CapX, London (2025)

10/12/2025

Rents go up and up and up. That is how most young people view their lot in the property market, particularly in London. A steady, year-on-year increase in rent eats up any increases in wages they earn and more. If you look at the statistics over the past few years, they’re right to think this.

A student who graduated in 2022 and moved to London will have seen their rent increase by around 28% over the past three years.

A 60-year-old running a firm with a London office would notice that his net effective rent is nearly as low now as it was back in 1990, 35 years ago. In contrast, 1990 residential rents in London were around £620 a month; a quarter of what they are today.

Office rents have risen 15% in nominal terms over 35 years. Accounting for inflation, that’s a real terms fall of two-thirds. This isn’t even a consequence of COVID: if our 60-year-old CEO signed the lease in 2019, he’d be paying less than in 1990 in effective terms.

So, this raises the question. Why have the rents for offices stayed flat while residential rents increased so much?

✍️Edward Donovan

Why rents for offices stayed flat while residential rents increased so much?

10/12/2025

The Government rightly calls Cambridge crucial to the UK’s growth mission. Our unique mix of world-class academia, research and development, entrepreneurship and deep expertise in life sciences, advanced manufacturing and agri-tech, among others, cannot be taken for granted. If we stand still, others won’t. Global competition moves fast and at a time when productivity and growth are central national challenges, we cannot afford complacency.

We know exactly what Cambridgeshire's local economy needs to thrive: better transport, more space for business, more homes, and the water and energy capacity to support expansion. If we close those gaps, our region will reap the benefits, attracting investment, growing businesses and driving up productivity and wages for local people.

✍️Paul Bristow

Cambridgeshire could be the fastest growing local economy outside London

09/12/2025

Defence procurement is back in the headlines as Secretary of State for Defence John Healey contemplates cancelling the £6 billion Ajax programme. Ajax is the UK’s single biggest order for an armoured vehicle in over 20 years and has been a disaster from start to finish. The programme is running eight years behind schedule, and trials in both 2020–2021 and this year have reportedly left soldiers with life-changing injuries.

Nobody set out to create a bad defence procurement system. But there are government reports stretching back as far as the Seventies pointing out the same set of mistakes: projects that take on unnecessary technology risk, undue optimism about timelines and poor cost control.

There are important changes that the Government can make to this system. Yet procurement reform is not enough. There remains a significant gap between the UK’s strategic ambitions and the resources it has to meet them. Embracing all these ambitions risks the UK being present everywhere at the expense of being resourced anywhere.

✍️Alex Chalmers

The MOD took an Israeli drone and created a vehicle that struggles to take off

09/12/2025

In difficult months, Kemi Badenoch has displayed strength of character and steadiness under fire. It would almost be straining credulity to believe that there have not been dark nights of the political soul, during which she must have wondered whether by going for the leadership so early, she had condemned herself to becoming William Hague 2.0 – or even Iain Duncan Smith 2.0. But if such doubts assailed her, she kept them to herself. This warrior girl is now entitled to sing King Alfred’s battle-song. ‘If you have a trouble/tell it not to the weakling./Tell it to your saddle-bow/and ride forth singing’.

That also defines one of her tasks. Even among unbelievers, Advent should lighten the spirits. Glad tidings of great joy: we could all do with some of those. Yet the British people have rarely seemed gloomier. There is no need to turn Panglossian. In many respects, the world is indeed in a terrible state of chaos – and I am not only referring to the Ashes. But this is still a great country and a mighty people. A nation with such a glorious past has no right to despair about its future.

✍️Bruce Anderson

The Conservative leader must give voters the greatest Christmas gift of all: hope

09/12/2025

Labour is leaning hard into ‘affordability politics’. Ministers don’t use the phrase, but the governing theme is clear enough: promise to ‘cut the cost of living’ by fiddling with headline prices. We’ve had pledges to ban ticket resale for profit, freeze regulated rail fares, cap prescription charges and give tenants new powers to challenge rent hikes in the Renters Reform Bill. The Prime Minister boasts new measures that will supposedly save families £500 a year on baby formula. On top of that comes another chunky rise in the minimum wage.

Progressives consider all this good politics. In the US, Zohran Mamdani won the New York mayoralty pledging rent freezes, free buses and government-run grocery stores. Here, the IPPR think tank urged Labour to emulate Australia’s ‘war on bills’, arguing that disquiet with the cost of living is structural and won’t fade. It sounds ruthlessly focused on what voters say they care most about. But I think, ultimately, it’s both a political mistake as well as an economic one.

Start with the politics. When people complain about the ‘cost of living’, they are not primarily furious about Taylor Swift tickets or a particular rail fare. They are angry that the general price level jumped and never came back down due to the recent high inflation. Between August 2020 and August 2025, consumer prices rose by about 28% – more than three times the increase in the preceding five years.

