The CapX Briefing

How close is the crisis?:

‘Last year, the taxpayer had to spend £109bn just servicing our accumulated debts. No UK government in 25 years has balanced the books. We’ve just been running deficits, building up debt ever since, and it has got to the stage where we have long-term gilt yields above 6%, which is always considered to be a serious danger level… You seriously do not want to get into that situation where the markets are forcing cuts on you. You want to do it in a civilised and controlled way, where you can actually choose what you’re cutting rather than have it forced on you… You get away with it for a while and then suddenly the markets will turn against you. And when it happens, it will happen very, very rapidly.’

You can’t tax your way out:

‘Rachel Reeves said she had to raise taxes by £66 billion in order to end Tory austerity… What she means when she says austerity is purely state spending. But if you take £66bn out of the pockets of individuals and businesses, you are forcing austerity on them. And if individuals and businesses stop spending and investing, then you are curtailing economic growth… Public sector productivity has not increased in 25 years. That’s how shocking the performance of the public sector is. If you keep on transferring resources from the private sector to the unproductive public sector, you slow economic growth, and that’s what traps you in debt.’

Cut across the board:

‘It’s not a case of a few things you don’t like, like migrant hotels, or the things which come up from time to time. You really have to cut across the board to get that sort of 10% reduction in government spending. And the place to start is with the biggest budgets. Welfare is the biggest budget, over £300 billion… We also have to look at the state pension, which is pretty well the other half of the welfare budget. It’s not very politically easy to tackle pensions. But it can’t be exempt.’

The triple lock time bomb:

‘The triple lock is basically an unexploded bomb beneath the public finances, because under it the state pension can only increase relative to average earnings. It can never fall back. And of course, average earnings are what are paying for the state pension. So you cannot have a state pension which runs ahead of average earnings, because it will eventually break you… Cutting the state pension by 10% would really just take it back to where it would be now if we hadn’t had the triple lock and pensions had increased with average earnings instead… Obviously, that is not an easy policy to sell. It’s the sort of policy which you can only really sell during a time of crisis, but I say we are rather approaching that, and I think the sooner we accept that, the better.’

Can you win votes for cuts?:

‘It is politically easier to spend money than it is to raise it. That’s why we have a deficit… I don’t believe it is impossible to sell a programme of cuts to the UK public. A UK government did that once, in 2010 – the coalition… The Tories were elected again in 2015, in spite of Labour running an anti-austerity campaign against them. And when Labour had an internal review of its failure to win that election, carried out by Jon Cruddas, the Labour MP for Dagenham, he came to the conclusion that Labour had lost not in spite of its anti-austerity campaign, but because of it – because the public at that stage still wanted the government to balance the books.’

The Tories need to think bigger:

‘In 2010, David Cameron’s Conservatives came to office promising to eliminate the deficit within five, six years. What Kemi Badenoch has suggested so far is to reduce the deficit by £23 billion. The deficit last year was something like £133 billion, so chopping £23bn off it is a long, long way short. It’s under-ambitious, I would say… We have to have spending cuts ahead of tax cuts. Tax cuts are, in the end, where you want to be. But you shouldn’t be starting there.’

How socialist is Reform's Poundland plan?

Marc Sidwell — Tue, 03 Nov 2026 17:44:13 GMT

Sorry, Andy. Manchesterism has been mogged – the PM’s political philosophy, such as it is, made the shortlist for the Collins word of the year, but lost out to ‘mogging’, meaning outshining someone or something.

Meanwhile, Americans are going to the polls today for the midterm elections – with voters distinctly unimpressed by Donald Trump’s stewardship of the economy (see our Stat of the Day). If MAGA Republicans are, as the polls suggest, heading for a thrashing, perhaps they can learn a thing or two from Kemi Badenoch’s Conservatives. See below.

As for Reform UK, the party’s former comms chief Gawain Towler writes for CapX today defending Robert Jenrick’s call for the rescue of Poundland. It’s certainly not orthodox free-market thinking, but Towler argues that, far from embracing socialism, Reform are practising a form of conservatism discarded by today’s Tories.

Are Labour about to nudge away your pension freedoms? Torsten Bell was promoting his plans for a default ‘guided retirement’ model today. But as former pensions minister Steve Webb told The Times, it would be a mistake to stop people from using their pensions as they wish.

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

Dan Kitwood/Getty Images

How socialist is Reform's Poundland plan?

Gawain Towler

‘Where Jenrick is open to the charge is his tone. “Wall Street” is a leftist trope for demonising free markets. Bernie Sanders loves it.’

Reform UK’s Robert Jenrick wants to save Poundland, and the 12,000 jobs that would be lost if it went into administration. How does this square with the free-market reforms in his ‘Teal Budget’? Kemi Badenoch says it shows Reform are ‘another left-wing party’. Or is it a return to a very different kind of conservatism? Read More

The UK must focus on its real Commonwealth friends

Sean Ridley

‘All this talk of reparations seems to be a cover for an attempted shakedown of the UK by its former colonies, especially those who’ve proven to be incapable of adequately governing themselves post-independence.’

Andy Burnham and King Charles are in Antigua and Barbuda for a meeting of Commonwealth leaders. Once again, many members are using the opportunity to demand slavery reparations. Burnham has agreed to send £40 million in development funding, but this will only turbocharge requests for even more. It’s time for the UK to move on. Read More

Stat of the Day

Best of the Web

John Healey’s anti-business bias has been exposed

Adam Smith, The Telegraph 🔒

‘It is a peculiar version of “growth in every postcode” that offers a generous new relief to a narrow group of London-based tech bros paid for by increasing taxes on family firms, small-scale service companies and other entrepreneurs found up and down the country.’

John Healey’s first Budget was pro-business in rhetoric only. He celebrated entrepreneurship while doubling the corporation tax surcharge on banks, hitting the gambling industry, hiking the tax on company cars and raising VAT for private-hire firms. The Chancellor’s refusal to cut welfare or raise broad-based taxes signals to businesses that he sees them as cash cows, nothing else. Read More

🎧Tim Worstall: Isabella Weber’s power-hungry economics

Why the Tories must be pragmatic about Europe

Albie Amankona, ConservativeHome

‘Looking back at the apocalyptic forecasts of the Remain campaign and the starry-eyed promises of the Leave camp, only one objective conclusion can be drawn: EU membership was never the primary driver of British destiny that either side claimed.’

The Conservative Party needs to return to pragmatism when considering the European Union. Leaving has neither been the great success that Reform UK claimed nor has it been the economic disaster that Labour predicted. Conservatives should recognise that British businesses value easy market access while prioritising the interests of the British state and maintaining strong border security. Read More

The Capitalist: Liam Halligan & Daniel Herring – what’s in the Budget?

And if you want more...

– Jack Rankin: the case for pragmatic liberalism (UCL)

– Welcome to the zeptoverse (BBC)

– What the Tories can teach the GOP (Project Syndicate)

Can we make CapX better?

Or reply to this email to let us know your thoughts.

We'll be back tomorrow.

Best of CapX: What’s anti-fascist about price controls?

CapX — Tue, 03 Nov 2026 15:29:59 GMT

Each week we bring you one of the best pieces from CapX in full, in text and audio. For more writing like this, go to capx.co. For interviews and discussion, listen to The Capitalist every Wednesday.

Manchester corn exchange – Alex Segre/UCG/Universal Images Group via Getty Images

Politicians should have less say in the economy, not more

Tim Worstall

The next assault upon economic logic to arrive in the bookshops is coming from Isabella Weber. The Guardian is already drooling over Anti-Fascist Economics: In Defence of Affordability, Dignity and Democracy which means, obviously, that all proper-thinking residents of north London will be doing so as soon as they can. Weber is an economics professor at UMass Amherst, which is a bit like teaching at SOAS or Sussex but without the intellectual rigour of either. Which is rather how this retailing of anti-fascist economics ends up promoting many of the things that actual fascists did to their economies.

Note that I am not trying to say that Weber is a fascist. Only that there’s a remarkable overlap between the economic policies she suggests and those actually enacted by real-life fascists in power. For example, Weber insists that rent controls would be a good idea. As did Mussolini, Hitler, Franco and Salazar, even the Peronists in Argentina. Yes, that is something of a cheap shot but not a very cheap one. For if we’re going to start considering what an anti-fascist economics is going to be like then we do need to be, well, not doing fascist economics.

The essence of fascist economics was that the form of capitalism and markets was preserved. But all of the things that make such a system work were subjected to political control. Prices, what was made, who made it, profit levels and so on, were things to be politically determined, not by the market. True, true, there were flavours of fascism but political control of the economy under the guise of a market and capitalist system was common to all. Which is indeed what Weber is suggesting.

She is not arguing for the wholesale expropriation of private property – she is not a socialist or a communist in that sense. But she does insist that government – politics – should be deciding prices of at least certain goods. Using the rhetoric of how the capitalists are ripping off the working woman to support that idea too – something which has more than just an echo of speechifying from the 1930s. This garnered a response from the Nobel laureate Paul Krugman that her argument was ‘truly stupid’, for which he later apologised. Apologised for being so rude, note, not changing his view of the proposals.

And do we really think government is going to speculate better than the assembled forces of the world’s speculators? Or is it more likely to be the idiot player in the market that others then profit from, at the taxpayer’s expense?

My own view is coloured by a paper she co-wrote talking about ‘related shifts of hegemonic power within the world capitalist system’ and my view is that no good at all is ever going to come from such verbiage. Germany’s plan to cap the price of gas – one of those price controls – didn’t work out well, despite Weber’s involvement: one study found it actually increased gas prices. I’m also deeply, deeply dubious about anyone saying that China dealt with Covid well or properly. That’s a great deal too close to celebrating the thwack of really firm government for me. Almost, you know, fascist-adjacent in its authoritarianism.

But my real objection is to not very well thought through plans based upon, well I suppose they’re based upon, Amherst economics. One is outlined in brief in the Guardian’s book review:

Take food, for example. At every stage of the value chain from source to table, she is urging governments to identify and implement interventions to keep prices down. At one end, four multinationals control between 70% and 90% of global grain trading (with profits that ‘thrive on volatility’). This does not optimise affordability. Her proposal? Create public buffer stock systems – publicly owned entities that can buy and sell grain into its market, not with the goal of maximising profits, but stabilising prices to protect producers and consumers. Keynes made this case a century ago.

