Years’ War, right through the wars we fought against France in the 19th century, the imperial expansion, then the First and Second World Wars and the Cold War – we were able to defeat countries that on paper had every advantage: France in the 18th century, China in the 19th century, Germany in the 20th century. That was because we were technologically superior, and because we had deeper, cheaper money markets, which meant we could concentrate fiscal force. That is no longer true. We owe £3 trillion. Our debt is the fourth largest in the world in absolute terms, after the much bigger economies of the US, China and Japan. And our rivals have noticed. When Javier Milei made his emergency broadcast about the Falkland Islands, he was technically talking about Argentina, but I’m sure he knew what he was saying when he said: a country that does not have growth, and that is lumbered by debt, cannot enforce its sovereignty. That was true of the Galtieri dictatorship too. Who is on the better trajectory now economically, us or Argentina? That should be the concern for all these NatCon types who claim to be patriots. The single biggest threat to our security is our debt level.’

How the IEA changed minds:

‘We were in a very similar position when the IEA was launched in 1955. The Second World War had crushed classical liberalism under its tank treads. Six years of full mobilisation had – like Covid, but more – totally changed people’s expectations of state intervention. It was kind of unpatriotic to be an individualist in a mobilised economy. The Liberal Party, which had dominated the early 20th century, was down to 3% in the 1945 and 1950 elections. So what were classical liberals to do? I remember Ralph Harris, shortly before he died, telling me that they had had these agonised conversations: do we withdraw and wait for a more propitious time, like those monks in the west of Ireland copying up the scriptures, waiting for a happier time to come? And Ralph said: “Look, there’s no point. I do not want to spend the rest of my life giving papers to small audiences at the Mont Pelerin Society. We need to be in the business of changing minds, and changing politics, and changing policies and outcomes.” So the IEA began engaging with new Conservative MPs elected in 1950 – people like Geoffrey Howe, Nick Ridley, Enoch Powell. And the big breakthrough was with Keith Joseph, who of course then came and was your godfather – or indeed your father – at the Centre for Policy Studies.’

Reaching a new generation:

‘I’ve come to realise that, by the time people get to university, it’s almost too late. Think back: whom did you know in your first year at university, and how many of them really changed their minds? If we ask the same question about people we did A-levels with – loads. People’s opinions are more plastic when they’re still 16 or 17. I now regret, in my time in politics, having spent too much time on campus and too little time in secondary schools. If you put together all the people we reach through our schools’ outreach programmes, our future leadership programmes, the people we bring into the office, our summer schools in Cambridge, our interns – we’re getting to a little over 3,000 kids. That’s great and transformative for those kids: we’re opening their eyes to things nothing in the school curriculum has prepared them for, and what they see, they don’t unsee. But if we want to change the trajectory of the country, I need to add two zeros to that number. That’s really what I want to do at the IEA.’

Why AI won’t be different:

‘Every technological change has been met by fears about the destruction of jobs. Very few people focus on the gains. This goes right back to the mechanisation of agriculture. If you look at the response at the time – particularly in the Tory party and the Times, which was the old conservative organ in the 18th century – there was this wonderful thing happening: people were getting a lot more yield out of the same amount of land, which released lots of people from backbreaking labour in the fields. But the dominant feeling was that there were going to be no jobs for them – swarms of vagabonds traversing the countryside, “sturdy beggars”, as the phrase went – that it would disrupt the social order and we wouldn’t be able to feed them. What they couldn’t see – the unseen, as Bastiat would say – was that once you no longer had to work six days in the field to feed your family, because food was cheaper, you were released to do something else. So people went and did something no one had dreamed of before: they worked in these newfangled things called manufactories. For the first time ever, people on low incomes could afford changes of clothes, glass in their windows, cutlery. Foreign visitors to Britain were astonished by the quality of life of the poorest people. When we then made the shift from manufacturing to services, exactly the same fear was voiced: “What are they all going to do? Are they all going to be flipping burgers? Are they all going to be cutting each other’s hair? There won’t be enough jobs.” And just as before, not only were there more jobs, but better jobs, easier jobs, better-paid jobs. We were living much better, working shorter hours. The ultimate automation, if you like, is AI. Why should we assume it will be qualitatively different?’

