CapX, London (2025)

03/06/2025

At long last, the Strategic Defence Review has been released. Soon to accompany it will be the UK Defence Industrial Strategy. This will tell us whether Rachel Reeves was serious in her aim to make the UK a ‘defence industrial superpower’.

This strategic pivot towards ramping up our defence capabilities is an welcome one. In an age of heightened geopolitical tensions, the UK needs to be war ready. However, after decades of industrial contraction, achieving superpower status will be a herculean task. Car production is down – as is chemical production. Steel is on the brink. When a country doesn’t make enough during peacetime, it’s hard to make tanks, planes and other things that go boom during war.

There is historical precedent for this. As James Holland has eruditely revealed, despite common perceptions of tactical brilliance and the motorised onslaught of Blitzkrieg, Germany’s war machine in the years before and during the Second World War was built on shaky industrial grounds. Its motor industry lagged behind those of the UK and France, and far behind that of the United States. Thus, at the outbreak of war, Germany had fewer tanks than Britain and France. And though it had limited access to natural resources, many German weapons platforms were over-engineered and expensive.

Take the MG34: a fearsome and impressive infantry weapon, it nonetheless required 100 individual parts and 150 man-hours to make, at a cost of $1,300 in 1938 ($29,695 in today’s prices). The British equivalent, the Bren, could be assembled within 50 man-hours – a ratio of three-to-one.

Then there was the resource-heavy Tiger Tank, which took 300,000 man-hours, a vast labour when compared to the American Sherman which required 48,000 and the Soviet T-34 which took 3,200. Though it outgunned its Allied counterparts, the Germans could only produce 1,347 Tigers, compared to 49,000 Shermans and 84,000 T-34s. Despite Germany’s impressive engineering capabilities, it simply couldn’t outproduce the Allies.

Scale wins wars, and nowhere is this more apparent now than in Ukraine.

✍️Sean Ridley

At long last, the Strategic Defence Review has been released. Soon to accompany it will be the UK Defence Industrial Strategy. This will tell us whether Rachel Reeves was serious in her aim to make the UK a ‘defence industrial superpower’. This strategic pivot towards ramping up our defence capa...

03/06/2025

It’s quite a thought that in order to have actually voted for Margaret Thatcher in the 1987 general election, you’d now need to be 56 years old. If you were born on the day after she left office in November 1990, you’ll turn 35 this year. My new biography of Thatcher is published this week – for historical comparison, imagine I was writing a biography in 1924, but on Benjamin Disraeli.

Over the three and a half decades since she left Number 10, it’s become the conventional wisdom to claim that most of the problems that bedevil our country are down to Thatcher. It’s the default, knee-jerk reaction of most left-wing commentators and academics. It’s utterly wrong and lazy thinking.

If you are like my personal trainer, Aaron Fowle, then you should read on. I had broken my hip and had gone to my local gym in Tunbridge Wells for some physiotherapy. Part of this was a weekly session with Aaron. He asked me what I did for a living, so I told him I presented a news and politics show on LBC radio each evening. Aaron then said: ‘So Margaret Thatcher… I’ve heard of her, but who was she? What did she do?’ Aaron was twenty-five at the time. He’s an intelligent guy, so I said I’d write this book for people like him who weren’t adults when Margaret Thatcher was Prime Minister. People like an Italian friend of mine, Alessio, who is a keen young historian, but also, like many of his generation, is quite prepared to believe many of the myths that have grown up surrounding Margaret Thatcher’s beliefs and motivations.

The aim of my book is not to cover every aspect of Thatcher’s life and career. A legion of other biographers have done that, and none more so than Charles Moore in his magisterial and brilliantly-written three volume account of her life. The aim of my book is simple: to introduce Margaret Thatcher to a new generation – one that lives basking in the glory of her achievements, or formed in the shadow of her failures, depending on how one views the eleven and a half years of her rule – and also to bust the many myths that have grown up about her.

✍️Iain Dale

A new generation needs to hear the paradoxical truth about Mrs Thatcher

03/06/2025

This edition of Nimby Watch, we’re going to the zoo! Specifically, we’re going to Bristol Zoo Gardens, a 12-acre site in the Bristol suburb of Clifton.

Alright then, where are we headed this time?

We’re off to Bristol Zoo Gardens, which was until 2022 the historical site of a relatively small city zoo, which had operated there for nearly 200 years.

Not sure I really like that kind of zoo. They’re really cramped, surrounded by loud city noise, it doesn’t seem all that fair on the animals.

