#63 Kicking Off
Plus: Spending under fire, censors' charters, brain drain BOTECs, and more
Welcome to the 63rd instalment of the Liberal Digest. For the second week running, Britain saw rioting on its streets in response to a brutal attack. This time the epicentre was Belfast, after an attempted beheading there of Stephen Ogilvie by a 30-year old Sudanese man, Hadi Alodid. Disorder erupted not long after, with vehicles and homes torched by masked mobs, causing immigrant families to flee. A grimly familiar rhetorical dance of claim, counterclaim and knee-jerk analysis from politicians and commentators alike has followed. Meanwhile, Sir Keir Starmer lost his Defence Secretary John Healey over continued wranglings with military funding. In better news, the World Cup returned — although even that is giving liberals reason to roll their eyes.
Did we miss something? Let us know. On X? Give us a follow.
Stop the Press!
Best op eds, interviews, news and analysis of the week in the old-school media
Defence Secretary John Healey resigned from Sir Keir Starmer’s Cabinet as the row over military spending escalated to new heights:
“Some Labour officials argue that Reeves was unwilling to push through cuts to departmental budgets in what could be the dying days of Starmer’s government. They said Starmer offered £13.5bn, far short of the £18bn demanded by Healey, with suggestions that only £10bn of it was “new” money from the Treasury. One said: “Rachel was making it clear to everyone that she didn’t want to do this and was putting all the blame for the proposed cuts on to Number 10.” The Labour officials see Reeves as trying to position herself for a senior role in a Burnham administration; her allies insist she could continue as chancellor to reassure the markets. A Reeves ally said: “It’s the chancellor’s job to keep control of the public finances — if money for additional spending needs to be found that needs the backing of the PM and cabinet.” Ed Miliband, energy secretary, also fiercely opposed cuts to funding for green projects, although his allies said he had not threatened to resign after Starmer insisted on them last week. The defence spending plan was initially due to be published last autumn.”
The Economist hopes that Brits won’t buy the political right’s increasingly febrile rhetoric:
“The sight of young men in masks burning down houses in Belfast led to a strange cocktail of loud condemnation and quiet vindication on the British right. Parties trying to appeal to authoritarian voters appalled by the attack have started suggesting that a riot is a voice of the unheard. Mr Lowe offers advice for protesters to avoid arrest; Mr Farage, for now, sticks to euphemism, warning repeatedly of “civil disorder” unless his precise policy prescriptions are followed. It is an unfamiliar position for a man who has never had to shore up his right flank. Even the centre-right has fallen prey to violent fantasy. Though Kemi Badenoch, leader of the Tories, condemned the riots in Belfast, she also argues that politicians relying on votes from “one particular community” is “how you end up with civil war”. The result is a strange spectacle whereby the Tory leader can decry violence, do a photo opportunity in Marks & Spencer, the symbol of Middle England, and predict civil war all in the same week. [...] The right’s base instincts fill the airwaves in part because there are few willing to fight them. Britain is cursed by a prime minister incapable of meeting this particular moment, as high-profile crimes blend with ridiculous fantasy. Never has a prime minister proved less willing to use their pulpit. While his opponents preach anarchy, Sir Keir Starmer is mute, surrendering to the right’s idea that the public are irredeemable. Fatalism has infected Labour when it comes to dealing with Reform, which, though first in the polls, is only roughly as popular as Rishi Sunak’s Conservatives, who enjoyed their worst-ever result in the 2024 general election.”
Matthew Lesh criticises plans to force AI nudity-detection software to be installed on operating systems:
“More creepily, the proposal would normalise government’s power to control which images you are allowed to see and take on your own device. We have already seen the UK’s Online Safety Act inspire authoritarians around the world to pursue even harsher ‘copycat’ measures. Eventually, this could come home to bite. It is not hard to imagine calls for this sort of technology to be used to prevent ‘hate speech’ or ‘disinformation’ during a crisis – in practice, anything that the censor dislikes. It would also mean users being regularly accused of wrongful behaviour, with little to no ability to contest the AI’s conclusion. There would be inevitable significant false positives, including against medical, artistic and breastfeeding imagery, locking out entirely legitimate uses of devices. Not to mention the need to install similar software on digital cameras and the continued existence of analogue technologies, which predators would likely still exploit.”
Ofcom ordered social media companies to put emergency measures in place to prevent illegal content going viral in a bid to stem misinformation:
“Sites such as X, formerly Twitter, and TikTok will have to have a “crisis protocol” in place to intervene when the sharing of dangerous content begins to rise. Under the measures to be implemented by Ofcom, the UK’s tech regulator, online platforms will also need to reserve a dedicated line of communication channel through which the police can contact them in a crisis. It follows concerns at the top of government over the speed with which misinformation spreads at pivotal moments. Ofcom’s announcement also follows the outbreak of rioting in Southampton over the police response to the fatal stabbing of Henry Nowak.”