Degrowth is a pose, not a policy:

‘We got a taste of this in the 2008 crash. I remember being in a debate in the European Parliament, and a friend of mine – a very nice man who was a Swedish Green – was fulminating against capitalism: it’s all failed, everyone’s losing their jobs, we always warned you this would happen. We happened to be walking out of the chamber together at the end of the debate, and I said to him: “I thought you’d be happy.” “What do you mean?” Well, you’re always saying GDP is too high, growth is too much of a big deal, we shouldn’t be flying, we shouldn’t be going on holidays, we’re consuming too much – you’ve literally got everything you said you wanted, and you’re still miserable. It is the wrong people who are suffering. What you realise is that anti-growth, degrowth is a pose. It’s not really a policy, and when people get it, they hate it.’

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It’s a remarkable achievement, and all the more so when compared to the declining performance of Scotland and Wales. The devolved nations are seeing the results of ducking the education reforms brought in by Michael Gove. That’s a lesson that Labour’s Education Secretary Lucy Powell would do well to learn, given that she plans to reverse them.

Across the Atlantic, the US-Canada trade war ratcheted up another notch today as Canada’s counter-tariffs came into force. As Mark Carney warned his people of tough times ahead, Janet Bufton wrote for CapX about the dilemma America’s northern neighbour finds itself in – and the limits to defiance.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Next has won a victory for common sense on pay

Harry Phibbs

‘The real culprits are not the lawyers but the legislators, the politicians, for passing bad law in the first place and then failing to repeal it.’

The British clothing retailer Next won an appeal allowing it to keep paying ​warehouse workers more than sales consultants. The comparison was always chalk and cheese but not under equalities legislation, which, by demanding equal pay for work of ‘equal value’, opened the door to huge discrimination claims. The latest ruling is welcome, but we need politicians with the courage to change the law. Read More

Canada is fighting back against US tariffs

Janet Bufton

‘The uncertainty, the tariffs, the loosening of commercial ties with the world are not costs the US is paying to get to some end goal – they are part of the end goal.’

Canada’s counter-tariffs against the US came into force today, supported by a huge majority of Canadians despite the economic pain they will incur as a result. Canadians are willing to stand up for themselves and pay the price as an act of defiance but they can only do this for so long. Read More

Stat of the Day

Best of the Web

How to wreck an education system

Fraser Nelson, Substack

‘It’s tragic seeing Scotland reduced to this level, as if learning maths and science are now too tough for the country whose Enlightenment created so much of the modern world.’

Education used to be Scotland’s great advantage. No longer. Thanks to devolution, the Scots were not offered the choice in education pioneered by New Labour and extended by Michael Gove in England. Those reforms worked amazingly well, as the latest PISA data show. Yet now they are being dismantled by a Labour government eager to disavow the Blair legacy. Read More

🎧The UK needs to back open-source AI

Damian Green

What should the law do about AI?

Julian Braithwaite, The Spectator

‘How should the law treat an artificial intelligence capable of acting independently in the world?’

As AI agents become more powerful, the question for regulators is not whether they are conscious, but whether they need a legal identity. The law has been creating artificial persons for centuries. As with companies, this could make sense for future AI models, and help control technologies that may soon think faster and better than we do. Read More

🎧 The Capitalist

Julian Jessop: Burnham’s growth plan won’t work

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And if you want more...

– Renew conservatism to fight the hard Right (The Times 🔒)

– When government separates choices from consequences (The Daily Economy)

– How Swedes learned to love the super-rich (The Conversation)

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Don’t hand China the future of AI

Damian Green

If you spend enough time in politics you learn to spot a familiar mistake dressed up as a novel dilemma. In the 1980s, Xerox forbade the American programmer Richard Stallman from so much as fixing a glitch in his own printer, on the grounds that the code inside it was proprietary. It was this small, almost comic grievance that lit the fuse for the open software movement. By the late 1990s, developers on both sides of the Atlantic had embraced the idea that code shared, copied and improved by many hands beats code hoarded by one company. The ‘open-source’ movement took hold even while closed-source code continued to thrive.

Britain and the US have in the decades since embraced both proprietary tech and their open alternatives. In allowing open- and closed-source tech to function side by side, we’ve reaped the rewards in innovation, in accessibility and in security. Just as important, in allowing both, governments avoided the kind of regulatory capture that would have let a handful of dominant firms lock the world’s code behind a paywall. Governments face the same issue today, and I fear they are approaching it with far less clarity than their predecessors managed.

