Andy Burnham spent seven years as Greater Manchester’s mayor complaining that Whitehall wouldn’t let go. We worked at the heart of his growth agenda over that period including on the £1bn+ Good Growth Fund. Now he’s in Number 10, and his answer to the housing crisis is to hand mayors the very powers he used to ask for.

Under proposals to be announced this week and briefed to the press over the weekend, England’s regional mayors will be able to “call in” major planning applications and direct councils to approve or refuse them. It doesn’t apply to every planning application (yet). Schemes need to be over 150 homes, 15,000 sq m or more of commercial space or be taller than 30 metres. In effect, every mayor in England gets the powers Sadiq Khan has held in London for a number of years.

Ten of the 14 devolved mayors have welcomed the move - across party lines. At least eight wanted it to go further, pushing for a 50-home threshold which shows the mayors are eager for more.

Why this matters

It would be easy to file this as ‘just another planning story’ in a Parliament full of them. I think that would be a mistake, for three reasons:

First, the money is (hopefully) following the power. Homes England - and with it a large share of the government’s £39bn social and affordable homes programme - will come under mayoral direction. We have seen the difficulty of working with national bodies like Homes England from a combined authority perspective through our work Andy’s £1bn+ Good Growth Fund.

Second, this is a ‘quick win’ that can be implemented fast. The government intends to use existing powers under the English Devolution Act, with the new rules in place by the end of the year. That’s only a few months.

Third, the direction of travel is clear. Burnham really meant it when he said that he wanted to push power out of Whitehall. That means that engagement with regional mayors will become ever more important.

A two-way street?

Burnham’s framing is that this power cuts both ways: mayors can override obstructive councils, but they can also block schemes councils wave through against the community’s interest.

He expects that the mere existence of the power will change behaviour - councils coming to the mayor early to work out what’s acceptable, rather than fighting it out at later.

He’s probably right about that. Sadiq Khan (who already has this power) consults on around 200 schemes a year in London and takes over only a handful; the deterrent effect does most of the work.

Early estimates suggest a mayor like South Yorkshire’s Oliver Coppard might see about 30 qualifying schemes a year. The number of actual call-ins will be small. The number of conversations shaped by the possibility of one will be larger.

However, this potentially sets mayors for fights they’re not used to.

They are used to blaming ‘Whitehall’ for various issues or saying it’s the responsibility of their constituent local authorities as in reality mayors have had limited direct power.

Having campaigned against green belt housing at Winstanley Hall during his Makerfield by-election, the prime minister could now watch Bev Craig, his successor in Greater Manchester, force a version of it through. Devolution is a wonderful thing until someone devolves a decision you don’t like.

Labour promised 1.5 million homes over the Parliament that’s about 300,000 a year. Two years in, delivery is running at roughly half that, and around a third of England’s planning authorities face sanctions for missing housing requirements.

What it means for you

If you’re a developer, investor or infrastructure promoter:

• Your engagement approach just changed. For any scheme near the thresholds, the mayoral combined authority is now a primary audience, not an afterthought. Strategy, evidence and relationships need to be built at that level and mayoral offices are thinly stretched and about to be inundated with more power and responsibility. Those who engage early and make themselves useful will be remembered.

• The thresholds may shape scheme design. Expect applications engineered to sit just above - or just below - 150 homes and 30 metres, depending on whether promoters see the mayor as an ally or an obstacle. Knowing who you’re dealing with, region by region, is now a material commercial question.

• Local authority relationships still matter. The likeliest outcome of a contested scheme isn’t a dramatic call-in but a negotiated landing zone brokered between council and mayor. Being positioned on both sides of that conversation is clearly an advantage.

• Political opportunity? Reform and Conservative mayors with very different priorities from Labour - not least when energy powers arrive in 2028 may use these new powers to block development and exploit political differences. A solar portfolio in Lincolnshire faces a rather different mayor than South Yorkshire.

The last two years of planning reform have largely been about changing the rules and removing requirements. This is about changing who decides.

For anyone with a stake in the built environment, the honest question is no longer “does the council support us?” but “what does the mayor think?” — and if you don’t know the answer, someone else is already in the room finding out.

Bradshaw Advisory works with developers, investors and infrastructure promoters on planning, devolution and mayoral and national government engagement across the UK. If you want to talk through what the new call-in regime means for your pipeline, get in touch.

The UK’s new steel trade measures are not a sexy or widely worried about topic amongst the general population - unless you make, process or trade it. Yet this seemingly innocuous piece of trade policy represents a perfect case study in the failure of modern British industrial policymaking.

Set to take effect from 1 July 2026, the Government has announced a diluted set of trade measures that will reduce tariff-free steel import quotas (the limit on how much steel a country can import without paying extra taxes), by 51% (not 60% as originally stated) and impose a 50% tariff on imports exceeding those thresholds. Huge.

The measures are designed to protect the domestic primary upstream steelmakers - producers that manufacture steel from raw materials - against China’s aggressive export of excess steel into international markets. Yet, at the same time, they risk creating substantial unintended consequences for the much larger downstream manufacturing base that relies upon imported steel. This is directly counter to the Government’s stated objectives on growth, industrial competitiveness and economic security.

Broader elements of the Steel Strategy reinforce this direction of travel, including support for decarbonisation through the transition to Electric Arc Furnace (EAF) technology and the introduction of a Carbon Border Adjustment Mechanism (CBAM) from 2027. Taken individually, the intent of each measure is sound. Collectively, they are and will cause devastating consequences.

The strategy itself has already demonstrated a stark failure to properly understand the UK’s steel supply chain, where many of our manufacturers depend upon imported specialist steel products, which aren’t produced in the UK. It also reflects an overreliance on politically influential stakeholders or ‘big players’, with insufficient weight given to the UK’s complex supply chains and businesses that rely on those imports.

More fundamentally, the strategy illustrates the archaic structures of UK policymaking - consultation without meaningful engagement, policy design without comprehensive economic analysis, and intervention without sufficient consideration of unintended consequences.

At a time when the Government is seeking to attract foreign investment, strengthen advanced manufacturing capability and improve regional productivity, the Steel Strategy risks undermining the very industrial base it claims to support.

The failures of the UK’s Steel Strategy should serve as a warning to policy makers of the present and future.

Update: Eleventh hour policymaking

Announced just six days ago, the Government confirmed a revised package of steel trade measures, following what it described as “intensive industry engagement” and efforts to align, and agree an approach with, the European Union. This, of course, should have been done in the first instance and perfectly illustrates the topic of this article.

Under the final arrangements, tariff-free import quotas will be reduced by 51% rather than the originally proposed 60%, while imports exceeding those quotas will still face a 50% tariff, up from the current 25% safeguard duty. Crucially, the government has now introduced exemptions for 11 product categories that are not produced domestically.

While this partial retreat is welcomed, the amends do not go far enough. The new measures are only a slight adjustment to the margins, not a fundamental rethink. The core architecture of the policy remains intact, and the revisions do little to address the underlying design concerns raised by industry.

In particular, the measures continue to reflect a simplified view of the steel market, treating broad product categories as substitutable despite significant variation in grades, specifications and supply chain requirements. As a result, many businesses remain exposed to higher costs and constrained access to critical inputs.

The eleventh-hour revision only underscores what a colossal failure the policy design process has been.

5 reasons why the Steel Strategy represents a failure of policymaking

1. Political capture and steel heavyweights

There are legitimate national security and economic reasons for supporting domestic steel production. Steel remains a strategic industry and the collapse of any form of domestic capability would, undoubtedly, leave the UK exposed.

Yet, it is clear that the Government took a one-sided approach to the development of the UK Steel Strategy - framed by upstream steelmakers and the power of trade unions. Typically, those who shouted the loudest won the day. That’s not to mention that steel in the UK is an inherently political topic.

The UK steel debate has for years been shaped by the high-profile crises at British Steel and Tata Steel, where tax payers money has been used to prevent plant closures and job losses. This narrative has led in part, to the political capture of the government machine that has led to the current crisis.

That being said, the Government should take the question of upstream capacity seriously. But in responding to that pressure, it moved to protect around 35,000 jobs in primary steel production - while giving insufficient weight to the far larger workforce downstream.

At Bradshaw Advisory, we undertook our own analysis ahead of the strategy publication, and determined that there were around 4.7 million people employed across the UK construction and manufacturing sectors alone who depend on steel as an intermediate input. Primary steel jobs make up less than 1% of that total, yet the Government focussed its attention and subsequent policy on solving their problem instead of the 99%.

Government representatives acknowledged this imbalance themselves. In a recent Public Accounts Committee hearing, the Interim Permanent Secretary at the Department for Business and Trade acknowledged that the measures could result in some SMEs exiting the market.

And while the revised measures provide some relief there are still clear winners and losers. The exclusion of fabricated steel products, in particular, has been criticised for protecting certain parts of the market while placing additional pressure on others.

The lobby power of the big, upstream steelmakers played directly into the political narrative, swaying ‘impartial’ policy makers who should know better.

2. The absence of UK steel supply chain data

The Steel Strategy is deeply rooted in the assumption that imported steel can be substituted with British steel. For most product categories, this is far from the reality.

For instance, stainless steel supply chains are extremely complex, where each product category requires advanced and highly specific manufacturing processes. These cannot be readily substituted with alternative steel types. More worryingly they are not available from UK sources.

Despite the eleven additional product categories that were made exempt from the new trade measures last week, the policy continues to treat all imports as a threat and undermines the complexity of the steel global value chain, and the specialist grades, coatings and dimensions that are unavailable within our borders.

Companies such as Rolls-Royce, Airbus, and the suppliers to Formula 1 teams face a material risk of supply chain disruption, bottlenecks and increased import costs as a direct result of the new measures. These are globally competitive UK businesses operating at the forefront of advanced manufacturing. Their critical supply chains are being placed at risk

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A further contradiction lies in Tata Steel’s own transition plans. As Tata moves to operationalise its Electric Arc Furnaces by late 2027/early 2028, it requires 2.5 million tonnes of scrap steel to operate efficiently. The UK does not yet have the capacity to produce anywhere near that volume. If scrap steel capacity is not swiftly expanded, one of the UK’s primary steelmakers will itself face supply chain disruption and increased import costs as a direct result of the Government’s own strategy.

More broadly, the aspiration to increase domestic manufacturing capacity by 20% ignores the timescales involved. Supply chain reconfiguration takes years, not months. Had there been effective cross-government coordination, including input from DBT’s very own supply chain team, there would have been a more sophisticated understanding of these constraints to inform policy design.

3. Consultation without listening

In February 2025, the Government launched the “Plan for Steel” consultation, followed in June 2025 by a Call for Evidence on replacing the steel safeguard measures. While there were over 100 responses to the first consultation, the government has not published a breakdown of respondents to the second.

Businesses invest time and resources to respond to consultations - of which there have been plenty under this current government. Yet, when policy bears little resemblance to the views represented, confidence in the process is undermined. Especially when the outcome has been so vastly different to the views expressed.

On steel, there is limited evidence that concerns raised by downstream manufacturers regarding specialist goods, import dependencies and economic competitiveness were reflected in the final strategy first published in March 2026.

In fact, the scale of industry backlash was such that the Government was ultimately forced to dilute the policy following what it described as a “programme of intensive industry engagement” between April and June 2026. It cannot have been the case that genuine concerns were factored into the policy process for such a quick and blatant reverse ferret. Opportunities to address fundamental issues in policy design should have been identified and rectified before the measures were first announced.

The same pattern has played out in the design of the UK’s CBAM architecture. Industry - alongside the cement and chemicals sectors - has repeatedly raised concerns that the Treasury’s proposal to apply a single CBAM rate per sector, based on average emissions, risks over - or under-estimating the true carbon intensity of imports, distorting competition and failing to reflect the complexity of modern supply chains. These objections remain unaddressed.

Having been privy to many government consultations, it is time to acknowledge that they do not materially influence policy design. Policies are often written ahead of consultation, not amended or adapted upon consultation closure, and with limited face-to-face engagement. We accept that there will always be winners and losers and that some responses to consultations are neither helpful nor realistic. But they should still be considered, the counterfactual understood, and a decision made based on all the tools at the disposal of the team.

And as the Government’s principal industry facing department, the Department for Business and Trade should excel in industry engagement. But it does not. Engagement lacks consistency, clarity or purpose. Engaging solely with trade associations, who don’t often represent the nuances of the business members, is folly.

What is required is a fundamentally different approach to engagement - one that draws on the knowledge and experience of those operating across entire value chains of any given sector, and that creates genuine feedback loops between industry dialogue and policy design.

