Subscribe now

On 28 October, John Healey will deliver the Burnham government’s first Budget. Advance briefing has promised a “steady-as-she-goes” approach that defers key fiscal choices. This, we believe, would be a missed opportunity for a new administration that has vowed to learn from Labour’s past mistakes.

Below, Arguably contributors and policy experts outline 10 measures the Chancellor could take to boost economic growth, living standards and fiscal stability.

1. Remove the tax cliff edges that penalise work

One of the basic principles of a just taxation system is to incentivise work. Britain, however, has contrived to develop a model unusually good at doing the reverse – at both ends of the income spectrum.

The Carer’s Allowance (worth £4,495 a year), paid to those who spend at least 35 hours a week caring for someone with a disability, is withdrawn entirely after £10,192, meaning that a carer able to obtain extra hours, a pay rise or a promotion can be left financially worse off. Meanwhile, someone who earns over £100,000 not only has the personal allowance of £12,570 tapered away, creating an effective 62p marginal rate, but also loses their entitlement to 30 hours of free childcare and to tax-free childcare (worth up to £2,000 per child).

The distortions that result are, as the IFS has put it, “among the most severe you will ever see within a tax and benefit system” or, more bluntly, “absolutely insane”. A parent with two children, it estimates, needs to earn £137,000 outside London or £149,000 inside the capital before they are better off in cash terms than when they earned £99,000. Thousands of employees are now declining promotions and cutting their hours, while doctors turn down extra shifts, harming the growth and public services that we depend on.

Fixing these distortions should be a priority for John Healey – and the Centre for British Progress has offered costed solutions. The childcare cliff edge could be replaced with a less punitive 3% surtax above £100,000 for each child benefiting from subsidies. This, it estimates, would raise up to £700m by encouraging workers to take on more employment – almost enough to cover the cost of fixing some of the worst distortions in our tax system.

The 62% tax rate would be cut to 54% by extending the taper range to £155,000 and the High Income Child Benefit Charge would be similarly reduced from 53% for two children to 48% by extending the taper range, currently £60,000 to £80,000, to £100,000. And the Carer’s Allowance cliff edge could be replaced by a taper rate of 55% (a static cost of just £101m) or one of 25% (costing £277m).

A midterm Budget is precisely the moment for a government to enact radical tax reform, and Healey can make an impeccably Labour argument: work should always pay, for high and low earners alike.

George Eaton is editor-in-chief and co-founder of Arguably

2. Tax autonomous vehicles before they go mainstream

Motoring taxes raise about £33bn a year. That’s more than stamp duty, inheritance tax and air passenger duty combined. But this revenue stream is about to shrink as its largest component, fuel duty, is hit by the switch to electric vehicles. Indeed, the Office for Budget Responsibility cites fuel duty revenue loss as the biggest fiscal hit from the net zero transition.

Meanwhile, the costs of congestion are about to go up. Autonomous vehicles bring huge benefits – particularly for those in remote areas, those with disabilities, or anyone who cannot drive. However, they will also substantially increase the amount of traffic on the road. Why? Because driverless cars reduce the marginal cost of driving to zero. Currently, driving comes with either a time cost (you have to focus on the road) or a financial cost (you pay someone else to focus on the road). While the technology is currently quite expensive, the cost is falling rapidly.

Waymo, a robotaxi operator in California, recently admitted that its autonomous vehicles are empty for nearly half their mileage. The Department for Transport estimates that automation could increase traffic by 24%, at a time when London is trying to cut traffic by a tenth. In areas of high congestion, which is most of our city centres, this could lead to gridlock.

The solution is a surcharge on autonomous vehicles. This could be charged per mile or per minute (the former is easier to implement, the latter better targets traffic), and set at a rate which covers the economic cost of congestion – which is substantial. Revenue raised can go towards reskilling taxi and private hire drivers, funding local transport infrastructure, and maintaining roads.

The Chancellor should move quickly on this, and get ahead of the issue before self-driving cars go mainstream. This leaves little time. Waymo is currently testing driverless cars in London for a launch next year. Uber and Wayve have already started offering customers autonomous rides – albeit currently with a driver for safety purposes.

This has immediate benefits. Bond markets reward long-term fiscal revenue streams now, through longer-dated gilt yields, and cheaper borrowing costs improve government headroom. By 2050, we estimate the charge would raise about £47bn a year, close to what council tax raises today. The time to move is now.

David Lawrence is co-founder of the Centre for British Progress and an Arguably columnist

3. Stop giving crypto a tax break

Britain’s tax system gives cryptocurrency a break it hasn’t earned and doesn’t deserve. Income from cryptocurrency investment is charged at 24% under capital gains tax (CGT) rather than 45% under income tax. That’s a luxury designed to encourage productive investment in business and job creation. Crypto earnings do neither – they just extract money from the real economy.

Denmark categorises crypto as ‘speculative trading’ and applies income tax rather than CGT. It’s a popular revenue-raising approach and Denmark’s Tax Law Council wants to go further still – taxing cryptocurrency gains regardless of whether they have been sold.

Mirroring Denmark’s approach would encourage crypto traders to redirect investments to more pro-growth purposes and generate £250m in revenue, largely paid by a tiny pool of very wealthy traders. In 2023-24, just 240 people banked over half of all crypto gains, with sales averaging £31m each.

The revenue could help fund the government’s VAT cut on household electricity bills (£850m). That’s significant because global Bitcoin mining uses more electricity than all UK households – and the latter are far more deserving.

Taxing extractive sectors is popular with the public. Our polling shows that half of Britons think taxing crypto to pay for the electricity VAT cut would make the tax system fairer, including Reform voters (+25%) and Conservatives (+36%).

Disincentivising electricity for cryptomining to incentivise electricity for UK households is a good tax story. Reserving tax incentives for investment that benefits us all is the right thing to do.

Polly Curtis is chief executive of Demos

4. Reform the fiscal rules to boost infrastructure

Do you remember Labour’s flagship state-backed new towns programme? Have you noticed that it’s all gone a little quiet on that front? A central obstacle, as ever, is money. In Britain today, investing in infrastructure such as housing is made incredibly difficult by the binding rules that the Treasury operates under.

The current fiscal framework mandates that public sector net financial liabilities must fall as a share of GDP by 2029-30, sharply restricting the amount the government can borrow to invest. This inhibits the “spend to save” model that Andy Burnham has advocated by counting borrowing against the rule even where income streams (e.g. housing rents) can help repay it.

An alternative approach, as the Centre for Cities has advocated, would be to bring the UK into line with European fiscal standards by excluding non-financial public corporations from the debt rule. This would give council-owned housing companies, as in France and Finland, greater scope to build by borrowing against future rental income.

Based on current rates, Labour will fall more than 500,000 homes short of its target to build 1.5 million homes by the end of the parliament, hindering economic growth and further inflating the housing benefit bill (now £37.3bn). Removing the self-imposed fiscal straitjacket that suppresses investment could be part of the answer.

Vicky Spratt is housing and society correspondent at The i Paper and the author of Tenants and the forthcoming We Were Promised The Moon

5. Make it less expensive to hire young people

Opportunity. That word should breathe fire into the belly of the progressive. A dynamic private sector is where it’s made – the first job, the career change, the step off welfare – enabled by a state that creates the conditions for investment and risk-taking. Removing the layers of treacle poured onto it should be at the heart of this Budget.

It starts with making that first opportunity cheaper to create. In a decade, the real cost of employing an 18-year-old has risen by 40%. GDP per head? 7%. Alan Milburn’s diagnosis of the NEETs crisis has been exceptional, and a worthy response must address the supply of opportunity as well as demand for it. We can’t keep paying firms to hire young people while making hiring dearer. The oft-admired Netherlands – with a NEET rate of 4% to our 13% – pays 18-year-olds half the adult minimum wage rate but in Britain the Low Pay Commission is set on closing the gap. The Chancellor should pause this convergence and phase in employer National Insurance through a worker’s early 20s rather than imposing the full rate on their 21st birthday. Harder politics, yes, but I’d take a real job at a lower rate over a non-existent one at a higher rate any day (and so would the 84% of NEETs who say they want one).

Then ungum the top of the labour market while protecting insecure workers. Scrap non-competes and relax enhanced workers’ rights for higher earners. Neither costs a penny. From January, six months’ service buys unfair-dismissal rights for everyone from a trainee barista to an overpaid think-tank executive. Labour doesn’t exist to make six-figure earners harder to fire. But a Labour government can make them easier to hire and freer to move. That’s one way opportunity gets made in a country starved of it.

Ryan Wain is senior director of policy and politics at the Tony Blair Institute

Subscribe now

6. Introduce local work visas for mayors

The Budget should give combined-authority mayors the power to create local work visas for recent university graduates, allowing them to retain international students and other young skilled workers.

The current system is excessively centralised. National salary thresholds and occupation rules take little account of differences in local labour markets, wage levels or growth strategies. A job paying £32,000 may be entirely viable and productive in Sheffield or Newcastle, even if it falls below a threshold designed around national or London wages, while the impact of new migrants on housing markets or local services will vary.

Mayors should therefore be allowed to sponsor a limited number of recent graduates who have studied in the UK, have a job offer in their region and meet locally determined salary or skills criteria. Visas could initially be tied to employment within the relevant combined authority, with a route into the national Skilled Worker system after two or three years.

This would have several advantages. It would help cities retain young, educated workers who are already here, speak good English and are likely to integrate easily into the UK labour market; support local employers facing recruitment constraints; and generate additional income tax and National Insurance revenues with relatively limited demands on public services.

There is also a wider principle at stake. If the government is serious about devolution and local growth, mayors should have some influence over one of the most important determinants of their labour supply.

Immigration policy need not mean choosing between a single national target and an uncontrolled system. Limited, accountable local flexibility would be both more economically rational and more consistent with devolution.

Jonathan Portes is professor of economics and public policy, King’s College London

7. End billions in losses from QE

The government has a problem: the Bank of England. The taxpayer is spending around £18bn a year covering losses from the Bank’s quantitative easing programme, roughly comparable to the Home Office’s annual budget. This is public money that is not being invested, not helping households with the cost of living and not improving our public services. Instead, it is being funnelled to the shareholders of commercial banks.

There are two ways to fix this. Option one: the Treasury could introduce a Thatcher-style reserves income levy on commercial banks to claw back some of these funds. This need not be permanent. The levy could fall automatically with interest rates, disappearing once the Bank no longer makes significant interest-rate losses on QE.

Ending this subsidy (and quantitative tightening) could save £7bn a year while still leaving banks with substantial profits. However, it would not please bank shareholders and could dent market confidence. The economics are sound, but the vibes could be bad.

So here’s option two: defer the losses. The government could save £5bn a year by reforming the indemnity between the Treasury and the Bank. The UK is an international outlier in having its Treasury pay for its central bank’s losses. In the US, Federal Reserve losses aren’t refunded quarterly by the Treasury. Instead, the Fed records a ‘deferred asset’ and stops sending profits to the Treasury until future earnings have paid off the loss.

There is a trade-off. This option would mean less future income from the Bank, and it would not substantially change the ultimate cost to the taxpayer (simply spreading it over time). But it would likely be better received by markets.

Neither option is cost-free. But staying as we are now is a choice too, and a worse one. When the government is searching down the back of the sofa to pay for urgent priorities, it’s time to stop writing multi-billion-pound cheques to cover failings in how QE was designed.

Harry Quilter-Pinner is executive director of IPPR

8. Create a Targeted Energy Discount for poorer families

Amid the debate around cost-of-living support ahead of the Budget, one number should focus minds on what to target – £2,137. That’s the implied Energy Price Cap this January should the Bank of England’s latest forecast materialise.

Another number that should inform debate is £44bn. That’s the cost of Liz Truss’s wasteful universal energy subsidy in 2022, which helped better-off families the most.

Instead, support should be targeted at poorer households who suffer the most from high energy bills. Since the start of the cost-of-living crisis, poorer neighbourhoods have turned off the heating more despite having less room to cut. The easiest way to deliver support is through the benefits system. But this would exclude too many vulnerable families on modest incomes who don’t receive Universal Credit.

