#45 Oh Mandy
Plus: The return of fiscal headroom speculation, insights on institutional reform, and the Employment Wrongs Act
Welcome to the 45th instalment of the Liberal Digest. One story dominated the news this week as Lord Peter Mandelson finally went down in such a blaze that we must believe that his political career is finally over (though with Mandy, you never say never). Opinions differ on whether Sir Keir Starmer is fighting for his own life or just that of his chief lieutenant Morgan McSweeney, but one thing is clear: there are plenty of others who would be more than happy to take the top job if/when Starmer does finally call it a day. Many of them are unlikely to be friends of us liberals. Starmer and his team have often talked a good game on prioritising economic growth and freeing up the planning system, but his actions have often fallen short. As growth forecasts are downgraded again this week, and fiscal headroom looks all-too-thin once more, where will the Labour Party turn? To the architect of the Employment Rights Act, Net Zero’s greatest remaining champion, or rightwards? Only time will tell.
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Stop the Press!
Best op eds, interviews, news and analysis of the week in the old-school media
Sir Keir Starmer’s entire premiership came under increasing pressure as the fallout from the ‘Peter Mandelson Files’ only continued to grow:
“Sir Keir has promised to release files, which he says will prove Lord Mandelson lied about the extent of his friendship with Epstein when he was being vetted for the US ambassador role. The government was forced into a climbdown by Labour backbenchers, after it had planned to withhold some sensitive material. After a Commons vote, the government will pass documents which could damage national security or diplomatic relations to Parliament’s Intelligence and Security Committee (ISC), rather than withholding them. The ISC says the government should decide which documents are made public - and which are not. They say this will be done by the cabinet secretary, with an expectation the documents are laid before parliament “very shortly”.”
More than 300 academics accused Bridget Phillipson of undermining free speech after mothballing plans to tackle cancel culture on university campuses:
“The education secretary pledged at the start of last year to establish a legally enshrined complaints system to protect academics from attempts to censor or cancel them by students or university authorities. However, the Department for Education has failed to set out any timetable to bring in the protections, with sources suggesting it is unlikely to be included in next year’s parliamentary session. In a letter to Phillipson, 370 academics including three Nobel laureates and senior figures of civil society accused the education secretary of kicking the scheme “into the long grass” with “real consequences for academics at the sharp end”.”
The Economist looks into the likely implications of the Employment Rights Act’s worker unionisation provisions:
“The challenge for employers, says Ms Henchoz, is that more powerful unions will magnify other changes in the act. That will make restructuring a company more risky, and mergers more complicated. Employers now face uncapped damages for unfair dismissal, higher penalties for collective redundancies without proper consultation and tougher restrictions on how employers can change workers’ contracts. “Employers are now beginning to get quite nervous,” says Ms Henchoz. “They thought they had generous redundancy packages, but people might decide litigation is a better option if they’re backed by the union.” One union official said they hope to inflict “punitive” damages on firms to compel them to change their behaviour. For years, British governments have hewed to the logic that a light-touch labour market brings investment and low unemployment. This Labour one turns this on its head, and argues that it has been a flaw rather than a strength that has produced low-wage work and fuelled populism.”
Rachel Reeves hosted Valdis Dombrovskis, the European Commissioner for Economy and Productivity, for talks — in which strong signals of closer economic ties were made:
“Since the Brexit referendum of June 2016 the EU has maintained that the four freedoms of the single market – goods, services, capital and movement – cannot be split. Nearly a decade later, EU insiders still believe it would be difficult to offer special arrangements to the UK, when member states are required to sign up to all policies. Publicly, however, the tone is warmer. The European parliament president, Roberta Metsola, said on Tuesday that Europe and the UK “need a new way of working together” on trade, customs, research, mobility and on security and defence. In a wide-ranging speech to the Spanish senate on the geopolitical challenges facing Europe, she said: “It is time to exorcise the ghosts of the past, reset our partnership, and find solutions together.””
Janan Ganesh argues that Conservative Party foreign policy is fundamentally unserious:
“The coming world, if it is to be one of several big powers rather than just the US, is scary but also mentally clarifying. Most countries will have to take essentially the same approach to foreign affairs, which is a kind of strategic promiscuity. Maintaining different relationships, consolidating none in particular: governments from Canada to Vietnam are going to have to play the roué. Starmer’s recent overtures to Europe and China are just the start — which is why he has so little to show for them — and the Tories are already scandalised. Their alternative? A monogamous love of the US that even then dare not speak its name, at least not while Trump is around to put off British voters. This isn’t tenable. Yet the conservative movement is boxed in on all sides. It committed to a worldview a decade ago, when the planet was pro-trade, the US was friendly and Europe at peace, and now does not know what to do. The British right cannot seek closer economic integration with its own continent without admitting that Brexit was a stinker of an idea. It cannot defrost the relationship with China without upsetting its own side. It cannot get much tighter to Trump without needling the public. Which leaves what? Getting on really well with New Zealand is not a foreign policy. I fear the Tories are just months away from falling back on that old recourse, that sure sign of conservative intellectual exhaustion through the decades: a pledge to strengthen the Commonwealth.”
