We also featured Shadow Work and Pensions Secretary Helen Whately on the truth about youth unemployment: Britain has lost 1.6 million lower-skilled jobs in twenty years, and no amount of training schemes will help if there’s nothing to train for.

Tim Knox and Nada Kakabadse counted 17 attempts to reform Whitehall since 1968, and found that not one has made a lasting change. Their piece explains why the machine always wins – and how to finally beat it.

Elsewhere this week: Ben Ramanauskas on how Buy British could kill Burnham’s EU dreams; Roger Partridge on the growth lesson from Down Under that Labour refuses to learn; Neil Garratt on why you can’t outrun the Westminster bubble on a Pendolino; and Jimmy Nicholls on why Sadiq Khan is right to take on London’s fun police.

Marc Sidwell
Editor, CapX

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Manchesterism’s first big test is the bond markets

John Penrose

Here it comes again. Whoever Andy Burnham chooses to be his Chancellor of the Exchequer will face the same challenge as all their predecessors since Gordon Brown: producing ‘fiscal rules’ to reassure the City they will be prudent holders of the nation’s credit card.

With Britain’s national debt higher than it’s been for decades, and some marmalade-droppingly-naïve recent comments from Our Andy about funding defence spending with ‘war bond’ borrowing and not being in hock to the bond markets, the new rules will be a crucial early test of Manchesterism’s credibility. If he gets it wrong, Burnham’s eyelashes will sit alongside Liz Truss’ lettuce in pub quiz ‘odd one out’ rounds for years to come.

Burnham’s team clearly recognise the danger, and have moved to calm bond market fears by bringing heavyweight former Bank of England and Goldman Sachs economists Andy Haldane and Jim O’Neill into the team, and committing to keep Rachel Reeves’s fiscal rules unchanged.

The problem is, choosing the loosest fiscal rules the bond markets will let you get away with isn’t the same as choosing the best rules to get Britain’s economy moving again. It’s the difference between scraping a pass in a few of your GCSEs, or acing them all with a string of grade 9s.

Which fiscal rules would give Britain that string of economic 9s? We should start by following the ‘golden rule’ of sustainable government finances, by only borrowing to invest in building new infrastructure which can be used by future generations, rather than to fund day-to-day spending instead. Rachel Reeves’s current rules promise to do it, but only as a ‘jam tomorrow’ pledge to be delivered in 2029, which means any hard decisions get postponed and it’s a rule with no teeth. An economically-serious Chancellor would publish a straight-line set of annual deficit cuts to bring day-to-day spending under control, so businesses and public services can plan ahead and investors know the difficult stuff won’t be ducked or put off.

Next, Andy Burnham’s new Chancellor should start controlling the red tape costs of any new laws and quango-imposed regulations by including them in the fiscal rules, treating them as seriously as traditional government spending for the first time ever. Every pound of red tape costs Britain’s economy the same as a pound of tax, so finding cheaper, more digital and less bureaucratic ways to deliver unchanged quality standards for our housing, businesses, workplaces and countryside would mean faster economic growth at zero cost to taxpayers.

Last but not least, any economically-serious new Chancellor must grip the huge and currently-hidden long term IOUs we’re handing future generations of taxpayers to look after our ageing population, by including the costs in the fiscal rules for the first time too. That means publishing annual government balance sheets of Taxpayer Net Worth, with a commitment to cut the net liabilities by a minimum amount each year until they are gone.

Finally, Manchesterism should lock in these new rules by embedding them in an Act of Parliament so they become legally binding and can only be changed with Parliament’s consent. There would be built-in stabilisers to cope with recessions or emergencies like pandemics or wars, but otherwise these much stronger and permanently-stable controls would cut the costs and risky uncertainties of investing in Britain. In a single stroke, they’d hugely improve our reputation as a safe, stable, commercially-attractive place for jobs, investment, wealth-creation and business growth.

These fiscal rules would put our economy on the best possible track, so Britain’s jobs, investment and exports all grow faster. But it’s a politically-steep and rugged pathway, instead of the wide, smooth, easier road to long-term mediocrity of doing the bare minimum the bond markets demand. Does Manchesterism have enough Northern grit and ambition to deliver what’s best for Britain? We’re about to find out.

And if you want more…

– The kind of entrepreneur Britons love to hate

– Pay up – or we’ll blow you out of the water

– Is Burnham just Blair in a T-shirt?