The problem with this is that it was dealt with a quarter of a millennium ago. It’s a point that Adam Smith makes in The Wealth of Nations. Speculators in grain – and yes, they’re both using grain as their example – move supply and prices through time. So would a public stock. But as we’ve already got vast speculative markets in grain we do not need that public option. The problem is already solved, stocks are held, supply and prices are moved through time.

It’s possible to witter on about how the system rests on speculators making money, which they shouldn’t, so we should have a public option instead. But that’s to misunderstand the very basics of speculative markets. The futures and options markets are, to the participants, zero sum. We out here gain the benefits of those movements in supply and prices, but anyone who makes money on a contract does so at the expense of whoever is on the other side of it. Those who get their speculation right make money, those who don’t lose: there is no net profit – nor loss. But the whole game is still net positive to society as a whole, because it achieves the movement of supply. And where someone does make a steady living from it – the merchant who actually buys at harvest, stores the grain and sells it later – that profit is just the cost of storage, finance and risk. A public buffer stock would have to bear exactly the same costs, only without anyone’s own money riding on getting the timing right.

But that’s not the worst of it, for what is also being ignored here is public choice economics. Those who run government have their own economic interests. Those interests provide the incentives that they react to. So, if politicians get to run buffer stocks with our money – get to speculate in the commodity markets with our money – then they’re going to do so in favour of politicians’ interests.

This is not just a theoretical concern. Even when there’s a real crisis, like the Iran war, decisions on when and how far to draw on reserves are made with one eye on the electoral calendar. Currently the Trump administration has run the Strategic Petroleum Reserve down to its lowest level since 1982 just before the midterms, despite Trump having criticised the Biden administration for doing the same thing. We could even generalise this and suggest – nay, insist – that things determined politically will be determined for political reasons. Which is a darn good reason not to have things politically determined, of course.

Plus, you know, political power over a nominally market economy – really rather fascist.

Even on other issues, Weber seems less than realistic. She’s a leading advocate of what’s popularly called ‘greedflation’. This is the idea that prices rise when producers with market power think they can get away with it, and that supply shocks give them cover to do so together. Therefore, she argues, targeted price controls work because we can just tell them they cannot do that.

But the theory doesn’t hold up. Sure, sure, we can agree with Weber that companies will raise prices if they think they can get away with it. Competition is why they can’t. That’s the knock-down argument in favour of free-to-enter markets. But the market power of certain producers isn’t the only possible cause of their being able to get away with higher prices. The standard explanation, which Weber rejects, is that an increase in the money supply leads to more cash in consumer pockets without an increase in production, leaving consumers willing to bid up prices to gain their desires. In such a case, companies can charge more, but it’s not thanks to their market power. It’s down to politicians and central bankers having indulged in the age-old sport of excessive money printing.

OK, so it’s fairly obvious that I don’t like Isabella Weber’s economics much. I think she’s wrong on all of the questions she attempts to address. Bully for me. You should make up your own mind about her and her proposals.

But there’s still this nagging point to be considered. The entire point of fascist economics was that politics gained more power over prices, income distributions and production within a nominally still capitalist and free-market economy. So how is insisting politics should have more power over prices, income distributions and production within a nominally still capitalist and free-market economy anti-fascist?

Tim Worstall is a Senior Fellow at the Adam Smith Institute.

Shabana Mahmood u-turns on migration clampdown

Harry Phibbs — Mon, 02 Nov 2026 17:47:44 GMT

Shabana Mahmood, the Home Secretary, has backtracked on her plans for stricter immigration rules. Most migrant care workers who arrived during the pandemic will be allowed to settle in the UK before 2030. But, under the new policy, most other migrants will have to wait 10 years before they can apply for Indefinite Leave to Remain. Tensions in the Government over immigration have scarcely been hidden today. Andy Burnham claimed it is ‘difficult to say’ whether the current level of net migration into the UK is too high or low – which was hardly the bold leadership needed on a contentious issue.

In a post on X, Jonathan Reynolds, the Business Secretary, promises that by ‘empowering our local leaders’ the Government will ‘drive the growth their communities deserve and expect.’ But devolution hasn’t exactly proved a panacea for delivering growth thus far. The London Mayoralty has a lot of planning power but a dismal record on housing delivery, for instance.

Chris Curtis, the Labour MP for Milton Keynes North, has blamed Adam Zerny, the independent leader of Central Bedfordshire council, for torpedoing a deal to give the area extra money and powers ‘because he decided that the geography wasn’t quite to his liking’. Curtis adds that: ‘One man has plunged us into the extraordinary position of turning down £1bn that the government is actively trying to give us.’

Rather than new layers of administration and failed attempts to give away £1 billion, read Lawrence Newport in CapX today on the real way to deliver growth.

In other municipal news, Labour confirm they will withdraw from power-sharing deals with the Green Party in 11 councils, due to the Green Party’s ‘anti-Semitic’ stance. A commendable decision. Will the Lib Dems now follow Labour’s example?

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

Harry Phibbs
Guest Editor, CapX

Today’s Takes

Fresh thinking from CapX

Peter Nicholls/Getty Images

Labour's mangled sixth-form-level Marxist class war

Stephen Pollard

‘When even someone as relatively sensible as Reynolds believes that employers are a class that don’t work for a living but somehow live off the backs of ‘working people’ then it shows the scale of Labour’s inability to grasp even the basics of wealth creation and growth.’

Emma Reynolds recently told GB News that she doesn’t think employers are working people. It is frustrating for a Treasury Minister at the heart of economic policy to hold such an antiquated view. It should be no surprise then that she was defending Labour’s tax increase on rental income. Reynolds is no Marxist. But it’s damning that she shows no understanding of how hard most employers work to create wealth and employment. Read More

Why Britain's decline is only a choice

Lawrence Newport

‘Many are just surviving, struggling to get by as life becomes increasingly difficult, and our politicians just regurgitate the same failed arguments and ideas.’

Britain has been in decline for some years now. We are rationing water in November, suffering high energy prices and low job opportunities, yet Britain’s decline is a choice. Generations are growing up conditioned to consultations, reviews and meetings about meetings but groups like Looking for Growth are taking radical action, like convincing the Government to accept the Fingleton Review’s recommendations in full. Read More

Stat of the Day

Best of the Web

Labour have betrayed aspiring homeowners

Matthew Lynn, The Telegraph 🔒

‘Ms Rayner has desperately tried to blame the Iran war, although it is hard to see why fighting in the Gulf stops anyone from putting up a block of flats in Middlesbrough or a terrace of semis in Swindon.’

Angela Rayner, as Housing Minister, has presided over a slump in housebuilding worse than the one we saw under the Conservatives. She could have swept away planning regulations, not to mention the fact that Nimbys are not a problem in Labour’s core constituencies. Housebuilders lack the incentive to build as their profit gets eaten by affordable housing targets and energy prices skyrocket. Rayner’s only answer has been to tax landlords and give tenants more rights. Read More

You can't tax your way to growth

Richard Fuller, ConservativeHome

‘The confusion over Labour’s position on welfare reform last week only reinforced the impression of an administration without a coherent plan.’

John Healey’s first Budget introduced more tax measures than any other Budget in recent history when there should have been tax cuts. The Chancellor also ducked the question of welfare spending as borrowing is going up more than expected. It is an economic and leadership failure that Healey is lacking a plan to get spending under control while burdening workers with more taxes. Read More

A lifetime at the forefront of the battle of ideas

Kristian Niemietz

18 years at the IEA: achievements and regrets

I am leaving the IEA after 18 years – that’s the lifetime of a young adult…

a day ago · 46 likes · 16 comments · Institute of Economic Affairs and Kristian Niemietz

The Capitalist: Liam Halligan & Daniel Herring – what’s in the Budget?

And if you want more...

– The race to keep AI under control (Financial Times 🔒)

– Could AI make the economy more human? (The Daily Economy)

– Labour’s leaks are corroding parliamentary standards (City AM)

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We'll be back tomorrow.

Weekly Briefing: Healey’s Budget won’t deliver growth

Oscar Gill-Lewis — Sun, 01 Nov 2026 09:25:17 GMT

Chancellor John Healey delivered his first Budget this week. His Budget contained 98 specific tax and spending measures, higher than in any Budget in recent history. Healey’s approach was predicated on ‘the state knows best’ mentality, but when it came to tackling big economic issues like our modest growth, he kicked the can down the road. CPS fellow Gerard Lyons gave his reaction to the Budget for CapX, it was long on intervention and short on economic strategy. It’s my piece of the week. Find out more below.

Damian Pudner looked at the Budget and saw nothing but a Chancellor taxing the banks and workers even more to pay for a booming benefits bill, instead of making the difficult decision with Labour’s majority. Labour removed tariffs on a small percentage of goods to help lower costs but Ted Grainger urges the Government to remove most of them. They should read their Adam Smith.

Andrew Tettenborn says that proposals to ban employers from asking candidates what they earn will only make recruitment more difficult and inefficient. Meanwhile, Matthew Lesh has a look at some new research which revealed UK data regulation is costing British tech businesses an estimated £5.3 billion a year.

Two-thirds (69%) of the 113 data-intensive technology businesses surveyed reported that compliance costs have risen over the past 5-10 years, while none say they have fallen, despite government attempts to reduce the burden in recent years

Elsewhere, Ryan Bourne took issue with Ed Conway’s view that since Thatcher, government has tried to make stuff as cheap as possible. Ryan argues successive governments have sacrificed affordability to other ambitions. Joseph Dinnage writes about why we need to fix our illogical tax system which is punishing doctors for working more. Madsen Pirie lays out how Margaret Thatcher made Britain a place to do business.

And in Nimby Watch, James Ball looks at Andy Burnham’s claim that devolution will speed up growth, when all the evidence suggests it empowers the Nimbys. Mani Basharzad looks at the European postwar welfare state and says it was built for a different time and different demographics.

On The Capitalist this week, Liam Halligan, Director of the Centre for Policy Studies, is joined by Daniel Herring, the Centre for Policy Studies’ Head of Economic and Fiscal Policy. They go through what was announced and what it means for taxes, growth and the public finances.