Shadow Justice Secretary Chris Philp called for a retrial of Palestine Action activists acquitted of a raid on an Israeli defence company’s British factory:
“Mr Philp said Crown Prosecution Service (CPS) guidance stated that a retrial might be necessary if a jury failed to reach a verdict, there was “sufficient evidence” for a realistic prospect of conviction and a retrial was in the public interest. He said the Palestine Action trial fulfilled these criteria, adding: “I therefore urge you to seek a retrial on these charges. There is no justification for this violence, no matter how strongly someone feels about a cause. “This verdict risks giving the green light to mob violence in pursuit of a political objective.” In the raid by the six Palestine Action activists, for which they were found not guilty, Sgt Kate Evans was struck with a sledgehammer and left with a fractured spine.”
Joseph Dinnage says those delighting in Starmer’s sticky situation should be careful what they wish for:
“If you thought the Left had too great a hearing under Starmer, then brace yourself for a Rayner administration. As Deputy Prime Minister and Housing Secretary, before she had to resign for dodging property tax, Rayner was responsible for executing Labour’s planned housebuilding revolution. The result? The Government is nowhere near close to hitting its national housing target and has given into the eco-Nimby mob and watered down its flagship Planning and Infrastructure bill. A politically canny operator she may be, but competent she is not. A self-described socialist, she would be running the economy from a position of illiteracy. This was evidenced during her time in government, having been instrumental in forcing a U-turn on the Government’s welfare bill and claiming that saddling businesses with regulation is the key to economic growth.”
Paul Johnson defends the decision to equalise the pension age as good policymaking:
“A stable and predictable tax and welfare system is socially and economically valuable. Graduates should be treated with more respect. In fact, these sorts of changes, for which we often get no notice at all, are often less easily defensible than a well worked out and necessary decision to raise pension ages gradually. Yet nobody seriously suggests governments shouldn’t be allowed to change parameters of the tax and benefits system. Few of us focus on these details. We make plans on particular assumptions, we get caught out by changes, we suffer the consequences. We live in a democracy where resources are limited and choices need to be made. As such we have some responsibility to understand and accept reasonable policy decisions. So it is with the Waspi women.”
The Guardian: Zero net migration would shrink UK economy by 3.6%, says thinktank
BBC: Parliament revamp could cost £40bn and take 61 years
Financial Times: Nearly 70 English councils say they face insolvency over special needs education debt
Stacks of Freedom
Highlights from our fellow Substackers
Martha Dacombe explains how bolting on good bits of government can always cover up the bad:
Daisy Christodoulou considers how we should approach regulating phone use by children:
Sam Dumitriu argues that devolution — done properly — can be an answer for Britain’s expensive infrastructure:
Joe Slater ponders what will become of the British political right:
Joe Hill trots through the reasons why Labour’s mission-led approach to government is failing:
Zion Lights rails against framing energy as something to be rationed rather than improved:
Jason Crawford sketches out why progressives should care more about progress:
Matt Clancy and his team list the most interesting things they’ve read lately:
Wonk World
Ideas and analysis from the think tanks, academia and other clever sorts
Nick Hillman explains that there are no easy answers on reforming student loan repayments:
“Many people will feel sympathy for them, both for the large debts detailed on their student loan statements and for the wider ‘failure to launch’ challenges faced by younger people, given the ups and downs of the graduate labour market and high housing costs. But much of the rhetoric on Plan 2 is overblown. Some – I stress not all – of the complaints are nothing more than successful graduates wanting someone else to cover their own debts. Intriguingly, given how progressive the loans are, the loudest complaints come from the left – for example, from Oli Dugmore of the New Statesman, Zarah Sultana MP, Nadia Whittome MP and Chris Curtis MP.”
Giles Wilkes published a new paper arguing that a better growth policy relies on a stronger, more capable Number 10:
“As well as being well-resourced, key to a successful Downing Street economic operation is a sensible discrimination over how it operates. The team in No.10 must use its own time and capital strategically, according to a plan that weighs issues by their importance, potential and political salience; an overpowered team trying to interfere wherever its attention alights will be a drain on everyone’s time and resources, and a source of uncertainty and short-termism. The people there need to speak clearly for the prime minister, not develop their own separate agendas. They need to see themselves as part of the whole government, build relationships across Whitehall, and therefore be well-placed to ensure departments are working together. They must be open to the influence of business, but have the nous to judge properly what they are being lobbied for, and treat what they hear as the start of the analysis, not the last word. No.10 is there to provide leadership on the topic of growth, but it has to recognise that it cannot directly manage all the processes involved – sensible delegation and devolution is key. Above all, the resources at the disposal of the prime minister need to be much greater. The leader of a country of some 70 million citizens, generating more than £3trn in economic output, currently relies on a handful of economically qualified staff to produce a strategy capable of tackling the political challenges of growth; few comparable countries would do it this way. There should be multiples more, with a wide range of skills and experience, knowledgeable of how both government and business works, and robust to the challenges that drive relentlessly governments from the right path.”