I’m sure the good people of the Bristol Zoological Society made sure animal welfare was their top priority – but they clearly shared a lot of these concerns, which is part of why they closed this site. They’ve moved the zoo to a much larger location further outside the city – 136 acres versus 12. According to the zoo, the new gorilla enclosure alone is four-and-a-half times the size of the old one.

So all’s well that ends well, then?

You know it’s too early in the column for that to be the case. The problem is that, as you will surely be shocked to learn, operating a zoo costs money – and making sure a much larger site has all the mod cons a modern zoo would want costs even more. As a result, the Zoological Society has been trying to sell off its old site to fund its activities for… quite some time.

This is where we come in, isn’t it?

You’re about to claim that people opposing having a lovely 12-acre zoo turned into thousands of homes is bad, aren’t you? Honestly, the cost of housing, and the shortage of good homes, in places like Bristol is so bad that I would cheerfully support demolishing the whole site and building thousands of homes on it. But that’s not what is being proposed – instead, most of the land will be turned into a public park, the zoo will continue to operate a café, exhibition space and some other projects, and there will be a little under 200 homes scattered around the edge of the site.

✍️James Ball

This edition of Nimby Watch, we’re going to the zoo! Specifically, we’re going to Bristol Zoo Gardens, a 12-acre site in the Bristol suburb of Clifton. Alright then, where are we headed this time? We’re off to Bristol Zoo Gardens, which was until 2022 the historical site of a relatively small ...

02/06/2025

Robert Jenrick is continuing to annoy all the right people. This weekend he turned his focus to the appalling attacks on front line prison staff, including by terrorists, that have left dozens of wounded, maimed and traumatised officers struggling to contain the threat in our High Security prisons.

Jenrick asked me to produce a rapid analysis of the current terror threat drawing on my experience as a former government reviewer of the UK threat and my work around the world on managing highly dangerous people. While this paper could not have access to the ongoing official review, I did think I had enough expertise to add to the debate. The criminal justice commentariat were apoplectic. Why?

The Conservative checklist to restore order and protect prison staff based on some of my recommendations is certainly radical. We need a specialised high control unit located inside a military base to incapacitate highly dangerous and subversive terrorists who cannot be managed safely. We need to rapidly expand non-lethal and lethal alternatives for specialised officers responding to terrorist incidents. We need all prison officials who deal with radicalisation screening – including prison chaplaincy – to pass enhanced and retroactive Security Clearance checks. We need front line staff working with terrorists immediately issued with stab- and spike-proof vests. We need High Security prisons as part of our Critical National Infrastructure. The Government needs an independent adviser on counterterrorism. And so on. The full text will be published this afternoon.

Now granted, the great and the good of our criminology boss class only had the political interpretation of these measures to go on, but the response was depressingly predictable from an endlessly self-referential and self-deferential cadre of progressives who last had a new idea when Roy Jenkins was Home Secretary. And to be fair to Robert Jenrick, he was endlessly clear on the Sunday TV sofa rounds that what we were calling for in tactical capability, to use one example, wasn’t the officer with the tea urn strapped like Dirty Harry. But there is an endless squeamishness from the bulk of criminologists when it comes to protecting staff from levels of violence which are both obscene and out of control.

✍️Ian Acheson

Every day, 29 prison officers are attacked: punched, stabbed, spat on, burned…

02/06/2025

The Strategic Defence Review has finally been published. It is rumoured to be two or three months since the independent reviewers, led by former defence secretary Lord Robertson of Port Ellen, delivered a final draft to the Ministry of Defence, and the wrangling continues within Whitehall over how much money the Government intends to spend on implementing its recommendations.

A weekend blitz of media announcements has left the Defence Secretary, John Healey, moving from ‘no doubt’ that spending would reach 3% of GDP by 2034 to scaling that back to an ‘ambition’. The Prime Minister, meanwhile, peevishly told the BBC that he was ‘not going to indulge in the fantasy of plucking dates from the air’ when it came to increasing the military budget. Presentationally, it has been a messy and confused start.

Often I react to Keir Starmer’s flailing media struggles as Oscar Wilde did to the death of Little Nell in ‘The Old Curiosity Shop’: you would need a heart of stone not to laugh. On defence spending, however, it is possible to find a sliver of sympathy for the Prime Minister, if only because he has faced hubris and nemesis in such short order, and now faces the prospect of looking unambitious and out of date. For a politician, these make for a dreadful fate.