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Proprietary and open AI models are advancing at a pace few governments can properly track. History offers a clear lesson for this moment: the policies that made open code the engine of Western innovation are precisely the policies Britain and America need now to out-compete a resurgent China. It would allow Western designers to build AI systems the world can actually trust, and stop a handful of dominant firms from locking the planet’s AI behind paywalls of their own making.

Clearly China already understands the importance of open source, though it puts it to rather less generous use. It opens its models not out of commitment to the free exchange of ideas, but because doing so could help wire the world’s developers into a system of its own design. Provided, that is, the West makes the mistake of doubling down on closed AI models.

The evidence is no longer in dispute. The Chinese firm Z.ai has recently released a model that competes almost on equal terms with Anthropic’s most advanced ones. Alibaba’s freely released models have already spawned real and powerful capabilities of their own. Chinese builders are now bound to this ecosystem, creating an army of loyal developers. Meanwhile the closed American model earns its owners a subscription fee and precious little else.

So let us be honest about the choice in front of us. The question is no longer whether artificial intelligence will be primarily built with open or closed models. China has settled that question for us. Its ecosystem will keep growing regardless of anything Westminster or Washington decrees. The only question left is whose open ecosystem the world builds upon. Britain has already made a start through the SOFAIR lab, a collaborative project bringing together top research talent from University College London, Oxford, Cambridge and Edinburgh in a national effort to develop next-generation open-source AI technology. In combination with America’s own open-source technology projects, it could help build a partnership among our two nations strong enough to outpace China.

The UK is currently one of the main hubs of AI technology development, with more than a dozen unicorn companies offering cutting-edge services. Some of these developed their own closed models. Others, like Stability AI and Fetch.ai, used open source to develop successful business concepts. And of course Google DeepMind, which is both founded and based in London, regularly releases open-source AI models, most famously its AlphaFold model which serves as an open-source research tool for the development of new medicines.

It should be obvious therefore that the most productive approach would be to let closed- and open-source models compete on an equal footing. Instead we find ourselves discussing whether open source should even be allowed. The debate is most intense on the other side of the Atlantic, but Britain has also started feeling its impact. This spring, NHS England announced it was restricting access to open-source code, ordering repositories to be made private by default. It was a classic example of government overreaction tackling a genuine problem in the wrong way: researchers using Anthropic’s Mythos had found serious vulnerabilities in open-source software used across the NHS, and alerted NHS England. Yet the very researcher who found them warned that locking down the code would not improve security. The guidance had already gone out, though, by the time that warning was heard.

It is a familiar pattern that the loudest warnings against open models come from those with the most to lose from them: the AI mega-firms whose engineering is world-class, but whose commercial instinct is to caution against the very openness that first made Western technology the envy of the world. A rented black box must be taken on trust, full stop. An open model can be examined, tested to its limits, and run inside a secure facility where not a single byte of data need leave the room.

My advice, therefore, is straightforward. Our government, including the NHS, should lean hard into open-source technology, and persuade the American government to do the same. Thereby allowing developers to build upon it freely.

The deeper danger isn’t losing to China, though that would create its own problems. It’s dependency that blocks the kind of creative development that would allow us to reap the full potential of this new technology. The nations whose standards the world adopts win far more than the nations that merely rent their software by the month. An AI ecosystem that is growing and allows any developer, small manufacturer, or university lab to examine, adapt, and build upon is not merely safer. It is an engine of prosperity that a handful of proprietary platforms could never match.

Open standards helped put the personal computer on every desk and the internet in every pocket. They did not impoverish the firms that built the underlying platforms, they multiplied the industries built on top of them a thousandfold.

Set AI free in the same way, and the dividend will not accrue just to London or Washington alone, but to every economy with the wit and grit to build on it.

Damian Green is a former First Secretary of State and Acting Chair of the Commons Culture, Media and Sport Select Committee.

Unsurprisingly, groups defending private enterprise seem increasingly disillusioned with their treatment by the Government, with the CBI calling on Healey to ease the burden on business and the British Chambers of Commerce proposing to scrap the pensions triple lock to pay for lowering employers’ National Insurance on young workers.

Little chance of either of those wishes being granted. But there was some very good news on private sector wages today from the courts. The retailer Next won an appeal as part of the ongoing litigation over an equal value pay ruling which had prevented it from paying warehouse staff market rates where these exceeded pay for shop assistants. The legal arguments continue, but we should be grateful for a partial victory for common sense.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Is John Healey crowding out private infrastructure?