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Max Young took a detailed look at the team behind Andy Burnham, Starmer’s putative successor. His conclusion of what they will offer is discouraging:

If Brits weren't sweating about what a Burnham premiership could be, they definitely were about the weather - especially if they had to catch an overheated and overcrowded train. Tony Lodge argues that more competition is needed on the railways. He highlights statistics which show that is the way to boost ridership, deliver value for money fares, create more services and get more trains built isn't Labour's nationalisation agenda, but competition and private investment.

Elsewhere this week: Jamie Whyte on why Labour’s misguided egalitarianism is about to get worse; Dalibor Rohac explains that to compete with the US on AI, the British need to cut energy bills; Matthew Elliott declares that the economic case for Brexit still stands but there is clearly more to do; Peter Young warns that Labour’s new insourcing policy is a capitulation to the public sector unions; and Ted Newson reflects that true Manchesterism was everything Burnham opposes.

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We will miss Keir Starmer

Maxwell Marlow

The Greek poets understood that the cruellest fate is not the one a man brings upon himself, but the one that was waiting for him before he arrived. Oedipus did not choose his fate, indeed he walked into it with the very best of intentions. So too, in his quieter and more lawyerly fashion, did Sir Keir Starmer.

Since last November, it has been common at dining tables, amongst friends hanging outside of ever-dearer pubs, and amongst the political class to list off the charge sheet against our departing Prime Minister. The dozens of U-turns, the adenoidal communications strategy and over-insistence on either breakfast clubs or having ‘full confidence’ when you have nothing of the sort, the chopping and changing of civil servants (from the disgraced Peter Mandelson to the Mandarins who Starmer accused of covering up universally known truths). Even his right-hand woman, his sentient flak jacket Rachel Reeves, has received the same ridicule. One of my less politically engaged friends only knows her as ‘the crying one’; it is the misery of the forlorn fate hanging over this government which has been so tragic to watch. And yet it feels inevitable.

But to dwell on these charges is to mistake the symptom for the disease, and to flatter ourselves that some bolder, luckier, less tin-eared man might have slipped the noose. The office Starmer accepted in July 2024 was, on any honest reading, close to ungovernable given the options at the last election of a full suite of establishment, derivative career politicians. We owe Starmer at least the decency of admitting it.

We can best see this in the lack of planning in the run-up to the election, and the essential belief that Whitehall would snap into order because ‘the good people will be in charge’. He promised to make Britain the fastest-growing economy in the G7; the IMF has since cut our 2026 growth forecast to 0.8 per cent, which is the steepest downgrade of any G7 nation. The tax burden is at its highest level on record. Some £75 billion of new taxes have been loaded onto businesses and households, the largest such raid in the G7. He promised that ‘politics would tread lightly on our lives’, only to shepherd through a new smoking ban, a social media ban, a free speech crisis, higher taxes on gambling and hospitality. The list goes on.

This Road to Serfdom is felt amongst almost all political quarters – nobody is happy, other than the central political class, which has come to be a synonym for Starmer’s government. The ideas that have come to make Starmer so derided are not those of the trade unions or the result of overly woke academics or activists. The march of insanity that was the Chagos debacle, the Assisted Dying debate which was so divorced from expert testimony, and now the popularity of those politicians and ideas which are defined for their non-Whitehall origins (of Andy Burnham and Nigel Farage), are all defined by the centrality of the Whitehall mindset losing its effectiveness. Starmer and co are entirely signed up to this habit of thinking.

Here, if anywhere, is Starmer’s true flaw — and it is not the one his critics name. He believed that competence and ‘stability’ could substitute for a theory of growth. You do not manage your way out of a structural crisis. He arrived with a temperament where better concepts of economics should have been. The bond markets, the OBR, a manifesto vow not to tax ‘working people’, and a parliamentary party with the collective survival instinct of a lemming saw to the rest.

In May, Labour shed more than 1,100 council seats whilst the heterodox Reform took some 1,450. More than eighty of his own MPs called for him to go immediately and Wes Streeting walked out of the Cabinet in protest. Now, Andy Burnham, the great hope of the Labour left despite his neoliberal governing record in Manchester, takes his seat in the Commons, and in all likelihood the keys to a house that is already ablaze. His party has concluded that the remedy for failing at growth is to install a man who will fail at it faster, and with far greater conviction.