Oscar Gill-Lewis
Deputy Editor, CapX

Healey’s state-knows-best Budget won’t deliver growth

Gerard Lyons

Darren Staples / POOL / AFP via Getty Images

The right language aimed at the wrong level. This was a Budget focused on micro-management. The Chancellor used the right language about the need to help workers and business, but it was predicated on ‘the state knows best’, with significant interference through targeted spending and tax hikes. The Red Book contained no fewer than 98 specific tax and spending measures. This is higher than in any Budget in recent history.

In contrast, the need to address some of the big macro-economic issues, such as continued modest growth and fragile public finances was postponed. In the summer the OBR said that fiscal pressures are likely to build over the long-term and it was a message it repeated today. Ahead of the Budget the market was unconvinced about future plans to reduce the ratio of debt to GDP and that is likely to remain the case.

Micro-management may allow the Government to claim it is taking action, but it is no substitute for tackling the macroeconomic challenges of weak growth, rising spending pressures and fragile public finances

Let’s consider the fiscal sums.

The Budget’s specific measures will provide a fiscal boost this year and next. They provide a fiscal boost of £7.6 billion in 2026/27 and £2.5 billion in 2027/28. In subsequent years, the Budget’s measures represent a fiscal tightening, of £0.7bn in 2028/29, £5.2bn in 2029/30, £6.1bn in 2030/31 and £7.4bn in 2031/32. As a result, the OBR notes that the tax take, in terms of the ratio of tax to GDP, ‘is expected to surpass its historic high of 37.2% in 2027/28’ and rise in every year of the forecast.

Public spending is expected to rise slightly to 45.7% of GDP in 2027/28 before falling to 44.7% by 2031/32. But this is predicated on curbing departmental spending, which seems unlikely. In turn, public sector net debt is expected to be 95.5% this fiscal year, and peak in two years in 2028/29 at 97.3%. But, even with an optimistic view of spending it still finishes the forecast period in 2031/32 at a high 95.6%. These fiscal numbers are vulnerable to any setbacks.

What about growth?

The Chancellor was right to highlight how the economy had been thrown off course by the war in Iran. Despite that, the economy has proved resilient in recent months. Even so the OBR’s forecasts point to modest growth. This is not a surprise, but it highlights the challenge. For a meaningful inroad to be made into the UK’s debt problem, the best solution is strong, sustained economic growth.

As the OBR notes, the near-term outlook is uncertain, being contingent upon the Iran war and its impact on energy prices, which will feed higher inflation and squeeze spending power. Real household disposable income is expected to fall a sizeable 0.8% this year, followed by only a 0.1% rise in 2027 and a 0.7% increase in 2028.

A year ago, the OBR forecast GDP growth of 1.4% for this year, which was already a reduction from the 1.9% it had forecast in spring 2025. By this spring, it cut that forecast further, to 1.1%. And while it raised it to 1.2% today, it might have been higher given the economy’s recent resilience.

Next year, though, the energy shock is expected to hit growth hard, with growth forecast at only 1%. That is low. Beyond that, the OBR sees growth averaging around 1.7% over the next four years. As the Chancellor noted in his speech, low investment has been a perennial issue, and while he announced measures to boost public investment, it is sluggish private investment that is the problem.

The most significant underlying policy shift appears to have been on energy policy, with a focus on targeted measures to reduce energy bills. A further review was promised, but in all likelihood this may move the future cost to keep bills low onto general taxation.

How will the City react?

The Chancellor faced two competing forces ahead of the Budget and his approach appears to have kept both on side, for now. His party was supportive of more state intervention and spending. Meanwhile the financial markets were looking for a Budget that did not provide any shocks, was growth friendly, met the fiscal rules and left a sufficient buffer to cope with future uncertainties.

That buffer, which had been £23.8bn for the main fiscal rule, is now set at £15bn, which was seen as acceptable to the markets ahead of the Budget. The other aspect for the City is that the increase in the banks’ surcharge tax was less than expected, from 3% to 6% and will be temporary. Also, as expected, the tax on the cash ISA will be left untouched.

All of this continues to take its toll on borrowing. The exact gilt issuance for coming years has yet to be announced, but it is likely to be sizeable, with the Gross Financial Requirement set to rise. This is the total the government needs to raise to cover new borrowing and the repayment of maturing debt. It is set to rise from £274.8bn this fiscal year, to £312.6bn in 2027/28 and £300.4bn in 2028/29, before stabilising around £250bn, predicated on the improved debt figures, which may not materialise. The Debt Management Office also announced a £4.4bn increase in gilt issuance for this fiscal year, compared to its spring forecast, with gilt sales of £250.6bn. High borrowing and high debt servicing look set to remain a fixture for some time.

The Budget will not materially impact the forthcoming decision of the Bank of England on interest rates. If anything, the OBR’s confirmation of a further rise in inflation and the fiscal boost provided by this Budget will add to the inevitability of a hike in the Bank Rate from 3.75% to 4% on November 5. The market expects Bank Rate to rise further over the next year, towards 4.5%, adding to pressure on the housing and construction sectors, as well as keeping yields elevated, adding to borrowing costs.

The Chancellor has bought some breathing space but the economy may still be gasping for breath in coming years if growth is modest, and debt high. He has done little to address the underlying weaknesses of the economy. The Budget was long on intervention and short on economic strategy. A ten-year plan is promised. Micro-management may allow the Government to claim it is taking action, but it is no substitute for tackling the macroeconomic challenges of weak growth, rising spending pressures and fragile public finances. The danger is that the difficult decisions have merely been postponed.

Thanks for reading The CapX Briefing! This post is public so feel free to share it.

And if you want more…

– Bureaucrats are interfering too much in businesses (Andrew Tettenborn)

– Healey’s do-harm Budget (Peter Young)

– Politicians should have less say in the economy, not more (Tim Worstall)

Can we make CapX better?

Or reply to this email to let us know your thoughts.

We’ll be back on Monday.

Even Burnham admits Budget not ‘radical’

Oscar Gill-Lewis — Fri, 30 Oct 2026 17:41:14 GMT

Andy Burnham has admitted that his first Budget was not radical enough. Businesses, banks and taxpayers will all agree with him as they continue to be punished for their hard work. Burnham will be coming to raid their coffers to pay for welfare and other spending he can’t cut. We are spending beyond our means but Labour can’t confront that.

Elsewhere, our columnist Joseph Dinnage warns us about a senior doctors walkout next month. Our illogical tax system means there is no incentive for them to work overtime, the more they work the more it costs them. Fewer doctors working means fewer lives saved. Another thing John Healey neglected to fix in his Budget. See more below to find out what Joseph recommends.

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

Getty Images

Bureaucrats are interfering too much in businesses

Andrew Tettenborn

‘A business owner is not concerned with equality or fairness, but making his business thrive and recruiting people who overall will help it do so. Demanding that he run his business according to bureaucratic notions of pay transparency, (…) makes his life more difficult and puts his profitability at risk.’

The Equality and Human Rights Commission, a quango with no understanding about the realities of running a small business, proposes to change the rules on disclosing pay, to promote equality. It wants to allow all employees to know what their colleagues earn but for there to be a complete ban on questions to would-be employees about how much they are currently earning. A law requiring such an invasion in all workplaces is apt to create not so much principled progressivism as sullen resentment and make life yet harder for harassed entrepreneurs. Read More

We need to incentivise doctors to work overtime

Joseph Dinnage

‘Since 2022, over 1.7 million healthcare appointments have had to be rescheduled because of industrial action. And now, senior doctors will be staging a 48-hour walkout next month.’

When doctors go on strike they can’t save people’s lives in hospital. They also can’t save as many lives when they work part-time. 77% of consultants are taking on less overtime because of the current pension allowance rules. John Healey should also abolish IR35 restrictions and lower the extremely high marginal tax rate for these high-earners. Incentivising them to work more will help to unleash NHS capacity. Read More

Labour's food tariffs are bananas

Ted Grainger

‘Remember next time, dear reader, when you go to the supermarket to purchase your bananas that you may be spending more of your hard-earned wages on making sure that countries in Africa maintain a competitive advantage because it makes the British Government feel good about itself.’

The Government removed tariffs on 100 or so goods to help lower household costs. In the big picture it’s a tiny proportion of total tariffs but it’s still the right thing to do. It’s a shame the Chancellor didn’t take this argument to its logical conclusion and remove tariffs on most items. We’ve known since Adam Smith published ‘The Wealth of Nations’ that tariffs only serve to make a population poorer. Read More

Stat of the Day

Best of the Web

The price we’ll all pay for the minimum wage hike

Ross Clark, The Spectator

‘We will have a National Living Wage (for the over 21s) of £13.20 per hour and a National Minimum Wage (for 18-20 year olds) of £11.27 per hour. This is nearly twice the level the minimum wage would have been had it simply increased with inflation since it was introduced in 1999.’

Initially, the minimum wage was set at a realistic level, so the harm it caused in destroying jobs was limited. Now that has got much more serious. It also narrows the wage gap. This will please socialists who believe in equality of outcome, but it matters because it is removing some of the incentive for low-paid workers to seek promotions with extra responsibilities. Read More

Cheaper gherkins are a Brexit benefit not to be scoffed at

Dominic Lawson, The Telegraph 🔒

‘I will speak up for gherkin politics, or at least, the Chancellor’s decision to remove the 12% import duty on that refreshing delicacy, along with tariffs on a range of other joys of the table such as garlic and marmalade. Was not that one of the points of leaving the European Union? The very supranational body Burnham is now courting, and which he clearly wants to rejoin?’

Reducing the tariff on jar of gherkins by 4p has been a good source of ridicule in a Budget that has avoided more challenging reforms. But these modest reductions in tariffs are welcome. A better point to make is that they would be incompatible with the Government’s ambition of rejoining the EU customs union. Read More

Today’s revival of state ownership will be disastrous

John Redwood

Back to the 1970s: why nationalisation keeps failing

John Redwood is an incisive commentator on economics and politics, writing his daily blog on www.johnredwoodsdiary.com. He has led two UK-based international industrial businesses, set up and sold on an investment management company and is a fellow of All Souls College, Oxford…

3 days ago · 36 likes · 8 comments · Institute of Economic Affairs

The Capitalist: Liam Halligan & Daniel Herring – What’s in the Budget?

And if you want more...