Andy Burnham performed an about turn on the promise to give in to so-called Waspi women:
“Extra government spending under a Burnham premiership is a key worry for gilt investors, who eye a risk of higher bond issuance in coming years. Worries were fuelled by Burnham’s recent remarks on taking some spending out of the UK’s self-imposed borrowing limits, remarks his team later walked back. [...] The bond market is sensitive to anything that will weaken the UK’s fiscal picture. The UK’s 10-year borrowing costs are at almost 5 per cent, having risen significantly in recent years on a mix of factors including higher inflation, elevated borrowing and political risks. Burnham also nodded to another expensive policy area in the same hustings. He criticised the financial burden being placed on young people by the student loans system.”
Why Britain should think twice about adopting a social media ban for children:
“As well as harms, social media bring benefits. And Australia’s ban has proved leaky, with many children still having access to at least some social-media sites; the measure has not led to an uptick in more wholesome hobbies. Britons may be some of the keenest cheerleaders for a ban, but they are also among the least likely to think it would work. Some families of children whose deaths have been linked to social-media use oppose the idea, partly because they fear the most dangerous content is not on major apps but lurking in darker corners of the web not covered by any regulation. And for the government, there is a danger of mixed messaging. Britain is trying to position itself as a tech and AI champion, but some of its rhetoric sounds hostile. Elon Musk, the owner of X, is a favoured target, but Silicon Valley as a whole also gets it in the neck from Labour bigwigs. Mr Burnham recently thundered that it was time to “regulate social media, artificial intelligence and big tech”, while Wes Streeting, another would-be Labour leader, said in the Observer that X and its chatbot Grok “should be treated like any other publisher”—a move that would make it near impossible for AI language models to be used in Britain. Neither has set out details of the tech policies he would actually pursue if he made it to Downing Street.”
Philip Aldrick and Dan Hanson consider the range of options for how Britain might roll back Brexit:
“Of the options considered, the largest boost would come from rejoining the single market for goods, an idea recently floated by UK officials and rejected by European counterparts. Next would be a bespoke package of interlocking trade agreements similar to what Switzerland has now. Last would be rejoining the EU Customs Union, meaning a commitment to tariff-free trade. Although Starmer has repeatedly reaffirmed Labour’s 2024 campaign promises not to pursue freedom of movement, single-market access or a customs union with Brussels, his government has clearly begun to test those red lines. Besides pitching the single market for goods, UK officials last month advanced legislation that could be seen as a step toward a Swiss-style arrangement. The measure would allow the UK to adopt new EU regulations without a vote of Parliament, a process known as dynamic alignment. That would ironically rely on the same top-down “Henry VIII powers” that Brexit-supporting former Prime Minister Boris Johnson controversially invoked in 2019 to speed up the UK’s withdrawal from Europe.”
Kemi Badenoch vowed that a future Conservative Government would scrap the Public Sector Equality Duty:
“The Tories believe that the PSED, which requires state-sector organisations to foster equality of opportunity between different groups, has contributed to a divisive box-ticking mindset. The PSED tells public bodies to promote equality of opportunity, rather than outcomes, between those who have a protected characteristic (such as women, black people and gay people) and those who do not. Speaking at the Institute for Government, Mrs Badenoch said it was a “self-evident truth” that all Britons should be treated equally.”
Palantir is preparing to sue Sir Sadiq Khan after he vetoed a £50 million deal to supply the Metropolitan Police:
“Palantir had been lined up to help the Met to use AI technology to automate intelligence analysis in criminal investigations. But the deal was blocked at the 11th hour by Khan, who cited concerns about the procurement process used to award the contract. However, Palantir claimed this was a pretext for a “politicised decision” after a spokesman for Khan said he had “concerns about using public money to support firms who act contrary to London’s values”. The company’s lawyers have now written to the Mayor’s Office for Policing and Crime (Mopac) informing Khan that they intend to challenge Khan’s decision in the courts to get it overturned. Palantir is likely to be tacitly supported in its claim by the Met. It has criticised Khan’s move, saying that without new technology it would have to cut officer numbers, which would in turn affect the force’s ability to keep London safe.”