We do not yet know what Burnham would bring to the table – we have an idea of what his Cabinet will look like, with Wes Streeting touted to be Chancellor of the Exchequer in order to placate the Labour Right, and Ed Miliband moved into MHCLG in order to kick-off a nationalised housebuilder by purchasing the troubled Vistry, whilst DESNZ plumbs Rosebank away from ‘Red Ed’s’ gaze. But on the big structural questions, which have doomed Prime Ministers from Theresa May to Starmer, we are left clueless.

We will miss Keir Starmer. He was misguided from the beginning, and commanded a disaffected majority in the Commons and in the country. He, nonetheless, did his best within the structures that his training in governance allowed him, and was held hostage by his backbenchers. For the chaos that comes next, let’s hope the Bond Vigilantes take mercy on us all.

And if you want more…

– Who will be the next Chancellor? (Damian Pudner)

– What the Left doesn’t get about investment (Mani Basharzad)

– A step forward for free speech in our universities (Freddie Attenborough )

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We also featured former Chief Secretary to the Treasury Steve Barclay with an insider’s perspective on how Keir Starmer could choose to fill the gap in defence spending without raising taxes – if he had the political will.

John Wills offered a bold plan to fix social housing that would go further than the Thatcher-era Right To Buy programme and literally give council homes away. It would still end up costing us less than the current system.

Elsewhere this week: Alan Hibben on the tribunal trap; Tom Willerton-Gartside from Looking for Growth on their new Bill to stop Net Zero costing you a fortune; John Penrose on devolution’s dirty secret; James Price channels Stalin on drone warfare; and Stephen Pollard on the real reason the Left don’t want Palantir to save the NHS.

Marc Sidwell
Editor, CapX

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Andy Burnham is coming for Downing Street. Be afraid

Gawain Towler

The numbers are not in dispute, whatever the spin. Andy Burnham took Makerfield with 54.8% of the vote and a majority of 9,231, on a turnout of 58.7%, the highest at any parliamentary by-election in almost seven years. Labour’s lead over Reform UK, 13 points at the general election, widened to 20. A seat Reform had swept only weeks before, taking all eight of its wards in the May locals on close to half the vote, delivered a thumping Labour win. So what happened?

The first answer is the simplest, and the one Reform will least want to hear. It was Andy. Not Labour, Andy. He fought the seat as a Christian name, ‘Andy, For Us’, complete with cartoon, Oasis track and the now-celebrated running shorts, and his canvassers were perfectly open on the doorstep that a vote for him was a vote to be rid of Keir Starmer. That is a remarkable thing for a Labour candidate to say about a Labour prime minister. It worked, because Burnham holds the one asset almost nobody else on his side still owns: he is a Labour man untainted. He spent the wreckage of the last two years in Manchester rather than the Cabinet, and the failures of a decade of opposition belong to other people. He is the King of the North precisely because he has never had to run the country.

Which gives the campaign its central irony. Burnham’s explicit pitch was to remove the Prime Minister; Reform’s entire effort went into stopping Burnham; and so Reform, a month after winning every ward in the seat by promising to throw the Government out, spent June implicitly working to keep Starmer in. The appetite for change had not faded. It had simply found a more plausible vehicle. That is the messenger problem in its purest form. The same message that carried Reform in May carried Burnham in June, because in a straight fight for the anti-Westminster vote, the King of the North will beat a local plumber with a difficult social media history every time.

And this is the part that should trouble Reform more than the scoreline. They did not lose for want of effort; by every account the ground game was relentless. They lost for want of preparation and data. Simons’s resignation was choreographed weeks in advance, which meant Burnham entered the short campaign with his voter identification done, his targets mapped and his machine already warm. Reform arrived with all the enthusiasm of the council sweep and none of the infrastructure beneath it. Enthusiasm wins wards. It does not, by itself, win a parliamentary seat against a professional operation with a head start.

Two things finished the job. The first was a disciplined social-media operation by Labour and the wider Left aimed squarely at women, and it told: Reform-leaning female voters peeled away, scarcely helped by a Reform candidate whose unearthed posts about women had become a national story. The second was the now-familiar sight of the Left coalescing, exactly as it did in Gorton and Denton. The Greens quietly scaled back to give Burnham clear water, the Liberal Democrats were crushed to 163 votes. The Conservatives, too, all but disappeared, every tactical instinct in the seat pointing the same way.