– Sovereign wealth fantasies (The Critic)

– The iron law of centralisation (Wallenstein’s Camp)

– Vietnam banks on Europe (FEE)

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Healey's welfare cut pledge unravels within hours

Harry Phibbs — Thu, 29 Oct 2026 17:52:22 GMT

Yesterday’s Budget ignored the urgent need to cut welfare spending – or even curtail its dramatic projected increase. This prompted renewed speculation of an early General Election that would allow the tough choices to be taken after it was out of the way. This cynical narrative was briefly challenged today when the Chancellor of the Exchequer promised that welfare spending would be cut before the election. ‘The system is unsustainable’, he said, seemingly agreeing there would be ‘a reduction in the benefits bill’ before the next election. But The Treasury then briefed that he had not meant any reduction would take place before the next election. It had all been a misunderstanding. Damian Pudner, writing on CapX, says we need a Chancellor with the ‘backbone’ to take the necessary measures. No sign of that yet.

In another cheery contribution, the Institute for Fiscal Studies said the current decade would be the worst for household income growth on record, adding that John Healey ‘has done nothing’ to ease household pain.

There was also further doubt cast on the Government’s ‘fiscal headroom’ – which has already been reduced from £24 billion to £15 billion in the 2029/30 financial year. The Energy Minister Baroness Curran said: “The OBR will have to republish the figures if Rosebank does not go ahead and it will need to be addressed.” Given that the OBR projects public borrowing of £71bn in the same year, the concept of there being any ‘fiscal headroom’ in such a context might strike some as esoteric.

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

Harry Phibbs
Guest Editor, CapX

Today’s Takes

Fresh thinking from CapX

Wiktor Szymanowicz/Future Publishing via Getty Images

Labour hand booming benefits bill to workers

Damian Pudner

‘Britain needed a chancellor with a backbone and economic philosophy to do what’s right in the long term for the country, but got a nothing burger Budget designed to change as little as possible.’

Chancellor John Healey had the chance to confront a runaway benefits bill and a tax burden strangling growth. Instead, he decided to raise taxes on banks and hard working taxpayers. He blamed the war in the Middle East for the economic deterioration, but by this logic, spending restraint, especially on welfare, is even more important. It’s time he makes some difficult decisions. Read More

Healey's do-harm Budget

Peter Young

‘Healey’s new tax attack on the banking sector will only make matters worse.’

This Budget does cause considerable harm, not just by failing to tackle any of the real problems facing the country, but through its punitive new measures targeting the hardworking and productive. Read More

Politicians should have less say in the economy, not more

Tim Worstall

‘And do we really think government is going to speculate better than the assembled forces of the world’s speculators? Or is it more likely to be the idiot player in the market that others then profit from, at the taxpayer’s expense?’

Isabella Weber’s new book supposedly celebrates and promotes anti-fascist economics. The Guardian is loving it. Fascist economics was a system which was nominally capitalist, but with all aspects under close political control. Strange then that Weber's 'anti-fascist' economic prescription insists politicians should have far more power over prices. Read More

Stat of the Day

Best of the Web

Labour’s energy promises are fake news

David Frost, The Telegraph 🔒

‘Nothing that Healey announced will do anything to change the underlying, real, costs of energy in Britain. Indeed at least one measure hidden in the Budget documents, a carbon tariff on non-EU imports of petrol, diesel, and jet fuel, will increase them.’

The Chancellor did not address the real causes of rising energy bills. Doing that would require Labour to interrogate its net zero policy, which they won’t do. Instead, he decided simply to conceal the problem, subsidise some energy costs and hide the rest. Read More

Wage compression is the problem everyone ignores

John Oxley, ConservativeHome

‘Wage compression is slow poison for an economy. People are discouraged from training, moving on and taking harder jobs. Their relative spending power diminishes, especially as other costs rise. It spreads a sense of misery.’

The lowest level of pay, the minimum wage, has been rising and rising for the last decade. Meanwhile higher earners’ wages have been stagnating. This causes some social status anxiety and contributes to the sense of being squeezed, by stagnating wages and rising costs like in rent and energy. The Conservatives are right to get rid of the £100k tax cliff edge but they also need to help more people become better off. Read More

AI will be able to create ‘Superscience’

Noahpinion

It’s almost hard to remember, but just a few years ago, a lot of very smart people thought that science was in terminal decline. Respected researchers were writing papers with titles like “Are Ideas Getting Harder to Find?”, “Papers and patents are becoming less disruptive over time…

8 hours ago · 258 likes · 19 comments · Noah Smith

The Capitalist: Liam Halligan & Daniel Herring: what’s in the Budget?

And if you want more...

– Wealth tax economists work is full of errors (Marginal Revolution)

– What the Left get wrong about neoliberalism (The Critic)

– Price discrimination is competition (Economic Forces)

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A peacetime Budget for a wartime world

Marc Sidwell — Wed, 28 Oct 2026 19:34:06 GMT

John Healey claimed he was delivering a ‘breathing space’ Budget today – offering small amounts of help to households and businesses now as a down payment on bigger reforms to come.

What that meant in practice was a lot of government tinkering – as Gerard Lyons points out in his analysis for CapX, this Budget has more tax and spending measures than any in recent history.

Yet the overall effect was remarkably modest, given the state of the public finances and the global economic storms Healey acknowledged are heading our way. Robert Colvile called it ‘a peacetime Budget for a wartime world’ – and one that left the Chancellor with just £15 billion of fiscal headroom, down from £23.6 billion in March.

@LiamHalligan ","username":"CPSThinkTank","name":"Centre for Policy Studies","profile_image_url":"https://pbs.substack.com/profile_images/1943349691854249995/fxQtJUHL_normal.jpg","date":"2026-10-28T15:28:02.000Z","photos":[{"img_url":"https://pbs.substack.com/media/HVuj9frXQAAmA0c.jpg","link_url":"https://t.co/96nYnXNuWV"}],"quoted_tweet":{},"reply_count":1,"retweet_count":10,"like_count":22,"impression_count":916,"expanded_url":null,"video_url":null,"video_preview_media_key":null,"belowTheFold":false}" data-component-name="Twitter2ToDOM">

But perhaps that misses the point. Despite Healey’s claims, this Budget may not really have been about giving breathing space to the people of Britain at all. It makes far more sense if it was designed to offer that breathing space to a Prime Minister in search of a mandate.

Andy Burnham denies he is planning a snap election, but few in Westminster believe him. All the can-kicking and the accompanying grab-bag of small, crowd-pleasing policies on show today do nothing to dispel that suspicion.

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

Wiktor Szymanowicz/Future Publishing via Getty Images

This state-knows-best Budget won't deliver growth

Gerard Lyons

‘Micro-management may allow the Government to claim it is taking action, but it is no substitute for tackling the macroeconomic challenges of weak growth, rising spending pressures and fragile public finances.’

John Healey’s first Budget was filled with 98 specific tax and spending measures. Yet he failed to tackle the UK’s debt problem. Only sustained growth can fix it, but the OBR expects just 1% growth next year as the energy shock bites. Meanwhile the tax burden is set to hit a record high. Read More

Is Britain really a MoneySavingExpert economy?

Ryan Bourne

‘Margaret Thatcher certainly tried to liberate markets to improve their efficiency, but vast swathes of UK state regulation before and since have actively raised the price of essential goods and services, often by restricting supply.’

Today’s Budget showed the influence of MoneySavingExpert Martin Lewis on economic policy: the Chancellor’s removal of standing charges from energy bills is something Lewis has long campaigned for. But that doesn’t mean that Britain’s whole economy is focused on keeping prices low, as Ed Conway of Sky News has recently argued. If only. Read More

The Capitalist: Liam Halligan & Daniel Herring: what’s in the Budget?

John Healey has delivered his first Budget as Chancellor. In this special edition of The Capitalist, Liam Halligan is joined by Daniel Herring, the Centre for Policy Studies’ Head of Economic and Fiscal Policy, to go through what was announced and what it means for taxes, growth and the public finances.

Best of the Web

Labour have never understood the City

Liam Halligan, Daily Mail

‘It’s hard to calculate precisely how much wealth was generated by the Big Bang, but it is certainly in the billions.’

Yesterday was the anniversary of the Big Bang, when Nigel Lawson and Margaret Thatcher transformed the City into the financial capital of the world. Neil Kinnock opposed the Big Bang and Lawson’s tax cuts, and Labour are still plagued by ideological hostility to financial services. Britain needs another Big Bang but we shouldn’t expect it from Andy Burnham or John Healey. Read More

Can Netanyahu cling on?

Adam LeBor, The Spectator

‘The catastrophic security failures around the October 7, 2023 terror attack, which took place under the Likud government, do not appear to have deterred many of its ultra-loyalist voters.’

On Tuesday, neither of Israel’s main political camps won a clear victory despite record turnout. Benjamin Netanyahu’s coalition has just beaten out its opponent by a few seats but it neither guarantees his party victory nor Netanyahu remaining leader. Both blocs have ruled out entering into coalition with one of the Arab parties for now, but the opportunity for electoral victory with a de-facto alliance may prove to be too tempting. Read More

Who cares about America’s debt?

Daniel Hannan

Donald Trump is bankrupting America

Daniel Hannan is Director General of the Institute of Economic Affairs…

a day ago · 30 likes · 10 comments · Institute of Economic Affairs

Stat of the Day

And if you want more...

– Protecting pensioners from income tax is unfair (City AM)

– The conservative case for a car-free Oxford Street (The Telegraph 🔒)

– The rise of AI empires (Foreign Affairs)

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Liam Halligan & Daniel Herring: what’s in the Budget?

CapX — Wed, 28 Oct 2026 19:32:20 GMT

John Healey has delivered his first Budget as Chancellor. In this special edition of The Capitalist, Liam Halligan is joined by Daniel Herring, the Centre for Policy Studies’ Head of Economic and Fiscal Policy, to go through what was announced and what it means for taxes, growth and the public finances.

Marc Sidwell
Editor, CapX

Is Healey’s headroom shrinking?

Marc Sidwell — Tue, 27 Oct 2026 17:31:06 GMT

As John Healey prepares to deliver the Budget tomorrow, one glimmer of common sense has emerged. No, it’s not about cheaper gherkins and marmalade.