4. Failure to consider unintended consequences

A striking weakness of the strategy is the lack of consideration given to unintended consequences and second-order impacts. This is a significant failure for a set of measures with such broad implications across the UK’s industrial base.

This includes increased costs for manufacturers that will ultimately be passed further and further down the supply chain.

Speaking to one defence firm, they have made clear that any additional import costs will be passed directly to customers, one of the most significant being the Ministry of Defence. In practice, this means the taxpayer will bear the cost of the Government’s own trade intervention.

At a time where defence spending is under increasing scrutiny and the MoD faces pressing capability challenges, the dynamic between trade policy and public expenditure appears to have received little attention.

There is also a risk that the measures simply displace, rather than solve, underlying market distortions. Traders may seek to circumvent the new regime through inaccurate product classification, or other ‘workarounds’ that represent a well-documented pattern of behaviour in response to restrictive trade measures.

The evasion of UK and Western sanctions against Russia demonstrated the scale and sophistication of such circumvention, eventually requiring the creation of the Office of Trade Sanctions Implementation.

The new steel measures present similarly significant enforcement challenges and raise questions about whether the UK has the resources and capability to effectively police the new regime it put in place. At a time where the purse strings are tight, should we be introducing measures that require increased expenditure to ensure enforcement?

Perhaps most concerning is the apparent absence of a clear assessment of how trading partners - including China - may respond. China has a well-established track record of economic countermeasures and retaliatory action to what it views as threatening to the Chinese economy. Whether the Government undertook analysis of the likely Chinese response - in both the near and far future, is unclear.

5. Policy incoherence

At large, the strategy illustrates a wider problem in policymaking: the inability for policies to be developed with consideration of the Government’s broader objectives.

The Government has made clear that economic growth is its central mission. The Industrial Strategy, published only months before the Steel Strategy, focused on targeted interventions, funding, and sector-specific plans for the UK’s eight key drivers of growth. The strategy outlined ambitions to attract inward investment, strengthen advanced manufacturing capability, improve productivity and enhance regional competitiveness.

Yet the new steel trade measures undermine many of these objectives.

Increasing the cost of a critical industrial input risks making the UK a less attractive location for investment relative to competitor markets. The US Ambassador to the UK - Warren Stephens - has been vocal on this point throughout his first year in post. If the increased costs of steel feed through into infrastructure projects, defence procurement and public expenditure, the Government will continue to fail to attract foreign investment.

Successful industrial economics, including China, Japan and South Korea, take a whole-system approach to policy design, aligning trade, energy and investment into their supply chain strategies, centred around clear long-term economic objectives.

And at a time where the UK continues to assert the need to strengthen its supply chains and long-term economic security, such interventions as the new trade measures cuts against these broad objectives.

The UK’s continued siloed approach to policymaking continues to prevent the level of integration required to meet the government’s wider strategic plans, let alone contribute to economic growth.

The ill-fated fortune of the steel industry

The challenges facing the UK’s steel sector are real, and the global context of China’s overcapacity and its use of trade as a geopolitical instrument, warrants a coherent response.

But the Steel Strategy has not delivered one. It has produced a package of measures that appear politically driven, economically underdeveloped and insufficiently tested against their wider consequences.

This is not simply a steel problem. It is a problem with how the UK designs and delivers industrial policy. Time and time again, the Government produces siloed policies that fail to connect overarching priorities with clear economic objectives, or deliver in the interests of our national security and economic resilience.

The Steel Strategy should therefore serve as a lesson for future sector-focused interventions.

Policymakers must develop a better understanding of entire value chains, engage meaningfully with all parts of industry and undertake rigorous assessments of potential unintended consequences before introducing major market interventions. What’s more, data-led decision making based on what is actually happening in the economy and accurately reflects the complex supply chains of our island trading nation, and not what the government of the day thinks is happening, is vital.

These lessons will become increasingly important as the government turns its attention to other strategically important and foundational sectors, including aluminium, cement and chemicals. The risk is that the same mistakes are repeated. The opportunity is to learn from them

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UK city productivity remains low relative to comparable European cities, and this represents a significant and persistent drag on national output. Addressing it requires action across a range of policy areas: the business environment, the tax treatment of investment, skills, planning, and infrastructure. Transport investment is one part of this, not the whole of it.

The contribution transport makes to productivity works mainly through labour markets. Better transport within a city-region allows more people to reach more jobs, improves the matching of skills to vacancies, and supports the agglomeration effects associated with larger, denser, more easily navigable labour markets. This is primarily an intracity and intra-city-region effect, delivered through buses, trams, suburban rail, and walking and cycling infrastructure, rather than an intercity one. This has a direct bearing on how a Burnham government should be expected to prioritise spending between local transport and large intercity rail schemes such as Northern Powerhouse Rail (NPR) and HS2, where the case for value for money is generally weaker.

It should be acknowledged that recent governments have already invested significantly in city-region transport. The first round of the City Region Sustainable Transport Settlements (CRSTS), worth £5.7 billion over 2022–27, and the roughly £15.6 billion announced for the second round (2027–32), were explicitly modelled on the consolidated, multi-year funding approach used for Transport for London. Bus franchising powers have also already been extended to authorities beyond Greater Manchester. A Burnham government would be building on an established direction of travel, not starting from a blank page.

Where Burnham has gone further in his stated asks is on the depth and permanence of devolution: fuller fiscal devolution rather than grant funding, land value capture as a funding mechanism, bringing more commuter rail services under local control as part of an expanded Bee Network, and longer-term funding certainty in place of single-year or short-cycle settlements. On policy specifics, this points to continued bus fare caps below the national level, expansion of integrated, branded networks to additional modes, and greater investment in walking and cycling. One notable gap is road pricing: Burnham has consistently ruled out congestion charging, having abandoned Greater Manchester’s Clean Air Zone proposals following opposition in 2022–23. This removes one of the more credible funding mechanisms available to support expansion without drawing on other budgets.

The treatment of NPR and HS2 will be a useful indicator of how these priorities are resolved in practice. The £45 billion NPR programme agreed in January 2026, with compact agreements signed by six northern mayors, has been explicitly described by government as a phased programme of capacity and frequency improvements rather than a new high-speed line. Government has also referred to a longer-term intention for a new line between Birmingham and Manchester, but has been explicit that this is not a revival of HS2, with no decisions yet made on specification or timetable; current indications are that work would not begin until HS2 Phase 1 and NPR are complete, which points to delivery in the 2040s at the earliest. Burnham has welcomed the NPR settlement but has continued to press for a high-speed Birmingham–Manchester link and an underground station at Piccadilly, both of which would carry a materially higher cost per unit of economic benefit than equivalent investment in intracity transport.

This leaves an open question for a Burnham government: whether it would prioritise the higher-return, lower-profile investment in local transport, or continue to press for the larger, more visible intercity rail projects with which Burnham has long been associated. His record in Greater Manchester suggests genuine commitment to the former, but his wider political identity has been built substantially on advocacy for the latter, and the two may compete for the same constrained funding.

This question will be set against a difficult fiscal context. Defence spending is rising, fiscal headroom is limited, and the second round of CRSTS funding has yet to be tested against a tighter spending review. Delivering the productivity benefits of intracity transport investment will depend on this being treated as a priority in its own right, rather than assumed to be affordable alongside the larger, less cost-effective schemes.

Now that Andy Burnham has pulled off a spectacular win in Makerfield, business needs to know what comes next and what to expect. The most important points for business are set out below:

How does Burnham become PM?

1. Starmer has heard the mood music and has accepted that his time is up as Prime Minister. He will stay on until a new Labour leader is selected.

2. The Prime Minister has now suggested a VERY short leadership contest from the 9th July until the 16th July (the day that Parliament rises from summer recess). Although the process is ultimately decided by the NEC.

3. Is there a contest? There is a multi-stage process. Prospective leaders need to secure support from 20% of Labour MPs (81 MPs), 5% of Constituency Labour Parties OR three affiliates (including two trade unions and constituting 5% of affiliate members) then it goes to the Labour membership to see if someone gets more than 50% of the vote under an alternative vote system.

4. A coronation? If only one candidate clears the MP and the CLP/affiliate stage then that candidate becomes leader (and PM) without going to the membership. Discussions will be taking place now between Wes Streeting’s team (and other contenders) with Andy Burnham to see if a deal can be done to avoid a contest.

Who is Andy Burnham closest to?

Josh Simons

Josh gave up his seat so Burnham could stand as an MP. He is a political chameleon having worked for Corbyn, then becoming central to the Starmer Project through his time running Labour Together and now has placed himself at the heart of Burnham’s team.

He is likely to be the Chief of Staff or Head of the Policy Unit. There may be potential tension in store in the future as it is not clear how closely the two align on policy direction.

Lucy Powell

Manchester MP and Deputy Leader of the Labour Party, Lucy has been running Andy’s Makerfield campaign alongside Louise Haigh. The two have known each other for many years and she will be given a Cabinet job as a reward for her loyalty and work on the campaign. Given her background in science it would seem that the Secretary of State for Science, Innovation and Technology job is the most likely.

Lou Haigh

The short-lived Secretary of State for Transport (resigning due to a historical criminal conviction for fraud) is back at the centre of politics having helped run Andy’s successful campaign. The two have known each other for more than a decade having been involved in his 2015 Labour leadership campaign. Again, she is likely to return to the Cabinet but that will surely bring back her criminal past.

Kevin Lee

Kevin is the single most trusted figure by Burnham in his team. Kevin has worked for Andy for more than 15 years including most recently as his Chief of Staff in his role as Mayor. Kevin is currently undergoing treatment for cancer. He is reportedly aware that he is not the right person to be Andy’s Chief of Staff in No10, but is likely to take on the role of Political Secretary in Downing Street which centred around keeping the Labour MPs on side and happy.

It’s the economy stupid

Most of a government’s success is down to the performance of the economy. That’s also what business cares about most.

The last time I saw Andy he was very critical of the Treasury and its approach to spending decisions - particularly a bias, as he saw it, against the North.

Since the end of May, he has expanded his economic advisory team to add credibility to his policy platform and reassure the ‘bond markets’ who see him as potential political risk and unknown.

Those advising him are:

• Richard Hughes - former chair of the Office for Budget Responsibility, advising specifically on fiscal policy/fiscal rules

• Josh Simons - former head of Labour Together, former minister/MP and policy adviser

• Andy Haldane - former Bank of England chief economist

• Ed Miliband - current Energy Secretary, former Labour Leader and economic adviser under Brown

• Lord Jim O’Neill - former Goldman Sachs chief economist/chairman of Goldman Sachs Asset Management

• Lord Stewart Wood - academic, former economics team for Gordon Brown. Ex-chief of staff to Ed Miliband

• Carys Roberts - former executive director of the IPPR think tank

• Zoe Billingham - chair of IPPR’s northern England division, advising on progressive policies

• Mark McVitie - former Labour Growth Group chief

In terms of Andy’s likely approach to the economy, much has been written about so-called ‘Manchesterism’. In my view - having lived and worked here for nearly a decade - Manchester has been successful for five key reasons;

1. Pragmatism and place before politics (Burnham, Sir Howard Bernstein and Sir Richard Leese all worked closely with Conservative governments and Labour),

2. Investing in transport links and connectivity with more public control (importantly that does not mean nationalisation),

3. Being willing to use creative financing mechanisms (see the £1bn+ Good Growth Fund that we were involved with, for example) to fund economic infrastructure,

4. Close partnership with the private sector and universities,

5. Long term thinking and consistency over many years.

I would expect that approach to continue into Downing Street when Burnham becomes Prime Minister. The two most likely candidates for Chancellor are Ed Miliband and John Healey.

Key policy positions

Heathrow - when I spoke to Andy about this around three months ago he was sceptical and felt it would undermine regional airports. If Ed becomes Chancellor he is also sceptical of the project due to environmental concerns (even though aviation is essentially a rounding error in terms of emissions).

Housing - Andy has been very pro housebuilding in Greater Manchester and sees it as key economic infrastructure. He understands current viability challenges and is very pro council homes being built.

Fiscal rules - I understand from his team that he they think there is plenty of wiggle room within the current rules to invest more in capital projects. A new rule that sees the deficit falling every year (rather than in year five of the forecast) may be introduced to show credibility with markets.

Business rates - while campaigning in Makerfield, Burnham said that “we had got it wrong” on business rates and pledged to cut business rates to support high-street shops, cafés and pubs. Funding the gap by going after long vacant properties and the likes of Amazon warehouses more.

Devolution - he clearly believes that more power should be given to local areas and away from Westminster, particularly looking at fiscal devolution and money raising powers locally.