If inflation had sat obediently on the Bank of England’s 2% target, the price level today would be just over 10% higher than in 2020, not close to 30%. In other words, prices are something like 18 percentage points higher than people expected. That is the source of the political rage.

✍️Ryan Bourne

‘Cutting the cost of living’ is an economic – and political – mistake

08/12/2025

Time and time again, politicians will promise new ‘rights’. These rights are usually in the form of new regulations, and are generally taken at face value, with the smiling faces of the beneficiaries being propagated as proof of its success.

The French economist Bastiat called this the ‘seen’ vs the ‘unseen’. The ‘seen’ is what is immediately visible when a policy is introduced. The ‘unseen’ is what most people don’t notice: the hidden costs, lost opportunities and negative unintended consequences.

If a shopkeeper’s window breaks, a glazier would be paid to fix it. What is ‘seen’ is the local economy being stimulated due to the broken window. What is unseen, however, is the shopkeeper’s ability to spend that money on new equipment or improvements. The business loses those benefits, and so the community loses out as a result.

Going around and smashing windows does not stimulate the economy, believe it or not. It merely shifts resources from one place to another, destroying value along the way.

Nowhere is the misunderstanding of this principle more evident than in the discourse on the impending Employment Rights Bill. What is ‘seen’ is lots of shiny new ‘rights’. Sick pay and parental leave enshrined from day one; ‘zero-hour’ contracts banned; and unfair dismissal rights after just six months.

The Government has now decided to appease union bosses by removing the cap for compensation during unfair dismissal claims, which currently sits at £118,000. On top of this, every employer in Britain will be required to hand their staff pro-union messaging, drafted by the state. They will be legally required to encourage staff to join a union.

All of these measures are, quite simply, concessions to trades unions.

✍️Reem Ibrahim

The hidden costs of the Government's employment rights legislation are enormous

08/12/2025

The Government is still in denial about its prospects of hitting the 1.5 million housing target. Indeed, as the rhetoric has been ramped up – with the rather embarrassing spectacle of ministers handing out ‘build baby build’ baseball caps – the prospects become ever more remote.

Housing Secretary Steve Reed tells the BBC that he still expected the Government to ‘just meet’ its target by 2029. He points out, quite reasonably, that the target is 1.5 million over five years, not an annual target each year of 300,000. Ministers were ‘pulling every lever’, the Planning and Infrastructure Bill had not yet become law. ‘The big increase to come in the latter part of this parliament’ – the graph would look like ‘a hockey stick’.

It’s right to say the Government will be judged on the five years of building rather than how the figures break down each year. But so far, the figures have been going in the wrong direction.

✍️Harry Phibbs

The Government shows no prospect of living up to its pro-growth rhetoric on housing

08/12/2025

Time and time again, politicians will promise new ‘rights’. These rights are usually in the form of new regulations, and are generally taken at face value, with the smiling faces of the beneficiaries being propagated as proof of its success.

The French economist Bastiat called this the ‘seen’ vs the ‘unseen’. The ‘seen’ is what is immediately visible when a policy is introduced. The ‘unseen’ is what most people don’t notice: the hidden costs, lost opportunities and negative unintended consequences.

If a shopkeeper’s window breaks, a glazier would be paid to fix it. What is ‘seen’ is the local economy being stimulated due to the broken window. What is unseen, however, is the shopkeeper’s ability to spend that money on new equipment or improvements. The business loses those benefits, and so the community loses out as a result.

Going around and smashing windows does not stimulate the economy, believe it or not. It merely shifts resources from one place to another, destroying value along the way.

Nowhere is the misunderstanding of this principle more evident than in the discourse on the impending Employment Rights Bill. What is ‘seen’ is lots of shiny new ‘rights’. Sick pay and parental leave enshrined from day one; ‘zero-hour’ contracts banned; and unfair dismissal rights after just six months.

✍️Reem Ibrahim

The hidden costs of the Government's employment rights legislation are enormous

08/12/2025

To paraphrase GK Chesterton, jury trial in the Crown Court has not been tried and found wanting, it has been found to require funding and thus has to be curtailed.

Keen observers of the Ministry of Justice will not have been surprised by the demise of the Leveson Review’s proposal for a judge sitting with two magistrates to try less serious cases in the Crown Court. The cost of recruiting thousands of additional magistrates will have alarmed the ministry, even if volunteers ready and willing to sit for several days at a time could be easily found. The conclusion that judges should be required to try the majority of Crown Court cases alone is dismaying, but they clearly believe it will be cheaper.

This plan is forged by the team that has already delivered closure of Magistrates and Crown Courts, leading to a national shortage of courtrooms. Their campaign to slash legal aid expenditure drove so many barristers and solicitors away from criminal practice that cases are increasingly adjourned because no one can be found to prosecute or defend. Meanwhile, cutting the maintenance of court buildings and recruitment of judges and recorders left the system under-resourced. Surely, however, this time they have it right? A single judge is surely capable of presiding over a fair trial, and how else are we to address the backlog?