Ben Ramanauskas

‘The Chancellor is right to point to the importance of fiscal discipline but lowering the discount rate undermines his stated commitment.’

Today, in his first major speech as Chancellor, John Healey sketched his plans for growth. Among them, he lowered the discount rate from 3.5% to 3% to encourage more infrastructure projects to be built. Unfortunately it will crowd out private projects and risks burdening the country with white elephants, while sticking taxpayers with the bill. Read More

Dear Andy, leave us alone

Ted Grainger

‘Please do not try to be our father, we do not need you or a paternalist state to make our lives better. As Morrissey said, leave me alone.’

Andy Burnham loves Oasis and The Smiths but he clearly hasn’t listened closely to their lyrics. If he had, he would realise how pro-freedom they are. Many problems like high unemployment and crackdowns on free speech have been caused by the state. To remedy them Burnham should instead encourage the self-determination and autonomy that Manchesterism is supposed to embody. Read More

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Labour can’t keep blaming Liz Truss

Julian Jessop, City AM

‘The claim that there is still a “Truss penalty” in the cost of UK government borrowing is both lazy and silly.’

In his first big speech as Chancellor, John Healey blamed Britain’s high borrowing costs on the 2022 mini-Budget. But his predecessor has had two years to rebuild fiscal credibility – so why are UK yields still an outlier? The real problem is a new Government set to double down on Starmer and Reeves's bad decisions. Read More

Labour’s rental reforms are hurting tenants

Tim Leunig, Telegraph 🔒

‘No government will get everything right. … But when a clear mistake is made, I learned that the best thing to do is to reverse course.’

The Renters’ Rights Act was an effort to make life better for Britain’s renters, but some measures are producing perverse outcomes. For example, a ban on landlords inviting bids over the asking price has led to flats being advertised at excessively high prices instead. To empower tenants, we need to build more houses. Read More

Why London won't build its next Canary Wharf

Michael Dnes

The Capitalist 🎧

Burnham’s growth plan won’t work

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– How the AfD won in Saxony-Anhalt (The Spectator)

– Expensive energy is bad for British science (Substack)

– What if AI isn’t a job-killer after all? (Noahpinion)

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Damian Pudner also addressed the Government’s cost of borrowing, pointing out that the bonds we have been selling are uniquely long-term. He argues that while political risk is part of the reason bond yields are higher than others in the G7, buyers in the gilt market have changed and are now a lot more price-sensitive when buying long-dated debt.

To cap off the week, our former Deputy Editor, Joseph Dinnage, gave us an inside look into Reform UK’s conference, where Robert Jenrick promised a ‘post-Thatcherite’ economic vision. Despite the recent scandal, the Reform faithful remained optimistic at conference – but it reopened concerns that members of the core team still behave more like a campaign group than a party ready for government.

Elsewhere, we featured Damian Green, the former First Secretary of State, calling for more efforts by the US and UK to invest in and develop open-source AI models to compete with China – a timely intervention just before Nvidia struck a $12.9 billion deal to purchase the open-source AI platform Hugging Face. We also had Vincent Geloso discussing the errors in the Stanford Encyclopedia of Philosophy’s new entry on ‘Capitalism’ – and what it tells us about the echo chamber in which too many critics of capitalism spend their time. Unfortunately, if you repeat a claim often enough, it can pass between scholars as established fact.

On The Capitalist this week, I sat down with Julian Jessop to discuss Burnham’s plans. We also talked about whether nationalisation could reduce the cost of living and why the new Prime Minister seems to think that the UK is an example of a failed experiment in neoliberalism – despite our record high taxes and profligate state spending.

Marc Sidwell
Editor, CapX

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Nationalisation is not a growth strategy

Mani Basharzad

Alan Greenspan was always attacked by the Left because of his belief in market forces. John Kenneth Galbraith, at a White House conference, made fun of him, saying that the cure for inflation is always the same for ‘Bolsheviks and the devoted supporters of Ayn Rand’. But each and every government learns the hard way that Greenspan was right about market forces. In 2007, when a Swiss newspaper asked Greenspan who he was going to support in the next US election, he answered: ‘The world is governed by market forces’, and it matters less who the president is in a highly interconnected financial world.