Instead, we propose a new Targeted Energy Discount (TED) for any household where no one has an income higher than £24,000. A scheme costing £2bn annually would reach two in five families and provide an average discount of £175 – far more than the £60 saving from the similarly sized 5% VAT cut on electricity bills for all households.

A TED should be activated on a quarterly basis when the price cap is high, so it can be switched on and off. This is key as politics has a habit of making temporary schemes permanent. The VAT cut on electricity bills risks becoming the new fuel duty freeze (‘temporary’ for 15 consecutive years now).

The government should design a TED now to announce at the Budget. There are real data challenges in doing so, but if we can design a £70bn furlough scheme in weeks, we can design a TED in time to switch on in January.

Ruth Curtice is chief executive of the Resolution Foundation

9. Let mayors pursue Regionally Significant Infrastructure Projects

One song we didn’t hear belting out from the mayors’ DJ set at Labour Party conference was ‘Stuck in the Middle With You’, but that’s exactly what is happening to infrastructure projects that are too big for the town hall, but too small for Whitehall.

The Good Growth Foundation’s ‘Good Growth Budget’ has a fix, and it comes with an acronym worth learning: RSIPs – Regionally Significant Infrastructure Projects.

Schemes too big for a council but too small to count as Nationally Significant Infrastructure Projects fall into a gap. They go to the local authority first, and a mayoral call-in can add months of delay. RSIPs would give mayors their own direct approval route, mirroring the national process but with lower thresholds and a new approach to discharging environmental duties at regional level. Think smaller reservoirs, sports stadiums, transport hubs or even data centres. Pair it with fiscal devolution and you give places the power and a reason to go for growth, rather than blocking it.

And the work shouldn’t all go to the usual giants. The same Budget would make reserving smaller public contracts for UK SMEs the default, worth around £1bn, and require bigger contracts to be broken into lots that local firms can actually bid for. More projects approved locally, more of them built by local businesses, more of the benefit felt there. That is local good growth.

So for next year’s DJ set, when RSIPs have been adopted, I reckon the mayors can play a Daft Punk classic because they will be building, and growing ‘Harder, Better, Faster, Stronger’.

Praful Nargund is director of the Good Growth Foundation

10. Reform PIP to prioritise severe needs

There are widespread calls to reform Personal Independence Payment (PIP) – the UK’s main disability benefit. The government’s own review, led by Stephen Timms, describes it as “no longer fit for purpose”.

The rapidly rising cost of working-age disability benefits – from £14bn in 2019-20 to around £25bn today – is a strain on the public finances. The cost is forecast to rise by another £9bn by the end of the decade – not far off the £11bn price tag for increasing defence spending to 3% of GDP.

But there is no consensus on how to reform PIP or even on whether the overall bill should be reduced. One reform option – among very many – would be to link benefits more closely to the severity of a person’s disability.

At present, people with very different needs get the same benefits. For example, someone unable to wash themselves and needing help dressing their upper body would receive the maximum, ‘enhanced’, daily living award of £5,960 per year. The same amount is given to someone unable to wash or dress themselves at all, unable to communicate verbally, and needing prompting to understand basic written information.

Broadly, and for any level of overall spending, a reform that tilted PIP towards people with severe needs, as measured by the current assessment, would tend to benefit younger claimants and those with learning disabilities, autism or cerebral palsy. It would tend to be less generous to older claimants and those with arthritis or back pain.

This illustrates a choice at the heart of PIP debates: for any overall budget, providing more support for some people means less for others. There is no change to PIP’s structure or to the assessment process that can remove that trade-off.

Helen Miller is director of the Institute for Fiscal Studies

Subscribe now

After a friend graduated with a first-class degree in Chinese, it took them several months and multiple interview stages to get a part-time job at a local supermarket. At the time I thought that this situation was atypical. Now, the above pattern is playing out across the UK. In 2022, NEET (not in education, employment or training) numbers among 16-to-24-year-olds started ticking up. By 2026, 13%, or nearly one million people, were in this category – leaving the UK with the worst rate of any European country other than Romania.

A good deal of current youth inactivity can be put down to historical macroeconomic factors. Deindustrialisation stripped the labour market of plentiful jobs that a 16 or 18-year-old could walk into out of school. Globalisation then exported many remaining entry-level manufacturing roles to cheaper labour markets. At the same time, rapidly increasing housing costs prevent young people from moving cities for opportunities, especially low-paid vacancies that don’t justify the rise in rent that comes with leaving home.

There is now an expectation that AI will quickly eliminate low-level knowledge work in sectors such as law, finance, consulting and software – resulting in a shrinking of the bottom half of the professional pipeline. Add the UK’s mediocre economic growth rates since 2008, which prevent jobs being created, and you get a perfect storm of NEETdom.

But these global headwinds shouldn’t let the Labour government off the hook. There are dozens of interventions that the Burnham government and businesses could pursue to mitigate the NEET problem.

Employers: the missing piece?

The recent Milburn report argued that we fail young people somewhere in the transition between school and work. But there’s a large omission here: it is taken for granted that employers do not want to, or cannot, carry out the same on-the-job training they provided for school leavers only a few decades ago.

Employers’ retreat from training has created a new burden – shifting costly training overheads from the private to the public sector. Some of this cost now rests on state schools, which are already overstretched by academic demands and behaviour management. Another portion has been outsourced to job centres, which can retrain the unemployed but cannot conjure the vacancies for them to fill.

Lower expectations of in-house training are a boon for big business – companies looking for cheap, disposable workers are now scraping the bottom of the barrel, investing little while claiming to be socially responsible. Nando’s has been offering a GCSE-equivalent “Level 2 Apprenticeship” in hospitality, with school leavers getting the chance to “experience life in [their] restaurants”. The benefit here is that the chain can offer an ‘apprentice wage’ which can be as low as £8.20 an hour.

Apprenticeship providers are usually expected to compensate for this lower pay by offering a chance to learn specialist technical skills, which come with a higher asking price down the line. This isn’t the case here. Few people used to “apprentice” for jobs waiting tables or working a till – until very recently, such jobs were a rite of passage, with a relatively low bar to entry.

Nando’s apprenticeships are at least paid. From October, up to 10,000 NEETs will receive the honour of limited work experience slots at Sainsbury’s stores. It’s no surprise that Labour has hailed this scheme, providing plenty of PR placements for the supermarket in the process. Indeed, the Milburn report doesn’t make much of a distinction between paid and unpaid experience.

There are already far too many stories about vulnerable young people being exploited by the same schemes that are supposed to help them. In 2025, Waitrose generated controversy for denying paid work to a young autistic man in Cheadle Hulme, near Manchester, after he’d already spent 600 hours on placement without pay. Another disabled man completed a nine-month unpaid placement as a binman with Southampton City Council before being rejected for paid versions of the same job.

So far, Labour has been too wary of confronting the big structural issues behind youth inactivity. Milburn has said we’d see a “profound… system reset” with “new approaches” laid out in a final report by the end of this autumn. While we await this, there are a number of smaller policy proposals the government and businesses could look at to improve the situation.

Poor public transport

In many areas of the country, Conservative-era austerity and privatisation policies have eroded people’s ability to get around via public transport. Labour has restored the £2 price cap on bus fares. But shortened timetables and unreliable services often make early-morning or late-night shift work difficult for those in remote or rural areas.

Those seeking to escape their reliance on public transport then encounter a Catch-22 – the prices of driving lessons and learner insurance have surged: the former by 37% since 2020 (from £28.47 to £39 an hour in 2026) and the latter by 27.8% since 2020. NEETs need a car to get to work, but need work to afford lessons and insurance. We’ve had a driving test backlog for six years now, resulting in an average learner needing to book a test five months ahead to get a slot, with no signs of a return to the pre-Covid era. Government agencies could highlight this issue and target investment effectively by devising a British Opportunity Index, tracking job and apprenticeship availability against public transport coverage by postcode.

Labour could also launch an initiative to train more driving instructors and examiners – perhaps even offering an extension of the Advanced Learner Loan to cover the costs of learning to drive in Britain’s most rural and disconnected areas.

Ghost jobs

Almost anyone who has been in the labour market as an active applicant can attest that there are not enough jobs to go around. Even employers with genuine vacancies ghost qualified candidates. No amount of CV-tailoring, work experience, or in-school support will protect NEETs from a basic lack of opportunity generated by an economy that has been in decline, or in stasis, since 2008.

Job boards have a structural problem: aggregators’ profit motives are usually at odds with the common good. The near-absence of regulation on job sites means employers can easily post jobs that don’t exist. The recruitment software company Greenhouse’s ‘2024 State of Job Hunting’ report, based on a survey of applicants across the UK, Germany and the US, estimated that between 18% and 22% of jobs posted on its own job aggregation sites were non-existent when audited.

Jobseeker’s Allowance and Universal Credit claimants are wasting time applying for non-existent vacancies when they could be retraining; government agencies are at risk of misjudging the number of vacancies and distributing investment and training to the wrong sectors that falsely appear to be growing.

We know that at least some ‘ghost jobs’ are ruses to harvest and sell data. We could try to make this impossible: there’s no real need for an employer to collect your telephone number, address and email if they haven’t committed to interviewing you. The data-collection incentive would go away if we introduced a single-point jobs board within the gov.uk ecosystem; employers could send messages to applicants through a secondary interface, with details withheld for privacy and released once a contract is signed.

What can Labour do?

It’s also worth asking whether Labour could divert some of the existing education budget into lower-responsibility, entry-level part-time roles for NEETs. As it stands, the thousands of free workers at Sainsbury’s would still need to rely on government benefits during their time on the scheme.

As a ‘two birds with one stone’ measure, a subset of this group could instead receive a slightly lower benefits entitlement in return for a few hours of paid work a week as teaching assistants, in council offices, in care homes, or in low-risk NHS roles. There are social-democratic precedents for these ideas. During the Great Depression, Franklin D. Roosevelt’s Works Progress Administration hired millions of unemployed workers to build up America’s infrastructure. These efforts stretched into ‘knowledge work’ and the performing arts, with out-of-work writers, actors and musicians contributing to paid public art and preservation projects.

We also need a serious re-evaluation of the economic policies that have worsened the NEETs crisis. One answer would be to reverse Labour’s employers’ NI rise (for those over 21), perhaps removing the ‘triple lock’ on the state pension to pay for it.

At the time of writing, Burnham is mulling over a youth minimum wage climbdown and PIP (Personal Independent Payment) cuts for under-25s – both of which will expend a good deal of political capital. The Conservative Party, under Kemi Badenoch, is suggesting going one step further – proposing a ban on school leavers claiming Universal Credit at all while halving National Insurance contributions for those aged between 21 and 24.

A safer option for Burnham might be to incentivise on-the-job training. We already have an apprenticeship levy system. But it could be improved. Employers should receive tax breaks for every employee hired on an apprenticeship or graduate scheme – on the condition that companies provide a regulated baseline of training and move trainees onto above-average graduate pay within a set timeframe.

If these transport, advertising and barriers to training disappear, there’s no guarantee we’ll bounce back to a pre-Covid market. We should be asking more of Britain’s employers. Instead, we’re working around demands firms wouldn’t have made a few decades ago. Businesses now feel empowered to put entry-level applicants through multiple rounds of interviews and cognitive tests, to demand experience in roles that are easily taught, and to ask for 24/7 availability, even for part-time shift work.

The Milburn report is a good start, but Labour needs to reckon with generational structural shifts in the employment market. Burnham can, and should, start with the smaller stuff: ghost jobs, poor public transport, employers’ NI – but at some point the party needs a fuller response to the forces reshaping the economy: globalisation, deindustrialisation, automation.

But it’s not all on the government – the market plays as important a part as the state in generating NEETdom. Perhaps retail and hospitality businesses should reflect. Their line of work has always involved a high turnover of inexperienced young people, who won’t have round-the-clock availability and might need to learn on the job.

Must the burden sit entirely with applicants, careers advisers and the government – or is anyone brave enough to tell these employers that they’re asking too much for too little pay?

Subscribe now

Andy Burnham used his recent speech at the UN General Assembly to call for “a single set of global principles and standards” to govern AI. At the same meeting, Finland corralled 22 countries into signing a joint statement demanding AI be kept safely “under human control.”