In February, perhaps realising the inevitable a little later than most, Starmer announced that from April 2027, the UK would increase its level of defence spending from 2.3% of GDP to 2.5%. It may seem like modest growth, and on the wrong side of the decimal point, but it still represents tens of billions of pounds; and the Prime Minister took the decision at some political cost, as he raided the overseas aid budget to pay for the increase.

The new commitment of 2.5% came with a caveat-burdened ‘ambition’ to go further and spend 3% at some point ‘in the next parliament, as economic and fiscal conditions allow’. Starmer must reasonably have felt that he was putting the UK on the front foot: already in the top third of Nato countries in terms of defence spending, we were now taking another step forward.

Harold Wilson once famously remarked that a week was a long time in politics. Three months, then, is an aeon, and Starmer now runs the risk of looking left behind.

✍️Eliot Wilson

The Strategic Defence Review has finally been published. It is rumoured to be two or three months since the independent reviewers, led by former defence secretary Lord Robertson of Port Ellen, delivered a final draft to the Ministry of Defence, and the wrangling continues within Whitehall over how m...

30/05/2025

You can’t build homes without people. And you certainly can’t do it without the machinery that gets the job done.

The Government’s pledge to streamline planning rules for small and medium-sized builders is a positive step, particularly for the SMEs that actually deliver homes. But planning is only one part of the puzzle. The deeper crisis lies on the ground: a shrinking workforce, rising costs and a tax and training system that actively punishes the very things that make construction possible.

Since 2019, the construction sector has been losing around 70,000 workers a year. The average age of a UK construction worker is now over 50. This isn’t a looming issue – it’s already here. Too many firms simply cannot find the people they need, and the skills pipeline is not replenishing fast enough.

And yet, instead of creating the conditions to hire, train and invest, government policy is doing the opposite. The recent increase in employer National Insurance is a tax on jobs. Proposed changes to Business Property Relief will penalise investment in capital equipment. But together, they form a tax regime that discourages both job creation and long-term investment.

This is not abstract theory. It directly affects the firms doing the work. Take plant hire – the sector that provides the excavators, cranes and generators that turn planning consents into physical reality. Most builders do not own this machinery; they hire it from specialist firms that invest in, maintain and deliver it. These firms are the backbone of Britain’s construction supply chain.

And they are overwhelmingly family-owned SMEs. Their value is held not in cash or shares, but in machines, yards and depots. Remove Business Property Relief, and many will be forced to sell off essential equipment just to pay inheritance tax – or close the business entirely. That does not just undermine capacity, it actively discourages future investment. It is a tax on productivity.

✍️Steve Mulholland

You can’t build homes without people. And you certainly can’t do it without the machinery that gets the job done. The Government’s pledge to streamline planning rules for small and medium-sized builders is a positive step, particularly for the SMEs that actually deliver homes. But planning is ...

30/05/2025

Not content on confounding the Prime Minister over traditional nuts and bolts welfare policies, Nigel Farage and Reform UK have now made a pitch at the other end of the political ideas marketplace. They have just released a piece of draft legislation to make the UK the world’s leading digital currency hub.

Among the better known cryptocurrencies such as Bitcoin and Ethereum, it also makes provision for stablecoins, such as Tether, to become part of the UK’s usual way of doing business, including taxation.

This Bill highlights a current lacuna, that is the lack of a Sterling pegged stablecoin. Stablecoins have emerged as a transformative force, blending the advantages of cryptocurrencies with the stability of fiat currencies. As we stand on the cusp of a new financial era, the absence of a GBP-linked stablecoin represents a critical oversight for the United Kingdom, a nation historically at the forefront of financial innovation. A GBP stablecoin is not just desirable, but essential for the UK’s economic future, its global standing and the empowerment of its citizens and businesses.

Stablecoins differ fundamentally from traditional cryptocurrencies like Bitcoin or Ethereum. While the latter are known for their volatility, prices swinging wildly based on market sentiment, stablecoins are just that, stable.

They are pegged to a stable asset, typically a fiat currency such as the US Dollar or, potentially, the British Pound. This peg ensures price stability, making them practical for everyday use: payments, savings, and cross-border transactions. Yet, they retain the core advantages of cryptocurrencies: decentralisation, transparency, and the efficiency of blockchain technology. In short, stablecoins offer the liberty and innovation of crypto with the certainty and trust of fiat currency, a hybrid instrument poised to reshape global finance.

The stablecoin market has exploded in recent years. From a modest $20 billion market capitalisation in 2020, it surged to over $150 billion this year, with daily trading volumes frequently exceeding $100 billion, according to CoinMarketCap data. This growth reflects a global appetite for digital assets that combine speed, affordability, and reliability.