Then there was Restore. Rupert Lowe’s new outfit, slick on Musk’s X and cheered on by the owner himself, took 6.8% and, more damagingly, took Reform’s eye off the ball. Much of Reform’s closing energy went not on Burnham but on a war on its own flank, leafleting that Restore ‘can’t win here’ and briefing against it in public. Reform and Restore between them polled 41.3%. Divided, it bought them nothing. The Right did not lose Makerfield for lack of votes. Well it did, but it also lost because it spent the final week shooting at itself.

What should worry CapX readers, though, is less the autopsy than the prospectus. Burnham now has his seat and, with it, a live run at Number 10. Look at what he is actually offering. He insists he will keep Rachel Reeves’s fiscal rules, which means the arithmetic does not move. Burnham may, like a certain kind of politician, profess not to care about the bond market. The bond market, unfortunately, cares a great deal about him. Denied the room to buy off the Left with money, he will buy it off with culture instead.

Expect, then, two years of red meat hurled to the hard-left benches: partly to placate MPs spoiling for a fight, partly to recover the Green defectors at a moment when the Greens look to be busily eating themselves. The tells are already there. A Government in this position supports assisted dying. It reaches for ever-tighter control of the internet in the name of safety. It hunts the cheap and divisive win because the expensive and unifying one, growth, is off the table. The danger of a Burnham premiership is not that it would be radical on the economy. It is that, barred from being radical on the economy, it would be radical on everything else.

Reform will tell itself Makerfield was a candidate problem. In part, it was. But the deeper lesson is the one the Right keeps declining to learn: enthusiasm is not organisation, and a movement that cannot count its own voters, or stop fighting itself, will go on handing seats to the best-prepared man in the room. On Thursday that man was Andy Burnham. We may all live to regret how good he is at this.

And if you want more…

– What Clarkson’s Farm reveals about rural Britain (Arthur Reynolds)

– Labour fail the defence test (Eliot Wilson)

– AI could fix policing. Politicians won’t let it (Ian Acheson)

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It makes a good counterpoint to the week’s domestic politics, in which Andy ‘business-friendly socialism’ Burnham and his campaign in the Makerfield by-election continued to loom large. In this week’s Nimby Watch, James Ball catches the Labour leadership frontrunner running against his own pro-housebuilding record.

This week we also said goodbye to deputy editor Joseph Dinnage, who signed off with a column on why our politicians are still refusing to make the hard choices that would get Britain growing. Joe will continue to write for us, so you can look forward to more lines like this:

Elsewhere this week: Glyn Morgan on what America’s predatory mercantilism means for Europe; Mani Basharzad on defending economic liberalism against the new market authoritarianism; Maxwell Marlow on the epidemic of illicit cigarettes killing Britain’s high streets; Shimeon Lee on a benefits system spiralling out of control; and Nima Sanandaji on why Sweden was never the high-tax poster child the Left claimed.

Marc Sidwell
Editor, CapX

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SpaceX is capitalism’s greatest vindication

Reem Ibrahim

Elon Musk’s SpaceX has launched the largest ever public offering of stock today, selling $75 billion worth of shares.

SpaceX emphasised its remarkable achievements in its IPO filing: ‘We are the primary launch provider for the US government. In 2025, we launched 11 of 12 National Security Space Launch (‘NSSL’) medium and heavy lift missions and all five U.S. crew and cargo missions to the International Space Station for NASA.’

The company is best known for building reusable rockets, and for dramatically reducing the cost of satellite production and rocket launches. Since 2023, SpaceX says it has launched more than 80% of the world’s mass to orbit each year, with an over 99% mission success rate on its Falcon rockets. Certainly an extraordinary achievement for a private company in a sector once dominated by government space agencies.

However, its business activities extend far beyond launching satellites and cargo into orbit. Through Starlink, its low-Earth-orbit satellite internet network, the company has become a leading provider of telecommunications infrastructure. SpaceX has over 9,600 Starlink broadband and mobile satellites in low-Earth orbit, providing internet connectivity to approximately 10.3 million Starlink subscribers across 164 countries, territories, and other markets.

This technology has proven to be invaluable in moments of crisis. When authoritarian crackdowns or internet shutdowns occur, satellite broadband can offer one of the few remaining ways for civilians, journalists, dissidents, and aid workers to communicate with one another and the rest of the world. As Al Jazeera reported, when the Iranian government briefly cut off internet access last year, Starlink was used by citizens to tell the world what was happening.