It is reported that the Chancellor will break with Labour’s manifesto commitment to raise the minimum wage for under-21s to match the full adult rate, after concerns it was increasing the challenges of getting young people into work. By the same logic, he really ought to reverse the job-killing Employment Rights Act as well. Meanwhile, both older minimum wage earners and those aged 18–20 are set to receive a 3.9% pay rise. Some things don’t change.

And another Labour target has fallen by the wayside. The Financial Times reports that the party’s promise to build 1.5 million homes in England by 2029 is now ‘effectively dead’.

That’s bad news for anyone worried about the housing crisis. But it could be bad news for the public finances too. The OBR increased Labour’s fiscal headroom based on their planning reforms. If that boost is failing to materialise, Healey’s headroom may be even smaller than feared. And we all know who’ll end up footing the bill for that.

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

Europe’s welfare state is turning young against old

Mani Basharzad

‘Europe has become increasingly unreformable because no one wants to accept that the welfare state they are proud of was not designed for the world we live in today.’

Europe built its postwar welfare state in a very different demographic reality. Life expectancy today is much higher and the ratio of workers to pensioners is shrinking, putting strain on the social contract between generations. As Bill Maher said recently, no wonder the young want socialism: they’re jealous that older people have it and they don’t. Read More

How Thatcher turned Britain around

Madsen Pirie

‘From the sick man of Europe, we became one of the most prosperous. Growth reached unprecedented heights, and Britain became the place to do business.’

When the Adam Smith Institute was founded, it was easy to discredit the postwar consensus: it was visibly failing. There was also a politician willing to fight for an alternative. Margaret Thatcher redistributed power from union bosses to their members and privatized state industries – and Britain boomed. Now Andy Burnham wants to put it all into reverse. Read More

Stat of the Day

Best of the Web

Britain needs another Big Bang

Andrew Griffith, The Telegraph 🔒

‘A resurgent City allowed countless businesses in the decades that followed to list and grow after the stagnation of the Seventies.’

This day 40 years ago was the ‘Big Bang’, when deregulation transformed the City. Employment in the sector doubled. Digitisation was brought in, which helped to make share ownership more accessible and attractive. This gave Britons a stake in the economy and ensured they had better lives via their pensions and savings. The Chancellor should give Britain another ‘Big Bang’ – instead we’re getting higher bank taxes. Read More

🎧Mel Stride: the Chancellor’s sums won't add up

Don’t overlook the ‘PuFins' in the Budget

David Willetts, ConservativeHome

‘[Healey] needs to continue to show effective control of public spending – not just because of the bond markets but because it is the right thing to do.’

The Chancellor’s Budget tomorrow will be heavily constrained. He has some room to manoeuvre thanks to Rachel Reeves’s change to the fiscal rules. Public Financial Institutions, or PuFins, can spend without adding to the net national debt. But such accounting tricks can’t answer the big challenges like soaring energy bills or the need to spend more on defence. Read More

The Capitalist: David Frost on how to free Britain

And if you want more...

– The invention of equality (Engelsberg Ideas)

– Healey’s £11bn defence dilemma (RUSI)

– Britain’s disk is full: can you cut spending?

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Best of CapX: Healey’s Budget will be built on sand

CapX — Tue, 27 Oct 2026 15:16:34 GMT

Ian Vogler - WPA Pool/Getty Image

Healey’s Budget will be built on sand

Mel Stride

When John Healey sits down after his Budget, the press gallery will focus hard on his headroom against the fiscal rules. In March the OBR put this at £23.6 billion against the main rule, which requires day-to-day spending to be covered by revenue by 2029/30. A recent Reuters poll of economists suggests it has since shrunk to just £10bn to £12bn, with some estimates as low as £5bn. My instinct is it may be up around £15bn, with lower estimates in part reflecting Treasury briefings ‘testing the market’. We will find out shortly.

In fairness, of course, high oil and gas prices are part of the reason for headroom pressure. But much of the damage was also undeniably inherited from Rachel Reeves. First came £40bn of tax rises in October 2024, led by a £25bn increase in employers’ National Insurance, alongside higher capital gains tax, inheritance tax on family farms and businesses and VAT on private school fees. A further £26bn followed last year, including a three-year extension to the freeze on income tax thresholds, National Insurance on pension salary sacrifice, higher taxes on dividends, savings and property income as well as a property value tax.

You can add to that high welfare spending, an extra quarter of a trillion pounds of borrowing across the parliament compared with the plans Labour inherited and a collapse in business confidence. The result? Lower growth, higher inflation, higher interest rates and heavier debt servicing costs. The Chancellor will blame global shocks alone, as his predecessor did. But he cannot disown the damage done by Labour’s own policies.

The best course would be to grip spending, not least on welfare, and use the savings to cut the deficit and taxes on business, that essential engine of growth.

So what is the right level of headroom? In a world of ever more frequent shocks, ideally rather higher than £24bn. Since the OBR was created in 2010, chancellors have on average left themselves around 1.4% of GDP, about £40bn in today’s terms. The £15bn or so economists expect Healey to aim for would be just 0.5%. He will probably set it at the lowest level he thinks markets will bear, and may get away with it for now, not least because bond market stress is focused as much elsewhere as on the UK. France has proven a helpful distraction. But slender headroom carries longer-term consequences, including fragility in the face of external shocks, a vulnerability to uncertainty around inflation and interest rates and potentially an ongoing cost of borrowing premium.

Markets will also judge whether the Government can stick to its plans. The OBR must take some inputs as given, even if it privately considers them unrealistic. One is the assumption that significant departmental spending restraint will kick in during the run-up to a possible General Election in 2029. The pressure on a Labour government that has already shown it cannot control spending will be exquisite, not least because of the sticky inflation it has helped to create. Departmental budgets are fixed in cash terms, so nothing tops them up when inflation overshoots. The IFS estimates that restoring their real value to March levels could cost around £15bn in 2029/30. And while inflation boosts the tax take through fiscal drag, it also keeps interest rates higher for longer, pushing up debt interest costs that already exceed £100bn a year.

The forecasts will also omit the cost of taking defence spending to 3% of GDP by 2030. Healey resigned as Defence Secretary over this, yet the Treasury has confirmed his Budget will not set a date for it. If health spending grows by 2.7% a year in real terms, matching its last settlement, and defence reaches 3%, everything else faces real-terms cuts averaging 2% a year. The IFS reckons avoiding those cuts would need around £20bn in 2030/31, rising to £35bn once realistic pay and productivity pressures are included. These are the numbers to set against whatever level of headroom he builds up.

The best course would be to grip spending, not least on welfare, and use the savings to cut the deficit and taxes on business, that essential engine of growth. But he won’t. Welfare reform awaits the Timms review of disability benefits and Alan Milburn’s review of young people out of work, with Milburn’s final report delayed until after the Budget. That speaks to Labour’s difficulty with tough decisions.

To reassure markets, he must at least signal that significant welfare savings are coming. He must give businesses hope by showing how spending control can cut their taxes, and soon. He should scrap most of the Employment Rights Act, drive further planning reform and slash red tape, from ESG reporting to onerous building regulations. He should tell business he will get government off its back. But the Chancellor won’t. He will sit down to cheers from the benches behind him, no doubt having rebuilt some of that headroom. But all of us, markets included, will know that his plans remain incomplete and ultimately, in time, undeliverable.

Sir Mel Stride is the Conservative Member of Parliament for Central Devon.

Is Britain broke?

Marc Sidwell — Mon, 26 Oct 2026 17:33:00 GMT

It looks like John Healey is set to offer the country a ‘mañana Budget’ on Wednesday – but what would something more radical look like?

This afternoon, Reform UK’s Treasury spokesman Robert Jenrick offered his party’s proposed alternative, under the slogan ‘Britain is Broke’. This teal Budget not only cites several Centre for Policy Studies publications, but also includes in its 64-point plan many supply-side policies that the CPS has championed.

@CPSThinkTank's work. (Though I'm not sure fully legalising imperial measures would be my biggest pro-growth priority...)","username":"rcolvile","name":"Robert Colvile","profile_image_url":"https://pbs.substack.com/profile_images/1512544093636808706/djnEg9sT_normal.jpg","date":"2026-10-26T13:29:26.000Z","photos":[],"quoted_tweet":{"full_text":"Britain is broke. And to fix it, we need to start growing again.\n\nThat’s why Reform’s Economic Rescue Plan includes these 64 pro-growth measures I’d take if I were Chancellor:\n\n𝗨𝗻𝗹𝗼𝗰𝗸𝗶𝗻𝗴 𝘁𝗵𝗲 𝗡𝗼𝗿𝘁𝗵 𝗦𝗲𝗮\n\n1. Approve Rosebank\n2. Restart oil and gas licensing\n3.","username":"RobertJenrick","name":"Robert Jenrick","profile_image_url":"https://pbs.substack.com/profile_images/2096330596738019328/FxCjGXoq_normal.jpg","photos":[]},"reply_count":5,"retweet_count":2,"like_count":32,"impression_count":2883,"expanded_url":null,"video_url":null,"video_preview_media_key":null,"belowTheFold":false}" data-component-name="Twitter2ToDOM">

Meanwhile, our Stat of the Day shows once more that Labour is heading very much the other way – more tax and more rules holding down our entrepreneurs.

If civil war on the right of British politics means the Tories and Reform outbidding each other on how far they’ll go to get government out of the way of growth – bring it on.

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

Data regulations are strangling British businesses

Matthew Lesh

‘Two-thirds (69%) of the 113 data-intensive technology businesses surveyed reported that compliance costs have risen over the past 5-10 years, while none say they have fallen, despite government attempts to reduce the burden in recent years.’

Data regulation imposes huge compliance costs on British businesses – new research commissioned by the Computer & Communications Industry Association puts the bill for our tech firms at an estimated £5.3 billion a year. And that’s not the end of the damage: the same rules also mean that businesses innovate less, or do so overseas instead. Read More

Burnham’s devolution drive has a Nimby problem

James Ball

‘The more devolved the authority, the likelier it is to say “no” to development. Absent a plan, the devolution strategy risks becoming the Nimby Supremacy.’