Infrastructure/railways - he firmly believes in a ‘full’ HS2 and Northern Powerhouse Rail. But how can these be funded? He believes in more state control of the railways and has been following the TfL model in Manchester (e.g. the ability to tap in and out on commuter train routes). He is passionate about infrastructure spending, particularly between commuters towns/cities, to boost agglomeration and growth.

Nationalisation - some are presenting Andy’s comments on “the essentials of life” as grand plans to re-nationalise large swathes of the economy. This is a misreading of things. More state control (e.g. through regulation and political direction) is not the same as nationalisation. This state direction/control approach is the one he will take and in his view much more pragmatic than alternatives. One exception looks to be Thames Water where public ownership looks more likely.

In our latest conversation, we spoke with Michael Kell, who began his career at IFS, spent 7 years working at HM Treasury, and subsequently was Chief Economist in a spending department (then called DCLG, now known as MHCLG) working closely with HM Treasury, and spent 8 years as Chief Economist at the National Audit Office. From that position, he led value-for-money work across multiple departments and saw how the central machinery of fiscal scrutiny actually translates (or fails to translate) into changes in how government spends money.

Our earlier pieces have focused on HMT itself. This one zooms out to a different question: what happens to spending decisions once they have been made? How does the apparatus designed to scrutinise them actually shape what departments do next?

What scrutiny is meant to do

Evaluation sits at the centre of what is meant to be the British state’s mechanism for learning about itself. “Evidence-based policy” became Whitehall’s organising aspiration in the late 1990s, made explicit in the Blair government’s 1999 Modernising Government white paper. But the apparatus around it predates that and is substantial.

HM Treasury publishes formal guidance on how programmes should be appraised before they begin (the Green Book) and how they should be evaluated after the fact (the Magenta Book). The National Audit Office (NAO) scrutinises spending across Whitehall on behalf of Parliament, using its own version of the approach set out in the Magenta Book. The Public Accounts Committee (PAC), which has examined public spending in some form since 1862, holds officials to account for what the NAO finds.

Here, we’ll be focusing our attention on the NAO and PAC. In theory, the process of scrutiny should look something like: NAO reports get read, departments respond, lessons feed back into how the next pound is spent.

Kell’s account is less tidy. The NAO report itself, he argues, rarely shifts a department. What does the work is what comes next — and even then only under particular conditions of personality and political weather.

Two channels, one that matters

Kell is direct about the mechanics of NAO influence:

“There’s really two channels through which the NAO could have impact through a report. And one is much more important than the other.”

The less important channel is the NAO report itself, with its conclusions and recommendations. The more important channel is what follows. Around 60 to 80 per cent of NAO value-for-money reports are followed by a PAC hearing, at which the senior civil servants responsible for the policy are called to give evidence. The PAC then produces its own report, often essentially drafted by the NAO but signed off by MPs, with its own recommendations. It is those PAC recommendations, Kell says, that carry weight inside departments.

“NAO reports by themselves are easily ignored in a way that PAC reports and recommendations are harder for departments to ignore.”

The NAO assessment is the evidential foundation, with the Committee report acting as a political amplifier. A finding only becomes consequential when MPs take it up. Without that amplification, the NAO’s analysis can gather dust on a shelf.

When a department actually acts

Even with PAC pressure, the typical response from departments sits in a narrow band. Kell describes it as “skewed towards either being ignored completely, or doing enough to plausibly say ‘we’ve looked hard at that recommendation, done something about it,’ without necessarily really doing much about it.”

The exceptions to this, where advice is actually taken on, and the reasons why departments decide to do so, are the interesting part.

What makes the difference, where it does, is partly a matter of personality. The disposition of the relevant Permanent Secretary, in Kell’s account, varies substantially:

“Some Permanent Secretaries seem to me constitutionally open-minded. They could see through the short games the NAO would play, and still see the value to them of the NAO’s assessment and its recommendations. Others had a much more combative mindset. It was almost like: well, if the NAO suggested it, we’re definitely not doing that, because I’m not getting pushed around by them.”

Kell adds that the Chair of the Department’s Audit Committee, an external appointment, can also push the Department to respond positively to NAO and PAC recommendations, but that depends on the priorities of the Chair and his or her relationship with the Permanent Secretary.

Beyond personality, the political and fiscal context the recommendation lands in matters. A recommendation that catches the right wind becomes easier for a department to embrace, sometimes precisely because it provides cover for something officials would have welcomed anyway:

“If the recommendations catch the right wind — political winds, fiscal winds — you could see that the department might think: much as it pains us to do what the NAO are suggesting, actually it makes sense, and moreover we can use the fact that the NAO are telling us to do it to give us some cover.”

Kell’s observations cut against the implicit model of how value-for-money scrutiny works. The premise of independent assessment is that the analysis is what counts. In Kell’s telling, the analysis is necessary but rarely sufficient. Whether it lands depends on the political context and the personalities involved.

With the grain

This shapes how scrutiny is actually done. Kell describes NAO Directors, who are responsible for the content of VfM reports, actively shaping their recommendations to fit the environment they will land in.

“As someone writing the NAO report you can try to see what those forces might be, and tailor your recommendations in such a way that they are more likely to be with the grain of those other forces.”

That is a striking thing for the former head of value-for-money work at a national audit institution to say. A recommendation, in his account, is also a piece of strategy. The findings behind it are independent. But the way they are framed reflects an understanding, built up over years, of which recommendations get acted on and which sit on a shelf.

Bradshaw put to Kell that this makes the work of an NAO director structurally similar to the work of anyone trying to influence government from the outside. He agreed, and offered his thoughts on an important factor to keep in mind.

“It can sometimes seem that government as a whole is monolithic, and certainly that an organisation like the Treasury is monolithic. And of course the reality is that it’s not. There are different factions, different competing organisational pressures and incentives and objectives. Influencing those is something that outsiders can try.”

The question is the same wherever the work is done: how does an argument cross the gap between being correct and being acted on?

What this tells us about evaluation in government

Kell’s account is specifically about value-for-money work at the NAO, but the pattern he describes runs across the technocratic apparatus of British government. Wherever the state tries to run an evidence-based process, politics keeps reasserting itself in the final mile. The analysis matters, but it matters only to the extent that political and personal conditions let it.

Personalities matter, too. Kell describes Permanent Secretaries varying substantially in how they respond to the same analytical material. That kind of variation is not something the formal architecture of evaluation is designed to capture and it makes a substantial difference to what actually happens.

Kell’s account challenges the implicit model of how evidence-based policy is meant to work. The route from “we have analysed this” to “the department has changed something” runs through territory that the technocratic frame tends to underplay. Politics, personality and timing are not corruptions of the process. They are how the process actually works.

First, some context.

From the end of the second world war until the financial crash, the UK’s growth rate averaged 2.5% a year. Since 2008 it has been 1%.

That means between £11,000-17,000 per person in lost growth.

The number of people of working-age on disability benefits has gone from 2 million in 2019 to 3.5 million at a cost of £55bn a year.

Today Alan Milburn’s report shows how more than a million - one million - people aged between 16-24 are not in education, employment or training.

We are undoubtedly in a serious situation.

The Planning and Infrastructure Act received Royal Assent in December last year and a large tranche of its provisions came in on 18 February 2026. For a number of the changes - e.g. pre-application requirements, the nature restoration fund - it is too early to tell if they are having a positive impact.

Where we can look at for impacts is judicial reviews.

The Act cut a claimant’s attempts to win permission for a meritless challenge from three to one. A parish council recently challenged the Stonestreet Green Solar DCO (for 99MW of solar power). It was thrown out as “totally without merit” in roughly four months. Under the old regime, the same claimant would have had three bites of the cherry.

A local NIMBY group challenged Luton Airport’s expansion DCO. The High Court ruled against them in December 2025. They tried to appeal the decision but were 9 days later than the new challenge deadline of 7 days, so the Court of Appeal blocked any further challenge.

Positive progress. The government and others clearly think more is needed.

Last week a policy note was published suggesting two new mechanisms could be introduced (through another Act) that further limit legal challenges. Government are consulting.

The first is to allow a narrow range of energy projects (decided by the Energy Secretary) to go to parliament for ‘authorisation’. This vote of parliament would be the equivalent of primary legislation and hence very hard to challenge. A great idea from the talented Robbie Owen and/or Catherine Howard I am sure.

The second is to introduce a ‘challenge window’. The relevant Secretary of State would publish a draft decision. A fixed period of time would then be allowed, during which a judicial review must be lodged. Any issues flagged during this period can be addressed before the final order is made reducing chance of a successful JR.

Good ideas but:

Why were they not implemented in the first Act?
Why not allow schemes other than energy projects to seek protection from parliamentary authorisation?
Why not expand the use/remit of Special Development Orders given dire economic need?

The situation is dire and we must do more.

The first-night coverage gave us the news that Reform swept northern England, Labour clung on for dear life, the Lib Dems quietly extended their gains in the South and the Greens made some serious progress in urban centres.

The more important question, what these results tell us about the long-term structural health of British two-party politics, deserves more careful treatment than the news cycle allowed. Here I’ve taken a look at the data and simply asked - is the two party system finished (at least for the time being)?

The short version: as a description of how British people vote, the two-party system looks dead. As a description of how Westminster works, there’s still a lag, given the system hasn’t had a proper test since 2024. But, as you’ll see below, the shape of the local election results indeed suggest that ‘this time it’s different,’ with genuine multi-party competition emerging that a) we cannot dismiss as ‘protest votes’ and b) will lead to a seriously different landscape at a general election if it persists.

What happened?

Before using the results, we need to acknowledge what they are and are not. Local elections consistently produce lower turnout than general elections (roughly 30-35% vs 60%+) and voters use them differently. The main parties’ supporters are more likely to stay at home, voters with grievances are more likely to turn out. This means Labour and the Conservatives always do worse at locals than at GEs, and challenger parties always do better. Any comparison between local and national figures has to carry that caveat.

A second caveat on the sample matters more than the headline demographic figures suggest. As the New Statesman noted ahead of polling day, English local elections “take place somewhere every year, but not in a way that offers a fully representative national snapshot.”

The specific issue in 2026 is that all 32 London boroughs voted, alongside all 32 metropolitan boroughs. London alone accounts for roughly a quarter of the councils in the sample and votes very differently from the rest of England. Labour and the Greens perform significantly better in London; Reform significantly worse.

The sample skews younger and more educated primarily because of London’s weight within it, not as a general reflection of the areas voting. Outside London, Reform’s share in these elections would be materially higher and the Greens’ materially lower. The national headline figures are, if anything, a conservative reading of how Reform stands across England as a whole.

With those points in mind, the basic picture:

Why the usual explanation doesn’t hold

The standard response to these kinds of local results is “protest vote.” Voters vent mid-term, smaller parties overshoot their genuine support, and the main parties recover at the general election. For UKIP in 2013-14, this diagnosis was broadly correct: UKIP reached 28% in local elections while Westminster polling had them at around 10-12%. Their local share vastly exceeded what voters actually intended at a general election. After 2015, the analysis looked prescient.

Reform is not UKIP. May’s local results put Reform at 27%. Current Westminster voting intention polls average 27.7% for Reform across the major pollsters. There is essentially no gap between their local performance and what voters tell pollsters they intend to do at a general election. The protest premium does not exist this time.

That makes the historical trend in Labour and Conservative combined vote share at general elections the right frame for assessing what is happening:

The long-run decline in combined Labour-Conservative GE vote share has been real but gradual, interrupted by 2017, when Brexit-era tactical voting temporarily squeezed the field back to 82%. The 2024 result at 57% marked the sharpest single-election drop in that share since the 1970s. The 2026 local combined share of 37% sits well below any previous local election low (the previous floor was 55% in 2013 at UKIP’s peak). Local elections always produce a lower combined share than GEs, but not by this much, and not consistently with Westminster polling showing the same picture.

The real question is what it would take for that trend to reverse at the next general election. For Labour and the Conservatives to recover to even their 2024 combined level of 57%, Reform and the Greens would need to fall collectively from 45% to around 28%. That is possible, but it requires a scale of tactical return to the main parties for which there is currently no evidence.

Where Reform and the Greens are winning

The fragmentation is not geographically random and the pattern across councils is directly relevant to the two-party question.

Reform is winning in post-industrial towns across the North and Midlands, places that voted heavily for Brexit and used to return Labour MPs automatically. The Greens are winning in younger, urban boroughs where Labour still dominates at Westminster but is visibly losing its grip at council level.

These patterns will be no surprise to anyone, they both extend trends easily visible since 2016 (and earlier). What is new is that these parties are now translating those voting patterns into actual local administrations. With that, they are building the candidate pipelines, local profiles and organisational infrastructure that general election campaigns require.