In fact, the time saving is unlikely to be that great. Leveson in his review estimated a 20% saving for a case tried by the Bench Division compared with jury trial. Even if a slightly greater time saving might be possible for a judge alone, remember that the court will be empty while the judge considers and writes their reasoned decision. At the moment, when a jury goes into retirement, judges embark on a new case. Further, this change would do nothing to deal with the existing backlog.

✍️Chris Kinch KC

Taking an axe to jury trials will do nothing to address the court backlog

05/12/2025

Stepping out of the political battle between the Office for Budget Responsibility and ministers, the OBR’s November reports lay out the massive missed opportunity for boosting productivity across the UK.

The numbers are dry, but their implications are crucial to our future prosperity. The OBR’s Economic and Fiscal Outlook calculates economic growth to 2030 as coming from two sources: labour supply growing at 0.5% per year, and productivity growth of 1% per year. Crucially, this productivity figure is a downgrade from the 1.3% estimated just months ago.

The OBR reproduces the embarrassing ‘whiskers chart’ showing the economy has under-achieved versus their productivity outlook in almost every year since the OBR was established – aside from 2017 immediately post the Brexit vote, and in 2021/22 after lockdowns. So even with this downgraded forecast, their estimations may still be optimistic.

The OBR also models different scenarios for productivity. In the worst-case scenario, the fiscal hit is enormous. The Government would have to return to the taxpayers, this time demanding an even larger sum than the raid just announced. Given the OBR’s history, we cannot write this off.

However, consider the positive scenario, whereby we have increased productivity growth due to AI and recovery from recent temporary shocks. The OBR estimates that this could see productivity growth hit 1.5%, meaning that we would earn more and the economy would create more jobs.

In this scenario, the entire meal of tax rises just announced by the Chancellor would have been unnecessary. Calculations show that improved productivity would result in a £49 billion improvement to the current budget surplus compared to the baseline scenario. That additional surplus is equivalent to £1,700 less tax per household, even before considering the benefit of increased earnings.

You would think such an exciting scenario would be a north star for our leaders.

✍️Andrew Allum

We need more ordinary Britons thinking like investors

04/12/2025

Today’s S&P UK construction data should set alarm bells ringing in Number 10.

Construction activity across housing, commercial and civil engineering has seen its steepest fall since the pandemic, with new orders nosediving and employment declining for eleven consecutive months.

This is not a natural cooling of the market. It is the predictable consequence of a policy environment that has become more expensive, more uncertain and harder for businesses to navigate. Instead of giving firms the stability to invest, recent decisions have weakened confidence across the construction supply chain at exactly the moment Britain needs it to be firing on all cylinders.

✍️Steven Mulholland

Construction activity has seen its steepest fall since the pandemic

04/12/2025

I agree with David Lammy.

The trouble is, I agree with 2020 David Lammy, who said this:

"A jury trial gives people the final say on the guilt or innocence of their fellow citizens. It entrusts the public to make life-changing decisions, rather than merely leaving it in the hands of lawyers. This is a civic duty – developed over centuries – which ensures fairness and representation in the criminal justice system and forms part of the bedrock of our democracy."

I think that was right, and – charitably, perhaps – I don’t think that even David Lammy really believes the David Lammy of 2025, who now proposes to do away with juries in the majority of cases they presently hear.

Let us not pretend for a moment that this plan is about addressing the backlog of cases waiting to be heard. There are three reasons for this.

First, juries aren’t slowing the system down, in any case. This second reason is because any change would not be retrospective, so all cases in the backlog would still be heard by a jury. These two points mean that the mechanism the Government has proposed won’t do anything to address the problem they have identified. But thirdly, if this were really about the backlog, the Government would be telling us that its proposed changes would be temporary, to revert to the historic norm after it has gone. That is quite clearly not the basis upon which they are proceeding. While the Government is certainly exploiting the present temporary difficulty to justify its changes, it don’t even pretend to claim that the solution it has identified will sunset when it is resolved. No, these changes are permanent. Again, as one David Lammy said in 2020 – ‘it would be wrong of the government to abandon this valuable tradition for short term benefit’.

Nor do these proposals reflect the conclusions of Brian Leveson, whose report made recommendations that went nowhere near as far as Lammy now wishes us to go. We should be clear: no matter how much he claims to be following Leveson’s conclusions in his vandalism, this isn’t what Leveson concluded. We have a rash; the doctor recommended some ointment; Lammy doesn’t get to say that he is following the doctor’s orders when he produces the guillotine.

✍️Alex Deane

Our justice system is not perfect, but that does not justify taking an axe to it

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