City A.M.: Britain to offer visa refunds to woo tech scale-ups
The Mirror: Over 100 MPs call to scrap ‘dangerous’ EHRC code that would segregate trans people
Bloomberg: Reeves to Lower UK Tax Burden for Wealthy US Expats
Stacks of Freedom
Highlights from our fellow Substackers
Our own Eamonn Ives analysed what outcomes Brits feel comfortable betting on and how they think prediction markets should be regulated:
Julia Willemyns tracks Britain’s brian drain through the proxy of top math talent:
James Breckwoldt looks at the lessons to be learnt from New Zealand’s free-market turn:
Lauren Gilbert runs through the relationship between immigration and house prices:
Alex Chalmers slams the recently floated idea from Business Secretary Peter Kyle that the Government should take large stakes in fast-growing companies:
Anya Martin explains how Senakw provides a template for boosting housing supply:
Wonk World
Ideas and analysis from the think tanks, academia and other clever sorts
Britain Remade released a short video charting the regulatory hurdles that have hobbled the construction of Hinkley Point C:
… and if you like the sound of working to remove those barriers, they’re hiring!:
The Resolution Foundation published a paper arguing for the triple lock to be reformed:
“There is not a strong case for continuing to increase state support for pensioners faster than the wages of typical workers – the inevitable practical effect of the triple lock. Even if you disagree, the triple lock is also a bad way to increase the relative value of the State Pension. Because it uprates every year by the highest of earnings, prices, or 2.5 per cent, the value of the State Pension depends not just on the level of earnings and inflation but also on how volatile they are. The OBR projects that State Pension spending will rise by a further £80 billion over the next 50 years, but warns it could easily be £40 billion higher or lower depending on economic conditions. The New State Pension is already at around 30 per cent of median full-time earnings, close to the level recommended by the original Pensions Commission in 2005. The current Pensions Commission should now give its definitive view on the appropriate level. Our view is that level has now been reached, and politicians should find the courage to replace the triple lock with a policy that is transparent, predictable, and fair across generations. The best option would be a ‘smoothed’ earnings link, which tracks earnings growth but protects the value of the State Pension from temporary price shocks. The triple lock means the State Pension bill is now £12.6 billion higher than it would have been under a smoothed earnings link since 2012, with overall spending around £9 billion higher when we take account of higher income tax receipts and lower means-tested benefit spending. Switching to such a policy from next year would be a net saving of around £650 million in 2029-30 that would continue to grow over time.”
Hear Hear
Podcasts for weekend listening
A new podcast on abundance from Virginia Postrel and Charles C. Mann launched, with episodes on exercise, dentistry and cooking dinner already live:
Marc Sidwell spoke to Preston Byrne about the latest plans to regulate smartphones in Britain:
Ryan Bourne and Stan Veuger use the World Cup as a bonanza economics case study:
Posting to Policy
Best of social media this week
Via Louis Mosley
Further Afield
Interesting stuff from around the world
China abruptly cancelled two planned meetings with the European Union, with no formal explanation given:
“Beijing is furiously lobbying against the EU’s proposed Industrial Accelerator Act, which would bar some Chinese products from public procurement contracts and limit takeovers of European companies. The European Commission has also recently outlined an update to its cyber security act to exclude Chinese companies such as Huawei from telecommunications networks and solar energy systems. Adding to Beijing’s concerns, the EU has blocked public funding for imported inverters used to control solar panel installations and other energy technology, a product dominated by China. The Commission last month called the rising trade deficit, now €1bn a day, “unsustainable” and has threatened fresh tariffs on Chinese goods to protect the bloc’s rapidly eroding industrial base, with sectors such as the car industry under particular pressure. It has also opened three anti-dumping investigations in June.”
Donald Trump said that a deal with Iran is “still close” despite launching retaliatory strikes over a downed American helicopter:
“The senior White House official argued that the U.S. has achieved its “key objectives” with Iran and that “the military part” of the operation “is done.” Now, the official said, the administration is in the second phase of a “negotiated deal and settlement” and “as always the president retains all options.” Israel, which on Monday traded attacks with Iran, has also complicated negotiations. The president called Netanyahu and told him to hold off on striking beyond direct retaliation. Trump confirmed last week that he called Netanyahu “crazy” over the phone in response to Israel’s ongoing fighting with Hezbollah in Lebanon, which is supposed to be included in a broader ceasefire with Iran.”
The World Economic Forum warned that the next food crisis is already in motion:
“The Strait of Hormuz is one of the world’s most critical chokepoints. Before the conflict, roughly 35% of global crude oil exports, 20% of liquefied natural gas exports, and up to 30% of fertilizer exports transited through this narrow strip of water – along with sulfur, essential for phosphate fertilizer production. The blockade has severely disrupted global fertilizer supply chains just as planting seasons advance across both hemispheres. As farmers face urea fertilizer price increases of 20% to 60%, on top of rising fuel, transport, and irrigation costs, the greatest risk is not immediate food shortages but rather cascading shocks that reduce future food production. It begins with energy-price spikes and logistics disruptions, followed by fertilizer shortages, then lower yields, with delayed transmission effects eventually leading to higher food prices and market volatility months later.”
The Guardian: Federal judge rules Trump’s $100,000 fee for H-1B visas unlawful
The Guardian: Armenia’s pro-Europe party wins election and cements shift away from Russia
POLITICO: Israeli finance minister banned from entering France
The Economist: For its own sake, China should change its growth model
Graph of the Week
Via the Adam Smith Institute