SpaceX is a company sitting at the intersection of defense, communications, and extraterrestrial exploration. It is no wonder investors are excited.

The largest IPO of the year ahead of SpaceX was chip maker Cerebras, which has created a Wafer-Scale Engine that contains 900,000 AI-optimised cores and has revolutionised the speed at which artificial intelligence models can be trained and run. Its shares were priced at $185 and closed their May 14 debut at $311.07, a roughly 68% jump that gave the company a market capitalization of about $66.95 billion. Certainly a sign of the kind of investor appetite SpaceX is hoping to tap into.

Musk has indicated that he hopes to allocate a larger portion to individual investors, and so far, individual investors alone have requested more than $70bn worth of SpaceX shares. Over $1bn has been requested from a single family office investor, and requests have come from sovereign-wealth funds. Large asset managers have also shown interest, with BlackRock placing an order to buy at least $5bn.

That level of demand is striking not just because SpaceX is large, but because of what SpaceX represents: the triumph of private enterprise in an industry once dominated by the state. For decades, space exploration has been treated as government territory. Rockets were built through sprawling procurement systems, launches were ruinously expensive, and progress moved at a slow pace.

However, this was not always the case. As Rainer Zitelmann argues, in the early 19th and 20th centuries, early forms of space exploration (namely, the building of space observatories) were typically privately financed. ‘In a sense, the state-dominated Space Economy of the mid-to-late 20th century was the exception, and the recent rise of private space entrepreneurs can be seen as a return to the historic norm.’

SpaceX has embraced private capital and relentless experimentation. It has revolutionised the entire industry in ways that the state has not.

That is the real significance of this IPO. SpaceX is not just selling shares, but it is offering public markets a stake in one of the greatest capitalist success stories of the 21st century. The company’s rise is proof that free markets are not merely good at producing things people consume directly. Free enterprise can transform civilisation-defining industries.

SpaceX now launches national security missions, carries astronauts, connects remote communities to the internet, helps people communicate during crises and pushes humanity closer to exploring the universe.

Whether SpaceX can justify its extraordinary valuation remains to be seen. What is already clear, however, is that activities once assumed to be the natural domain of government can often be done better, faster, and more ambitiously through the dynamism of capitalism and the brilliance of entrepreneurs.

SpaceX is a lesson not only in what markets can achieve, but a reason to ask where else the government should get out of the way.

And if you want more…

– Reeves is closer to an IMF bailout than she thinks (Damian Pudner)

– What the World Cup tells us about free trade (Ben Ramanauskas)

– The £1,000 rule killing Britain’s cake sheds (James Hodgkinson)

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Later in the week, John Penrose wrote his column on Burnham’s comments on the unfairness of Britain’s tax system. Burnham’s right – our tax code does need an overhaul – but he’s right for all the wrong reasons.

And now for something completely different. Speaking at London’s SXSW festival earlier this week, former First Lady Michelle Obama told young people to toughen up and accept the fact they might not enjoy their first job. I agree, and in my column I argued that by basing its employment rights legislation on the demands of teenagers, the Government has discouraged businesses from hiring them.

CapX also covered a number of other stories this week. Free speech campaigner Freddie Attenborough argued against the Government’s decision to ban US left-wing commentators Cenk Uyghur and Hasan Piker from the UK; Matthew Bowles wrote about Labour’s cowardly approach to planning reform; and Anne Strickland discussed the financial questions that need to be asked about the Government’s counter-terrorism programme, Prevent.

My favourite piece of the week was by Erik Lidström, who wrote about the evolutionary reasons behind the Left’s antipathy to free markets. You can read it in full below.

It is also with a heavy heart that I announce that this will be my final Weekly Briefing, as I am leaving CapX next week. It’s been a pleasure, and whatever you do, be sure to keep reading Westminster’s finest opinion site.

You’ll also find some of our other favourite pieces from the week.

Joseph Dinnage
Deputy Editor, CapX

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Why the Left can’t stand free markets

Erik Lidström

At its heart, the reason is a fundamental mismatch between our hunter-gatherer brain and the market economy. Up until a relative blink of an eye, humans lived as hunter-gatherers for close to 2 million years, some 70,000–80,000 generations, successions of mothers and fathers, sons and daughters. For at least 150,000 years, our ancestors were exactly like us and lived in groups of 20–70, within tribes, whole countries, of about 500.