Andy Burnham seems to be learning the power of market forces the hard way. UK long-term borrowing costs have hit a 28-year high, at 5.8%. No wonder bond markets, as a former Clinton adviser once said, ‘can intimidate everybody’. But the Burnham team seems slow to understand the economic situation they have inherited from the Starmer government.

A 28-year high in borrowing costs isn’t something that can be solved by capping bus fares. This is the fundamental flaw in Burnham’s economic policy: small solutions for big problems, paired with Labour myths about ‘40 years of neoliberalism’ in the rhetoric. Let’s delve into the policies Burnham has announced. First, single fares are being capped at £2 outside London, cutting affected fares by up to one third from the existing cap. Based on calculations by Policy Engine, this will cost £409 million. Then comes the VAT cut for domestic electricity, which falls from 5% to 0%; the six-month Exchequer cost is expected to be £669 million.

The Government’s policy before the Budget has been small cost-of-living interventions, but is there hope that policymaking will change? There are signs, but for the worse. A Guardian exclusive says that Burnham is convincing MPs that ‘more public control is the way to grow the UK economy’, with more essential services being brought under state control.

Does he forget that this is what Rachel Reeves believed? She said: ‘The only way to drive economic growth is to invest, invest, invest. There are no shortcuts.’ Soon, they will understand that what drives growth isn’t investment itself, but the profit opportunities created by growth, which then drive investment.

With long-term yields at their highest in three decades, can he finance his investment plans through taxes? With manifesto restrictions, he has little room for manoeuvre, especially after two Reeves Budgets. The gains Reeves made from capital gains tax (CGT), for example, acted as a windfall tax. But the problem is that you can only play that card once. Before the Budget, the word went around and people rationally sold their shares to avoid paying the higher CGT. It worked once, but it can’t work again.

The cards Burnham has to play are worse than Starmer’s. Jim O’Neill declined a formal role in the new Government, apparently because he didn’t want to back a potential wealth tax. If Burnham wants to finance increased government spending with less conventional taxes such as a wealth tax or an exit tax, it would be a solution worse than the problem. As the Austrian economist Ludwig von Mises once said:

It may sometimes be expedient for a man to heat the stove with his furniture. But if he does, he should know what the remoter effects will be. He should not delude himself by believing that he has discovered a wonderful new method of heating his premises.

Burnham’s policies seem more like Mises’s analogy of burning furniture to heat the stove. Nationalising industries that were privatised because they were so inefficient and made losses when they were nationalised before. Taxing the wealth and property of millionaires who are leaving the country at record levels. Convincing MPs that the problem of a country which spends 44.3% of its GDP on public spending is that it doesn’t spend enough. Convincing markets that he wants to borrow to spend more on infrastructure, while all the spending promises he has made are populist cost-of-living measures such as cutting VAT or bus fares.

The markets are right, and the wisdom of crowds with skin in the game in the stock market is far more rational than politicians whose careers are built around spending other people’s money. They have already seen the highest levels of inflation and interest rates in the G7, alongside ballooning spending that the Government shows little interest in reducing. Little wonder they are nervous.

While everyone is waiting for Andy Burnham’s 10-year plan, markets have guessed that it is likely to resemble more of what we have had in recent decades. Focusing on TikTok and communications has been one of the strengths of Burnham’s No 10, but it is of little use in economics, where we don’t deal with vibes, but numbers and facts.

The way out is not more small spending increases sold via online videos, but to get serious about where Britain is right now after two decades of a ‘capitalist command economy’.

And if you want more…

– Will the Sturgeon drama ask the right questions? (Philip Patrick)

– Burnham’s statism will lead to more misery (Emma Munday)

– The countryside lobby’s war on batteries (James Ball)

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We’ll be back on Monday.

Meanwhile politics as normal continues, as Labour’s plan to scrap the ‘world’s biggest quango’, NHS England, has run aground as the high salaries of the arm’s-length body’s officials are incompatible with pay levels in the Department of Health. Instead, the official recommendation is to replace NHS England… with yet another quango.

And in a sign of what economic stagnation and weakness over the Chagos Islands invites, Argentina’s Javier Milei is sabre-rattling over the Falklands. In 2024, writing for CapX, Karl Williams predicted this danger. As he said then, growth is essential to keep Britain safe: ‘Want to keep the Falklands? Build some bloody houses.’

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Can Reform deliver their post-Thatcherite promises?

Joseph Dinnage

‘Reform – in spite of the increased professionalism of their conference and growing interest from the corporate world – still behave like more of a campaign group than a well-oiled party.’