Why vote efficiency under FPTP determines whether any of this reaches Westminster

Under first-past-the-post, winning seats requires votes to be concentrated enough to reach the top in individual contests, but spread widely enough to reach the top in many of them. The Greens pile up large margins in Hackney and Bristol but trail badly almost everywhere else, which is why 18% of votes produces only 12% of seats.

Reform’s 27% reaches 35-45% in specific northern constituencies while remaining competitive across a much wider range of areas, which is why 27% of votes produces 29% of seats.

This distinction is the central question for whether fragmentation translates into parliamentary change. Reform is already converting votes into seats more efficiently than the Greens, and that efficiency is improving as it builds concentrated local bases. If it continues to track at current polling levels into the next general election, the arithmetic for 50-100 Reform Westminster seats is not implausible.

The new battlegrounds

Three distinct contest types are emerging to replace what used to be a simpler two-party map.

The first is Labour versus Reform across the North, where the Conservatives have become an irrelevant third party and the fight is now a direct replacement for the old two-party contest, just with different protagonists. The Makerfield by-election is the first live test: Reform swept every ward in that constituency last month at around 50% against Labour’s 24% and Labour’s response has been to field Andy Burnham, whose personal vote is the argument (not the party’s underlying local strength).

The second is Labour versus the Greens in progressive urban seats, where Green local bases are creating a slower-building but real Westminster threat. In Bristol East, the Greens took 31% of the vote in 2024 against Kerry McCarthy’s 45%. A 7-point further swing to the Greens would flip the seat. In London, Hackney, Lewisham and Waltham Forest now have Green councils within boroughs containing safe-looking Labour Westminster seats. Those are the next stage of the same trajectory, running one electoral cycle behind Bristol.

The third type is less visible but potentially the most disruptive: a growing number of seats where three or four parties are genuinely competitive and small vote-share shifts produce large and counterintuitive outcomes under FPTP. In several Labour-held marginals in Lancashire and East Anglia (e.g. Hyndburn, Lowestoft, Norfolk South West) Labour leads the Conservatives by around 5 points with Reform close behind. In those seats, a further shift from Labour to Reform would actually end up handing the seats to the Conservatives. The party that gains votes does not gain the seat, but the party that held it still loses one. As more of the electoral map falls into this kind of multi-party instability, national swing figures become an increasingly unreliable guide to what the actual seat count will look like.

Is the two-party system finished?

As a description of how British people vote, the two-party system is over. Labour and the Conservatives combined polled 37% in May and sit at 36% in current polls, the lowest combined share in any comparable measurement. Reform is dominant in the North; the Greens are building in younger urban boroughs. It reflects where voters have been moving since 2016 and it is accelerating.

The parliamentary two-party system has not yet collapsed, but it has not been tested since 2024. A great deal has changed since then.

Labour’s 2024 landslide rested on a specific combination: an anti-Conservative tactical vote, Reform splitting the right before it had genuine local presence, and Labour winning scores of seats on thin pluralities of 30-35%.

The reverse is happening now, with Labour polling at around 17-18%. Reform is winning the very councils containing the seats Labour won most narrowly. For FPTP to deliver another disproportionate Labour majority, you would need Labour to recover 15 points nationally while Reform simultaneously fails to consolidate in the northern seats it has just taken at council level. That requires a lot to go right for Labour at once - which does not look at all likely.

Reform has eight Westminster MPs, 2,357 councillors and is running council administrations across northern England. It is not UKIP. The Makerfield by-election in June, fought in a constituency where Reform just won every ward at 50%, is the first real test of whether that organisation holds under general election conditions. The two-party system at Westminster may yet survive, but I’m not sure that I would count on it.

The King’s speech today opens the new session of parliament and should set out a forward looking agenda for the government. However it is now nearly wholly irrelevant as the real question is not if the PM will go, but when.

It is likely that, at the latest, Keir will not be prime minister past the Labour Party Conference in the autumn.

Labour MPs have two main routes to get him out:

1. 81 or more Labour MPs have to be publicly happy to back an alternative candidate triggering a leadership contest. Keir is automatically on the ballot paper.

2. The Cabinet clearly tells him that time is up and he needs to go - some emerging signs that this may be underway. He could look to sack Ministers and replace them, but that would not work and the party would be even more ungovernable.

The likely candidates:

The three most touted replacements for prime minister are Andy Burnham, Wes Streeting and Ed Miliband. Each has strengths and large challenges to overcome including - if successful - sticking the Labour Party back together.

Andy Burnham (56)

Burnham is often seen as the most electorally attractive successor to Starmer. As current Mayor of Greater Manchester, he has built a high-profile brand, identified as a greater communicator, and shown an ability to connect with voters beyond Labour’s traditional base.

However, his route to the premiership is the most complicated. Lacking a seat in parliament, Burnham needs to return to Westminster before mounting a leadership challenge. That could be months off which is why his supporters have been pushing for the PM to set out a timetable towards September rather than going immediately.

He would need an MP to stand down - likely in the North West - and then fight and win the seat. The challenge is that many of the likely constituencies are now much more firmly in the hands of Reform UK or Greens who may actually end up winning the seat.

Burnham’s also coming under increasing criticism for his historic shifting of political positions with rivals likely to play on that and accuse Burnham of inconsistency and opportunism during a leadership contest. He has already contested two disastrous leadership elections - trying to straddle too many factions to get elected hence he is known as ‘flip flop Andy’.

He will play up his ‘outsider to Westminster’ credentials and the one who best understands voters. However, despite his reinvention, his career has been very much one of a Westminster insider.

Ed Miliband (56)

Some MPs argue that Miliband comes with an advantage given his prior role as Labour Party leader (2010-2015) others may see it as baggage.

He’s well known, regarded and respected in the party but less so with some unions (e.g. the GMB) who have been critical of his management of the net zero transition. He retains positive support among the party base and MPs despite his 2015 election defeat which is a distant memory. However, perhaps the electorate still recalls the bacon sandwich and the Ed Stone?

Over the last two years and in his role as Energy Secretary, he has developed credibility for delivery. His supporters will argue that Miliband has great political experience and resilience, making him a stronger candidate second time round.

Arguably, he has been one of Labour’s more credible ministers on delivery. He has a clear vision for the energy transition and has pursued it with passion and vigour. Net zero is also one of the unifying issues on the Left.

Would Ed prefer to be the kingmaker or to try and take the leadership crown for a second time himself?

Wes Streeting (43)

Streeting is widely viewed as one of the most polished media performers and is well prepared for the leadership campaign to come. His team has been quietly preparing his leadership campaign for months and has told Sir Keir as much.

He is articulate and charismatic with a working class background. Streeting’s success as Health Secretary has positioned him as focused on delivery and performance.

However, his past association with Peter Mandelson is damaging. While Wes published an exchange of messages with the former US Ambassador, rivals will likely critique Streeting for being too ‘right-wing’ and overly aligned to Tony Blair.

The only way for him to win is by ‘coronation’ as if it reaches the membership against anyone to the left of him they will win.

Other candidates

A number of additional contenders have been bandied around. Angela Rayner most notably, but we think Burnham, Miliband and Streeting are much more likely bets. Why not the others?

Angela Rayner: Rayner certainly will have considered herself a future leadership contender with a political identity that appeals to sections of Labour’s soft left. However, she has just had to pay £40k in back tax and is not that popular with the public. Although a good communicator, she is not generally seen as a great ‘policy brain’. Therefore, she is unlikely, in the short term, to challenge to Keir Starmer.

Rayner will remain influential within Labour circles and the unions. But as things stand, she looks more likely to be an important factional voice within the soft left rather than the central vehicle for a coordinated leadership challenge. She is likely to be back in Cabinet.

Shabana Mahmood: Mahmood is a serious Cabinet figure who has delivered policy change. She has been involved in internal pressure on Starmer, but she is unlikely to be the next leader. Her politics sit on the more socially conservative/Blue Labour side of the party, which limits her appeal with the membership and MPs. Recent LabourList polling put her as the least popular Cabinet minister among Labour members. She may be forced out of the Cabinet.

John Healey: Healey is highly experienced and well regarded as a steady departmental operator, particularly on defence, but he has little visible leadership campaign infrastructure or obvious factional base. His profile is more that of a senior Cabinet stabiliser than a candidate who could galvanise MPs and members behind a post-Starmer reset. He may come forward as a ‘caretaker’ while a full contest is held or be kept on in his current role.

What do the top three contenders look like on policy?

Streeting - Pro-Growth Reformer

Streeting’s economic positioning has centred around the idea that Labour must remain visibly pro-business while still pursuing reform. On Heathrow and wider infrastructure spending, he has broadly aligned himself with Labour’s growth agenda, supporting faster delivery of major projects and planning reform to unlock investment.

His rhetoric has focused on stressing improved public-private partnerships. At the inaugural Investment Summit in October 2014, Streeting argued that stronger labour protections and economic growth are mutually reinforcing - “being pro-business and pro-worker is the roots of being pro-growth”, positioning himself as focused on balancing investment confidence with social outcomes.

Unsurprisingly, his investment priorities have been centered on NHS reform, life sciences and innovation - designed to appeal to both business leaders and the electorate.

Miliband - Green Industrial Strategist

Miliband’s positioning is heavily influenced by climate policy, state intervention and industrial strategy. His position on Heathrow expansion reflects this clearly: supportive in principle if the project were to meet legally binding climate change goals, as well as local environmental standards.

Across planning and infrastructure, he favours a stronger role for the state in directing investment and shaping markets. On housing, he has advocated “use it or lose it” planning powers and backed the construction of new towns.

Economically, Miliband remains associated with redistribution and market reform, having traditionally backed measures such as mansion taxes, while his new focus falls under the vision for deeper green investment and long-term industrial renewal.

Burnham - The Regional Candidate

Burnham’s political brand is closely tied with his successes as Greater Manchester Mayor and the investment, transport connectivity and devolved powers he has secured.

His infrastructure policies are rooted in the argument that The North has been systematically underfunded - he famously accused Sunak’s Government of “making the north pay” for successive HS2 failures as he questioned the levelling up agenda - “my arse” - to the Independent’s Jon Stone.

Burnham has also pushed for greater local control over planning powers, arguing that mayors and regions should shape regional economic growth. Burnham is pro-worker, union-aligned, yet takes a pragmatic approach to attracting business investment across Greater Manchester. His broad economic agenda focuses on regional resilience, wages and job security.

What does this mean for the big issues in infrastructure?

Understanding the intention and ‘vibes’ of our candidate on policy in general is useful, but we need to understand how they would likely steer the Labour party on specific ongoing policy areas, hitting business’ bottom lines. Here’s a summary…

Heathrow expansion

Streeting: Most likely to back Heathrow as part of Labour’s pro-growth, infrastructure-led agenda.

Miliband: Generally against Heathrow expansion. More recently, he said he would support it if it met strict carbon, net zero obligations and environmental tests.

Burnham: Currently sceptical of Heathrow as it reinforces London-centric investment; likely to prioritise regional connectivity but open to persuasion.

Planning reform

Streeting: Most aligned with the current Planning and Infrastructure Bill agenda, on the basis of his voting record and pro-business framing.

Miliband: Co-architect of the current reforms, with a particular interest in unblocking clean energy infrastructure consents.

Burnham: Strong devolution-focused critique of how infrastructure investment is distributed, but limited public commentary on the substance of the planning regime itself.

Business taxes

Streeting: Pro-business framing in government and has stood by the employer NIC rise while seeking mitigations for affected health providers; earlier-career positions on corporation tax and capital gains suggest more interventionist instincts.

Miliband: The clearest redistributionist of the three, with a track record of mansion tax and 50p rate advocacy now partly realised in the Autumn 2025 Budget; not on the public record on NIC.

Burnham: A corporation tax sceptic with a stated preference for shifting the tax burden from labour towards capital; no public position on the current employer NIC rise.

Employment and workers rights

Streeting: Pro-worker, but most focused on balancing new rights with business confidence and investment.

Miliband: Strongest pro-union candidate, likely to defend Labour’s employment rights agenda most robustly.

Burnham: Pro-worker and pragmatic, with a focus on fair pay, secure work and using public levers to improve employer behaviour. Has had battles with unions in Manchester.

Capital investment

Streeting: Most likely to frame capital investment around business confidence, productivity, public service reform and private-sector partnership.

Miliband: Most committed to green investment and industrial strategy, with clean energy infrastructure central to his growth model.

Burnham: Most focused on changing the geography of investment, with a stronger role for devolved institutions in shaping transport, housing and infrastructure priorities.

HS2 and infrastructure spending

Streeting: Likely to back infrastructure-led growth, with an emphasis on deliverability, investor confidence and avoiding another HS2-style cost failure.