The Prime Minister believes that devolving power will lead to more development and faster growth. But his strategy looks set to empower the nation’s Nimbys instead. Take a look at Wales, where Plaid Cymru now want to ban steel pylons in favour of costly underground cables – a proposal that will make everyone’s energy more expensive and slow down efforts to modernise the grid. Read More

Stat of the Day

Best of the Web

A timid Budget would be playing with fire

Roger Bootle, The Telegraph 🔒

‘For people of a certain age, the sight this Wednesday of a Labour chancellor by the name of Healey delivering the Budget will stir uncomfortable memories of what happened 50 years ago.’

Budgets often try to please both the electorate and the backbenches, but nowadays chancellors also have to keep the financial markets happy. Pleasing all three groups simultaneously is very tricky. This Wednesday, John Healey will have to find money for defence spending while praying the bond vigilantes are kinder to us than they have been to France. Read More

Burnham crosses his fingers on migration

Sam Leith, The Spectator

‘“It’s fine to have free movement as long as not too many people move” isn’t a policy: it’s a pair of crossed fingers.’

Andy Burnham wants an ‘honest discussion’ about EU free movement and the changing balance of migration. He could start by admitting that free movement is a red herring when it comes to small boats. Bringing it back wouldn’t stop the boats – and it certainly wouldn’t give us more control over who comes in. Read More

Why so few workers pay their way

The strange death of the net contributor

Britain has almost run out of taxpayers, or at the very least, it’s slowly running out of people who pay enough taxes to plausibly finance the state. If a household pays more in tax than it receives in benefits during a given financial year, it is traditionally described as a ‘net contributor’ household. In 2023–24, the ONS reported that 46.7 per cent o…

8 days ago · 17 likes · 13 comments · Institute of Economic Affairs and Valentin Boboc

The Capitalist: David Frost on how to free Britain

And if you want more...

– What civil servants really think (Re:State)

– Watch: ‘Can’t Tax This’ (a tax rap) (YouTube 📹)

– The winners and losers of Trumponomics (The Economist 🔒)

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Weekly Briefing: Healey’s £20bn accounting trick

Oscar Gill-Lewis — Sun, 25 Oct 2026 17:20:44 GMT

As John Healey prepares to deliver the Budget this Wednesday, it’s already clear that Labour are looking for ways to keep on borrowing and spending more. Last week, a new report from the Centre for Policy Studies warned that Labour could use a loophole in the fiscal rules created by Rachel Reeves to borrow more off the books – by increasing funding to Public Financial Institutions, known as PuFins.

And, lo and behold, the FT promptly reported that £20 billion more would be allocated in the Budget to the British Business Bank and the National Wealth Fund. The CPS report’s author Tim Dier wrote for CapX about why the Government needs firm fiscal management and budgetary restraint – not an increasing reliance on financial wheezes. It’s my piece of the week. Find out more below.

We also featured Sean Ridley, the energy and environment researcher for the CPS, on why the Government can’t rest on its laurels after approving the Jackdaw field in the North Sea and should now approve drilling in Rosebank as well. James Price also urged the Government to reopen the North Sea and permit fracking to avoid the growing threat of blackouts.

Daniel Herring, Head of Economic and Fiscal Policy for the CPS, looked at the latest International Tax Competitiveness Index, which ranks the UK 30th out of 38 countries. To improve our ranking, he argues the Chancellor should focus on tax simplification, broadening the tax base and removing exemptions. A new wealth tax, by contrast, would push us down to 35th place.

Meanwhile Harry Phibbs analysed whether family firms can survive Labour’s reported plan to close a tax loophole – by almost doubling the tax rate for passing a family business on to your children compared to selling it to a stranger. With three-quarters of SMEs in Britain family-owned, it’s probably not the best idea.

What could be more damaging to the social as well as the economic fabric of the nation than to single out family businesses for punishment? Yet that seems to be the idea

Elsewhere, Nigel Biggar encouraged us all to stand up for our islands’ history and help preserve the valuable traditions and institutions we have inherited. Mel Stride warned that Healey’s Budget will be built on sand, with too little headroom and spending plans that won’t survive contact with reality. And in his latest column, John Penrose argued for getting rid of benefit cut-offs and tax cliff edges for both high and low wage earners.

On The Capitalist this week, CapX’s editor Marc Sidwell sat down with David Frost, who led the UK’s Brexit negotiations and later served as Brexit minister under Boris Johnson. Lord Frost argued that the campaign to keep Brexit’s freedoms needs to start now, and explained why he thinks neither the Conservatives nor Reform UK are yet going far enough, and what it would take to make the Civil Service serve ministers again.

Oscar Gill-Lewis
Deputy Editor, CapX

Labour need to stop using smoke and mirrors accounting

Tim Dier

Leon Neal/Getty Images

Imagine borrowing £10,000 from the bank, lending it to a friend, then telling everyone the debt’s gone – because your friend owes you the money.

That’s obviously nonsensical – you still owe the same £10,000 to the bank, regardless of what you did with the money. But that’s Labour’s approach to our public finances. Let me explain how it works.

In his first Budget, John Healey will likely use PuFins to bury even more borrowing, channelling billions into Labour’s pet projects

Public Financial Institutions (PuFin) are publicly-funded bodies that invest taxpayer money via loans, equity investments and guarantees – with the aim of encouraging or ‘crowding in’ private capital, driving policy goals such as green energy or other infrastructure investment.

As I explain in my latest research, prior to 2024, borrowing for PuFins showed up in public sector net debt excluding Bank of England (PSND ex BoE), just as borrowing to build a road would. This handbrake kept the Government honest and meant PuFins were used sparingly.

But in Rachel Reeves’s first Budget, she changed the fiscal rules, from considering PSND ex BoE to considering public sector net financial liabilities (PSNFL).

This meant that the ‘investments’ that PuFins make could largely offset the debt taken on to fund them. Almost like magic, the debt all but disappears from plain sight and barely registers against the fiscal rules.

In fact, had the old PSND target been kept, the October 2024 Budget would have broken the debt rule by £5.8 billion. Under the new PSNFL target, it passed with £15.7bn of headroom. This ultimately allowed the Government to spend more. Needless to say, PuFins have become the Government’s favoured instrument.

Louise Haigh MP, one of Prime Minister Andy Burnham’s principal strategists, doesn’t hide her desire to circumvent the fiscal rules. Writing in Renewal, she argued: ‘we should enable the newly established National Wealth Fund to borrow against their existing balance sheet outside of the fiscal rules.’

The problem is that we’ve been here before. As The Restorationist magazine pointed out, it has all the hallmarks of the Private Finance Initiative (PFI).

Under PFI, accounting treatment kept borrowing off the books, with grave long-term financial consequences for taxpayers. Tony Blair and Gordon Brown, who were responsible for the overwhelming majority of PFI deals, used them to pay for schools, hospitals and other infrastructure worth around £60bn, but taxpayers were handed a bill of nearly £200bn.

The desire to use PFI was driven by accounting smoke and mirrors. History could be repeating itself with PuFins. In his first Budget, Chancellor John Healey will likely use them to bury even more borrowing, channelling billions into Labour’s pet projects.

The state has a poor track record of picking winners at the best of times. With National Wealth Fund capital earmarked for a plethora of projects from green hydrogen through to carbon capture, the taxpayer may never see that money again, let alone any investment return that exceeds the cost of 10-year Government borrowing, which is now over 5.4%.

One case where a PuFin might make sense is financing a fleet of standardised, gigawatt-scale, multi-reactor nuclear power stations. Creditors would recognise the economic value of plentiful energy, and the plants could be sold once operational to pay down the borrowing.

But that’s not what’s happening. The British Business Bank, another PuFin, instead focuses on asking applicants to demonstrate gender and ethnic diversity at all levels of their business, and views organisations with a clear commitment to diversity and inclusion more favourably in its investment decisions. Investment returns on taxpayer money are clearly of secondary importance.

The National Audit Office flagged another risk, warning that overlapping PuFin mandates could concentrate exposure in particular areas, crowding out private investment. Quite an irony, given that one of the arguments in favour of PuFins was that they help mitigate market failure.

The more pressing reality is that this kind of overly complex financial engineering through PuFins does nothing to fool the UK’s highly sophisticated international creditors or bond traders. All it does is demonstrate an increasing determination to deny financial reality and shy away from tough choices – which further undermines the UK’s financial credibility.

What the Government needs now is to demonstrate financial common sense, firm fiscal management and budgetary restraint – not an increasing reliance on financial wheezes such as PuFins, designed to keep clear liabilities away from headline borrowing totals and meet overly flexible fiscal rules.

Hiding debt doesn’t make it disappear – it just encourages massive over-spending, weakening our public finances even more. We need to find ways to balance the budget, cut debt and ensure the state takes up a smaller share of the economy than it does now. It’s time to clip the PuFins’ wings before it’s too late.

Thanks for reading The CapX Briefing! This post is public so feel free to share it.

And if you want more…

– How Britain lost its energy edge (Sebastian Charleton)

– Why small business has lost faith in Westminster (Robert Colvile)

– I’m on PIP – and I want welfare reform (Luke Murfitt)

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How much unused council land is there really?

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Labour’s off-the-books borrowing

Oscar Gill-Lewis — Fri, 23 Oct 2026 16:40:32 GMT

Puffins are beautiful birds found across the Northern Hemisphere. PuFins or Public Financial Institutions on the other hand, need to have their wings clipped. That’s the argument made in a new report by CPS fellow Tim Dier, who warns the Government has been using them to hide debt, with alarming echoes of Labour’s costly past misadventures with PFI. Shadow Chancellor Andrew Griffith is also on the case. You can find more below.

Elsewhere today, the latest monthly figures show consumer confidence has taken a big hit since September – on a par with those caused by Brexit and the pandemic. It won’t be the news John Healey wants to see the week before his first Budget. See our Stat of the Day.

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

Leon Neal/Getty Images

Labour need to stop using smoke and mirrors accounting

Tim Dier

‘In his first Budget, John Healey will likely use PuFins to bury even more borrowing, channelling billions into Labour’s pet projects.’

Public Financial Institutions (PuFin) are publicly-funded bodies that invest taxpayer money aiming to encourage private capital to follow suit. Changes made by Rachel Reeves mean that borrowing to fund PuFins doesn’t show up in government debt figures, artificially buying more fiscal headroom. The Government needs to control spending, not try to hide it. Read More

How Kemi Badenoch can make sure work always pays

John Penrose

‘Some benefits have hidden cut-offs where getting a promotion or working a few hours overtime can mean claimants cross hard-to-spot lines where the system suddenly takes away big chunks of help.’