The start of Reform UK’s conference didn’t quite go as planned, as the party’s Head of Policy James Orr and Nigel Farage’s close aide Dan Jukes both stepped down over a donation scandal. Yet core party supporters haven’t wavered, and the corporate presence rivals that seen at Conservative Party conferences in recent years. Reform say they want to deliver a post-Thatcherite vision – can they deliver? Read More

What critics keep getting wrong about capitalism

Vincent Geloso

‘Milton Friedman supported a negative income tax – a variant of a guaranteed minimum income – and schooling vouchers. Hardly the mark of someone who believed in the complete absence of political interference.’

The Stanford Encyclopedia of Philosophy’s new entry on ‘Capitalism’ turned out to be a takedown rather than a neutral account – it went viral as a result. There is nothing wrong with critiquing capitalism, but it’s important that critics engage with what its defenders actually believe. Otherwise, as in this case, anti-capitalist attacks get recycled by one scholar after another until they lose touch with reality. Read More

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Bardella and Farage ‘speak the same language’

James Heale, The Spectator

‘I am convinced that in the new European architecture… we could tomorrow work with Great Britain.’

Jordan Bardella of France's National Rally joined Nigel Farage on stage at Reform UK’s conference today, where the pair signed an agreement to send Channel migrants back to France. The man tipped to be France's Prime Minister if Marine Le Pen wins the presidency also suggested that Farage in Downing Street would allow new forms of European co-operation. Read More

The shrinking graduate premium

John Burn-Murdoch, Financial Times

‘In the UK, … the long-run erosion of the graduate premium has accelerated in the past four years … even for those with STEM degrees and graduates in London’s knowledge-intensive labour market.’

New analysis shows that in both the US and the UK, the wage premium for graduates has started to fall, even as the number of graduates declines. Whether AI is the immediate cause or not, it’s clear that economic and technological change is weakening the link between academic credentials and career prospects. Read More

We have forgotten how power works

Stephen Webb

Wallenstein's Camp

Is Soft Power A Delusion?

The more tenuous UK hard power, economic and military, become, the more reliance UK elites place on the soft version. But are they in the process trying to buy a seat at the top table at the expense of Britain’s own long term interests?Wallenstein's Camp is a reader-supported publication. To receive new posts and support my work, consider becoming a fre…

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16 days ago · 9 likes · 1 comment · Stephen Webb

The Capitalist

Julian Jessop – the problem with Burnham’s growth plan

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– Set football free (ConservativeHome)

– Why is the Right embracing state power? (Reason)

– Don’t underestimate Britain’s latest trade deal (City AM)

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We'll be back on Sunday, with the Weekly Briefing.

Though with the leader of the increasingly anti-capitalist Greens now running for Keir Starmer’s old seat in Holborn and St Pancras, perhaps Sadiq Khan just sees which way the wind is blowing.

On the bright side, the Department for Business and Trade has confirmed it won’t be imposing an exit tax on British entrepreneurs, despite strong rumours to the contrary. It says something about where we are that not imposing an obviously destructive tax counts as good news. Just wait for the announcements from Labour’s conference in Liverpool.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Britain is selling its debt to the wrong market

Damian Pudner

‘The old captive buyer is fading; the new buyer will simply demand a higher price, shorten duration or walk away.’

Britain sells more long-term debt than most comparable economies. This has protected us against refinancing risk, but we can’t afford to buy that protection at any price. With buyers now much more price-sensitive and mobile, and the cost of long-term debt rising accordingly, we need a new strategy. Read More

Will the Sturgeon drama ask the right questions?

Philip Patrick

‘While Sturgeon herself may be a banal, grotesquely overexposed figure, her and her party’s baleful impact on Scotland and, to an extent, the UK, and why the public and the media enabled the process, is genuinely fascinating and urgently needs to be better understood.’

Channel 5 is making a TV drama about Peter Murrell's embezzlement conviction. The gushing blurb suggests it will present a Sturgeon-centric myth, forgoing the more interesting tale of the SNP’s endless scandals and how politicians with integrity were marginalised. This is a golden opportunity to show what really went on in Scotland’s corridors of power. Read More

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INEOS boss: save the North Sea

Brian Gilvary, City AM

‘This is not managed decline; it is ideological destruction of a national resource owned by the country in the name of Net Zero.’