Miliband: Pro-infrastructure where it supports clean growth, but most likely to apply a firm net zero test to major transport (roads) and aviation schemes.

Burnham: Strongest advocate for renewed northern transport investment, including HS2 Phase 2 and Northern Powerhouse Rail, with infrastructure framed as central to regional and national growth. He will likely want to shift spending away from the South East towards other regions.

Housebuilding

Streeting: Closely aligned to the current pro growth planning reform agenda, with housebuilding framed as central to growth, investment and delivery.

Miliband: Supportive of planning reform and housebuilding, but with greater emphasis on affordability, land reform, new towns and accelerating clean energy infrastructure.

Burnham: Backs large-scale housebuilding tied to regeneration and affordable housing, with a stronger focus on devolution and regional control over investment and delivery.

In our second conversation, we spoke with Paul Swinney, former Director of Policy and Research at the Centre for Cities and now Chief Economist at The Data City, who has spent nearly two decades moving ideas about cities and regional productivity into the mainstream of national economic policy. Few people have spent more time developing the case for regional growth and watching it land, or fail to land, in Whitehall.

Our previous piece looked at the Treasury’s internal analytical capacity. This one asks a more practical question: how does Treasury think about regional investment, and what does that mean for anyone trying to get a proposition through? Swinney’s answer, in short, is that the missing ingredient is not a better benefit-cost ratio. Rather, it is a coherent national strategy that does not currently exist, and that a well-constructed proposition may need to supply for itself.

How the Treasury thinks about regional growth

The Treasury’s relationship with regional policy has shifted considerably over the past two decades, from treating subnational economics as a marginal concern, something done to make people in certain parts of the country feel better, to a broader acceptance that national productivity depends on whether cities like Manchester and Leeds are pulling their weight. George Osborne’s focus on devolution and the Northern Powerhouse was a turning point, and the mindset change it produced has proved reasonably durable.

But this shift in understanding has not been matched by a clear national strategy for what to do about it.

“The shift in central government thinking from seeing the UK economy as one homogenous unit to understanding that there is a great deal of variation across the country is a good thing. But it isn’t clear about what exactly it expects the contributions of difference places to national growth should be, and how this then dictates where in the country it invests.”

This gap, between a general acceptance that regional underperformance matters and a firm commitment to addressing it, is the root cause of most of the dysfunction Swinney describes in how regional investment decisions get made.

The missing strategy and what it does to investment decisions

In principle, regional investment should work like this: government sets a national goal, that goal determines where resources go, and local and national actors work together to find the best projects within that framework. Swinney’s version of what that goal should look like is specific: close the 12-13% productivity gap between the UK and France and Germany, by improving the performance of the big cities that are most responsible for the shortfall.

“Once you’ve set that strategy, it determines how you channel funding, what you’re going to support and what you’re not.”

The problem is that this layer of strategic direction is largely absent. And without it, the system for appraising regional investment ends up doing a job it was never designed for.

The Green Book is Treasury’s framework for appraising public spending: weighing costs and benefits to assess whether a project represents value for money, producing what is known as a benefit-cost ratio (BCR). It already includes a strategic case element, strengthened through successive rounds of reform. In principle it is a good tool for choosing between competing projects within an agreed envelope of resource.

The trouble is that without a prior decision about where that envelope should go, the Green Book ends up answering a question it cannot answer: not just which projects are worth funding, but which places deserve investment at all. That should be a political, rather than a technical choice.

“The problem with the Green Book is not the Green Book. It’s the lack of direction and political choice being taken at the top.”

The result is the perception of what Swinney calls a “computer says no” dynamic. A proposition arrives, Treasury finds the numbers wanting and says no. But it seemingly offers no alternative and has no conversation about what might work instead.

“One of the Treasury’s goals is to improve UK economic performance. To achieve this goal it needs underperforming Birmingham, for example, to be making a larger contribution to the national economy. If a project comes forward, it’s right that it pushes back if the project isn’t deemed good enough. But it should be in its interests to help find a better alternative investment into the city, rather than the process ending there. And from the outside it feels like there’s a lot of the former but little of the latter.”

Why bad projects never die

The same missing strategy that makes it hard to get good regional projects approved also makes it almost impossible to close down bad ones. Rail projects in the North and Midlands are the clearest examples.

The same proposals get announced, cancelled and revived in cycles — truly the projects that never die. Northern Powerhouse Rail stands out as a key example here.

Each time, the economics of at least parts of the proposals struggle to stack up. And yet they keep coming back, because the forces driving them have nothing to do with appraisal and everything to do with politics. Swinney identifies two drivers.

The first is a fairness argument: the North and Midlands do receive less transport investment per head than the South East, and that disparity is real. But the economic question, whether any specific large rail investment is actually the right intervention to close the regional productivity gap, is separate.

Answering it requires a national strategy that diagnoses the economic problem and sets out what good regional investment looks like. Without that, there is no framework within which to assess individual projects on their economic merits, and the fairness argument fills the vacuum.

“Much of the discussion on public transport isn’t driven by an economic argument, but a fairness one. ‘They get this amount of transport and that’s not fair, we should get that too.’ But what if transport isn’t the reason why prosperity is lagging? Unfortunately this isn’t a question that gets much consideration, it’s just assumed.”

The second driver is what he describes as the aspirational politics of trains, a mode of transport used disproportionately by professionals, including politicians, who tend to project their own habits onto their constituents.

“Trains are seen as aspirational transport. Politicians project their world view: I use the trains, the trains are very good, therefore we must improve the trains. And ‘build some train tracks’ is an easy answer to the very difficult challenge of a struggling economy.”

Swinney is not arguing against rail investment in the North and Midlands, far from it. The point is that investment decisions should follow from a clear diagnosis of what is actually constraining growth in a given place, rather than from a prior assumption that more rail is the answer.

“To be clear, sometimes transport will be the answer. And within that, sometimes it will be trains. But other times it’ll be buses. Or it will be building more houses around existing transport infrastructure to improve the chances of people using what is already in place.”

Without a clear national strategy defining what regional investment is actually for, there is no agreed basis on which to evaluate whether any given project serves it. So the cycle continues: politicians keep asking, Treasury keeps going through the motions of rejecting, and the resources and political energy that might have gone into better-evidenced propositions get consumed by the dance. And crucially, the economy continues to struggle.

What this means for getting a proposition through

For organisations trying to engage with Treasury on regional investment (developers, infrastructure companies, combined authorities or businesses with a stake in regional growth) the practical implications follow fairly directly from the diagnosis.

A strong BCR matters, but it is not enough. In a system where strategic direction from the top is weak, what counts at least as much is whether a project can be tied to a national economic goal clearly enough that Treasury has a reason to want to say yes. The chain needs to run from project, to local constraint, to national performance.

“You want a transport case that says: this is how we increase the pool of skilled workers, which makes it more likely that high-skilled businesses locate in Greater Manchester, improves Greater Manchester’s performance, and so improves the national economy.”

Most significant regional propositions will involve combined authorities, but the question is how to use that relationship well. Combined authorities remain under-resourced relative to the powers they hold, which limits what they can bring to Treasury. Investing in developing a proposition jointly: building a well-grounded local case rather than treating sign-off as a box to tick, produces something structurally harder for Treasury to push back on without offering an alternative.

Timing matters too. Swinney makes a useful distinction between political ‘climate’ and ‘weather’ here. The climate, the background understanding of regional economics inside Whitehall, has improved and is unlikely to go backwards. The weather is the political moment: which minister is in post, what the current administration’s priorities are, whether the agenda is live.

A proposition framed in the language of current priorities, launched when the moment is receptive, has a better chance than one with identical economics presented at the wrong time. The lesson is to have the case ready, and watch for when the window opens.

The final point is the most uncomfortable. There is no shortage of national plans — industrial strategies, levelling up frameworks, growth missions — and devolution settlements are beginning to come with more defined funding allocations attached. But what is still missing is the explicit link between those allocations and defined regional growth targets: a clear statement that we need X level of productivity improvement in Y places, and that this is how resource is being directed to achieve it.

If national government continues not to be forthcoming on this, a well-constructed proposition may therefore need to supply that strategic logic itself, articulating not just the case for the project, but how it connects to national economic goals in the concrete terms that existing frameworks stop short of. That is a harder ask. But given where the system currently sits, it may be the most direct route through.

This article is part of the Treasury Grade interview series by Bradshaw Advisory. The analytical framework and practical implications drawn here are those of Bradshaw Advisory; Paul Swinney’s direct views are represented only through quotation.

The word is that the long awaited steel strategy will be revealed on Thursday. If so, that will presumably include such weighty questions as what happens to Scunthorpe, how the funds set aside for steel will be spent, what we do about energy pricing for steel, where we are going with CBAM, ETS and how they relate to the EU’s own versions of those.

But it is also going to deal with the UKs future trade measures. This note focuses on that. It is a sort of checklist for the perplexed: it outlines a number of things to look out for in the announcement. The answers matter. Depending on how they pan out collectively, one should be able to see clearly enough which basic direction we are going in. Either we are going to keep essentially to roughly the current level of import protection for the domestic steel industry or we are going to shift decisively to join the more strongly protectionist direction already set out by the EU and the US.

1. How will the UK deal with the current steel safeguard measures?

Under WTO safeguards rules, these have to expire in June. It looks like the UK will use a dodge which also looks like what the EU intends to do. We will say we are renegotiating our bound tariff commitments (we are entitled to do so) under Article XXVIII. This is how we raise our bound tariffs, rumoured to be going to 50%.

But we are supposed to offer “compensation” for this in order to avoid retaliation from trading partners. Given that the EU is mostly our largest supplier in steel import categories and planning to do the same thing itself, we may judge that that may be less of an issue. In any case, it allows the can to be kicked down the road because these article XXVIII negotiations usually take years.

If you do that, the normal way to minimise retaliation is to offer a tariff quota equivalent to what is deemed to be traditional trade levels. These already exist in a way under the safeguards regime due to expire in June.

2. Will the UK also really shrink the tariff quota amounts like the EU has said it will?

The rumour is the out of tariff quota rate will go to 50%, but what about the tariff quota amounts and the in tariff quota duty rate? The EU has said it will halve its safeguard based tariff quotas, including against the UK. Will we follow suit?

The main way in which you avoid retaliation is to effectively offer a tariff quota roughly equivalent to historical trade in the hope that this largely takes care of trading partners’ core commercial interests. That would suggest sticking fairly close to what is already there. But If, however, we choose to now shrink what has been sent historically, that becomes a harder task, and exposure to retaliation on other goods exports becomes greater.

In some cases there may be some scope to do so, because the tariff quotas have not been filled in any case. That may give some room to look like we are being strong defenders of the UK steel industry when it’s more a matter of smoke and mirrors.

There is also the little matter of Tata not making primary steel at the moment, which appears to put us in a somewhat different position from the EU in terms of the rationale for shrinking imports. When the original safeguard measures and tariff quotas were applied, both Scunthorpe and Port Talbot were in business. But domestic supply has shrunk with Port Talbot’s closure pending their EAF steel making coming on line. There has been and remains a need for that “missing” steel at least for the next year or so. Will these tariff quotas really shrink in such circumstances?

3. What about all those countries that we have free trade agreements with (e.g. India. Japan, Korea, Turkiye, Vietnam etc.)?

The WTO Article XXVIII route applies for countries with which we have non-preferential trade under the WTO. As noted above, that allows breach and renegotiation of your bound tariff provided the negotiated outcome is rebalanced. Otherwise retaliation is permitted.But our free trade agreements generally don’t have such provisions. Global WTO safeguards can (and indeed must) apply to FTA partners as well, but once we lose that basis in June, we will have lost the basis to constrain the FTA partners, some of whom are steel exporters.

You do of course have the option of keeping your market open to them or at least do with the implicit message that if you increase your sendings, things might change. Everyone seems to be banging on about China being a problem, but the UK does not have a FTA with China. (It is worth noting, by the way, that China has not in fact been anything like the dominant supplier of steel to the UK. It is the EU and others that are by far the largest suppliers). At a time when the international trading system is fragmenting, there is perhaps a case more than ever for trying to be a Member of the shrinking club that makes every effort to keep to its obligations.

If that doesn’t work politically and the choice is to pass on maintaining those obligations, the best you can do is resort to diplomacy and negotiation looking for a pragmatic fix outside the parameters of the text of the agreement.

If you are looking to do that, the odds of success are probably maximised if you are able to do two things. First, at least reach an understanding that traditional levels of exports will be allowed duty free under a TRQ type arrangement. After all, the economies concerned have been used to only sending the amounts permitted under the existing safeguards TRQ regime. They will rightly say that was time limited and doesn’t affect their rights, but at least it gives you scope to reach a deal. Second, make it clear that you are looking to genuinely negotiate this rather than impose it arbitrarily. It would be a matter for the lawyers of how any arrangement was arrived at: via letters of understanding, protocols to the agreement or whatever.