Britain Remade urged the Government not to u-turn on its commitment to implementing the Nuclear Regulatory Taskforce’s recommendations in full:
“If the government is serious about growing the economy, reducing bills, and delivering a new golden age of nuclear energy, its implementation plan must back the Fingleton reforms in full. In particular it is essential that the government proceeds with recommendations 11, 12 and 19. The stakes here are high. Nuclear energy is the most land-efficient zero-carbon technology we possess. A single power station can power millions of homes. If we are serious about halting climate-driven nature loss, then nuclear energy must expand in a safe, secure and sustainable way. Yet that will not happen unless costs fall significantly. We cannot afford for the government to U-turn on accepting all of the recommendations of the Fingleton Review.”
The Institute of Economic Affairs look at the hidden costs of the Government’s plan to strengthen the ‘right to request’ flexible working:
“Changes to our way of life during the Covid lockdown accelerated an existing drive for more flexible working opportunities. However, the costs of flexible working requirements have rarely been properly assessed and could extend to undermining growth, increasing unemployment and the rise in post-Covid withdrawal from the workforce. The rationale for the ‘right to request’ flexible working has expanded from concern for economically disadvantaged workers with health issues or caring responsibilities to a belief that all employees should be able to request a change to their working arrangements. The Employment Rights Act strengthens the ‘right to request’ flexible working arrangements and will make it very difficult for organisations to resist such requests.”
Hear Hear
Podcasts for weekend listening
Our very own Eamonn Ives spoke to James O’Malley about his research into Britain’s incredible immigrant founders:
Posting to Policy
Best of social media this week
Via Sam Richards
Further Afield
Interesting stuff from around the world
Bolivian President Rodrigo Paz outlined major reforms to unleash a mining and oil exploration boom, under a new policy dubbed “capitalism for all”:
“Asked whether capitalism had a chance in Bolivia after two decades of socialist government, Paz responded that his country had a long history of private enterprise. “Today the informal economy is 85 per cent [of the total economy],” he said. “That 85 per cent don’t work for the state, they are capitalists . . . and the other 15 per cent don’t like the state because the state corners them on taxes.” The solution, he said, was to cut taxes and import duties and “swap a corrupt state which blocked everything” for a state which facilitated business. “People want to be rich,” he said, citing the word “qamiri”, which he said meant “abundance” in the indigenous Aymara language. “To be rich is not a sin in our societies.” Paz said that after 12 weeks of his government, Bolivia’s country risk — the additional premium demanded by investors to hold its sovereign debt over that of US Treasuries — had fallen from arbout 1200 basis points last year to close to 600 basis points.”
The Economist argues that anger is deadly to moderate politicians:
“Populists such as President Donald Trump do not even try to defuse public anger. Faced with voters who have lost jobs or economic status, populists seek to weaponise that humiliation. Whether politicians hail from MAGA in America or from European parties of the populist right and populist left, the claims are similar: greedy elites or scheming foreigners have betrayed the good people and destroyed their jobs, a narrative that predates anxiety about AI. Decline is presented as an act of theft. Populists may not have a credible plan to bring old jobs back, let alone to help those laid off in the future. But stoking anger is a win. Populists show supporters whose side they are on. They can promise vengeance, by slapping tariffs on foreign countries, or by imposing humiliation on immigrants, political opponents and other villains who—in their telling—have chosen to hurt their supporters.”
Melissa Lawford reports on how the scene is set for a new nuclear arms race as non-proliferation treaties expire and geopolitical tensions grow:
“China has also been developing nukes at a startling trajectory, more than doubling its stockpile of warheads over the last six years. And it is China’s rise that will be Donald Trump’s biggest concern. A three-way race will be hugely destabilising for the world order. If America tries to build an arsenal large enough to deter its twin foes at once, it will spur an even more dramatic increase in their respective stockpiles. “This is the end of an era. It is not the end of arms control but it is definitely the end of arms control as we know it,” says Heather Williams, director of the Project on Nuclear Issues at the Centre for Strategic and International Studies (CSIS). Smaller nuclear powers such as Britain and France will also face pressure to bulk up, particularly at a time when US security guarantees feel less reliable. And there will likely be a proliferation of new nuclear states.”
American tariffs on Indian exports are set to fall from 25% to 18% after a trade deal was struck, while Donald Trump declared a win over Russian oil:
“While full details have yet to be disclosed, Trump claimed that India – the second largest purchaser of Russian crude – had agreed to stop buying Russian oil, after many months of pressure from the US. After a call with Modi on Monday, Trump wrote on his Truth Social platform: “This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!” Modi hailed the “wonderful” news on tariffs in a post on X, formerly Twitter, but did not explicitly mention his country’s oil purchases. India, which relies heavily on oil imports from overseas to cover the vast majority of its demand, has imported cheaper Russian oil in recent years, as much of the western world sought to cut economic ties with Moscow following the 2022 invasion of Ukraine.”
BBC: US and Russia agree to resume regular military contact
The Guardian: Israel accused of spraying cancer-linked herbicide on farms in southern Lebanon
Financial Times: US job cuts surge to highest January total since 2009
Clark Aoqi Wu: China’s century of purges
Graph of the Week
Via The Economist