David Peniket

[Julian Jessop @julianHjessop]

So just to be clear... 🤔

1️⃣ you will "buy British" even if a foreign company can provide a better product at a lower price?

2️⃣ you will ignore all our international agreements that require fair competition for government contracts, even though other countries will now lock UK companies out?

3️⃣ you think protectionism is a sensible economic policy, despite all the evidence that it undermines productivity and growth, and costs jobs?

[Adam Smith Institute @ASI]

Since you mentioned the 1980s, @andyburnham, here’s a reminder of what was achieved:

• Top rate of income tax: 83% → 40%
• Savings income taxed at up to 98% in 1979 — surcharge abolished
• Basic rate: 33% → 25%
• Inflation: 21.9% peak (1980) → 2.4% (1986)
• Days lost to strikes: 29.5 million (1979) → 1.9 million (1990)
• Real take-home pay for the average earner: up by a third

• Right to Buy: over a million council tenants became homeowners
• Home ownership: 55% → 67%
• Individual shareholders: 3 million → 11 million — one in four adults

• Foreign holidays: roughly doubled
• Homes with a telephone: two-thirds → nearly nine in ten
• Pensioners’ average incomes: up around 30% in real terms
• Infant mortality: down almost 40%

• Real GDP: up by almost a third
• GDP per head outgrew France, Germany and Italy in the 1980s
• Manufacturing productivity: slowest growth in the G7 in the 1970s → fastest in the 1980s
• Self-employed: 1.9 million → 3.5 million
• Nissan to Sunderland, Toyota to Derby, Honda to Swindon
• Britain became a net oil exporter
• London restored as the world’s financial capital in 1986

• Budget surpluses three years running — Britain repaid debt, 1987–90
• National debt: 47% of GDP → 28%
• State spending: ~45% of GDP → ~39%
• The civil service: 732,000 → 565,000

• Corporation tax: 52% → 35%; the small firms’ rate: 42% → 25%
• Personal tax allowances: up more than 25% in real terms
• Higher rates of income tax: nine → one
• Death duties: fourteen rates → one
• Exchange controls scrapped after 40 years

• 40+ nationalised businesses privatised — 600,000 employees moved to the private sector
• The 33 big state industries: took ~£500m from taxpayers in 1980 → paid £8.4bn to the Exchequer by 1987
• British Steel: world-record loss-maker (1980/81) → £733m profit (1989/90)
• BT, 1984: the largest share offer the world had ever seen
• “Tell Sid” broke the record again in 1986
• British Airways: nationalised loss-maker → profitable, private, “the world’s favourite airline”
• The Channel Tunnel launched and entirely privately financed

Over to you.

[David Peniket @DavidPeniket]

@TomTugendhat @Arm @GoogleDeepMind Let’s be realistic; it was inevitable that both companies were going to be acquired by overseas owners.

Plans to create national champions will not work.

As Tony Blair has written, our security is dependent on a strong relationship with the USA, whether we like it or not.

[Harry Cole @MrHarryCole]

Booting Palantir out of the NHS would be madness.

[Prosper UK @Prosper_UK_]

Every party knows the triple lock is popular.

But popularity is not the same as sustainability.

Real leadership means explaining difficult choices honestly, not leaving the bill for younger taxpayers and pretending that is fair.

[Iain Martin @iainmartin1]

What’s the point of the motor car? Who is it for? What’s your plan for dealing with all the people and horses impacted by the introduction of the motor car?

[Simon Clarke @SirSimonClarke]

This would be so, so stupid

[Joe Hill @jo3hill]

Andy Burnham got a big round of applause on Monday for saying:

“We will make sure that all eligible public contracts are subject to proper social value weighting.”

Here’s what that means, and why it’s a bad idea.

Most public sector contracts award c10% of the ‘marks’ in the bid evaluations for “social value” - the supplier’s commitment to various policies which aren’t to do with the contract. Employee training, creating jobs outside of London, DEI, Net Zero and using SMEs are all common areas they compete on for a good score. The model is rooted in the Public Services (Social Value) Act 2012, which established 30 pages of guidance on it. The Procurement Act 2023 and the latest National Procurement Policy Statement continued this commitment. Only MoD is exempt from using social value in tenders, though it regularly does - for example, a tender for nuclear deterrent research last year awarded marks for a commitment to reversing the impacts of Covid-19 on local communities and Net Zero.

Social value is a bad policy. And you don’t have to believe any of the many goals government are trying to advance through social value are bad goals to agree with me. Because even if you want all those objectives delivered, making companies for them as a ‘buy in’ to working on government contracts is a bad way to do it.