There’s not much time now to satisfy the second element if this is the road the UK goes down, unless, of course, secret economic diplomacy has been under way. If the first element also was to involve shrinking the historical TRQs it would presumably make it more difficult to reach a pragmatic understanding.

Failing that, the UK imposes and the other parties go to dispute settlement under the FTA agreements. Not the way the UK traditionally sees itself behaving, but it is an option.

4. Where does all that leave us with the EU?

The situation described above is in fact what we are facing with the EU! They are not entitled to apply tariffs to us under the UK EU FTA once the safeguard justification lapses in June. But they have made it clear they intend to breach those obligations and apply restrictions to the UK and all their other FTA partners. Except for the EEA. To add insult to injury, they will shrink our TRQs and not even maintain the levels under the safeguard.

But is all of this bluffing? The matters have been under discussion bilaterally. Will we find out that some kind of negotiated agreement has been reached with the EU whereby at least the historical sendings will be maintained and not shrunk? Or will they remain intransigent and we have to suck it up?

But, even if they back off, will that even do the trick? Will we be subjected to the melt and pour obligation that the EU says it is going to apply as a condition for any TRQ access?

In this, they are following the US. We have not been able to satisfy that standard with the US. Will we be able to satisfy it with the EU? If it is melt and pour inclusive of the UK plus the EU that might ease things considerably. But If it is applied rigorously without EU aggregation, presumably only steel originating from Scunthorpe would meet EU conditionality, at least until Tata EAF steel comes on stream.

Or, then again, maybe not even then. It depends on how this would be applied. It is conceivable that scrap used for EAF would have to originate in the UK to satisfy this standard. Maybe that is doable. If you believe some experts, they think there will be plenty originating in the UK and our users wouldn’t be priced out and have to purchase from third markets. Let’s hope so.

5. Where do UK steel users fit into this?

Most attention has been on so-called primary steel measures. But there are important businesses adding real value downstream using steel as an input whether in steel processing or elsewhere. Many of those users are anxious that new trade measures should not effectively increase their input costs by restricting import competition and obliging them to purchase from higher cost domestic producers. If the measures taken do involve higher tariffs and smaller tariff quotas, will this be in saecula saeculaorum? Or will there be a provision for review and potential alleviation of cost in the event that competition is reduced. There are some factors that can be weighed in anti-dumping and countervailing duty cases regarding downstream impacts. Will some such parallel provision be part of any such package?

In our first conversation, we spoke with Prof. Jagjit Chadha, formerly Director of the National Institute of Economic and Social Research, whose career has spanned academia, the Bank of England, and some of the UK’s leading economic policy institutions. A first piece from that conversation focused on how the Treasury processes external ideas. This piece goes further into the weeds: Chadha’s observations about the Treasury’s internal analytical capacity, and what has been happening to it.

Prof. Chadha is clear that the Treasury remains staffed by some of the best economists in Whitehall. But quality of personnel and quality of institutional output are not the same thing. Across the conversation he identified three structural shifts:

● The erosion of institutional memory.

● The growing influence of special advisers.

● The Unintended consequence of the OBR’s creation.

That together raise an uncomfortable question: whether the Treasury is becoming less well-equipped to do its most important job at precisely the moment when that job is getting harder.

The capital that walks out the door

The most concrete of Chadha’s concerns is the loss of institutional memory. Experienced economists have left for the private sector, to consultancies, investment banks, the City, and the pipeline to replace them has thinned.

This matters in a way that goes beyond the standard worry about talent retention. Economic policymaking involves a great deal of knowledge that exists nowhere in writing.

“There aren’t hard and fast academic studies on everything in the British economy. We rely on institutional memory (the Bank, the Treasury, and to some extent the OBR) about what happened in the past.”

What experienced officials carry is something closer to judgement than information: an understanding of how volatile governments behave, how data revisions can distort a picture, when a model is being pushed beyond what it can reliably tell you. These things accumulate slowly and are hard to reconstruct once lost. Technically strong younger economists, arriving into a department without a critical mass of senior people, are missing the layer from which they would otherwise learn.

Chadha’s sharpest observation here concerns the use of external consultants to fill the gap. Consultants have a legitimate role, he acknowledges, but there is a structural difference between advice given by someone who owns the idea and will be there to defend it over the course of their career and advice given by someone who will not.

“Ownership matters. If you give advice without responsibility, it isn’t the same as owning an idea and pushing it forward.”

Papering over a structural deficit in institutional knowledge with external consultancy manages the problem in the short term while quietly deepening it.

The SpAd problem

The second development is the growth of special advisers. Their increasing prominence has, in Prof. Chadha’s view, changed the incentive for Treasury officials to develop and defend rigorous positions in the first place.

If official analysis can be overridden or contradicted by political appointees, who often do not have much direct policy-making experience, and if those appointees are increasingly seen as the primary channel to ministers and the press, the return on producing careful, independent analysis diminishes.

“That undermines the incentive for the Treasury to develop its own views, because whatever they say may be undermined by a special adviser.”

This is not a complaint about politicisation in the abstract. It is a more specific claim about incentive structures: that the institutional space in which independent official analysis could develop and be defended has narrowed and that this has consequences for the quality of thinking that reaches decision-makers.

Chadha also raises, carefully, the question of leaks, noting that the noise created around fiscal policy in recent years made coherent policymaking harder, and that he does not believe the source was the Treasury itself.

The OBR paradox

The third development is the most counterintuitive. The Office for Budget Responsibility was created to bring independent scrutiny to the Treasury’s fiscal forecasts, a widely supported reform. Prof. Chadha does not dispute the rationale.

But he points to an unintended consequence. Before the OBR existed, the Treasury performed a significant amount of internal critical analysis of its own fiscal position. The OBR has taken over much of that function.

“The OBR’s role has taken away some of the constructive analysis and internal reflection the Treasury used to do so well, leaving the Treasury with less power than it otherwise might have had.”

And that space, he suggests, has been filled not by reinvested internal capacity but by special advisers. A reform designed to improve the quality of fiscal scrutiny may, as a side effect, have reduced the Treasury’s incentive to maintain the capacity for policy analysis itself.

A compounding problem

Taken individually, each of these developments has a plausible explanation. Salaries are higher in the private sector. Ministers have always needed political advisers. Independent fiscal scrutiny is a reasonable governance ambition.

Taken together, however, they paint a picture of a Treasury whose staff are less empowered and less incentivised to produce the kind of deep, independent analysis that good policymaking, particularly in today’s conditions, requires. This is not that HMT lacks overall capacity, but increasingly lacks the incentives and conditions that will allow its immensely talented staff to do their best work.

There are clear points of interaction between the three factors:

● A younger workforce without experienced mentors is more likely to apply analytical frameworks mechanically, without the contextual judgement to know when the framework doesn’t quite fit the problem.

● A SpAd layer that can override official analysis reduces the incentive to develop that judgement in the first place.

● An OBR that has taken over part of the internal scrutiny function removes one more pressure to maintain analytical rigour internally.

The problems the Treasury most needs to solve today are immense: sclerotic productivity, persistent regional inequality, chronic underinvestment in infrastructure, a tax system that has accreted rather than been designed. None of them have answers which can be drawn from an off-the-shelf framework. They are long-run structural problems that require deep, experienced, genuinely contested thinking.

The uncomfortable question Prof. Chadha’s observations raise, is whether the Treasury is currently well set up to provide what the country desperately needs.

In our first conversation, we spoke with Prof. Jagjit Chadha of the University of Cambridge, formerly Director of the National Institute of Economic and Social Research, whose career has spanned academia, the Bank of England, and some of the UK’s leading economic policy institutions. Our discussion ranged widely, from fiscal sustainability to infrastructure investment and the changing structure of economic policymaking.

One theme stood out in particular: how the Treasury processes external ideas.

Chadha argues that the department is extremely effective at absorbing analysis from outside, but far less inclined to debate it openly.

“The Treasury is remarkably good at hoovering up information and opinions from the marketplace, from academia through to think tanks, consultancies and the media.”

For businesses and organisations engaging with HM Treasury, that dynamic has an important implication. If further debate rarely happens and feedback is limited, influence tends to depend less on single interventions and more on reputation, persistence, and presenting ideas in ways that reflect the Treasury’s own analytical priorities.

Or, as Prof. Chadha puts it:

“It’s a repeated game involving reputation.”

The missing debate

In many other policy environments, economic arguments are stress-tested through open debate.

Prof. Chadha contrasts the Treasury’s culture with the one he encounters in academia:

“When I give a seminar in academia, nearly every point is challenged. That’s part of the process.”

For him, this kind of exchange is how ideas improve.

“I’m a firm believer that it’s through debate and discussion that we learn more.”

By comparison, Treasury thinking can appear more closed.

Without that iterative back-and-forth, ideas might be absorbed internally and consolidated into what Chadha calls the “Treasury view” - a position that may reflect extensive internal analysis, but which emerges largely behind closed doors.

A low-feedback system

For external organisations, this creates a distinctive engagement environment.

Officials may read and consider external analysis carefully, but detailed feedback is uncommon.

As Prof. Chadha notes, the most straightforward way to demonstrate engagement would simply be to respond.

“People want to know what they’re saying is being read and thought about. The best way to demonstrate that is to say: ‘I read your paper - let’s have a chat.’”

But that exchange does not always happen.

“The Treasury absorbs, but it doesn’t interact.”

Over time, that can shift where policy debates take place.

“If you don’t think they’re going to come back to you, why would you wait? People may carry on the debate in the media instead.”

In other words, the conversation often moves into the public arena prematurely rather than remaining within government for more consideration.

What this means for engaging the Treasury

None of this means external engagement is futile. The Treasury remains deeply influenced by external analysis.

But it does mean organisations need to approach engagement on the Treasury’s terms.

The first requirement is Treasury-grade analysis.

If officials are unlikely to come back with questions or requests for clarification, the material you put in front of them needs to be able to stand on its own. That means framing arguments in a way that aligns with the department’s analytical approach and priorities.

In practice, that often means thinking about proposals through the same lenses the Treasury uses itself: fiscal sustainability, value for money, and the kind of appraisal frameworks set out in guidance such as the Green Book.

Ideas that do not engage with those frameworks rarely travel far inside the building.

The second requirement is proactivity and persistence.

In a system with limited feedback loops, it is rarely enough to publish analysis and assume it will find the right audience. Ensuring that ideas reach the relevant officials and are understood in the context intended, often requires sustained engagement over time and may favour well-funded lobbyists rather than disinterested independent analysis.

Finally, influence tends to accumulate through credibility and consistency, rather than single interventions.

As Prof. Chadha puts it succinctly:

“It’s a repeated game involving reputation.”

Officials faced with a constant flow of external input inevitably rely on signals of credibility. Individuals and institutions that repeatedly produce rigorous analysis, and demonstrate an understanding of how the Treasury approaches problems, are far more likely to be taken seriously.

For organisations engaging with the department, the lesson is straightforward - success rarely comes from a single well-timed intervention.

Instead, it comes from building a track record of analysis that the Treasury recognises as serious, credible and aligned with the way it thinks about policy problems.

In a system where ideas are absorbed quietly and debate happens largely behind closed doors, reputation, built patiently over time, becomes one of the most valuable assets external actors can have.

Historically, defections in UK politics have been the stuff of endgame desperation, think of the fag-end of a government, where MPs flee sinking ships like rats sensing an electoral storm. The SDP split in the 1980s or the Change UK fiasco in 2019 come to mind, often from beleaguered ruling parties. Yet here we are, barely into the first half of the parliamentary term post-2024 election, with defections flowing from the opposition benches.

This anomaly unfolds against the backdrop of Keir Starmer’s Labour government, widely regarded as one of the most unpopular in recent memory, plagued by early policy missteps on everything from energy bills to immigration. Despite this, or perhaps because of it, right-leaning Conservatives are jumping to Reform UK, a party that polled strongly, but due to the First Past the Post electoral system with little to show for it, in 2024 but now appears poised for exponential growth.

Reform UK’s new recruits

Key among the defectors are figures like, Danny Kruger, who crossed in September 2025; Robert Jenrick on 16 January; Andrew Rosindell who followed on 18 January; and Suella Braverman on 27 January - whose dramatic move within a week included accusing the Tories of “betrayal” on core issues.

Ignoring Lee Anderson’s earlier shift, as he was elected on Reform’s ticket in 2024, these MPs bring a mix of ideological fire and practical experience.