It is perhaps not so surprising that left-wing leaders, and smaller countries left behind in the AI race, want to regulate technology. But the range of voices calling for regulation is much larger. Ezra Klein, the New York Times columnist and co-author of Abundance, recently came out in favour of a ban on recursively self-improving AI. A few days later, Francis Fukuyama announced that he had “changed his mind” on AI risk, writing that “regulation and a negotiated slowdown in the development of the technology is increasingly necessary.”

In the debate between AI ‘accelerationists’ and AI ‘doomers’, both Fukuyama and Klein appear to have sided with the doomers. But what’s interesting is that neither is a typical doomer: Klein is known for opposing burdensome regulations and accelerating technological development to support economic growth. Fukuyama has also been critical of regulatory constraints on the economy, and admits that he was sceptical of AI doomer scenarios until recently.

What changed? Recent events have rightly spurred calls for regulation at the frontier of AI. But for the UK, the calculation is different. Since we do not have firms at the frontier of AI, unilateral regulation makes little sense. We should instead prioritise model access for the AI Security Institute (AISI), and do everything we can to increase our AI leverage. This means that the optimal UK AI policy, from the perspective of global AI safety, may even look ‘accelerationist’.

Read more

Subscribe now

Imagine the scenario. A new prime minister takes over midterm. The ideological shackles are fearlessly cast off, delighting the party faithful. But there’s trouble immediately ahead. War means energy prices are set to rise. The global economy is on tenterhooks. Whatever light there was in the fiscal tunnel now appears to be dimming. A Budget approaches.

Now, snap back to the present. For the above describes not 2026, but 2022. The differences are as important as the parallels. Andy Burnham is not Liz Truss. Not on comms ability, not on understanding Britain, not on fiscal literacy.

As importantly, the Iran war is not Ukraine. The fiscal outlook for the Budget is tough, but in terms of the likely consolidation required it falls short of 2024 – when taxes rose by £40bn – or the gloomy 2022 forecasts that so panicked the Conservative Party.

Yet the question Labour strategists dare not ask is this: might Kemi Badenoch be Keir Starmer? Is she, after two years of patient preparation, finally ready to make her move?

Read more

Subscribe now

A new consensus is emerging. Low or even negative net migration is good and what voters want. Home Secretary Shabana Mahmood remarked last November, when UK net migration stood at 170,000, that “when I first came into parliament, back in the days of 2010 and onwards, we were talking about migration in the tens of thousands, so I would say it is still pretty high”. The few politicians who do acknowledge the negative implications for national income and tax revenue – a potential £7bn hit to headroom in this month’s Budget – argue that Whitehall can offset them. Foreign workers are now an “addiction,” as Keir Starmer put it, that must be replaced with homegrown employment.

But this consensus has now been complicated by Andy Burnham’s Labour conference speech. In Liverpool, the Prime Minister declared that he would reopen the debate on the UK-EU relationship. Burnham says he will consider all options, from a customs union to the single market to Rejoin. Free movement of people will be the EU’s price for any deal that substantially reduces the cost of Brexit.

This is because the EU remains committed to the policy that all four freedoms of the single market must go together: goods, services, capital and people. Without the latter, British businesses will not gain substantially greater access to the other freedoms. The helpful but minimal UK-EU ‘reset’, which would trade small reductions in trade barriers for a youth mobility scheme, represents the limits of either side’s ambition to date. As a result, the UK is saying ‘no thanks’ to a large amount of potential national income gained through higher trade, migration and investment with the EU.

Britain could re-establish free movement with the EU in two ways: by rejoining the EU (boosting GDP by up to 5%) or by negotiating a single market agreement (up to 3%) that provides barrier-free trade in exchange for the free movement of people and alignment with EU rules (but with virtually no say over those rules).

To unlock bigger economic gains, progressives will have to win the argument on free movement. This isn’t as impossible as it appears, with half of the public saying they would support free movement in order to improve economic relations with the EU, and just 21% opposed, according to a recent Ipsos poll. There are a number of arguments that Labour could make, which have the advantage of being true as well as politically helpful.

Historically, free movement is the biggest expansion of autonomy for Europeans that the EU has delivered. No other developed economies – bar Ireland and the UK, and New Zealand and Australia – grant reciprocal rights to live, work and retire in each other’s jurisdictions. These reciprocal arrangements provide people with a wider choice of jobs, relationships, culture and food – while also supplying ‘refuge’ from recessions and bad governments.

Brits are Europeans – culturally and geographically – even if we are no longer EU citizens. Why should the majority of Europeans get this right and not us? Other Europeans are also our neighbours and friends, with similar outlooks on life – we share similar preferences on work-life balance, public services, women’s rights and environmental protections. Why wouldn’t we want to be able to mix more with them?

Free movement is also good for Brits who don’t take up the right to live abroad. More EU citizens in Britain means more workers, bringing skills that we lack and more tax revenues to pay for healthcare and pensions.

Politicians portray immigration as a cheap alternative to training domestic workers, but the evidence is mixed: there appear to be lower levels of training in hospitality and construction when immigration is high, but training in other sectors of the economy rises in response. Numerous studies have shown that falling immigration leads to higher automation because domestic workers can’t be recruited to do the work. We’re fortunate that the English language, our open labour market, London and Britain’s great universities are such attractions that we became the largest destination for new EU citizens after enlargement in 2004.

It is strange for a country with big economic problems to reject one of the few policies that we know would raise growth and improve our fiscal position. There is no fixed number of jobs in an economy, so immigrants don’t compete with British workers in a zero-sum game. Immigrants spend their wages and so create demand for native workers. Immigration likely also raises average UK wages by making us more productive. The average migrant is a net benefit to the public finances.

Free movement cuts red tape. Labour’s current immigration system is a Rube Goldberg machine – attempting to deliver simple policy outcomes (lower net migration) via complex means. There are now high salary and skills thresholds, and shortage lists that will allow visas for lower-paid jobs, but only if employers in a sector agree to complicated and possibly unworkable plans to train British workers.

The government is currently in the business of workforce planning, which didn’t work when Harold Wilson’s government introduced it in 1965 and is unlikely to work now. Better to allow employers to pick the best workers for the job, while improving the UK’s poor skills training system and ensuring that the minimum wage and working conditions rules are enforced.

Ukraine joining the free movement zone is an opportunity, not a threat. Free movement flows have slowed within the EU over the last decade as incomes in newer member states have converged with those of Western European countries and unemployment in southern Europe has fallen.

Sadly, it’s unlikely that Ursula von der Leyen’s promise of rapid Ukraine accession to the EU will happen. But when it does, it will offer a fillip to European labour markets as ageing really starts to bite in the 2030s, while the alternative – government incentives to raise birth rates – has little effect.

The final argument is that free movement constrains government overreach in Britain and elsewhere. Sweden is deporting British citizens for minor bureaucratic missteps such as failing to apply for settled status on time. EU citizens in Britain have been wrongly targeted by the Home Office and the Department for Work and Pensions. Under free movement rules, such treatment becomes illegal.

It’s no surprise that Brexit has failed to neutralise the immigration issue, as many Leave advocates predicted. We face the same trade-offs as in 2016 between growth, ageing and the cultural change that immigration brings. Politicians will always have to manage those competing imperatives, but freedom of movement offers a way to do so that’s far less damaging than the alternatives.

Subscribe now

Back in 1987, a young Labour MP warned in the London Review of Books of the “tremendous danger” in believing that Thatcherism “is somehow now invincible, that it has established a new consensus and that all the rest of us can do is debate alternatives within its framework”.

That Labour MP was Tony Blair. In the 39 years since he wrote those words, every UK prime minister has dwelt in the shadow of Thatcher’s revolution: her privatisations, deregulation, tax cuts and trade union reforms. “I always thought my job was to build on some of the things she had done rather than reverse them,” Blair later remarked. What made Andy Burnham’s Labour conference speech unashamedly radical was his insistence that he would.

His address was at once anti-Thatcherite and Thatcher-esque, its ideological self-confidence mirroring that of the woman who once declared: “The Old Testament prophets didn’t go out into the highways saying, ‘Brothers, I want consensus.’ They said, ‘This is my faith and my vision! This is what I passionately believe!’”

While Thatcher rolled back the frontiers of the state – the UK accounted for 40% of the total value of all assets privatised across the OECD between 1980 and 1996 – Burnham wants to roll them forward: to expand public control or ownership of housing, energy, water and social care. In short, his mission is to transform Britain into a fully-fledged European-style social democracy.

But in a fraught economic and geopolitical era, that ambition faces formidable obstacles. In this post I’ll explore what Burnham’s speech got right and the areas where greater radicalism is needed – most obviously on economic growth, the factor on which his success may hinge.

Read more

This will be the first Labour Party conference in five years where I do not have a degree of agency over what the leader will say. To which I can only say: good! In fact, to paraphrase Sir Steve Redgrave, anyone who sees me skulking around a Liverpool rehearsal suite now has permission to shoot me.

Still, like any Labour member, there are things I want to see on Tuesday. And chief among them is the hope that Andy Burnham chooses the right cause. By now, he will know that the leader’s speech is quite unlike any other. Defined by its unusual length – around an hour – it is simply impossible to restrain it to one topic. It becomes more like a play, with subplots and a denouement. Or like a body of water, where tributary arguments must cascade into a central river. Crucially, this river cannot be stagnant. It must move and flow, carry people with it, and give the speech its urgency and impetus. And its destination must be the first glimpse of the Britain our prime minister wants to build, illuminated in its most politically attractive and salient light. With the stakes this high, an ordinary argument will not suffice. It must be a great cause.

Subscribe now

In 2022 – my first leader’s speech with Keir – that cause was climate change. The £28bn Green Prosperity Plan captured Labour’s determination to harness state intervention in pursuit of progressive ambition. Meanwhile, last year’s speech was dominated by the fight for Britain’s soul and the confrontation with ethno-nationalist racism. This year, Burnham arrives in Liverpool with no shortage of options, many of them personal. There is his vow to end rough sleeping, his first promise in his first speech as prime minister. There is devolution, the policy ballast which undergirds his narrative of economic rebalancing. Then, perhaps most enduringly of all, there is his long-standing commitment to transform the shameful state of social care in this country.

Such is the time to fill on Tuesday, all three could feature. But if I were him, I would not elevate any of those beyond mere River Gowy status. Because as with so many aspects of being prime minister, the blank page of a conference draft can encourage delusions of untrammelled agency. The truth is this: your causes chose you, far more than you chose your causes. And this year, the cause that has chosen Burnham is the crisis of opportunity for our young people.

The moral imperative is clear. It is utterly intolerable to allow nearly a million young people to languish out of work, education or training when we know how scarring that is for their long-term life chances. But allowing dementia patients to languish in inadequate care homes is also intolerable. Homelessness is intolerable. Britain’s regional inequalities are intolerable. The difference is the politics.

After all, Kemi Badenoch, perhaps now Labour’s main opponent, has made her strategic intentions crystal clear. She will seize on the moral urgency of Chancellor John Healey’s previous calls for higher defence spending. And she will ask again and again why the Labour Party cannot cut welfare spending even when our national security is at stake. I am more than ready to believe there is a compassionate Labour approach that cuts worklessness, not welfare. But we are long past the time when it should have been clearly spelt out. And this is a task only a prime minister can now perform.

Then there is the fiscal arithmetic. We all know the funding settlement is tight in the later years of this parliament. And we all know that yet more tax rises will be an extremely difficult sell to the British people. A significant change in the labour market for young people is, therefore, one of the few ways the government might improve the OBR’s fiscal forecasts. It is vital, not just on its own terms, but for maintaining national renewal rather than decline.

The electoral strategy also stacks up. As many have noted, Labour’s voter coalition is sociologically strained, an uneasy cultural mix of middle-class progressives and more conservative working-class voters. What brings them together is a sentimental connection to advancing working-class opportunity. They either need it in their town now. Or their family history is bound up with its benefits. It is the emotional glue of the party. Nothing moves the conference hall quite like it.