There was a strict division of labour, where men hunted, while women mainly gathered, looked after children and cooked. Big-game hunting and gathering not only provided different sources of food, but they were also subject to two different rules for sharing. Big-game hunting is hit and miss in the most literal sense. Big games are large, high-variability resources, and in all hunter-gatherer tribes, they are shared equally, according to strict rules. Woe betides the successful hunter who keeps more than his predetermined share. He faces ostracism or worse. Gathered food is not subject to such variability, and no one, except certain kin, has any right to what a woman gathers.

In countries of some 500 people, there existed two kinds of social coordination. First, the intuitive ones between people who know each other. Secondly, in smaller and larger groups, we can also deliberately organise ourselves, using bureaucratic rules. Both modes of organisation, and particularly the first one, constitute our human micro-cosmos.

We no longer live as hunter-gatherers, and our societies now consist of tens of millions in a world with over 8 billion inhabitants. Within a market economy, there is a third kind of coordination, based on three rules that David Hume pointed out: secure property rights, that we may freely buy and sell products and services and that contracts are respected. With these three rules in place, we may interact with people whom we have never met, or even know exist, on the other side of the planet.

These three rules hold sway in our macro-cosmos and create what Adam Smith called a Great Society. Friedrich Hayek gave the self-organisation of the market and beyond the name the extended order.

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a month ago · 1 like · CapX and Marc Sidwell

The market is an example of a Complex Adaptive System (CAS), a complex system that can learn and adapt. Other examples of CASs are flocks of birds, schools of fish and anthills. There are no ant CEOs, ant managers or ant accountants. Nor is there an ant ‘hive mind’. There are just ants, walking about doing ‘ant things’, and the result is the ant hill.

This is where the hunter-gatherer brain and the workings of a free society collide. First, the Great Society ‘does not compute’ to the hunter-gatherer brain. Second, we have this innate rule that external high-variability resources should be shared equally. For such resources, as for big-game hunting, there is no causal link that can be identified between effort and reward. You may work 80 hours per week for years to start a business and fail, or you may work equally hard and have a runaway success. Or you may not work that hard, but even so, ‘strike oil’ and make it big, because you had some idea or noticed some opportunity. No one can determine ‘the merit’ of anyone in the Great Society.

Through cultural learning, we may learn and accept the appropriate behaviour in the market, and the way the economic game is played and acknowledge that the outcomes are based on a combination of skill and luck. Experience, as well as insight from authors such as Adam Smith, will also tell us that if we leave this chaotic thing, which is the market economy, to its own devices, incredible prosperity will be generated for society as a whole, but without anyone being able to predict individual outcomes. We may, therefore, mainly through culture, move away from our innate hunter-gatherer gut feelings towards that bourgeois culture that created our flourishing societies.

Others, such as students, journalists, politicians and academics, who are not participants in the market economy and who, as a result, lack the appropriate culture and insights, will instead obsess about Gini coefficients, high salaries, bonuses, windfall profits and the like, just like a group of hunter-gatherers obsesses about the equal sharing of a newly felled gnu.

And if you want more…

– Why Thatcher still matters today (Robert Colvile)

– Britain needs to build better (John Myers)

– The trillion-dollar opportunity in outer space (Rainer Zitelmann)

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We’ll be back next week.

Benjamin Elks of the Taxpayers’ Alliance wrote about how we measure the size of the state. He argued that current metrics only tell part of the story. Sitting outside the official figures are a swathe of groups that rely on the public purse for a significant portion, and sometimes all, of their income – charities.

Is banking reform Rachel Reeves’s greatest achievement yet? Writer Graeme Orchard thinks so, who argued that the Chancellor is absolutely right to pursue serious, common-sense reform of ring-fenced banks in order to free up capital for investment in British businesses.

The economist Samuel Gregg – who appeared on this week’s episode of The Capitalist – wrote about the British Right’s embrace of industrial policy. He argued that this is a mistake, and that industrial policy would embed cronyism and malinvestment into our economy.

And finally, my favourite piece this week was written by CapX columnist Damian Pudner, who wrote about the British public’s impatience with our political status quo. You can read the piece in full below.

You’ll also find some of our other favourite pieces from the week.