• Danny Kruger, before politics, founded Only Connect, a charity aiding ex-offenders, and authored the “Levelling Up Our Communities” report, advocating for social investment and community-driven economics, ideas that resonate with impact investors and social enterprises.

• Robert Jenrick, a former corporate lawyer at Skadden Arps and Sullivan & Cromwell, co-founded Horizon Investments focusing on residential developments, later steering Christie’s international operations in the creative industries. His pro-business voting record, including consistent support for corporation tax cuts, aligns with Reform’s entrepreneurial ethos.

• Andrew Rosindell, while more politically oriented as international director of the European Foundation, has indirectly tying into cultural branding that businesses in tourism and heritage might appreciate.

• Suella Braverman, a barrister specializing in public law and judicial review, served as the Attorney General’s, offering legal acumen for navigating regulatory hurdles, a boon for firms wary of Labour’s interventionist policies.

• Malcolm Offord, now leading Reform in Scotland after his defection, draws on decades in private equity, founding Badenoch & Co. and amassing a fortune in finance. His role extends Reform’s reach into devolved assemblies, including Scotland, Wales (already with one Senedd and one Holyrood member), and London - now with a team of two London Assembly members, where the party’s influence on local economic policies is growing.

• Nadhim Zahawi, the former Chancellor and YouGov co-founder. Zahawi’s business credentials, building a polling empire from scratch, are gold dust for Reform, signalling a pivot toward economic pragmatism. His entrepreneurial journey from Kurdish refugee to multi-millionaire via YouGov exemplifies Reform’s narrative of aspiration and wealth creation.

These individuals’ histories reveal a pattern of business-savvy engagement that could transform Reform’s appeal. Offord’s financier background, including yachting wins and classic car collections, embodies the high-net-worth networks Reform is courting. Farage’s Dubai event, schmoozing expats with Candy and Zahawi, underscores this: Reform is positioning itself as a global, pro-business alternative, tapping into diaspora capital.

Reform’s electoral growth

From a handful of councillors in 2024, the party has surged to 677 seats in the 2025 locals (with defections and by elections taking this to over 900), securing control of 10 councils and two mayoralties, Greater Lincolnshire and another in the North. Projections for 2026 locals suggest further gains, potentially reaching 2-2,500 councillors across more councils.

Membership has exploded, now over 270,000, driven by a unifying spirit of anti-establishment fervor, and hope. This expansion spans sectors: from small businesses via “Small Business for Reform” campaigns to big corporates at conferences. Yet, challenges in command and control persist, Reform’s rapid influx risks internal fractures, though less severe than the legacy parties’ current disarray under Labour’s unpopularity and Kemi Badenoch’s increasing paranoia.

For business, this evolution demands recalibration.

Initially tentative, with agencies dispatching junior teams to Reform’s 2025 Birmingham conference (attended by over 4,500, double the prior year), engagement is deepening. Sponsors like Heathrow and interest from lobbyists (one in five public affairs operations attended) indicate Reform is no longer an “aberration.”

Defections enhance this: they inject experience across economy and society, from finance (Offord, Zahawi) to creative sectors (Jenrick). Policy formulation accelerates but remains unset, fluid until the 2028 manifesto, offering businesses a window to influence on taxes, deregulation, and support, core to Reform’s pro-entrepreneur pitch.

The caveats

Reform’s growth, while unifying under a clear banner, could strain coherence, mirroring corporate mergers where cultural clashes derail synergies. Businesses must weigh this against opportunities: a party with MPs like these understands boardrooms, not just ballot boxes. As Reform eyes continued ascent, industry engagement will pivot from caution to collaboration, recognising that in politics, as in markets, disruption often precedes dominance.

This cadre elevates Reform’s scope, challenging businesses to engage earnestly. The party’s trajectory, electoral wins, membership boom, assembly footholds, suggests it’s here to stay, demanding strategic adaptation from the corporate world.

[Note: photo taken By Owain.davies - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=149683943]

The UK plans to stop letting low-value imports avoid customs duty by 2029 - abolishing customs duty relief on low-value imports by March 2029.

Under the new regime, all goods imported into the UK that are valued at £135 or less will be liable for import duties (tax).

The reform will directly impact e-commerce, online marketplaces, logistics providers, international sellers and UK retailers.

The government’s consultation closes on 6 March. The consultation will shape how the new system will work.

Businesses that do not engage risk having a system designed without them.

Affected sectors:

• Small e-commerce businesses and online sellers

• Overseas sellers shipping direct to UK consumers

• Logistics firms, parcel carriers & customs brokers

• UK retailers & domestic importers

• SMEs with small batch imports

Background and context

Under current rules, goods imported into the UK with a value of £135 or less are exempt from customs duties (though VAT still applies). The Government now intends to remove this “de minimis” exemption entirely.

The stated aim is fair competition: creating a level-playing field between UK retailers and high-street businesses and online retailers, ensuring that inexpensive imported goods no longer enjoy a tax advantage over UK-sold goods. The reform is also about revenue. The Office for Budget Responsibility forecasts the change will raise over £530 million per year by 2029–30.

The reform is in response to the sheer surge in low-value imports over recent years. According to HM Revenue and Customs (HMRC) data, around 1.6 million low-value parcels per day entered the UK in 2024, with the total declared trade value rising from £3.8 billion in 2023-24 to £5.9 billion in 2024-25. HMRC and ministers argue that the old system simply cannot cope with this volume — and that the UK must modernise or risk becoming a global loophole for duty-free e-commerce.

The planned change also reflects international trends and a “commitment as part of the G7”. The European Union is phasing out its €150 duty exemption on non-EU parcels as part of a major customs overhaul (taking effect from 2026 onward). In August this year the United States removed its $800 de minimis duty free threshold for imports from all countries. This emphasises the structural reset of how global cross-border e-commerce is taxed.

Graph: Value of cheap parcels from China has more than doubled

What you need to know

The Autumn Budget 2025 announced the UK’s plans to remove the Customs Duty relief on Low Value Imports (LVI) - the exact policy detail is still to be determined. What we do know:

Consultation: There is a consultation open on the proposal, especially the technical design of new systems, which will be open until 6 March 2026. Please see the link below.

Timing: The removal of the £135 threshold will take effect by March 2029. Businesses should note that this date is a deadline and the government could implement it earlier if ready.

New Customs System: The government plans to introduce new import systems for high-volume, low-value e-commerce parcels. The existing BIRDS (Bulk Import Reduced Data Set) system, which currently streamlines low-value imports, would be replaced by a dedicated Low Value Imports (LVI) system to handle the increased reporting requirements. The government is seeking input on the technical design through its consultation. Among the proposals are using simplified tariff codes (“bucket” categories) for low-value goods to ease compliance, and possibly charging a small administration fee per parcel alongside the duty.

VAT and Process Alignment: Import VAT on these shipments is already collected (since 2021 reforms), and the government is considering how VAT will align with the new LVI system. One idea is to have overseas sellers or marketplaces remit duties periodically (e.g. quarterly, similar to how they file UK VAT returns) rather than on each parcel at the border. This would shift the point of duty payment to a more aggregated model, reducing friction at the border.

Exclusions: Gift shipments will remain exempt or subject to separate thresholds. Businesses sending commercial goods, however, should assume no relief under £135 once the policy kicks in.

What the consultation covers

The consultation (open until 6 March 2026) seeks views on the following key themes:

Fiscal representative: The government plans to require an in-country representative who will take on responsibility for any duties and liabilities.

Data requirements: The consultation will include what data should be collected, such as goods descriptions and final destinations.

Tariff treatment: The government is considering ‘buckets’ for simplification of tariffs.

Additional fees: On top of import duty, the government is considering extra fees for ‘services rendered’, such as administrative or security).

VAT: The government is considering how to apply VAT under the new LVI system.

Early engagement will help share day-to-day compliance for businesses operating across e-commerce and logistics - it will be the key and decisive opportunity to influence policy.

The consultation document can be found here.

Risks of inaction

Businesses operating across e-commerce and logistics should not underestimate the impact of this reform. In particular, firms should consider the following:

Compliance costs: Firms will face higher compliance costs and reporting burdens.

Higher costs to customers: Whilst the duty will be relatively low, it is expected that most operators will pass the costs on to customers.

Operational disruption: The shift from one system to another may create delays. This is one of the reasons for the three-year lead-time in the policy.

Possible shifts in supply chains: The potential shift in supply chains (towards domestic fulfilment) may create adjustment costs for some online retailers.

‘Squeeze’ on intermediaries: The duty exemption elimination will make some roles in the value chain unviable, particularly relevant to logistics service providers and freight forwarders.

A shift in UK trade policy

This is one of the most consequential customs changes since the introduction of the UK Global Tariff, the UK’s independent tariff schedule, in 2021.

Global shift in trade policy: The planned UK reform echoes US and EU elimination of ‘de-minimis’ exemptions, indicating a coordination global trade policy towards full duty application and increased oversight of cross-border e-commerce.

EU alignment: The alignment with EU customs policy is a key trend - it demonstrates the Prime Minister’s emphasis on the EU-UK ‘reset’ despite no return to the Customs Union. The alignment is set against the backdrop of wider efforts to align with the EU, of which we will likely see significant progress this year as a result of the UK-EU Trade and Cooperation Agreement Review.

Compliance: The shift signals a more protectionist approach to the UK’s domestic industries and a tougher approach to import compliance. As indicated above, businesses affected by the changes will need to upgrade their systems to capture data and ensure full compliance with customs declarations across different jurisdictions.

Impact on developing markets: For overseas sellers — particularly in developing markets — this marks a clear tightening of access to the UK consumer market. The shift in policy will impact trade flows and lead to supply chain adjustments, at cost to such markets.

Next steps for businesses

Companies who are exposed to the planned reforms should get in touch with Bradshaw Advisory so we can support you:

• Respond to the consultation - engage early to mitigate the impact.

• Model the financial and operational impact of duty on low-value goods to build business resilience.

• Prepare for new data, systems and liability requirements to ensure compliance.

• Monitor how this reform interacts with VAT, platform rules and wider trade policy.

About Bradshaw Advisory’s Trade and Security Unit

Bradshaw’s Trade and Security Unit supports businesses to navigate complex challenges and seize new opportunities in international trade. We support our clients on a range of challenges:

• Board and ExCo advisory: helping boards and ExCos to understand key cross-border risks and how to factor such risks into commercial strategy.

• Economic analysis: We help companies to understand and communicate their role in the cross-border investment ecosystem.

• Pre-transaction due diligence: We help LPs, boards and other investors to consider key trade and policy risks that may affect a potential investment.

• Trade Policy Intelligence: We provide ongoing trade-relevant intelligence through bespoke trade policy briefings.

• Market entry into the UK: We help companies wishing to enter the UK market to manage the trade, political and policy questions around their strategy.

• Market expansion beyond the UK: We help UK companies to expand into new markets through market analysis and relationship-building.

• Trade remedies case advisory: We help companies who may need to engage with the UK trade remedies process.

• Trade policy political engagement: We help companies and industries who would like to see a change in government policy or regulation regarding trade.

Trade and Security Unit team:

Sir Crawford Falconer, Senior Adviser

Crawford was the UK’s Chief Trade Negotiator between 2017-2024, responsible for the UK’s independent trade policy post Brexit. Crawford led Free Trade Agreement negotiations with Japan, the US, India, Australia and many others. Crawford was previously New Zealand’s Chief Trade Negotiator and Ambassador to the WTO.

Amy Tinley, Deputy CEO and Director

Amy was previously Special Adviser to the Rt Hon Dr Liam Fox MP, Trade Secretary between 2016-2019. During her time as SpAd, Amy led the development of the UK’s first post-EU Trade Strategy and Export Strategy. Amy has particular expertise in international trade and investment, freeports and trade agreements.

Tamsin Morgan, Unit Lead and Senior Consultant

Tamsin is a trade and economic security policy specialist, with over 8 years working on trade from both within and outside of Government. Tamsin has particular expertise in economic statecraft, including sanctions, export controls and supply chain partnerships. Tamsin has a postgraduate degree in policymaking from King’s College London.

Trump’s tariff threat against NATO partners

Last weekend, Trump outlined his latest threat against the UK, Denmark and other NATO partners, vowing to impose new tariffs against allies who oppose his ambition to acquire Greenland. If implemented, new 10% tariffs on “all or any goods” would have taken effect from February 1st, with a further escalation to 25% scheduled for the 1st of June.

While Trump framed these measures as necessary for global security — citing threats to Greenland from China and Russia and warning that “world peace is at stake” — the proposal was widely regarded as undermining the sovereignty of Denmark, the people of Greenland, and the collective security framework of NATO.