Finally, and most importantly for Tuesday, there is the storytelling. Opportunity issues may score low in salience polling. But as a canvas for talking about the nation’s future, nothing else comes close. Not only that, our young people have been at the sharp end of Britain’s biggest challenges for almost two decades.

The years of Tory austerity redistributed the public realm away from their material interests. Brexit narrowed their horizons. They carried the social contract on their shoulders throughout the Covid-19 lockdowns. They are patient zero for having their childhood contorted by social media. Artificial intelligence and climate change are their problems, far more than ours. And their reward for all this is to become a generation that sees the basic security of a good life – fair pay, a secure job and a good home – move further and further from their grasp.

After all that, can Labour’s offer to the most disadvantaged of these young people really just be welfare? Of course not. And on Tuesday, Andy Burnham should make opportunity his cause.

The announcement this week by Andy Burnham of a new National Centre for Information Defence (NCID) marks an important change in how we think about security and a potentially radical shift towards what I call ‘cognitive rearmament’.

The background to this shift is a dawning realisation that cognitive security can’t be taken for granted. Most would agree that happy and healthy societies depend on people who can think for themselves. Workers who can solve problems. Citizens who can use their votes wisely and can spot lies and deception. Parents who know how to look after their children.

During the last century, there were good reasons to believe that exactly these types of cognitive capacity were improving. IQ was rising, education had become universal, university participation expanded vastly. The world’s science systems were becoming ever more sophisticated and at the end of the century, the Internet opened up all of human knowledge.

Subscribe now

Now, however, while vast sums of money are being spent on AI, which is achieving dramatic improvements in machine analysis and reasoning, there are glaring signs of cognitive regression among people, an unhappy combination of ever-smarter machines and possibly dumber humans who are easier to manipulate.

IQ levels began to reverse at the beginning of this century in some of the richest countries, including the UK, Germany and Denmark. The PISA scores measuring school children’s levels of attainment peaked in 2012 and then started to decline, with sharp falls in reading, maths and science.

The annual Monitoring the Future study in the US found a significant rise in the proportion of 18-year-olds who struggle to concentrate or learn new things, while 25% of adults in high-income countries (and 35% in the US) are now unable to use “mathematical reasoning when reviewing and evaluating the validity of statements”.

These patterns have coincided with declines in everyday civility, including a willingness to listen and learn. In the US, a majority now believe their fellow citizens to be morally bad, which may explain why people move so fast towards angry intolerance.

With this regression come new threats. The spread of misinformation on social media platforms has been well-documented. Large proportions of the population now believe claims – on crime or migration in particular – which are the opposite of the truth.

Meanwhile, cognitive warfare has become a higher priority for states. Russia’s budget for cognitive warfare has been estimated at $2bn, while China’s is near $10bn. The 20th National Congress in 2022 announced an expansion of the “study and mastery of the characteristics and laws of information based and intelligent warfare” with the brain described as a priority for People’s Liberation Army investment and as the “main battlefield” of future warfare. In 2024, after floods killed over 200 people in Valencia, a Chinese operation posing as a Spanish human rights NGO circulated calls for the government to be overthrown.

These moves have prompted responses: Sweden established a psychological defence agency, France created VIGINUM in the office of the prime minister and Moldova set up a Centre for Strategic Communication and Combating Disinformation. The UK has at last caught up with the announcement of NCID.

Yet most countries have been slow to realise just how threatened they are by the weaponisation of collective stupidity, and even slower to understand the parallel effects of the big technology platforms which have incentives to lock populations into addictive, compulsive behaviours, and to undermine their ability to agree on effective laws, regulations or taxes.

In response, our societies urgently need to commit themselves to cognitive rearmament. That will require new institutions and capabilities for defence. But the task goes much wider. It requires nations to put a far higher premium on skills to spot lies, deceptions and manipulations, and to understand multiple points of view, rather than jumping to simplistic but wrong interpretations of events. It means rethinking defence to include both technological capabilities and in-depth strength in the population.

That process of developing robust critical thinking skills needs to start early, in primary school. Finland is a trailblazer and has for several years ensured that young people learn about disinformation. Denmark has done the same. But education is just as important for the adult population and should become a primary duty of public broadcasters.

We also urgently need new institutions to guard against the deepfakes that can easily disrupt elections, and new laws to promote truth and discourage industrial-scale lying. There is much to build on, including courts that see it as their primary duty to ‘ascertain the truth by the best evidence available’, consumer laws which already punish misleading and false advertising claims and the beginnings of serious action to strengthen truth in politics (such as Wales’ 2026 law banning lies in political communication).

Many democracies tried in the past to resist subversion and manipulation. Ancient Athens even subsidised access to the theatre to help citizens gain the skills needed to take part in shared decision-making. Mass education became a priority across the world in the 19th century, from Kerala to Scandinavia, which pioneered extensive adult education – cognitive infrastructures that helped enable the region’s extraordinary social and economic success in the 20th century.

Comparable ambition will be needed everywhere in the 21st century to ensure populations have the skills needed to navigate a world of ubiquitous smart technologies trained on every detail of human psychology, and to spot verbal and visual lies and manipulations.

Taking cognitive rearmament seriously matters for social and political reasons. But it also has obvious economic consequences. Improving cognitive capacity among older people is essential for economic growth, in the many countries with rapidly ageing populations that need to keep a growing army of the over-50s productive. Reversing cognitive decay among young people is equally essential for prospects of future growth.

Meanwhile, new industries will likely emerge around cognitive defence, with plenty of export potential – as every nation comes to realise that cognitive resilience is essential to future security and prosperity. For a precedent, just look at how rising cyberattacks and cybercrime spawned the vast cyber security industry. As defence spending increasingly covers not just drones and missiles but also these less tangible forms of defence and attack, new sectors are bound to grow.

For now, it remains unclear which nations have the foresight and courage to understand the new world we are in – a world which is being rapidly transformed by AI, in which new landscapes of cognitive vulnerability are becoming decisive.

Those that watch these developments passively will look as foolish as nations in past eras that failed to grasp that their old castles and walls, cavalry and cannons, had been rendered obsolete.

Geoff Mulgan is the author of Collective Stupidity, forthcoming from Princeton University Press

Subscribe now

Only the most churlish Starmerite would deny that Andy Burnham’s No 10 operation has got off to a flying start. With deft, swift and optimistic comms, Labour has overtaken Reform in the polls and is well on its way to reuniting the left. Despite this, I feel anxious that a Labour Prime Minister, with the potential to break the curse of fleeting tenures, is going to repeat one of Keir Starmer’s biggest mistakes: not moving far or fast enough on Europe.

During my time as a Foreign Office special adviser, I saw Rachel Reeves eventually conclude that breaking Labour’s red lines on Europe was necessary to achieve higher economic growth. But the window of opportunity had already closed. By the May elections, Starmer and Reeves had missed the political benefits of a more pro-European stance: rallying the Labour base and eroding support for the Greens and the Lib Dems. They had also missed the fiscal benefits of bond markets pricing in a higher growth trajectory. It was only in the dying days of his premiership that Starmer vowed to put Britain “at the heart of Europe” – without anything resembling a plan to do so.

What I fear now is this recent history repeating itself. The risk is that Burnham and John Healey endure a painful Budget, start to lose the party’s enthusiasm and the nation’s support, and only then realise they need to go further on Europe, having laid none of the diplomatic and political groundwork. In this post I’ll set out how they can do that – and why an election with Europe on the ballot is now Burnham’s best hope.

Read more

Subscribe now

Announcing his 1988 Budget, Chancellor Nigel Lawson said that “while tax reform is a simple matter for the armchair critic, it is very much more difficult in practice. It is difficult technically and difficult politically — since any tax system, however it arose, creates powerful vested interests in favour of the status quo.” He wasn’t wrong.

In 2026, Andy Burnham is riding a wave of support as voters return to Labour. But the policies fuelling this popularity won’t come cheap and they sit atop the highest interest rates on government debt in nearly three decades. The new Prime Minister will need to find some revenue and, taken alone, his ambition for economic transformation won’t save him.

The fate of Burnham’s predecessors serves as a warning: the bond-market backlash that blew up the Liz Truss government over unfunded tax cuts, and the pre-Budget briefings and U-turns that eroded Rachel Reeves’s credibility for the sake of technocratic tweaks, not transformative change. The new Prime Minister will need to do fiscal policy differently.

Yet proposed Budget measures are already prompting dissent. We see business advisers concerned about capital gains tax (CGT) reform, billionaires reportedly moving abroad to avoid an ‘exit tax’ and landlords opposed to a proportional property tax, while Londoners are warned that such a change could leave the capital paying £7.5bn more. Such groups, with economic and political sway, risk creating a post-Budget storm. The memory of tractors on Whitehall after farmers faced inheritance tax, and the government’s subsequent partial U-turn, compounds the trepidation.

In the Budget, Burnham should push through the noise to deliver meaningful tax reforms. But in the years ahead, Britain needs a more fundamental national conversation about the tax system. How should we get more money into the Exchequer without crushing growth? Who should the tax system help, and who should have to pay more? And how can the government manage the “powerful vested interests in favour of the status quo”?

That national conversation will not happen in the standard Budget process. It will not be driven by the Treasury alone. Instead, disruptive institutional change is needed. Learning from Elon Musk’s Department of Government Efficiency (DOGE) — both its successes and failures — Burnham needs a ‘DOGE on tax’.

The Burnham bill

Burnham’s bills are not small, and there are no easy options for paying them.

There are the recent cost-of-living measures, including the £100m cut to business rates for pubs and small venues and the £850m temporary removal of VAT on household electricity bills. Burnham also faces an £800m shortfall on council housebuilding and up to £9bn on defence (if the 3%-of-GDP target is to be met by 2030). A 10% increase in the social care budget, meanwhile, would cost £7.4bn.

That is before we account for the rise in government borrowing costs since the last official forecast in the spring — which has more than halved the Chancellor’s fiscal headroom from £23.6bn to £11.6bn — or the hard-to-measure long-term ambitions such as place-based regeneration and reindustrialisation.

Higher public investment could be funded through borrowing, but that risks raising debt interest costs as lenders demand higher interest rates. Spending cuts should play a role, but the political turmoil after the Starmer government’s cuts to winter fuel payments and disability benefits shows the risks. Tax rises will have to lift some of the weight.

Why we need a DOGE on tax

To drive through transformative tax reform, Burnham’s government needs to build legitimacy, embrace disruption, own trade-offs and give reforms the time and expertise to be assessed properly.

David Cameron’s coalition government tried something similar with the Office for Tax Simplification (OTS). The OTS was designed by Chancellor George Osborne as dry, legalistic and politically toothless. Consequently, ministers happily took the administrative tidying-up offered by the OTS, while shelving structural or politically sensitive reforms.

For a lesson on disruptive institutional change, we should look across the Atlantic. Musk’s DOGE lacked depth, running on chainsaws rather than expertise. It alienated staff and claims about its savings collapsed under scrutiny. But as Demos has identified, the federal initiative had real upsides: it challenged orthodoxies, owned disruption and drew on private-sector nous. DOGE posed good questions, but answered them badly.

Calls for a British DOGE have largely focused on spending cuts, but it is tax where the political and institutional barriers are highest — as decades of inertia show.

Tax reforms that make chancellors nervous

Burnham has two promising ways to raise revenue while keeping the bond markets calm. Both, however, have scared off his predecessors.

The first is reforms that improve fairness and efficiency in the tax system — but are undermined by uncertainty about how much revenue they would raise. Successive chancellors have shied away from pro-growth CGT reform, i.e. matching the rates with income tax, introducing new tax-free allowances to encourage investment and removing opportunities for investors to bypass the tax by moving abroad or passing on assets in inheritance.

Despite calls for change from across the political spectrum, uncertainty about the market response stands in the way. Closing the tax break for partnership businesses — which mainly benefits partners in legal, financial or accounting firms — is another missed opportunity. That reform was reportedly set for the Budget last year, but big-business lobbying and forecasting jitters threw it off course.

These are not isolated problems. They reflect a policymaking process in which Budget tax reforms are designed at speed, drowned in lobbying and starved of external expertise, before being cut down to fit an ever-changing fiscal black hole. Rushed forecasts often change as corporate opponents get louder. Too often, the chancellor of the day gets spooked.