✍️Gawain Towler

Not content on confounding the Prime Minister over traditional nuts and bolts welfare policies, Nigel Farage and Reform UK have now made a pitch at the other end of the political ideas marketplace. They have just released a piece of draft legislation to make the UK the world’s leading digital curr...

30/05/2025

When the Prime Minister stood at his lectern outside UK Permanent Joint Headquarters at Northwood to announce his mind-boggling Chagos giveaway last week, he adduced one point into his argument with even more studied earnestness than usual.

In an increasingly dangerous world, Starmer claimed, ‘Russia, China, Iran’ opposed the agreement – and therefore his deal to surrender sovereignty over Chagos must be on the right side in international affairs.

He claimed:

'It is worth reminding ourselves who is in favour of this treaty, this deal, and who’s against it. In favour are all of our allies: the US, Nato, Five Eyes, India. Against it: Russia, China, Iran and, surprisingly, the leader of the opposition and Nigel Farage are in that column alongside Russia, China and Iran, rather than the column that has the UK and its allies in it.'

In doing so, Starmer sought to silence his critics, attempting to paint the Conservatives and Reform as somehow supportive of the intentions of hostile states.

It took less than a week for this nonsense to be blown out of the water. With all the power of a missile fired from one of the gunboats the UK parks in the perfect harbour at Diego Garcia, the Prime Minister’s claim has been humiliatingly and very publicly demolished.

Over the past few days, prominent Mauritian newspaper Le Mauricien reported Chinese diplomats making a visit to Port Louis in order to welcome Starmer’s deal – which they described as an ‘historical achievement’ and offered their ‘massive congratulations’.

✍️Ross Kempsell

When the Prime Minister stood at his lectern outside UK Permanent Joint Headquarters at Northwood to announce his mind-boggling Chagos giveaway last week, he adduced one point into his argument with even more studied earnestness than usual. In an increasingly dangerous world, Starmer claimed, ‘Rus...

29/05/2025

Nigel Farage has handed the Tories a way to return to political relevance. His recent spending proposals are a textbook example of fantasy economics – offering huge, unfunded tax breaks that would rack up billions on the nation’s credit card. If Kemi Badenoch and her team are serious about bringing the Conservatives back from electoral oblivion, they must call this out for what it is – and offer a serious alternative.

Simply put, Reform’s numbers don’t add up. Their flagship policy – to raise the income tax allowance to £20,000 – is estimated to cost between £50 and £80 billion annually. That’s before you include the abolition of inheritance tax on homes valued under £2 million or the expanded transferable tax allowances for married couples – while the latter policy may have its merits, it is estimated that the two measures combined would cost another £15bn combined.

And Farage’s fiscal fantasy doesn’t stop there. His platform takes an oddly left-of-centre turn with new spending commitments, from reinstating winter fuel payments for pensioners to removing the two-child benefit cap. These policies may be popular, but the long-standing commitment to offering economic bribes to pensioners has come at the cost of our public finances. Without serious funding, they are no more than yet another raid on the public purse.

As is often the case with populist parties, much of Reform’s economic strategy is built on soundbites, not sustainability. Farage insists that cuts to Net Zero programmes and asylum housing will somehow pay for all of this. But the numbers Farage is relying on are outdated. With regards to Net Zero, for instance, the Institute for Government revealed that most of the funding comes from the private sector, not the Treasury.

Time and again, Reform fail to offer credible solutions to Britain’s economic woes. If Badenoch wants to rescue the Tory brand, she must challenge both Labour’s tax-and-spend complacency and Reform’s fiscal schizophrenia.

✍️Oliver Dean

Nigel Farage has handed the Tories a way to return to political relevance. His recent spending proposals are a textbook example of fantasy economics – offering huge, unfunded tax breaks that would rack up billions on the nation’s credit card. If Kemi Badenoch and her team are serious about bring...

29/05/2025

In recent months, the Labour Government has talked tough about welfare reform, particularly in its apparent willingness to make difficult choices on disability benefits. The current system, according to the Prime Minister, could not be defended on ‘economic or moral terms’. In announcing the reform package, the Secretary of State for Work and Pensions Liz Kendall said she would deliver the ‘biggest shake-up to the welfare system in a generation’.

With their huge Parliamentary majority, this felt like the opportunity for Labour to tackle a major societal problem that will, literally, bankrupt Britain if allowed to go unchecked. After all, 1 in 10 working age Brits are now on a sickness or disability benefit and 2.8 million people are out of work due to long-term sickness. As a result, the disability bill is set to top £100 billion a year by the end of this Parliament. These are not just catastrophic numbers for the country but a tragedy for every individual trapped in a welfare system unable to work.