Most people recognise that the way social value is practiced in procurement is performative. It asks suppliers to make commitments, they fill out a form saying what they can do, and then there’s no follow up. Not even to check if they were telling the truth. Many think there should be. But imagine how prohibitively complicated that would be! On Net Zero, for example, most suppliers have to hire a consultancy to fill out their tenders because they don’t track their emissions (particularly small companies). Keeping doing that would be very costly to them. Government struggles to monitor the basics of contract performance - quality of delivery, and actual cost. Until we fix that, there’s no point doing social value monitoring.

But setting aside the implementation problems, the policy is full of holes.

Social value requirements are complex and costly to compete on. Doing it isn’t hard for the big “primes” that get c10% of public sector commercial spending, but it is hard for smaller companies - particularly start ups and scale ups, who have huge challenges accessing government procurement as it is. This only further stifles innovation, which is the whole point of going out to the market in the first place - markets are great at innovating, much better than governments. But the most innovative companies are further discouraged from bidding because of social value.

The policy also fails on its own terms. Take SMEs. A bias towards allocating contract spending to small businesses isn’t a good idea, but it’s been a consistent one across governments and that won’t change. But social value doesn’t improve that. A big supplier can get full marks for saying it has a lot of SMEs in its supply chain. But a SME has to fill out the same bid to compete with that, even if its whole budget is going to an SME (their own company). Bizarre!

And it isn’t free. Anything that suppliers do to meet social value objectives which they wouldn’t otherwise do comes at a cost. I’ve had civil servants glibly tell me “that’s just the cost of doing business with government”, or that it’s a kind of tax they should pay for the privilege. This is moronic. Suppliers pass that cost on to government when they work out what a profitable bid would be, so government is just funding their social value activities.

This is a really inefficient way of government funding those objectives. Hundreds of different companies doing their own small Net Zero initiatives (for example) is much less efficient than the government bolstering its own (considerable) clean energy infrastructure plans.

(Cont)

[City of London @cityoflondon]

We’ve responded to a ministerial direction on the City Plan 2040.

The issue of tall buildings and the Tower of London World Heritage Site was fully examined over a year ago. We strongly believe further hearings are unnecessary.

Read more here: https://t.co/cY4DrCB3li

[Josh Hunt @iAmJoshHunt]

Whilst a lot of what's being discussed around tax is just speculation at this point, this is very much the direction of travel that's been emerging over the last couple of years. So there's every chance some or all of these measures get implemented.

The tax I'm particularly interested in is Capital Gains Tax (CGT). Whilst it makes up a tiny portion of the country's tax revenue, it's an extremely important tax, because the rate it's set at has a broad potential impact on economic growth and investment in the country.

Based on HMRC's own modelling, a 10 point rise in the higher rate of CGT would lose around £2bn a year by 2027-28.

So we need to ask the obvious question… if it doesn't raise revenue, what is it actually for?

CGT brings in about £13bn. Under 2% of all receipts. From roughly 350,000 people, with 41% of it coming from a few thousand who realise gains above £5m. It's a tiny base and a highly mobile one. Which is precisely why talk of an exit tax is also now circulating.

Aligning CGT with income tax means a top rate of 45%. That would not just be high. It would be the highest capital gains tax in the developed world. Above Denmark at 42%. Above Norway at 38%. Nearly double the top federal rate in the US. And because we don't index gains for inflation, that 45% would land on nominal gains, not real ones.

On the OBR's numbers the tax take is already heading for 38.5% of GDP by 2030-31, the highest since records began in 1948, and past 40% on the IMF's broader measure. We are nearing Scandinavian levels of tax, but nowhere near Scandinavian public services.

Because the state is not short of money. It is bad at spending it. Really bad. By the government's own assessment, £198bn of major projects are currently rated in doubt or unachievable. HS2 has gone from a £33bn budget to as much as £100bn for London to Birmingham alone. The level of government waste is staggering, yet seems to consistently be presented as a tax problem.

And that's before we even start looking at the ballooning welfare budget and astronomical amount of debt interest we pay.

That is what you are being asked to fund with the return on your risk.

The real cost here is not the revenue forgone. It is the part we never see, the hidden cost. The companies that don't get started. The capital that doesn't get deployed. The founder who incorporates in the US instead. You can't tax what was never built… you can only tax it into never existing.

But perhaps that misses the point. Because this is unlikely to raise money, and on some level I imagine they know it.

Consider who is left. On the ONS's own numbers, 53.3% of people now live in households that take more from the state than they pay into it, once you count the NHS, schools and every benefit in cash and kind. Net contributors are already a minority. So a policy that punishes them does not have to add up fiscally. It only has to add up at the ballot box.