The second clutch of reforms is economically obvious but politically daunting. Swapping council tax and stamp duty for a proportional property tax is a clear example. We would end a system in which North East households typically pay council tax at a rate, relative to the value of their house, more than three times that in London, while unlocking 79,000 homes each year by stopping stamp duty from discouraging property sales.

Merge National Insurance with income tax and you level the playing field between employees and other income earners (investors and landlords, for example), while tackling anti-growth tax incentives that favour one kind of income over another. Even a two-percentage-point shift raises £6bn. Fix the way we tax pensions, where the biggest reliefs often go to the very wealthy, and you achieve a fairer intergenerational settlement.

But once again, the barriers are deep-rooted. All these big but necessary reforms have winners and losers, and the latter shout louder. Landlords, pensioners, business owners, investors, high-value homeowners — these groups can make life extremely hard for a government, and IPPR has highlighted pathologies among the public and the press whereby concerns are amplified at the expense of praise. As Demos has argued, the chronic legitimacy deficit for the tax system means every chancellor feels unable to break with the status quo.

Public misunderstanding compounds this problem. As I’ve heard in focus groups, many people assume that pension contributions are fully taxed, so later charges feel like double taxation. It isn’t true, but try explaining that on the doorstep.

The standard Budget process, held tightly within the Treasury, is not fit to tackle these barriers.

The three pillars of a successful DOGE on tax

To effect progressive change in the tax system, and avoid the fate of the OTS, a successful ‘DOGE on tax’ needs to do three things.

First, build legitimacy through public participation, so the government can own the trade-offs. That does not mean discussing the minutiae of tax reforms (which risks triggering a harmful market reaction), but the values and principles underlying the tax system and how they weigh against each other. Labour should be discussing how to balance tax on work vs wealth, young vs old, sector vs sector. Embedding these values into tax policy — and using Burnham’s successful communications operation to raise their salience — would increase the legitimacy of ambitious tax reforms.

Second, be disruptive by design. That means escaping the restraints of Treasury orthodoxy and the Budget policymaking process. It means producing a mandate for tax reform based on first principles, not day-to-day constraints.

The name of the body also needs to be disruptive. Burnham could call the organisation the RESET Unit (Reforms for Equitable, Simple and Efficient Tax) or the FAIR Tax Unit (Fix, Axe, Improve, Reform). Whatever the choice, he must signal that real change is coming.

Third, assemble the expertise that serious forecasting requires. Do the background research needed and get a range of perspectives. With that, create a stable assessment of the expected revenue and the risks, rather than a rushed spreadsheet that changes weekly in the Budget lead-up and prevents chancellors from making a balanced choice.

Burnham should grasp the opportunity of his first Budget to drive meaningful change, but the radical overhaul we need is unlikely. A DOGE on tax may come too late to shape this Budget, but national renewal was never going to arrive in one fiscal cycle. The tax system is the engine that funds everything else Burnham has promised in the years to come. He needs to be brave enough to rebuild how it’s made.

Subscribe now

The long-expected news came last week. The FT reported that the UK’s AI Security Institute (AISI) had not been offered access to Anthropic’s latest large language model (LLM), Claude Mythos 5.1. For the institute, widely lauded as a successful UK initiative and described internally as “a start-up in the government”, this was a humbling moment.

But Anthropic’s exclusion of AISI from testing access shouldn’t necessarily surprise us. Before that, the institute had been offered unique access to pre-deployment models through a system of patronage dependent on the good grace of both the American frontier companies and now, officials suspect, the US government. Could Britain’s new normal now involve no access to cutting-edge LLMs?

In the same week, Anthropic researcher Jacob Coxon resigned, writing that he was deeply concerned about AI technology wiping out humanity. Evan Hubinger, a fellow Anthropic employee, responded by saying that he agreed with Coxon’s concerns and that there was a 10% chance of AI killing all humans.

There is legitimate concern among both the public and the British political class about these developments. How could there not be? But concerns surrounding AI safety are being misdirected in ways likely to make us more vulnerable.

Read more

Subscribe now

In 1981, a socialist leader was elected promising public control of industry, higher wealth taxes and a “complete rupture” with capitalism. François Mitterrand is now a curiously neglected figure – given that he ruled France for 14 years – but as Andy Burnham vows to end “40 years of neoliberalism”, Mitterrand’s fate feels once more instructive.

When Burnham declared a year ago that “we’ve got to get beyond this thing of being in hock to the bond market”, the Prime Minister’s fiercest critics likened him to Liz Truss. But Mitterrand’s presidency offers a more apposite parable of what happens if a left-wing government loses the confidence of the markets.

Two years after nationalising most private banks and France’s largest industrial groups, and raising the minimum wage by 10%, Mitterrand was forced into the tournant de la rigueur (or ‘austerity turn’). French public spending was cut by 44 billion francs, taxes on workers and consumers were increased by 40 billion francs and budget deficits were capped at 3% of GDP.

By comparison with the late president, Burnham’s ambitions appear strikingly moderate. But avoiding a Mitterrand moment has become one of his government’s defining tasks. It’s why you won’t hear Burnham repeat that earlier comment on the bond markets – which he would insist was misinterpreted – but will hear him declare that his administration is “grounded in fiscal responsibility”.

And he has little choice. Government borrowing costs are the highest in the G7, reflecting economic and political risks as well as the Bank of England’s overly aggressive bond sales. The national debt is 94.1% of GDP, its highest level since the early 1960s. And inflation, which had fallen consistently before the Iran war, has risen to 3.1%, with markets pricing in as many as five interest rate rises.

Weeks before the Budget on 28 October, John Healey’s room for manoeuvre is becoming painfully limited. The £23.6bn of “headroom” that Rachel Reeves left last November – the government’s margin for meeting the fiscal rules – is now estimated to have fallen to as little as £5bn.

In this post I’ll explore just how Britain became so fiscally exposed, explain why a wealth tax and rash welfare cuts are both bad options, and outline the space that a credible and progressive centre left should occupy.

Read more

Subscribe now

Every three years, the OECD publishes the results of its PISA assessments – a worldwide study of how well 15-year-olds do in reading, maths and science. Last week, the results of PISA 2025 were published and were among the most dramatic on record. The average test scores across dozens of countries have fallen precipitously since the last assessment in 2022 – and those scores were themselves down on the 2018 round.

What is going on? Two global trends are likely to be part of the explanation. First, Covid and the pandemic-era school closures may well have had a bigger, and longer-term, impact than we thought. Second, the rising use of technology and social media may be sapping students’ capacity to concentrate.

But England has avoided the downward trend: it is in the global top ten for reading, maths and science, and the second highest-performing country outside of East Asia.

Comparing England with the devolved nations is instructive. In 2012, England and Scotland scored around the same, but by 2025, Scottish students had fallen about a year behind in maths and science, and a smaller amount in reading. The scores of students in Northern Ireland, with its selective grammar school system, are around the same as in Scotland, while the scores of students in Wales are even lower.

Chart: Arguably. UK devolved national educational authorities PISA scores: science, reading and maths, 2018-2025.

Comparing policy approaches is also instructive. From 2010, England pursued a different education policy to Wales and Scotland – and, it has to be said, to many other parts of the world. As education secretary from 2010-14, Michael Gove introduced a knowledge-rich curriculum, removed coursework and teacher assessment from the exam system and reformed school league tables to focus on qualifications in traditional subject areas: English, maths, the sciences, history or geography and foreign languages (the English Baccalaureate).

The schools minister, Nick Gibb, oversaw a programme of phonics teaching and assessment in primary schools. There were structural changes too: it was made easier for state schools to opt out of local authority control and become academies and new ‘free schools’ were established, many of which were deeply committed to Gove and Gibb’s principles of explicit teaching, direct instruction and high expectations for all students.

By contrast, Wales and Scotland embraced almost diametrically opposed policies. Scotland started developing its Curriculum for Excellence in the late 2000s, and one of its main architects moved to Wales to advise on the curriculum. These curricula rejected the importance of traditional knowledge and assessment in favour of concepts such as 21st-century skills, teacher assessment and project-based learning.

This type of policy experiment is one of the benefits of devolution: culturally similar regions can pursue different policies, and we can all learn from the findings. And in this case, the findings are clear. It’s not just PISA 2025: English students are doing well in other international tests too, while some of the new free schools championed by Gove are delivering remarkable results and attracting visitors from around the world.

Share

Michaela Community School in Brent, with its controversial head teacher Katharine Birbalsingh, gets a lot of headlines, but there are other highly successful new schools too: Mercia School in Sheffield, Dixons Trinity in Bradford and Ark Soane in London have all posted exceptionally impressive results with non-selective intakes.

Are there downsides to English academic success? A common refrain is that English schools might be doing well at exams, but the students who leave them struggle in the job market, with 839,000 young people in England not in employment, education or training. However, the UK’s natural experiment can help us. Wales has a higher NEET rate than England, and one that has risen faster. So clearly education policy cannot solely be to blame here: it is likely that other economic factors matter more.

Another possible downside is mental health. Perhaps English students are uniquely depressed and miserable as a result of hot-housing in exam-factory-style schools. Again, this is difficult to sustain: the World Health Organisation does a frequent survey of adolescent health and while it finds that English students do dislike school and feel pressured by schoolwork, it also identifies something very similar in Wales and Scotland. As with NEETs, these are complex areas with complex causes which are not totally within the gift of schools to change.

What should Labour’s – and more broadly, the centre left’s – response to all this be? At present the signs are that the government would like to tear up many aspects of the Gove settlement. Education Secretary Lucy Powell and her predecessor Bridget Phillipson have been sceptical of school freedoms, academic accountability metrics, such as the EBacc, and the focus on terminal exams. But unpicking Gove’s reforms would be a mistake. On a purely political level, it is problematic for Labour to seem ambivalent about a success story which is attracting so much positive international attention.

But, more importantly, it would also be a mistaken policy turn. Gove’s measures delivered benefits for individuals and for the country at large, and it would be better to extend their reach than cancel them outright.

Two specific reforms, currently under discussion, represent a retrograde step. First, Powell has suggested that she would like to bring back coursework for national exams. This is a bad idea: even in 2010 it was obvious that coursework was being gamed and becoming a workload-heavy time sink for teachers and students. Now, with the advent of generative AI, the potential for coursework to lead to plagiarism is greater than ever.

Second, Andy Burnham has suggested that we need new qualifications such as GCSEs in AI, manufacturing and plumbing. These might sound relevant and good for the job market, but history shows that it is very hard for 11-16 schools to deliver high-quality vocational courses for large numbers of students.

A student who wants a career in AI is probably better served by doing well in their GCSE maths and physics courses than by taking a new GCSE in AI. A student who wants to be a plumber will be better served by enrolling on an existing plumbing NVQ at a further education college, which can provide specialist equipment and teaching, and manage links with local employers.

What should a reforming Labour government do instead? Powell has said that she wants an education system that “spreads excellence” rather than hoards it. One possible policy would be to identify around a hundred outstanding middle and senior leaders who have worked at some of the most successful schools in England, and create a training programme focused on preparing them for headship in struggling schools outside the big cities. If the government wants to focus on vocational education, it might be better to concentrate on FE colleges rather than schools, as they have greater specialist vocational expertise.

If Labour is serious about spreading rather than hoarding excellence, this would be far more powerful than dismantling a curriculum, assessment and accountability system that is rapidly becoming the envy of the world.

Subscribe now

Everyone seemed to write essays this summer. Tony Blair, Andy Burnham and, of course, Mark Zuckerberg. In “The Future is for Everyone”, Zuckerberg claimed that the world of superintelligence would not only consist of existential risk and threats to jobs and people alike, but, ultimately, opportunities for all to revel in the fruits of technology. The issue, as the title of his essay suggests, is that an emphasis on the future is not good enough — because it is not now.

Zuckerberg’s essay was not short of imagination or possibility, but it was short on dates. All his promises, once superintelligence arrives, remain in the future tense — the future is for everyone, eventually.

Even to someone more technologically optimistic than most, the gap between the present and that promised future feels less like a compelling vision than an admission that the medium term remains ill-thought-through. Those currently building the future are struggling to explain to those outside the tech bubble why they must wait for another LLM release for things to get materially better. Or even, that their technology will not kill off vast swathes of humanity within the next few years.