What happened after these initial grandly expressed ambitions has been something of a reality check. What was announced turned out to be rather inconsequential – and more like a continuation of the patchwork of minor tweaks that have been happening for years rather than a fundamental reform of the system. And now, under growing pressure from Labour backbench MPs, it seems that even these minor changes are likely to be watered down.

✍️Lana Hempsall

The disability bill is set to top £100 billion a year by the end of this Parliament

29/05/2025

The decision by US Court of International Trade to block Donald Trump’s tariffs, declared by the President under International Emergency Economic Powers Act (IEEPA), comes as a relief after the weeks of uncertainty and policy reversals that followed the ‘Liberation Day’ on April 2.

It also shows that, while businesses had good reasons to be rattled by the prospect of tariffs, European policymakers would have done best by not expending too much energy humouring Trump and offering him off-ramps.

Just last week, Trump’s announced a 50% tariff on imports from the EU, which he then postponed to July 9 following his phone calls with Giorgia Meloni and Ursula von der Leyen. If enacted, the policy would have amounted to a de facto embargo on some $600 billion worth of goods, many of them inputs into US manufacturing.

Throughout this administration, the bloc has gone out of its way to engage constructively with the Trump team. The Trade Commissioner, Maroš Šefčovič has made countless trips to Washington and the EU was offering the United States meaningful mutual concessions to tariff rates as well as cooperation on strategic matters such as 5G/6G, in line with efforts made under the auspices of the Trade and Technology Council during the previous administration.

In its obsession with bilateral trade deficits in goods, the Trump administration appeared to be treating European value-added taxes as tariffs under the logic that those who sell US goods in Europe are liable to pay VAT. Yet VAT is trade neutral – the exact same tax is levied on products coming from within the EU or from anywhere else in the world. Asking Europeans to overhaul their tax systems to satisfy some imaginary grievance is just not reasonable – just as it is not reasonable to use the threat of tariffs to force Europeans to change their food standards.

The tone and the timing of the announcement on Friday was curious too. Just as it became transparent that the US President was being taken for a ride by Vladimir Putin, Trump decided to unleash his angers against the EU, accusing it of being ‘formed for the primary purpose of taking advantage of the United States’.

✍️Dalibor Rohac

The decision by US Court of International Trade to block Donald Trump’s tariffs, declared by the President under International Emergency Economic Powers Act (IEEPA), comes as a relief after the weeks of uncertainty and policy reversals that followed the ‘Liberation Day’ on April 2. It also sho...

28/05/2025

Nigel Farage made a bold pitch to British families this week, announcing Reform’s plan to introduce a fully transferable marriage allowance alongside promises to scrap the two-child benefit cap and restore winter fuel payments. Standing at a Westminster press conference, the Reform leader declared his party would help families feel ‘financially able’ to have children.

The marriage allowance proposal deserves serious attention, it represents genuinely sound tax policy that would create a significantly fairer system for families across the country.

The current system creates glaring inequalities that violate basic principles of good taxation. Consider this stark example: a household earning £50,000 annually faces dramatically different tax bills depending on how that income is split between partners. If earned by one person, the household pays £10,480 in Income Tax and National Insurance. But if two people each earn £25,000, the same household pays only £6,691 – a difference of nearly £4,000.

This isn’t just unfair; it’s economically destructive. The tax system should treat households with identical incomes equally, regardless of how couples choose to organise their working lives. Many families split work according to their specific circumstances – one spouse working part-time to care for children or elderly relatives, or taking career breaks during crucial family periods. The current system penalises these entirely reasonable choices, forcing families to make decisions based on tax considerations rather than what works best for their situation.

The principle at stake is neutrality: tax policy should not distort how families choose to earn their living. When the system actively discourages certain working arrangements, it fails this fundamental test.

Britain’s approach looks increasingly outdated when compared internationally. While the UK taxes single earners relatively generously – someone on the average wage pays about 21.4% of their gross income as tax, lower than France (28.1%), Germany (37.4%) or the US (24.4%) – we treat families far more harshly. A single-earner family with two children in the UK still pays 21.4%,compared to 20.8% in France, 19.8% in Germany, and a remarkable 5.1% in the United States. We’re not just being unfair to our own families; we’re making ourselves less competitive as a place to raise children.

✍️Daniel Herring

A tax system that penalises traditional family arrangements makes little sense

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