Joseph Dinnage
Deputy Editor, CapX

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The status quo is dead

Damian Pudner

This week I was fortunate enough to sit down with the Rt Hon Liz Truss. We discussed the usual things you expect. The state of the UK economy, the Bank of England, the Civil Service, and to quote Truss, how ‘Power was taken from the elected and given to progressive bureaucrats and judges’. I must admit I found our conversation refreshing.

So let me be just as direct. British politics has reached a point where the old arguments no longer work and the old settlement is visibly falling apart.

For 30 years, the British state has expanded on the misguided assumption that someone else would always pay. Taxpayers. Bond markets. The next generation. That growth was always just around the corner. That all we needed was more spending, more regulation, more quangos, more debt, more promises. And that the productive part of the economy – the private sector – would simply absorb it, that bond markets would keep lending to us, that the public would keep accepting the situation.

Well, they won’t. And deep down, everyone in Westminster knows it.

Tony Blair’s intervention this week is enlightening – not because Blair has suddenly become a convert to a small-state and free markets, he very much hasn’t – but because even the man who built managerial Britain can see the public is calling time on the politics of the uniparty. Even Blair now concedes welfare spending can’t keep going vertical, that the Civil Service is bloated, inefficient and too costly, that government spending generally is not sustainable.

I’ve spent enough time on trading floors, watching gilt markets price sovereign credibility in real time, to know that any politician who thinks bond markets don’t matter is making a very expensive mistake. The problem isn’t necessarily that Britain is about to run out of money. It’s not. The problem is that Britain is institutionally dishonest about what is required to put it on a sustainable debt path. The state hides trade-offs behind all kinds of fiscal illusions. Voters are told they can have everything they want – entitlements are preserved, services expanded, risks socialised – and that elusive growth or wealth taxes will somehow cover it. They won’t. We seem to have normalised bad economics. Gary Stevenson would be proud.

To cut through the misrepresentation, we need radical transparency. People need to know what welfare, pensions, debt interest and healthcare actually cost per household. What each pound of public spending delivers. Know where their hard-earned money gets wasted on process, bureaucracy, and compliance rather than reaching those who need it.

This is exactly what a new group called the Great British Think Tank, for which I am a senior research fellow, is doing – taking the political spin out of the figures and showing the public the real, no-nonsense picture. And the public, it turns out, can handle it. They’re not children, but they’ve been treated like they are for too long.

We need a reset. The state cannot subsidise every lifestyle, remove every risk, guarantee every income, underwrite every failure and still leave space for an economy that actually grows. At some point a society has to be honest about the difference between a genuine safety net and a system that has drifted into subsidising dependency.

Politicians know this. They just won’t say it, because saying it costs votes in the short term. The result is that we get stuck in stasis, in a slow, painful managed decline. One of high taxes, weak growth, rising debt, deteriorating public services and an electorate that is losing faith in institutions at a rate that should alarm everyone in SW1.

Welfare reform must re-establish the incentive to work – and not apologise for it. Planning reform must put housebuilding and infrastructure as the number one national priority. Fiscal reform must impose real discipline on a state that has lived beyond its means for decades, and at an ever-increasing rate.

The latest iteration has failed on every measure it set for itself. It promised competence. It delivered paralysis. It promised fairness. It delivered a scale of intergenerational inequality that will take decades to unwind. It promised expert management of the economy and gave us the highest inflation in 40 years followed by stagnation.

Time is running out for the political status quo. And the public, I suspect, is far ahead of Westminster on this.

And if you want more…

– How ‘distributionalism’ killed long-term policymaking (Mani Basharzad)

– The Nimbys have conquered Peckham (James Ball)

– We need a new Europe to save Ukraine (Ján Figel)

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We’ll be back next week.

Helen Whately, Shadow Secretary of State for Work and Pensions, wrote about the Government’s abysmal record on welfare reform, pointing out that there was no commitment in the King’s Speech to bring down this soaring bill.

Speaking at an event at the Centre for Policy Studies this week, Shadow Chancellor Mel Stride discussed Labour’s economic mismanagement and the cost of Andy Burnham’s leadership ambitions. You can read the transcript on CapX.

On Thursday, the Office for National Statistics released its latest migration data, showing a drop in net migration to 171,000 in 2025 – the lowest year on record (outside of Covid) since 2008. Karl Williams argued that Shabana Mahmood must not rest on her laurels, as the impact of recent demographic change is still there for voters to see.