Read more

Today’s edition of Arguably features an in-depth interview with Times columnist James Marriott on his new book, The New Dark Ages: The End of Reading and the Dawn of a Post-Literate Society.

James and George Eaton discuss AI’s effect on universities, the legacy of TV on literacy, Andy Burnham’s English degree and whether the decline of reading threatens liberal democracy itself.

To read the full interview, become a paid subscriber or sign up for a seven-day free trial.

Subscribe now

George Eaton: The decline of reading is now quite a well-established trend. But you were one of the first commentators to spot it and give it the prominence it deserved. What were the early warning signs you picked up?

James Marriott: Probably the first was my own habitual pessimism. This is something I’ve always been talking to my friends about, and I think that pessimism wasn’t unjustified because one of the things I try and emphasise in the book is that this is a long story now and it dates back to the 1950s and the rise of television.

I did a piece about the challenges facing the humanities and this theme came up that people were struggling to get their kids to read books. I spoke to a lecturer who said that she had once assigned books such as Middlemarch and Ulysses to her students and those were basically falling off the syllabus because the capacity to read them wasn’t there. You always have to be careful as a columnist to avoid merely projecting your own prejudices onto the world, but that was a moment when I thought this is really something.

GE: You describe at length the moment in 2007 when Steve Jobs, an “appropriately messianic figure,” unveiled the iPhone. Is that where you would place most of the blame?

JM: No, I don’t think so, it’s probably equally proportioned. As I say in the book, it seems that all the most important statistics for the beginning of the decline of reading come from the 1950s. And television transforms leisure time in a way that we completely fail to appreciate because we’re so used to it. It’s hard to think ourselves back into that time when you’d just go to your front room and the most entertaining objects in the front room were probably your spouse and whatever the most interesting book you read was and probably also the radio.

So the iPhone is finishing what television started and it contains multiple revolutions within itself because it’s such an extraordinary piece of technology. The one that’s in the background of this book, and the reason this is such a ubiquitous topic of conversation, is the rise of short-form video, the rise of TikTok, the colonisation of every single social media platform with video. The idea that we’re moving from a text-based internet to a video and image-based internet has finally erupted and it’s really striking for people that their everyday lives look much, much less textual than they would have done even five or ten years ago.

GE: You quote the Google whistleblower Tristan Harris as saying that “you can try having self-control, but there are a thousand engineers on the other side of the screen working against you”. How much has using a ‘dumb phone’ helped in your case? And do you essentially think we need a people’s revolt against smartphones?

Read more

Subscribe now

Much has been made of the decline of the British high street, a process which now feels inexorable. The high streets etched in our public imagination will not return in the forms they took in previous decades. And Whitehall is not rising to the challenge of reinventing local retail for this century.

Successive governments have leaned on the same High Street Task Force or commissioned independent reports to solve the ‘enshittification’ of the high street. Much emphasis — not unreasonably — has been placed on addressing the immediate challenges of litter, antisocial behaviour and vacancy rates. But despite ad hoc and short-lived investments in high streets, the rapid turnover of politicians means that only one high street strategy has been developed in the last ten years — the post-Covid strategy to help high streets recover from the pandemic.

The High Street Fund was launched by businesses including Barclays and Deloitte after the 2011 riots, sparked by a protest over the police killing of Mark Duggan, which resulted in days of looting and riots in towns and cities across England. The fund provided small grants for emergency shop repairs and the replacement of damaged stock.

The Future High Streets Fund announced by Theresa May was established to support “shovel-ready” projects — such as the pedestrianisation of two streets in North Devon. Boris Johnson’s Levelling Up Fund and Rishi Sunak’s Long-term Plan for Towns followed, focused on supporting similar schemes such as the creation of Aberdeen Market.

In recent years, Keir Starmer went further, creating the £5bn Pride in Place Programme, granting 10-year endowments to 250 disadvantaged communities. A study by the Independent Commission on Neighbourhoods found that the Starmer administration spent more than Johnson on such interventions, relative to its time in office — a record to be proud of as we move into the Burnham administration.

Our personal favourite is the well-intentioned Chewing Gum Task Force, funded by chewing gum manufacturers including Wrigley and managed by Keep Britain Tidy. The Task Force has helped local authorities clean over four million square metres of pavement. We await the establishment of a Graffiti Task Force, funded by paint manufacturers!

But to be frank, most of these policies have been sticking plasters on a longer, deeper decline. Shopping has increasingly moved online, where retailers continue to benefit from more favourable tax treatment than their bricks-and-mortar competitors, including Chinese giants such as Temu. At the same time, the rise of out-of-town business parks has drawn spending away from the high street, while the cost-of-living crisis has squeezed disposable incomes.

The Burnham administration has turned its attention to high streets early. And, so far, the new government seems to understand the scale of the problem. The Prime Minister has started with a crackdown on money launderers and tax evaders. Though there is no consensus on the scale of counterfeit Britain, Westminster City Council alone has seized millions of pounds’ worth of dodgy merchandise from American-style candy stores that have come to symbolise Oxford Street’s decline. Burnham has also established a task force to — as the Guardian put it — generate “radical” ideas to revive high streets.

But no amount of cosmetic change will ‘save’ the high street. The public has long voted with its feet — or, more accurately, its thumbs — opting for Amazon and other online retailers. Punters do so in the comfort of their pyjamas. If we want to encourage people to get up from their sofa, a much more radical vision for the high street is needed.

That requires the uncomfortable and serious task of restructuring our local economies. Our high streets are oversaturated with retail and, too often, dominated by low-quality shops. We must look for an alternative.

In innovation policy — which is charged with the development and application of new ideas and technologies — the ‘triple helix’ model, coined by Henry Etzkowitz and Loet Leydesdorff in the 1990s, describes how the interaction between industry, academia and government is necessary to foster innovation. The modern high street, dominated by retail, needs a triple helix of its own: experiences, shops and services — attracting young and old alike, drawing in people across different income groups and backgrounds to sustain high street footfall.

Thriving high streets benefit from experiences: bowling alleys, cinemas, laser tag, children’s play areas and restaurants. They need retailers: from independent or community-owned shops to large international brands. And they need to include services: dentists and GPs, laundrettes and libraries, nurseries and food banks, pharmacies and substance misuse services.

The high street must, in short, give the public access to beetroots, bowling alleys and botox — experiences, retail and essential services in one place. This helps increase the central metric of high street success: footfall. Those that are dominated by retail lack a diverse mix of uses and risk entering a doom loop, whereby declining footfall attracts low-quality businesses, accelerating decline and vacancy rates.

Share

Not every parade of shops can offer that variety, of course, but large town-centre high streets can and should. Peckham’s Bussey Building is one example: a cluster of former industrial factories and a car park off the high street, it has been transformed into a visitor destination with culture, leisure and hospitality, complete with a rooftop bar. It shows how assets can be repurposed creatively to draw people back to the high street.

Those high streets often benefit from wealthier punters with higher-than-average disposable incomes, but the working-class industrial high streets in the North and Midlands need not look like Kensington or Chelsea’s main thoroughfares to serve their communities and be places of meaning.

But we need a new financial model for high street regeneration to ensure that every postcode benefits. There are currently two models that we are heavily reliant on and neither is going to provide the transformational change at the scale we need.

The first is public subsidy. Historic England, Arts Council England, the Ministry of Housing, Communities and Local Government and the Department for Culture, Media and Sport all play their part, as does the National Lottery Heritage Fund alongside many voluntary and community organisations.

The government should continue investing, particularly in places where market conditions make private investment difficult. But there will never be enough public money to regenerate every struggling high street through grant funding alone. We therefore need to use public investment to attract and shape much larger pools of private capital.

The second model is redevelopment, particularly through housing. There is merit in building more homes on and around high streets. They are usually well-connected, centrally located and often surprisingly low-density: many were built around one- and two-storey commercial premises in the early and mid-20th century. More residents mean more customers.

But redevelopment is undermined by poor viability, fragmented ownership, the cost of assembling sites and low land values. We therefore need a broader toolkit. We propose High Street Investment Zones: special-purpose development vehicles giving the new mayors and their strategic authorities greater autonomy and stronger powers to shape the future of strategically important high streets.

These investment zones could combine more muscular Compulsory Purchase Order (CPO) powers with targeted public investment and stronger licensing and enforcement powers. A beefed-up CPO mechanism would allow places not only to bring vacant and underused properties back into productive use, but to exercise greater control over uses that can undermine the long-term health of a high street — including, where appropriate, limiting the proliferation of gambling operators and vape shops.

Zones could operate similarly to what Power to Change, a charity that promotes community ownership, describes as a Property Holding Vehicle (PHV): a government-backed investment vehicle to purchase and restore high streets.

In Power to Change’s vision, the PHV would be brought under community ownership. But there are alternatives. Instead, a High Street Investment Zone could take a broader portfolio approach to regeneration, acquiring properties and sites, regenerating them and capturing some of the subsequent uplift in rents, values and revenue from business rates. Returns from successful assets could then be recycled into harder-to-develop parts of the high street.

Rather than the government using limited fiscal headroom to regenerate places it does not own, the public sector should build an asset base whose returns help finance the next round of regeneration. That’s not unreasonable when, as IPPR has set out, local authorities sold 75,000 council-owned assets between 2010 and 2023.

Finally, high streets need to be more attractive places to spend time. That means addressing their physical deterioration and the insecurity that has become associated with too many of them.

Cheap neon signs, overflowing bins, hostile street furniture, poor lighting and no tree cover, after a record-breaking summer, do not make the high street attractive. Beautification — an approach many governments have already tried — is a perfectly reasonable strategy when paired with structural changes such as new financing models for high street regeneration, more diversity across them and a concerted effort to help shops retain more of their income. Programmes such as Pride in Place can support this, but maintaining attractive high streets requires ongoing investment.

The second dimension is safety. People will not spend an afternoon, stay for dinner or allow their children to travel independently to a high street they do not feel comfortable in. That means basing police resources in high streets. Barking, in east London, demonstrates how not to do this: the historic Barking Magistrates’ Court in the centre of Barking is now insecure housing and the former Barking Police Station was allegedly converted illegally into a ‘beds for hire’ hostel with 30 people living in five rooms back in 2015. The building is now a nail salon.

Unlike London’s ‘tri-borough’ service, where policing is split across three local authorities, the government’s new Local Police Units will mirror local authorities’ geographies — bringing them closer to the communities they serve, which may help the high street feel safer. But we need a new generation of police officers and stations alongside properly resourced local authority enforcement to tackle persistent antisocial behaviour, environmental crime and businesses operating outside the rules.

Reinventing the high street for real does not mean returning to the past — retail habits have changed too profoundly in the last half-century with the rise of out-of-town retail for the baby boomers, online retail for Gen X and falls in drinking for Gen Z. Now, most British towns, without large reserves of wealth, can no longer guarantee demand for separate family-owned butchers, grocers, bakers and chemists. But the human desire for social connection and independent commerce, outside major multinationals, remains.

We must adjust to the digital age by providing a high street with the things the internet still cannot replicate: human interaction, experience, public services, community, place, identity. To achieve this, we need to find a new model to finance high streets. Laying the groundwork over this parliament requires taking back control of the high street from counterfeit operators and building the political appetite to break up the retail monoculture that can no longer sustain our town centres.

Subscribe now

Earlier this year I found myself on an air-conditioned, nearly silent train, eating onigiri while watching mountains, rainforest and factories pass by at 300km/hr, and wondering where Britain went wrong.

I was travelling from Taipei, Taiwan’s northern capital, south to Taichung, a journey which takes you past factories that made the chips in your phone and the screen you’re reading this on. Just decades ago, these factories were rice fields.

Taiwan’s rapid industrialisation would be comparable to China’s if it hadn’t ended in such a different place: today Taiwan is richer, freer and the most democratic country in Asia.

There is one, elephantine reason to not want to be Taiwan. The de facto independent island of 23 million people faces a daily threat of violent conflict between superpowers.