The Government is close to a decision on the Jackdaw and Rosebank fields in the North Sea, but approval won’t undo years of damage. Investors have got the message that the UK North Sea is not a reliable place to deploy capital. Unless policy changes, our energy security – and tax receipts – will pay the price. Read More

Labour has no answer to Britain’s prisons crisis

Ian Acheson, UnHerd

‘The Justice Secretary has argued that prison construction takes time. But that is time he doesn’t have.’

Andy Burnham’s Justice Secretary Alex Norris has said that fixing prison overcrowding will take a decade. We don’t have that long, and converting prison laundries into cells is no answer. Labour’s decisions have only bought a few months before the next crunch. An answer to the looming crisis is as far off as ever. Read More

Will AI turn us all into aristocrats?

Clara Collier

Asterisk Magazine

We already know what a world without work looks like

This article originally appeared in Issue 15: Work. Subscribe to the print magazine to get future issues delivered to your door…

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18 days ago · 262 likes · 21 comments · Clara Collier

The Capitalist

Julian Jessop – Burnham’s growth plan won’t work

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And if you want more...

– Germany’s political firewall is crumbling (Project Syndicate)

– Secrets of the Bayeux tapestry (BBC)

– The end of human driving (Human Progress)

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I spoke with the economist Julian Jessop for this week’s edition of The Capitalist about what Burnham’s analysis gets wrong, why politicians can’t be trusted to make long-term decisions and what would actually get Britain growing again.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Marc Sidwell
Editor, CapX

Today’s Takes

Fresh thinking from CapX

Don’t hand China the future of AI

Damian Green

‘The nations whose standards the world adopts win far more than the nations that merely rent their software by the month.’

The UK used to allow proprietary technology to compete alongside its open alternatives. As we enter the age of AI, our Government seems unsure how to deal with open-source models. But investing in open-source projects with the Americans is essential if we want to stay ahead of China. Openness helped put the internet in every pocket. We need to set AI free in the same way. Read More

Burnham’s statism will lead to more misery

Emma Munday

‘Everyday Britons are not being bled dry by a greedy rentier class. There are simply too few gains to divide.’

Andy Burnham entered Downing Street laying the blame for Britain's economic stagnation at the feet of ‘40 years of neoliberalism’. But progressive policies are the real reason our economic growth has stagnated. Just look at the US, where a wide range of households have become much richer than their British counterparts thanks to a more supply-side approach. Read More

The Capitalist: Burnham’s growth plan won’t work

Will the man who paints himself as the antidote to Thatcherism lead us back to the worst of the 1970s? This week on The Capitalist, as Britain’s borrowing costs spiked and Andy Burnham faced MPs as Prime Minister, I spoke to the economist Julian Jessop about Burnham’s plans – and whether they can really get Britain back to growth.

We discussed whether nationalisation is a recipe for reducing the cost of living, and Burnham’s curious belief that Britain’s current condition – with taxes at record levels and the state bigger than ever – can be labelled a failed experiment in neoliberalism.

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Westminster is stifling startups

Ryan Bourne, The Times 🔒

‘Westminster has nothing resembling the entrepreneurial representation found in American state legislatures.’

Britain’s most politically neglected businesses are the ones that never become large enough to lobby a minister. Such entrepreneurial upstarts get crushed by regulation that favours established firms. Evidence from the US suggests that one way to fix this would be to have more entrepreneurs in Parliament. The trouble is, we hardly have any. Read More

This is how to fix regional inequality

Paul Ormerod, City AM

‘Blanket spending on the regions does very little to narrow the economic gap between them, as the last 60 years demonstrates.’

Concern over regional inequality is nothing new. Andy Burnham’s ‘prosperity in every postcode’ is not so different from the Conservative desire for ‘Levelling Up’, and Harold Wilson worried about the same issue in the 1960s. Billions have been spent since, to little effect. To make a difference, we need to address the root issue: low productivity. Read More

Why AI won't rescue central planning

Valentin Boboc

Economic Affairs

Can AI fulfil the dream of central planning?

Valentin Boboc is a Senior Economist at the IEA…

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18 days ago · 14 likes · 3 comments · Valentin Boboc and Institute of Economic Affairs

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And if you want more...

– Is recycling a waste of time? (Works in Progress)

– Business rates are broken (ConservativeHome)

– A glimmer of hope for dark matter (Brookhaven National Laboratory)

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