Kemi Badenoch has faced criticism for wanting to change childcare rules which leave parents suffering crazy tax rates if they earn more than £100,000. She is right to target the worst example of a tax and benefit cliff edge – but she shouldn’t stop there. We need to ensure that work pays, at every income level. Read More

I’m on PIP – and I want welfare reform

Luke Murfitt

‘We cannot protect the vulnerable with promises the taxpayer can no longer afford.’

An entrepreneur who built a business while living with Parkinson’s argues that welfare cuts are necessary to ensure the system remains sustainable for those who need it most. But controlling the bill is only half the task. From backing disabled founders to recovery plans for sickness benefits, he sets out practical ways to spend money better. Read More

Stat of the Day

Best of the Web

Business needs to speak up in Britain's battle of ideas

Liam Halligan, City AM

‘For decades, under the Tories and now Labour, the state has been getting bigger – and is now far too intrusive and chronically unaffordable, to the extent it’s threatening financial stability.’

It is Britain’s entrepreneurs and businesses that create wealth, not politicians. In the looming battle of ideas over our country’s economic direction, business leaders must stand up to be counted. They should be pragmatic when dealing with government, but they mustn’t lose sight of what works – low taxes and a smaller state. Read More

Would a British wealth fund work?

Sam McPhail, The Spectator

‘Given that the government decided to cut £30 million from army exercises in a scramble for cost-cutting, how long would it have been before our annual investments were picked apart?’

John Healey has announced that Britain will have a sovereign oil fund like Norway. But we are different from them in important ways. Oil and gas plays a much bigger role in Norway’s GDP than ours, 20% versus 1.3%. Not to mention the likelihood that our politicians will raid the fund for parts in the coming years. Read More

Building on scraps won’t fix the housing crisis

Fin McCarron

Notes on Growth

The budget is fast approaching and with it the inescapable conclusion that the UK just doesn’t have that much money. It’s not a new or original observation but the estimate that conflict in the Middle East has halved the chancellor’s fiscal headroom has only made it more acute…

8 days ago · 8 likes · 10 comments · Fin McCarron

The Capitalist: Lord Frost on how to free Britain

And if you want more...

– Charity status is being abused (The Critic)

– Burnham is leaving Thames Water in limbo (The Telegraph 🔒)

– Insurers rule the waves (ConservativeHome)

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Dan Davies - "Back of Mind"

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

Nigel Biggar: stop trashing Britain

Marc Sidwell — Thu, 22 Oct 2026 16:33:45 GMT

Could Labour be about to take the cost of doing business seriously? In a new interview with The Times, John Healey talked about being on the side of bloody-minded entrepreneurs, and even had a good word to say about turning a profit.

Not so fast, though – with employers groaning under the weight of tax and regulation, they need more than reassuring rhetoric from the Chancellor. Matthew Lynn writes below on the reforms entrepreneurs need to see.

And as my colleague Daniel Herring writes in City AM today, even a Budget that avoids damaging missteps like a rise in capital gains tax won’t fix the problems with Labour’s existing policies on tax and 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

Alishia Abodunde/Getty Images

Stop trashing Britain’s inheritance

Nigel Biggar

‘British history – just like any other – has been populated by creatures and sinners, not gods and saints.’

There is a distorted narrative gaining ground in Britain that ‘Empire equals evil’. But this is clearly nonsense. Our ancestors weren’t perfect, but they left us with valuable traditions and institutions such as the common law and racial equality. We need to understand what it’s taken to create and protect what we’ve received or, like the young in France today, we’ll gleefully burn it to the ground. Read More

Britain is heading for blackouts

James Price

‘For over 20 minutes, engineers ran the grid beyond its normal safety limits, the point at which one more breakdown can knock power stations offline one after another and black out the country.’

Britain’s energy system is a mess. Engineers working on the grid are suffering high levels of stress, as our increasing reliance on renewables makes the system less flexible. In June, Britain came within a whisker of not having enough power to go round. If we don’t change direction, we can’t be sure the lights will stay on. Read More

Stat of the Day

Best of the Web

Ditching a CGT rise doesn't make Healey pro-growth

Daniel Herring, City AM

‘Ultimately, if growth was this Government’s number one priority, it would be finding ways to reduce taxes on business by cutting spending.’

Labour have ruled out increasing capital gains tax at the Budget. That’s good news – it would be damaging and counterproductive. But John Healey appears likely to raise taxes on banks instead. That will also be bad for the economy – and won’t even raise that much money. Read More

How Labour could actually help entrepreneurs

Matthew Lynn, The Spectator

‘A Chancellor who was appointed as part of an administration that plans to “end 40 years of neo-liberalism”, and wants to bring whole chunks of the economy back under public control, does not seem a natural backer of the side hustlers and gig-workers trying to start up their own enterprise.’

Apparently John Healey is planning a ‘budget for entrepreneurs’. It’s about time after the beating they’ve got from both major parties for the last 10 years. He could start by restoring the entrepreneur’s 10% rate of capital gains tax or repealing the draconian IR35 rules that discriminate against the self-employed. Read More

Why France can build and the UK can't

the mirage of Thatcherfuturism

A rare swing-and-miss from Martin Wolf in the Financial Times[1] brings me back to a subject which I wrote about in June, but not very well (I was frazzled and exhausted), so I think it’s worth setting out a little more clearly. Consider the following extract…

11 days ago · 70 likes · 22 comments · Dan Davies

The Capitalist: David Frost on how to free Britain

And if you want more...

– The age of discovery isn’t over (The Progress Network)

– The case against comprehensive schools (The Critic)

– Ryan Bourne on the economics of everything (Cato Institute)

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How much could the UK actually raise from higher taxes?

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David Frost: prepare to fight for Brexit

Marc Sidwell — Wed, 21 Oct 2026 16:36:16 GMT

At last – four years after the last Tory government approved it, the Jackdaw gas field will go into production later this month, improving our energy security and even reducing emissions (by cutting carbon-intensive LNG imports).

We shouldn’t stop there. As my colleague at the Centre for Policy Studies Sean Ridley wrote for CapX today, approving Rosebank will be a much bigger test of Labour’s willingness to put pragmatism over ideology.

In this week’s episode of The Capitalist, I sat down with David Frost, who negotiated the Brexit deal. Lord Frost says that as Andy Burnham talks of rejoining, it is time to launch a new campaign to keep Britain out of the EU. We also discussed the radical liberalisation our economy needs.

Elsewhere on CapX today, former Shadow Chancellor Mel Stride warns that whatever headroom John Healey sets aside next week, his Budget plans rest on unrealistic spending assumptions, leaving them incomplete and ultimately undeliverable.

And for more big thinking from the CPS, in association with Create Streets, see our Stat of the Day, on the millions of homes that could be built near stations and rail lines using low-quality green belt land.

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

Matthew Horwood/Getty Images

Why Healey’s Budget plans don’t add up

Mel Stride

‘The best course would be to grip spending, not least on welfare, and use the savings to cut the deficit and taxes on business, that essential engine of growth.’

As John Healey prepares for his first Budget next week, the markets will be watching closely. In all likelihood he will leave himself a very slender headroom, the smallest amount that markets will tolerate. Healey would be wise to reassure the markets further by at least signalling that significant welfare cuts are coming. But who would believe him? Read More

Ministers must stop stalling on Rosebank

Sean Ridley

‘The UK’s political class must realise that Britain needs to put pragmatism before ideology in its energy policy.’

The Government has finally approved the Jackdaw gas field in the North Sea after it was stuck in regulatory limbo for years. Now ministers must approve the more controversial Rosebank field as well. Together, both sites will boost tax revenue by £4.1 billion over the next decade, and support thousands of jobs. We cannot afford to let green ideology trump the economic case for more North Sea production. Read More

The Capitalist: David Frost on how to free Britain

This week on The Capitalist, I discussed with David Frost why Andy Burnham’s move towards rejoining the EU didn’t surprise him, why he thinks the stay-out side is at risk of complacency and why the campaign to keep Brexit’s freedoms needs to start now.

But much of the conversation was about what Britain has failed to do since leaving, and the ‘massive, massive liberalisation’ he says is needed. Frost resigned from the Johnson government at the end of 2021 because it wasn’t challenging the big-state, high-spend status quo. He sets out what he thinks has gone wrong: state spending well above early Blair-era levels, markets of every kind gummed up by regulation and the erosion of a shared national project. He also explains why neither the Conservatives nor Reform UK are yet going far enough, and what it would take to make the Civil Service serve ministers again.

Best of the Web

Why is Britain blocking AI?

Tom Ough, UnHerd

‘Even on environmentalist terms, then, the hunger for reliably-powered data centres ought to be harnessed rather than fought.’

Microsoft has pulled out of a data centre deal in Essex that would have hosted thousands of Nvidia chips. The project was initially announced and celebrated jointly by Donald Trump and Keir Starmer. It stalled and eventually fell through because the site couldn’t connect to the grid despite government support. To build twenty-first-century infrastructure, we need to learn from America’s simpler planning laws. Read More

Get the Brexit economic debate right

Ryan Bourne, The Times🔒

‘Brexit has certainly had significant net costs to date. But if we must debate the case for rejoining, can we at least explore the whole ledger?’

Andy Burnham wants to rejoin the EU. He has been boosted by a Goldman Sachs report which suggests we should aim to integrate more with the bloc, but it completely ignores the EU’s protectionist attitude to AI and the economic downsides that come with it. Brexit hasn’t been costless, but we need to explore all aspects of re-integration. Read More

What would a wealth tax actually raise?

By the Numbers

Next week, the UK government will announce its latest budget…

10 days ago · 81 likes · 39 comments · Hannah Ritchie

Stat of the Day

And if you want more...

– Redwood: Scottish independence is a mistake (ConservativeHome)

– How to save Grimsby (The Critic)

– Is France heading for another 1789? (Engelsberg Ideas)

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We'll be back tomorrow.

David Frost: the fight to stay out of the EU starts now

CapX — Wed, 21 Oct 2026 14:48:05 GMT

‘Most people believe we’ve been living in some sort of crazy neoliberal lab experiment for the last 40 years… And that’s because nobody has tried to challenge it.’