But on almost every other metric, Taiwan is roaring. Last month, its annual growth forecast hit 11.05%, a rate unheard of for developed countries. For context, the UK hasn’t grown above 4% in a normal (non-rebound) year since the early 1970s. Unemployment is low at 3.3%, and the country is more equal than its neighbours, and indeed the UK.

Read more

Subscribe now

Samuel McIlhagga is Arguably’s new assistant editor. He spent just under two years reporting on the economics and politics of the West Midlands for the Birmingham Dispatch.

Before that, he spent a decade working as a freelance feature writer and reporter for titles including UnHerd, Foreign Policy, the FT, the Independent and Jacobin. In 2024, he won the Rupert Cornwell Prize for foreign journalism.

You can pitch him at samuel@arguably.uk and follow him @McilhaggaSamuel.

George Eaton, Editor-in-Chief, Arguably

Back in July, as he accepted the Labour leadership, Andy Burnham declared that he would be a leader for “the north and the south, for Scotland, for Wales and for Northern Ireland”.

It may have been unintentional, but Burnham missed out a vast swathe of the country in his political promise: the Midlands. Much has been made of the Prime Minister’s northern-centric agenda and the potential fiscal consequences for the south-east. But in contrast to London, Birmingham is conspicuously absent from Burnhamite discourse.

And people have noticed. Burnham’s consistent failure to mention the Midlands, or cite Birmingham as a city in need of renewal, is frustrating given his rhetorical concern with “forgotten or written-off” places.

Burnham has made NEETs (Not in Education, Employment or Training) and chronic unemployment central to his messaging about the “left behind.” However, he has failed to note that the second-largest city in the UK now has the second-highest rate of working-age adults on out-of-work benefits (at 25%) of any conurbation — rivalling only Blackpool.

In many ways, Birmingham is in crisis: racked by a disputed ‘bankruptcy’, afflicted by a prolonged bin strike and governed by an unstable rainbow coalition of parties after the 2026 local election. Burnham and Labour’s politics cannot descend into tidy binaries about north and south if the city is to flourish and harness its unique advantages.

These include its geographic centrality and function as a major railway node, event-space infrastructure (the NEC, Utilita Arena and ICC), the city’s unusually young population (43.8% under 30, compared to 35.7% for England) and decades of accumulated industrial process knowledge through large manufacturers such as Jaguar Land Rover (JLR) and Aston Martin.

The last time Labour indulged in north-south thinking, under Clement Attlee and then Harold Wilson, a large part of Birmingham’s growth was limited by 1940s IDCs (Industrial Development Certificates) and 1960s ODCs (Office Development Certificates). These government vetoes sought to restrict development in the Midlands and redistribute it to places such as south Wales, the north-west and Scotland.

The result was catastrophic, transforming Birmingham and the West Midlands from the region with the highest household income, between 1961 and 1963, into an area defined by high unemployment and an undiversified economy — especially compared to London and Manchester. An odd inversion, considering Birmingham featured as a model of a diversified high-wage city in the urbanist Jane Jacobs’s The Economy of Cities.

The Prime Minister’s Birmingham blind spot hasn’t always been so pronounced. Back in the late 2010s, local media celebrated the “Two Andys” — Burnham and Andy Street, the then (wet) Tory mayor of the West Midlands — as an innovative cross-party collaboration in devolution, centred on HS2 and bottom-up regional growth. This was, in some respects, a forerunner of the political model Labour is now pursuing.

Since then, the current Labour mayor of the West Midlands, Richard Parker, seemingly hasn’t managed a one-to-one meeting with Burnham at Downing Street, and there has been no indication of a No 10 Midlands to accompany the current northern outpost. In 2026, the south has Westminster; the north has its new venture; Scotland has Holyrood; Northern Ireland has Stormont; Wales has Cardiff Bay — the Midlands has nothing.

This is an oversight on the Prime Minister’s part — Birmingham should be central to Labour’s vision, not marginal. Burnham has leading West Midlands MPs in his cabinet such as Shabana Mahmood and Pat McFadden to help craft a regional strategy. Mahmood holds Ladywood with a majority of 3,421, down from 28,582 in 2019 — largely due to the Gaza Independents (a pattern replicated across Labour seats in the area). As the next election approaches, there will be pressure on Burnham to pay more attention to the city.

In the early 1960s, Birmingham and the urban West Midlands had higher average family incomes than every other region of the UK, including London. The city’s weekly wages are now £299.90 below the capital’s and £15.90 below Manchester’s. Labour’s time in office will have been a failure if Birmingham does not begin to narrow this gap. But the city doesn’t necessarily need to follow Manchester’s path to recover.

Should Manchesterism really be Birminghamism?

Ironically, the Prime Minister’s ‘Manchesterism’ looks more like a set of policy proposals designed to address the needs of Birmingham than Manchester itself.

London and the home counties are the pole which Burnham negatively structures ‘Manchesterism’ against (despite protests to the contrary) — criticising the elevation of the knowledge economy over manufacturing, property speculation over productive investment and Treasury thinking over mayoral strategy.

This is strange because Burnham, alongside figures such as council chief executive Howard Bernstein, pioneered Manchester’s rise through very different means. Namely, growth was achieved via a dramatic increase in high-skilled service companies and an FDI (foreign direct investment)-led, partly Chinese and partly Emirati, property boom. In many ways, the tenures of Bernstein and Burnham made Manchester more like London, not less like it.

But these uncomfortable facts about Manchester’s rebirth are increasingly marginal to the main thrust of Labour’s regional devolution approach. At some point, Blairite notions about the knowledge economy, SME tech firms and university-led innovation were traded for industrial strategy, state-led development and reindustrialisation by Burnham.

Even the PM’s more populist offerings — tidying up high streets, cracking down on vape shops, helping pubs with rising costs, tackling anti-social behaviour — seem better suited to Birmingham than Manchester.

Spend any amount of time in both places, and you quickly realise it’s not Manchester city centre that is drowning under litter, full of empty shopping units and fenced-off derelict buildings. Compare Manchester’s Northern Quarter and Ancoats (buzzing with shops, bars and clubs) with Birmingham’s Digbeth and the Jewellery Quarter — often dead on the weekend and attacked by fly-tippers.

But these comparisons with Manchester do not mean that Birmingham needs to ‘catch up’ with its northern sibling. Instead, the city needs to play a different game — recognising a path-dependence that goes back to the 19th century.

Subscribe now

Birmingham’s special path

Manchester has always been vanguardist, a city of capitalism at scale: Adam Tooze recently described it as the premier “shock city of the 19th century”. In contrast, Birmingham, up until the 20th century, was more artisan — full of small manufacturers and inventors producing patents and prototypes.

From the city’s awkward 18th-century development (it’s not on a port or large river) to its mid-20th-century obsession with car travel and motorways (it’s the least active city outside North America), Birmingham has been on a Sonderweg (or special path). This includes being less radically left-wing than Manchester or Glasgow (masters and artisans worked closely together) with large manufacturers only arriving in the early 20th century in the form of motorcycle and car plants.

The historian Asa Briggs wrote in Victorian Cities (1963) that “if Engels had lived not in Manchester but Birmingham… Marx might not have been a communist but a currency reformer.” Indeed, Burnham should think of our contemporary great industrial cities as each having a comparative advantage — Leeds dominating wool, Sheffield steel, Manchester textiles, Liverpool commerce and Birmingham light engineering in the 19th century.

Birmingham was a town that radical Nonconformists and experimenters more interested in scientific innovation than Anglican orthodoxy went to in the 18th century, avoiding the stuffiness of the wealthy capital. Joseph Priestley, the discoverer of oxygen, pioneered a scientific renaissance and Boulton and Watt scaled up the production of steam engines into an industrial process. Birmingham’s leading political dynasty, the Chamberlains, who would go on to capture the Foreign Office, the Treasury and No 10, were Unitarians, not Anglicans.

In 2026, however, Birmingham lacks the skills to turn its outsider status back towards innovation — mostly because of the growth of huge manufacturing concerns in the early 20th century that, once deindustrialised in the 1970s and 1980s, left an economic and skills hole in Britain’s second city.

The skills gap

The Midlands’ capital has struggled to build a dense knowledge economy, and is currently characterised by economic inactivity and low-skilled service work. Consequently, the developmental and ‘productive state’, outlined by think tanks such as Common Wealth, is arguably a concept more suited to Birmingham than Manchester.

For instance, West Midlands-based firms such as JLR, Aston Martin and Collins Aerospace are disproportionately affected by global shocks and tariff wars, compared with Manchester’s knowledge-service firms, including multinationals like PwC and homegrown tech groups such as cloud-computing firm ANS.

In contrast to Birmingham’s short-term trade shock risk, Manchester may be affected in the medium term by AI eating into its intelligence premiums — the extra money that a scarcity of top-level human intelligence tends to generate for those with elite education in law, consulting, medicine, finance and academia. Instead of seeking to bring every British city to the same standard, Burnham should recognise the comparative advantages of each.

His “good growth in every postcode” has direct implications for Birmingham, a city that, unlike Manchester, attracts record FDI but struggles to distribute it beyond a narrow set of corporate offices. Despite the relocation of Goldman Sachs, PwC and HSBC offices to Centenary and Chamberlain Squares in Birmingham, the city historically has one of the lowest skills profiles in the country (defined as those with no GCSEs or vocational qualifications).

According to 2024-2025 Nomis ONS data, Birmingham’s graduate-equivalent workforce stands at 45.3% against a UK national average of 48.6% — almost every other large city sits above it (Manchester 58.5%, Glasgow 56.8%, Newcastle 50%, Liverpool 49.7%, Leeds 48.9%). Currently, there are few jobs for the population to go into — even if education rates improve. Birmingham’s job density measure is four points below the national average, while Manchester’s is 36 points above.

When you expand to PUAs (Primary Urban Areas), which take in older and less educated suburbs, Manchester, Newcastle, Leeds and Liverpool slip behind the national average graduate share. But, notably, Birmingham remains well behind its peers — in effect, the city has a very low share of graduates in both its urban core and peripheries.

Share

Abundance with Brummie characteristics

But a comparative lack of graduates might not be a bad thing — Birmingham could act as a hedge against Manchester and London’s reliance on generating returns from scarce human intelligence in law, tech and consulting (all industries challenged by AI). Burnham’s focus on technical apprenticeships might equip Birmingham’s large non-graduate population with the tools to pioneer the green energy transition and extend high-speed rail.

In short, with the right strategy, Birmingham should be the British city occupying the top left-hand corner of the above scatter graph — dense with jobs, without relying on AI-threatened graduate knowledge-work. These roles would need to be in engineering, manufacturing and construction, rather than sectors such as customer service support, IT support and administration, to act as a proper hedge. Birmingham could look to its East Midlands neighbour Derby as a start — it has around the same graduate workforce percentage as Birmingham but much higher job density and skilled work rates, despite being a fifth of the size.

Meanwhile, Burnham’s prioritisation of NEETs should benefit what is a critically out-of-work metropolis. Where jobs do exist, Birmingham continues to be a city slanted towards low-wage elementary occupations (12.6% vs a 9.1% UK average), rather than higher-wage technical and vocational jobs. Birmingham has a low share of manufacturing and technical jobs for a below-average graduate workforce city — machine operators are 0.3% below the national average, while skilled trades are 2% below average.

To paraphrase the journalist David Goodhart, Burnham’s Manchesterism might transform Birmingham into the “hand” capital in modern Britain’s “head, hand, heart” division of labour between knowledge, manufacturing and care. If all three specialisms are brought into parity, Birmingham’s reliance on non-graduates need not be a problem. In fact, it could be an advantage.

As the Harvard political philosopher Michael Sandel argues in The Tyranny of Merit, places and people shouldn’t need to conform to the edicts of the global professional-managerial class to flourish. What Britain lacks, and what Birmingham could provide, is a large technical Mittelstand of industrial and R&D companies registered and owned in the UK, backed by an energy policy which won’t cripple innovation through inflated costs (something Germany currently struggles to mitigate).