That is the real inversion. The arithmetic of the economy and the arithmetic of the electorate now point in opposite directions.

Which leaves one question. Why strive? Why take the risk, the years, the personal guarantees, when the state takes the largest cut in the developed world if you win, taxes your inflation as if it were profit, and fines you on the way out if you decide this isn't the right country to build anything in.

This isn't a growth strategy. It's managed decline.

As I say, this is all just speculation right now. But it seems very much in line with the path we're currently on.

[Dr Lawrence Newport @lawrencenewport]

When an institution is failing, it is always a good idea to split the team into two separate locations.

That always improves productivity, communication and ease of management.

[Robert Colvile @rcolvile]

Equalising capital gains and income taxes keeps coming up. And it keeps not happening. Because it's a bloody awful idea.

[Barney Hussey-Yeo @Barney_H_Y]

From a very credible Labour source:

- Wes Streeting promised the Chancellorship for not running.

- Capital gains raised to match income tax. Possible exit tax.

- Economic focus: devolution, plus state ownership of cost-of-living essentials (energy, water, transport).

- Nothing on AI or tech, bar higher capital gains and an EIS/SEIS-style relief for backing British businesses. (Spoiler: startups now incorporate in Delaware and raise on SAFEs. I’ve done 60+ angel investments; only two were eligible.)

Andy and Wes don’t seem to grasp that tech has been the core engine of growth for 20 years, and AI will only accelerate that.

So why would any founder build here? How does the UK compete with the US and China on AI? Where does growth actually come from?

The world economy is changing fast, and we need to be ready to thrive in it, not just survive.

I really hope this admin appoints some figures who actually get what’s happening. Losing business support early, from a disastrous first budget, was the beginning of the end for Starmer.

[Tom Harwood @tomhfh]

Burnham won Makerfield because he abolished social housing requirements in new development.

Genuinely.

There’s a near universal understanding that Manchester is a part of the country that is actually growing, because people can see it growing.

They can see the new shops, restaurants, bars, public realm, and gleaming skyscrapers - all new in the last 10 years. They see the wealth and success that investment has brought.

This was not inevitable.

Had Burnham ‘done a Sadiq’ and insisted on ludicrous social housing requirements in every development, little would have been built. Investment would have remained on the floor, and Burnham would have no magic Manchester ‘for us’ growth vibes about him.

[Fraser Nelson @FraserNelson]

Another evolution in Reform; threatening companies who won’t do what they want.

Serco - like any company or any person - is at liberty not to accept a contract from the government for any reason.

[Matt Clifford @matthewclifford]

I do find it extraordinary that current events in AI don’t make the top ~30 stories on the BBC News homepage

[Louis Mosley @louismosley]

Tampa General: sepsis deaths down more than two-thirds.

Parts of Westminster: yes, but is it aligned with our values?

[Julian Jessop @julianHjessop]

This thread from Peter Kyle @peterkyle neatly sums up the problems with the government's new industrial strategy. Here are just three (including the guff about Kraken)... 🤔

1⃣ the fact that governments in other countries often take equity stakes in private businesses does not mean that the UK should too. In general, if your competitors are making mistakes it is better not to copy them!

2⃣ the Minister's is at least right that "the UK [government] has a responsibility to create the conditions that businesses need to succeed". But that's not what this government is doing. Indeed, this comment will infuriate businesses struggling with higher taxes, higher labour costs, higher energy prices, and more red tape under Labour.

3⃣ he then says "that's why we backed companies like Octopus’s Kraken, now valued at $8.6 billion"...

The British Business Bank's much-hyped £25 million (sic) investment in Kraken is a perfect example of spin over substance. Crucially, the business was already a 'winner'.

The UK government's stake is also only a tiny part of a $1 billion fundraising round. This was easily covered by other investors, such as Fidelity and the Ontario Teachers' Pension Plan.

I suspect that the UK taxpayer will make a decent profit on this one. But the new industrial strategy is supposed to be about supporting start-ups that actually need government help to grow, not just jumping on a bandwagon.

Indeed, the prospect of a profit on Kraken may just encourage wannabe tech bros in government to take bigger, riskier bets elsewhere. This will not end well...

[Political Currency @polcurrency]

“You are not serious people.”

Tony Blair’s latest assessment of British politics reminded George Osborne of TV’s most famous characters and his struggle to relinquish power to his children.

🎧 LISTEN: https://t.co/9qA6ffpP8h

🖥️WATCH: https://t.co/UsNKpKNSyh

[robert shrimsley @robertshrimsley]

To me this is the key point. It's a great manifesto, but for Badenoch.