This week on The Capitalist, I spoke to Lord Frost, who led the UK’s Brexit negotiations and later served as Brexit minister under Boris Johnson.

We discussed why Andy Burnham’s move towards rejoining the EU didn’t surprise him, why he thinks the stay-out side is at risk of complacency and why the campaign to keep Brexit’s freedoms needs to start now.

Below, you’ll find some longer excerpts from the conversation.

Marc Sidwell
Editor, CapX

Don’t take Brexit for granted:

‘I think there is a real risk of complacency on the stay-out side now. I think there is an assumption that once people look at it, all this [the costs and conditions of rejoining] will come into play, but there will be arguments made on both sides. The strategic context has changed with Trump and with Putin, and with European defence and collaboration looking to many a more plausible proposition. So I think it would be a real risk to let Burnham do his worst and only then start campaigning… It is not enough to say, “Oh, it’ll never happen,” or “The British people don’t want to talk about it.” We will be caught on the hop.’

Why he left the Johnson government:

‘I have been disappointed. It’s one of the reasons I left the Johnson government all those years ago at the end of 2021, because I was uncomfortable that we were not seriously challenging the big-state, high-spend model. The previous Tory government didn’t challenge high spending, really. It got stuck on things like the Net Zero programme… We need a massive, massive liberalisation. None of that’s been done, and no real attempt has been made by anybody on the Right to persuade public opinion that it needs to be done. It obviously should have started five, six years ago. It should start now. That is the second-best time to do it.’

The ideas nobody has heard:

‘People have simply not heard these ideas for a very long time. Most people believe we’ve been living in some sort of crazy neoliberal lab experiment for the last 40 years and it’s time to get the state back into politics. And that’s because nobody has tried to challenge it. People on the Right don’t really want to do it. They don’t want to talk about the spending cuts that are necessary. They don’t want to talk about reforming the labour market again. But if they don’t, we are not going to solve the problems. That’s the basic difficulty. Therefore, they must.’

What’s gone wrong with Britain?:

‘One is we’ve just let state spending drift up too high. It’s 10 percentage points higher as a share of GDP than it was in the early Blair era. That in itself is enough to take 1% off growth, probably. Second, the markets are all gummed up. All our markets of all kinds are simply gummed up, over-regulated massively compared to where we were 20 or 30 years ago. The third bit of it, I think, is less economic and more cultural. I think it’s about the erosion of the sense of the British nation state’s political project – that we are all one country together, all pulling in the same sort of direction.’

The Right isn’t radical enough:

‘None of the parties on the Right are really pushing things enough. They’re not pushing solutions that are commensurate with the level of our problems… Similarly, Reform UK. I think it’s not enough just to suggest we can do this by removing benefits from non-Brits and migrants and so on. Obviously, it all helps, but we all know it’s not really the core of the difficulty… They need to find a way of being more radical, accepting that might come with a short-run political cost.’

No, Minister?:

‘This sense that the Civil Service is a kind of state entity in its own right, with its own role and own responsibilities to protect the constitution in some way – I think that needs to be killed off… We don’t need to tear it up and start again, but we do need to water down Northcote-Trevelyan quite a lot. We do need ministers to have real control… Simply ranting about the blob is not going to do it. It’s not like there’s some plot among the Civil Service to stop things happening. They are operating in a system where the incentives are less to serve the government of the day and more to do other things, and therefore you have to change the incentives.’

Build the grid (and make data centres pay for it)

Why small business has given up on Westminster

Marc Sidwell — Tue, 20 Oct 2026 16:37:29 GMT

Small businesses have given up on Westminster – and who can blame them?

That’s the message from polling by Opinium discussed by Robert Colvile in CapX today. By a margin of two to one, small firms feel the Government is not on their side, with more tax and more red tape every year. The remarkable thing is that despite it all, firms remain optimistic. Then again, they haven’t seen John Healey’s Budget yet.

In other news, the disastrous provisions of the Renters’ Rights Act are beginning to bite, as we repeatedly warned. A tribunal has decided to lower one tenant’s rent by £200 a month, after they challenged a £50 rise. The ramifications go far beyond one case: it puts landlords on notice that the rent is now whatever a tribunal decides. This won’t end well.

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

Why small business has lost faith in Westminster

Robert Colvile

‘There was a wider concern about the gradual, creeping spread of taxation and regulation – the fact that it seems to get more and more difficult to run a company every single year, in almost every single way.’

Small businesses are the engine of our economy, yet they don’t think politicians are on their side. From the high price of energy to Making Tax Digital, they feel under siege from an endless accumulation of added costs and regulation. Read More

Will Labour tax family firms into extinction?

Harry Phibbs

‘What could be more damaging to the social as well as the economic fabric of the nation than to single out family businesses for punishment? Yet that seems to be the idea.’

John Healey is considering a measure in his upcoming Budget that would impose higher tax rates when passing a family business on to the next generation, rather than selling it to strangers. Has the Government learnt nothing from the response to the family farm tax? Read More

Stat of the Day

Best of the Web

The UK government is living on borrowed time

Andy Haldane, Financial Times 🔒

‘In today’s straitened circumstances, the rightward fork is far more likely to succeed.’

In 2024, barely a vape wrapper separated the economic manifestos of the two main parties. Today, while Andy Burnham promotes 1950s-style state socialism, Kemi Badenoch is looking to the smaller state and lower taxes of the 1980s. The Conservatives’ plan is exactly what we need right now. Read More

Business is losing the argument for growth

Lynton Crosby, The Telegraph 🔒

‘The world many British businesses grew up in is not coming back anytime soon, if at all, but we can build a competitive economy people feel invested in, and a business community trusted because it has earned the right.’

Growth is vital to solve the economic problems we face. But somehow voters no longer see a link between a strong economy and their own living standards improving. That case urgently needs to be made, but business leaders are not doing a good job advocating for themselves. They need to reach out in a language that voters understand. Read More

Why data centres are good news for billpayers

Sam Dumitriu

Notes on Growth

Electricity demand from data centres is set to roughly double by 2030 in Britain. If forecasts are correct, they will consume almost as much electricity as the whole of Wales does today. It is easy to see why this isn’t an exciting prospect to the already-stretched lay bill payer. Yet data centres may be a blessing in disguise for the grid. Let me expla…

10 days ago · 25 likes · 3 comments · Sam Dumitriu

The Capitalist: Robert Tombs on Britain’s legacy

And if you want more...

– No to the ‘Common Good’ economy (City Journal)

– France’s coming bond crisis is a test for Europe (City AM)

– Is Mayor Mamdani a capitalist? (Civitas Outlook)

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Burnham has spotted the welfare pipeline

Or reply to this email to let us know your thoughts.

We'll be back tomorrow.

Just how bad is our tax system?

Marc Sidwell — Mon, 19 Oct 2026 16:30:13 GMT

Your taxes aren’t just too high – they’re also needlessly damaging.

My colleague Daniel Herring wrote for CapX today about the latest International Tax Competitiveness Index, which shows Britain languishing in 30th place. We may be doing better than France, which comes 38th, at the very bottom of the table, but that shouldn’t be cause for complacency. Since the index was created in 2014, our ranking on corporate taxes has dropped by eight places.

Even John Healey ought to appreciate the case for designing a simpler, better system that makes us more competitive. But with senior Labour figures like Louise Haigh calling for higher taxes on wealth, which would push us even further down the rankings, don’t expect any improvement at the Budget.

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

Ian Forsyth/Getty Images

Bad taxes are damaging the economy

Daniel Herring

‘Sadly, chancellor after chancellor has been unwilling to take the steps needed to fix our tax system.’

This year’s International Tax Competitiveness Index is a disappointing read for the United Kingdom. The way we raise taxes is far too economically damaging – and getting worse. It doesn’t have to be like this. There are plenty of ways to raise the same amount of money without harming the economy as much. The Chancellor should focus on simplifying the tax system. Read More

The UK was an energy superpower. What went wrong?

Sebastian Charleton

‘If global fuel supplies ran short tomorrow, could we keep the lights on? In Britain today, the answer is not a straightforward yes.’

This country used to be the original energy superpower, the birthplace of the Industrial Revolution. Today, a sclerotic planning system has left our infrastructure crumbling, while our energy bills keep getting higher. We have one of the most vulnerable energy systems in the G7. We need to gut the planning friction that paralyses infrastructure development and we need to build up a nuclear energy fleet. We can’t rely on renewables alone. Read More

Stat of the Day

Best of the Web

AI is blowing apart the case for Net Zero

Ross Clark, The Spectator

‘Thanks to renewables and a grid which is inadequate to handle them, we have expensive, intermittent electricity.’

There was a time not so long ago when green jobs were going to replace all the dirty old jobs. In the age of AI, which is attracting so much investment, it’s neither realistic nor practical. If Britain wants to be a big player in AI it needs a lot of reliable power, which intermittent renewables can’t provide. Needless to say, this is not what Ed Miliband wants to hear. Read More

Capital really is leaving Britain, whatever the Left says

Brian Monteith, The Telegraph 🔒

‘Simply put, we cannot keep voting for governments that punish success or we all become losers.’

Millionaires and billionaires are leaving the UK in droves. In 2024 and 2025 we lost almost 30,000 liquid millionaires. A lot of them will have gone to Dubai, which has seen British membership of its Chambers of Commerce skyrocket. This can’t go on. It leaves those of us still here paying ever-higher taxes even while public services inexorably decline. Read More

Can we fix the scandal of teenage PIP?

Fraser Nelson's notebook

The Times Welfare Inquiry launched last week with major stories and interviews every day. And in today’s newspaper there’s a follow-up element we weren’t expecting: an OpEd from the Prime Minister outlining his thoughts on welfare. It splashes today’s paper. Reading the piece, it’s quite Milburnesque - an encouraging sign that he may take welfare reform…

12 days ago · 63 likes · 16 comments · Fraser Nelson

The Capitalist: Robert Tombs on Britain’s legacy

And if you want more...

– How a Ukrainian ‘startup’ sank Nord Stream (Engelsberg Ideas)

– When rabbits were a royal luxury (The Conversation)

– We have to make people care about economic growth (The Critic)

Can we make CapX better?