In recent decades, before the energy crisis caused by Russia’s 2022 invasion of Ukraine, and China’s expansion into the automobile market, German cities such as Stuttgart, Wolfsburg and Ingolstadt sat in a top-left position — a spot Birmingham could occupy at a much larger scale. These German cities are dense with high-value non-graduate technical jobs created through the duale Ausbildung apprenticeship system. Birmingham should copy them — without replicating the Mittelstand’s vulnerabilities to Chinese exports.

Policies for Birmingham

Birmingham’s revival as a city of a thousand trades is almost entirely dependent on two things — Labour reducing sky-high commercial energy prices and overly restrictive planning regulations. Once these constraints have been addressed, because a focus on skills is useless without jobs, Burnham should do four things.

One, revive Vince Cable’s National College Scheme and make Birmingham and the West Midlands their home. Only two out of the seven National Colleges made it to 2026 without being cut or effectively going bankrupt. The High Speed Rail College in Aston, Birmingham, closed after only six years with fewer than 30 students.

Two, massively expand the city’s tram system. Lyon, one of France’s second-tier cities, has 13 metro and tram lines (including funiculars), while Birmingham has one. As data analyst Tom Forth has pointed out, Birmingham effectively shrinks in size at rush hour because of its overreliance on buses, limiting people’s ability to commute to the city centre for higher-skilled and more productive work.

Three, abolish Birmingham’s central Queensway (A4400) and Middleway (A4540) ring roads. The ‘concrete collar’ strangles movement and development within the city. The West Midlands Combined Authority should replace them with a Viennese-style Ringstrasse — complete with a circular tram system, dense housing, a circular park and commercial space for start-ups.

Four, urbanise the gap between Birmingham and Coventry. There is currently 9km of poor-quality green belt between them (known as the Meriden Gap) — the two places are effectively part of the same conurbation but are arbitrarily separated by planning restrictions. Closing the Meriden Gap by clustering housing development around the pre-existing Birmingham-Coventry rail line, the planned HS2 interchange station and a planned tramline, would create strong economic agglomeration effects for the region.

The lack of highly productive firms in Britain’s second city can be seen in the data. Birmingham has become one of the largest cities by population in Western Europe, surpassing Marseille, Lyon, Cologne, and Brussels — while having a GVA (gross value added) score 16 points below them on average. To be frank, this isn’t just a Birmingham problem: almost all large provincial ex-industrial English cities are outcompeted by their continental peers.

However, the city could pioneer a separate trajectory out of this very English abyss: pushing for the fruits of Labour’s newfound enthusiasm for industrial policy and national manufacturing champions. If anything, Burnham needs to look 90 miles down the M6 for what should be the main beneficiary of his politics.

Leave a comment

I spent a chunk of my summer sitting in my London flat. This is a building designed to trap heat in a city never designed to have any. At some point, I caught myself actively fantasising about a cold summer. Think grey Bergen drizzle, a lake in southern Sweden, somewhere with a temperate climate that would require a jumper.

Seemingly, I’m not the only one. The word ‘coolcation’ has been gaining traction lately. What, exactly, does this portmanteau mean? According to many, the implication is that while Southern Europe bakes (with Spain and France pushing past 45°C this summer), northern Europeans looked at the forecast and turned the car around – trading beaches for fjords and Benidorm for Bergen. This seems like a plausible story to me: does the data agree?

What do the numbers say?

People are, without question, searching for holidays differently. On the French version of Hotels.com, searches for Copenhagen jumped 246% after the first May heatwave and Dublin rose 151%, while cooler holiday searches were up 74% year-on-year. The trouble is what this search data can and cannot do. A growing literature, from Choi and Varian to Havranek and Zeynalov, has shown that search interest is a good nowcast: it estimates what is happening right now, before the official statistics land, which in our case means the next few booking weeks. What it does not do is forecast the season.

Subscribe now

I built a comparison, using multiple indicators, myself. For each set of destinations, I put the demand signal (search interest, forward bookings, stated intent) next to the realised outcome (actual overnight stays and arrivals, from national statistics offices and Eurostat). The result? What I like to call: ‘the coolcation gap’.

Across these destinations the demand signal averages nearly 200% growth year-on-year while the realised outcome averages about 6% growth, a divergence of roughly thirty to one. If the coolcation were a real migration, the northern ‘cool’ destinations should be climbing while the southern ones fall. Instead, every destination that was supposed to be losing tourists is still growing: Norway’s foreign guest nights are up 14%, but so is Malta at 10%, Greece at 4%, Spain at 3.5%, Croatia at 1%. So, the north did go up somewhat but the south did not go down.

Greece shows why. At first glance it had a record 2025, but when I looked closer, it turned out to be a pricing story. In July, revenue per available room rose 15.4%, but almost all of that came from a 20.7% jump in the average daily rate, while occupancy actually softened.

A genuine coolcation shows up as empty rooms and falling rates. Instead, the rooms are nearly as full and the prices are higher, which is a sign demand is holding.

So if tourists are still, hesitantly, arriving and spending in the Mediterranean, what’s changed? To identify a change we have to look at when people are travelling. Southern Mediterranean tourism is still 59% concentrated in the prime summer months, but most of the growth is ‘in the shoulders’, with May and June bookings up 13% and September and October up 20%, and airlines scheduling 4.6% more seats into the region this coming winter.

Why is this a problem?

To identify the problem, we have to look further into the future. The European Commission’s Joint Research Centre (JRC) 2023 modelled 269 regions against a Tourism Climate Index, finding that a 1% rise in climatic comfort buys about a 0.57% rise in bed-nights. Meanwhile, when the same model is projected forward to a world 3 to 4°C warmer, it gives a headline number of roughly 10% of summer demand lost in the south.

I assumed a 10% demand reduction would not be problematic per se – until I placed the projected summer warming next to how much each economy leans on tourism.

The coasts that are projected to warm the most, the Iberian, Italian, Adriatic and Aegean rim, almost entirely overlap with the coasts that lean hardest on tourism as a share of the economy. In contrast, the Atlantic northwest – Ireland, the UK, western France – barely shows up on the tourism dependence map.

Looking at the data systematically, we can see which countries are most exposed – the ones where the heat and the economic dependence coincide, hot and reliant on the summer season.

So I turned that overlap into an exposure map. The horizontal axis is how dependent each economy is on tourism, measured as travel receipts as a share of GDP (Eurostat, 2024) – that is, the actual money foreign visitors spend, rather than the flatteringly large ‘total contribution’ figures the World Travel and Tourism Council (WTTC) publishes, which fold in supply-chain, investment and knock-on spending and so inflate the headline two- or threefold. The vertical axis is my own costing of what a JRC-style 10% summer drop would take off the table, in euros. The arithmetic is deliberately back-of-napkin: inbound revenue × summer share × 10%.

Share Arguably

The map splits two dynamics apart. We can see absolute exposure in the top half and structural exposure in the bottom and top right corners. Structural exposure is defined by how much the whole economy depends on tourism. Croatia sits at 17.5% of GDP, three-quarters of it earned in summer, in a country of under four million, with Cyprus and Malta beside it, small and hot and almost entirely a summer proposition, with no autumn demand to fall back on.

This is where political economy becomes a useful lens. There is a critical tradition in tourism studies that refuses to treat tourism as mere leisure and reads it instead as a relationship of power, asking who owns and profits from it. Growing out of dependency theory in the late 1970s, it defined itself against the sunny modernisation view that tourism was a straightforward development ladder for poorer countries, arguing the reverse: that heavy specialisation results in dependency rather than an opportunity.

Turner and Ash had already named the ‘pleasure periphery’ in 1975, the poorer sunlit regions reorganised to serve the leisure of wealthy northern populations; Raoul Bianchi’s more recent political economy of tourism has carried it forward. The thesis is consistent across all of them: the core exports comfort; the periphery imports price-taking seasonal demand and rebuilds itself around serving it.

Climate adds a physical squeeze on top of the structural one, turning the periphery’s one asset, pleasant rather than dangerous summer sun, into a liability in its peak weeks. While a diversified economy loses a product line, a dependency loses its reason for being. That is why the same 10% is a rounding error for Germany and an existential question for Malta. This is why ‘just pivot to the shoulder season’ costs a city that is still charming when it rains very little, and a sun-and-sand monoculture almost everything.

Somebody must be gaining from climate change. The JRC pencils in Germany, Denmark and the Netherlands for demand gains above 5%. Notably, West Wales, of all places, is the single biggest projected winner. But the gains are diffuse, spread thin across temperate places and hard to pin specifically on climate rather than price or fashion. The losses, meanwhile, when they concentrate, land hard and narrowly on a few summer-only economies. Diffuse gains and concentrated losses: that asymmetry is the real policy problem.

The implications

If the threat is timing rather than migration, the policy response is not to chase the ‘coolcation’ crowd north but to make the months around the current peak work. It’s encouraging that the levers are known and some are already being pulled.

The most concrete are the dull, structural levers. Staggering school holidays across the continent is the single high-leverage move available, and the one policy governments are slowest to coordinate. Yet, flight capacity is following market demand: seat numbers into Italy, Spain, Greece, Croatia and Portugal for the final quarter of 2026 are up 4.6% year-on-year, with Greece adding 10.7%. This is precisely the off-peak connectivity a longer season needs. And winter hotel rates across those five markets are now markedly below summer, which is the price signal doing its job, pulling cost-sensitive travellers into April and October.

But connectivity and price discounting only smooth the curve; they do not cure the dependency – the harder and more important half of the equation. The exposed economies in the top-right of my map cannot price their way out of being a single-season monoculture, and the good news is that the most serious of them have stopped pretending otherwise.

Greece, which is overheating both literally and figuratively, is now building the machinery to break that single-season dependence. It includes a Special Spatial Framework that grades each region by carrying capacity – how many visitors a place can take before its infrastructure and environment start to buckle – rather than letting the islands absorb unlimited numbers. National and regional tourism observatories now track visitor pressure across regions and seasons, while the state actively pushes tourism inland and into the mountains, through the Peloponnese and Epirus, places that work in November.

The OECD’s 2026 tourism review mirrors current Greek dynamics, albeit in convoluted policy language, arguing that dependent nations need to reduce seasonality and diversify their tourism products, or watch competitiveness erode. Around Greece, the rest of the Mediterranean is diversifying into gastronomy, wellness, rural stays and archaeology, and the European Commission is nudging the whole bloc toward ‘climate-resilient tourism strategies’.

Happily, for once, the climate-conscious choice and the pleasant option point the same way. A Mediterranean holiday in May or late September is cooler, quieter, cheaper, and kinder to the place, since your money arrives in the months it is needed most – rather than in the months when the town is already drowning in demand.

You do not have to discover Bergen to escape the crush. Instead, simply keep your original plans and move your trip five weeks back. That is the whole coolcation, really: it was never about going somewhere colder, only about going at a colder time.

I started this summer sweating in a London flat and fantasising about a lake in Sweden. It turns out the lake could also just be in a more affordable country but at another time of the year.

A postage stamp shows Eleanor Roosevelt, the longest-serving first lady, reading to children (AS photo family/Shutterstock)

Earlier this year, Reform UK announced that it would introduce a “Women and Motherhood Protection Act” if elected. The proposed law would offer various forms of protection around pregnancy, breastfeeding and fertility treatment. Suella Braverman, the party’s education spokesperson, declared that “a Reform UK government would be the most pro-woman, pro-mother, and pro-family government in British history”.

Yet the contradictions are obvious. The protections promised by Reform already exist in law and, by repealing the 2010 Equality Act, it would actually remove the right to equal pay for equal work, reverting to the narrower standard of equal pay for identical work. And let us not forget that Reform was happy to have James McMurdock – convicted aged 19 for assaulting his girlfriend – as an MP from 2024-25. A “pro-woman” party this is not.

On the left, meanwhile, there is increasingly a similar, but distinct, biological fatalism, which is also inadequate. Put simply, bio-essentialism is the notion that sex differences are rooted, immutably, in bodies. It is less interested in how culture and social life produce divergences in the experiences of men and women; when discussed at all, they are reduced to expressions of deep-seated hormonal and genetic coding – witness recent calls for paid menstrual leave.

Instead of lapsing into either pseudo-scientific ‘just-so’ stories about men and women, or flat-out denial of biological reality, social democrats need to devise stronger answers than the right.

Read more