And finally, has the Government finally gone totally mad? Maybe so. This week, it was reported that Rachel Reeves is considering imposing price caps on certain goods in supermarkets to compensate for so-called ‘price-gouging’. As Andrew Lilico argued, price caps never work. You can read his piece in full below.

Below you’ll find some of our other favourite pieces from the week.

Joseph Dinnage
Deputy Editor, CapX

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Price caps never work

For thousands of years, governments have been tempted to respond to inflationary pressures by imposing caps on prices. Diocletian’s AD 301 Edict on Maximum Prices is a famous early example, but there were repeats throughout the ages. By the 1970s, prices and incomes policies were being used by many governments to try to counter inflation. And this has not been solely a practice of left-wing governments. In 1982, the right-wing National Party Prime Minister of New Zealand, Robert Muldoon, announced a nationwide freeze on wages and most prices, which lasted for the next two years.

It sounds so simple. If consumers are suffering because prices are going up, then forbid that. Who could object, beyond greedy firms profiteering by pushing prices up? This notion that price rises are ‘profiteering’ or ‘price gouging’ has in recent years become particularly associated with the supermarkets sector. There were complaints of profiteering when supermarkets raised the prices of products that ran out or ran short during Covid, such as hand sanitiser. In the US, alleged ‘price gouging’ by supermarkets and how to curtail it was a significant plank of Kamala Harris’ 2024 Presidential campaign. Similarly, New York Mayor Zohran Mamdani is establishing a system of state-owned (specifically, city-owned) supermarkets in response to what he describes as ‘price gouging’.

A key SNP manifesto pledge for the 2026 Scottish Parliament elections was that it would impose a legal cap on 20-50 essential everyday items sold in large supermarkets. Now it appears the UK Government has been negotiating a similar arrangement, seeking to get supermarkets to agree to caps on the prices of 20 items in exchange for some temporary relaxation of cost-raising regulations.

The talk of ‘price gouging’ or ‘profiteering’ is rather revealing. The thought seems to be that supermarkets have raised prices in response to the shocks of recent years – Covid, the energy price shock following the Russian invasion of Ukraine and now the Iran war. These price rises have maintained supermarket profits and in some cases may even have increased those profits. This is somehow regarded as unjust.

In economic theory, ‘price gouging’ has no specific technical meaning. However, the scenario in which economists would generally be most sympathetic to restrictions being imposed on something describable as ‘price gouging’ would be roughly as follows. Imagine there has been some natural disaster such as an earthquake, and that this disaster has destroyed most of the productive capacity for an industry – e.g., suppose there were only one beer production plant left. Then the remaining producer has temporary monopoly power. Prices of beer will naturally and appropriately rise because of the shortage – economists would not accept that being legitimately criticised as ‘price gouging’. But in addition to this natural shortage-driven rise, there is also the potential for a further rise associated with the newly-obtained significant market power of the one remaining beer producer.

Let us be clear here: most economists – perhaps even the overwhelming majority – would argue that price controls would be a mistake even in this case. Allowing the monopoly pricing would provide very powerful incentives for new production to be set up, speeding the process of recovery and getting production back to normal. Capping prices would reduce incentives to restore production and perhaps mean recovery was much slower. Nonetheless, even many economists that felt price caps were a mistake in this situation would at least concede that they had a meaningful rationale: the curtailing of temporary market power.

But what conceivable rationale could there be for capping supermarket prices in the UK today? The groceries sector has been subjected to multiple reviews – frequently on the basis of claims that its prices are too low (because supermarkets exploit monopsony (big buyer) power to squeeze prices to their suppliers such as farmers. No monopoly power has ever been identified. Supermarkets are highly competitive.

Indeed, large supermarkets are a marvel of the modern age, on a par with wonders such as the Internet. We have a cornucopia of goods available, allowing us to buy almost anything we could want in multiple variants, from around the world. These are provided to us via the automatic responses of thousands of economic agents to thousands upon thousands of prices, in a web of interactions far beyond the ability of any human mind or machine to duplicate. Tampering with that process is so obviously potentially harmful that only a fool, or a desperate politician, would contemplate it.

Andrew Lilico

And if you want more…

– Nimbys are holding back British tech (James Price)

– How Big Consulting captured the British state (Katie Carruthers)

– Why elites fear common sense (Frank Furedi)

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We’ll be back after the Bank Holiday.