Trump provided conveniently provided himself a two-week window before the new tariffs would take effect. This ‘wiggle-room’ created space for behind-the-scenes diplomacy. I spoke at length about how the UK and Europe should respond to Trump’s veiled threat during interviews with a range of media outlets including Times Radio, Sky News and BBC Radio 5 Live.

Last week was a critical week for the transatlantic alliance and the wider international order. While negotiation took place during the World Economic Forum Annual Meeting in Davos, with a ‘framework of a deal’ secured between the US and NATO, Trump’s latest outburst demonstrates the value of deeper UK integration with our European counterparts to challenge the use of coercive economic measures and protect the benefits of open and global trade.

US Supreme Court ruling on Trump’s IEEPA tariffs

Next month, we expect to hear from the US Supreme Court on its judgment on the legality of certain US tariff measures, those imposed under the International Emergency Economic Powers Act (IEEPA) last year. This may implicate how the President drives US trade policy in 2026.

Of course, the court is not bound to make a straight binary decision and could present any ruling as a ‘halfway house’ rather than say all the measures are invalid or upholding all of them as legal. If they go down this route, it may be a while before it becomes clear as to what exactly the court has vacated with the Administration’s application of IEEPA tariffs.

Second, even if the Court strikes down (i.e. rules as illegal) the trade measures, it may not give clarity on refunds of the existing tariffs. They may choose to remain silent on that, or they may remand it to lower courts to sort out. This could result in a long and potentially complicated process for importers to get refunds. Although, refunds are unlikely.

There are four broad principles to keep in mind depending on the verdict, in addition to thinking about what the President may do in response:

1. Limits on presidential authority

At the heart of the case is whether the Court is prepared to place meaningful limits on the President’s ability to impose tariffs under delegated statutory powers. A decision that narrows executive discretion would be legally significant, but it should not be read as removing tariff risk altogether.

2. Congressional versus executive control

The Court may use the judgment to re-emphasise Congress’s constitutional role over trade and taxation. Even if the tariffs fall, any language suggesting that Congress must more actively authorise or oversee trade measures would shape US trade policy only gradually - and would not prevent swift executive action in the near term.

3. Willingness of the courts to intervene

Of equal importance is whether the Court signals a greater readiness to review the substance of trade decisions, rather than deferring automatically to the executive.

4. Market and operational implications

For business, the immediate question will be whether the judgment creates exposure for existing tariff regimes, disrupts supply-chain assumptions, or introduces new volatility into US trade policy at short notice.

If tariffs are struck down, what are the likely alternative routes?

Even if the Court invalidates the specific measures under challenge, it is important to be clear that the Trump Administration could use several alternative mechanisms to re-impose tariffs, potentially very quickly (although, USTR haven’t yet got around to thinking much about plan B and what these might be):

• National security powers (Section 232):

Tariffs can be re-introduced following a Commerce Department investigation framed around national security. This route has historically been resilient to judicial challenge and could be targeted at specific sectors.

• Unfair trade remedies (Section 301):

The administration could revive or expand tariffs in response to alleged unfair trading practices, particularly involving China. This mechanism is slower but legally well-trodden.

• Section 122 of the 1974 trade act:

This is a power to apply a 15 percent tariff but it has to be applied to everyone and it only lasts 150 days. But some experts believe it could be extended if only to buy time for the Administration to sort a rejigged arrangement

• Section 338 of the 1930 tariff act:

This is a power to impose tariffs up to 50 per cent on a country deemed to be discriminating against the US. It has never been used but some experts believe that it can be used and, although some investigation is required, the Administration need not wait for any outcome from it.

• Non-tariff barriers with tariff-like effect:

Quotas, licensing requirements, customs enforcement measures, or product-specific standards can be deployed to similar commercial effect, often with less visibility than headline tariffs.

• Targeted sectoral action:

Rather than broad-based tariffs, the Administration may opt for narrower, politically salient sectoral measures (e.g. autos, steel, critical minerals), increasing risk for specific business lines rather than whole economies.

International and strategic signalling

Finally, the judgment will be read closely by US allies and trading partners. A legal rebuke to unilateral tariff action may be stabilising in the medium term, but businesses should assume continued policy volatility.

The Government’s announcement of a new Northern Growth Strategy, with Northern Powerhouse Rail (NPR) at its heart, is a significant moment in the long history of transport investment in the North of England.

It is framed as a once in a generation upgrade that will improve commutes, connect city regions more effectively, and help drive productivity and growth. It also seeks to reverse a familiar political story of ambition followed by delay.

As with announcements of this kind, it is tempting to reduce the debate to a simple binary. Either you support NPR and the North, or you are sceptical and therefore against it. The reality is more nuanced. Transport infrastructure can be a powerful enabler of productivity and growth. But it only delivers transformational outcomes when it is part of a wider set of place-based interventions and when the programme is designed and governed in a way that makes delivery realistic.

This announcement deserves both recognition and scrutiny. Recognition for its ambition and political clarity. Scrutiny for its economics, its opportunity cost, and its long-run deliverability.

Transport and growth

It is entirely credible to argue that improved rail connectivity across the North could support economic growth. Better transport can increase the size of labour markets, strengthen business links, and reduce frictions that prevent firms from accessing talent, supply chains, and customers. However, transport investment is best understood as an enabling condition for growth rather than growth policy in and of itself.

The biggest productivity gains tend to come when improved connectivity aligns with complementary interventions on housing, skills, local transport and the wider business environment. Done together, these policies reinforce each other and make it more likely that transport investment translates into sustained economic growth.

The economics

Northern Powerhouse Rail has never been a simple proposition. In its original conception, it was often understood as a high-speed and high-capacity scheme, a major piece of civil engineering intended to knit together northern city regions more tightly. That kind of investment can, in principle, deliver productivity impacts through labour market integration and agglomeration. But it also comes with familiar economic challenges. New rail infrastructure is costly, and the passenger demand required to justify it can be hard to demonstrate.

The cancellation of HS2 also changes the context in ways that are easy to miss in public debate. Some of the case for NPR depended on network effects and demand patterns shaped by HS2. Parts of the enabling works and system interfaces that would have supported NPR were also expected to sit within the scope and funding of HS2. With HS2 curtailed, the benefits may be lower and the costs higher than previously envisaged. That does not mean there is no case for investment, but it does mean the economics need to stack up.

There is also a wider point about appraisal and decision making inside Government. The Green Book Review created more space for transformational projects and for the idea that appraisal should not be mechanically reductionist. That is sensible. But economics still matter, especially when budgets are tight and opportunity cost is real. It is one thing to assert that a scheme is transformational. It is another to evidence it. If NPR is ultimately justified on transformational impact, the question is whether it risks becoming a case of hope over judgement.

What is NPR now

One striking feature of the announcement is that it says relatively little about NPR as a single coherent high-speed railway. Instead, it describes a phased package of improvements across a set of city pairs, with early development focused on Sheffield to Leeds, Leeds to York, and Leeds to Bradford.

Longer-term work includes a new route between Liverpool and Manchester via Manchester Airport and Warrington, plus wider improvements across the Pennines. There is a sensible logic to phasing and deliverability, and it avoids the risks of an all or nothing mega project. However, it also raises a basic question. Is this NPR the project, or NPR the label?

Governance and delivery

The announcement explicitly references HS2, including an intention to keep NPR within a fair funding envelope and avoid repeating past mistakes. It also notes a longer-term ambition to build a new rail line between Birmingham and Manchester, while stressing that this is not a reinstatement of HS2 and would occur after NPR.

In one sense, this is politically unavoidable. No major rail announcement can now be made without confronting public scepticism about cost escalation and delivery failure. But the public has a right to expect that an announcement of this scale provides something more concrete on how those mistakes will be avoided in practice, and the absence of that detail inevitably raises the suspicion that lessons may not have been fully learned.

The key point is that lessons are not learned through messaging. They are learned through institutions, governance and delivery choices. If Government wants the public, and the Treasury, to believe that major rail schemes can now be delivered more effectively, it will need to demonstrate a different approach on scope discipline, cost realism, accountability and transparency around risk.

Opportunity cost

Even if one accepts the strategic case for better northern connectivity, there remains a serious economic question about opportunity cost. There is a strong argument, made by organisations such as Centre for Cities, that the binding constraint on productivity is often not the speed of travel between cities, but the quality of access to dense job markets within city regions. On this view, some of the highest productivity returns come from improving the reliability, frequency and reach of local and regional transport networks.

It is important to recognise that Government is already investing substantial sums in intra-city transport, including through programmes such as the City Region Sustainable Transport Settlements. The marginal question is therefore not local transport or inter-city rail. It is how the next pound is best allocated, and whether additional investment should prioritise flagship inter-city connectivity, or deepen the within-city links that unlock agglomeration benefits more directly and more widely.

This is not an argument against NPR. It is an argument for being clear about why this is the best use of scarce capital, and what alternatives have been considered.

Funding

The Government has committed £1.1bn over the Spending Review period to support planning, development and design work, and set a funding cap of £45bn for NPR over its construction period. There is a sensible political and fiscal logic here. Early-stage investment creates momentum without forcing immediate decisions on the full cost and funding profile. But the harder question remains how this becomes a funded, deliverable programme over the long term.

Those later years will be defined by real pressure on public spending, including rising defence commitments and limited fiscal headroom. If NPR is to become more than a long-term aspiration, the test will be whether future Spending Reviews can sustain a credible funding path, and whether the programme can be managed within its envelope without diluting the benefits that justify it.

Conclusion

The UK needs a serious strategy for raising productivity and spreading economic opportunity. The North of England has deep strengths in advanced manufacturing, clean energy, financial and professional services, life sciences and technology. Better connectivity between major city regions can be part of the answer. But if NPR is to succeed where so many previous transformational schemes have struggled, it will require stable scope, strong governance, credible funding and integration with wider place-based policy.

Announcements are easy. Delivery is hard. The question now is whether Government can sustain a programme that is disciplined enough to be delivered, but ambitious enough to matter.

Andrew Morrison – Chief Economic Adviser

Andrew is Chief Economic Adviser at Bradshaw Advisory and a former Senior Civil Servant economist with over 30 years’ experience in economic appraisal, cost–benefit analysis and strategic policy advice across the UK Government. He has held a range of senior analytical leadership roles, providing independent economic advice to Ministers and senior decision-makers on complex, high-value policy and investment decisions.

How will it work?

The tax will take the form of a recurring annual charge which will be additional to existing council tax liability and will feature four price bands. Properties valued between £2mn and £2.5m will face a charge of £2,500 while more expensive properties worth £5m or more will be taxed £7,500. More than 100,000 properties are expected to be affected by the change.

The property values will be based on new valuations to be carried out by the Valuation Office and will reflect their value in 2026. These values will then be used to sort properties into one of four bands. Those worth £2 - £2.5 million will have a surcharge of £2,500; £2.5 - £3.5 million of £3,500; £3.5 - £5 million of £5,000; and those worth £5 million of £7,500.

What are the political implications?

Some type of ‘mansion tax’ has been called for in Labour circles for some time - notably mooted by Ed Miliband when he was leader back in 2014. It is designed as a signal Labour are on the side of ordinary people, and are not afraid to go after the ‘super rich’. But could it politically backfire?

Bradshaw Advisory’s new analysis of Land Registry price-paid data, matched to constituency boundaries, shows how sharply exposure to a prospective mansion tax is concentrated in Labour’s urban strongholds in London and the South East.

By calculating the share of transactions above £2m in every Westminster seat, our analysis places Cities of London and Westminster, Kensington and Bayswater, and Chelsea and Fulham at the top of the rankings, with between 16 and 29% of recent sales clearing the threshold.

Several of Labour’s top brass and rising stars represent constituencies high on the list, including Keir Starmer, Rachel Blake and Emily Thornberry.

With borough elections due next year, the concentration of high-value property owners in key wards adds yet another layer of political complexity. The Parliament as a whole has an unusually large number of marginal seats. The newly elected MP in 2024, Ben Coleman, sits on a tiny majority of 152 in Kensington and Chelsea. It’s measures like this which could the Budget so consequential.

Our analysis was covered by The Guardian and The Spectator. Please contact matthew.brighty@bradshawadvisory.com for the full dataset.

Public institutions were also ahead of the curve. The Law Commission and Sir Geoffrey Vos clarified how English law applies to digital assets and smart contracts. There was momentum in Whitehall and the Bank of England.

Now, however, progress has slowed. Other countries are setting clear rules and moving quickly, while the UK is still debating the basics.

The global shift

The US has passed national legislation for stablecoins, giving firms legal certainty about how to issue, back, and use them. That clarity is already turning into products. Banks and asset managers are bringing tokenised versions of government bonds and money-market funds onto public blockchains. BlackRock’s $3 billion and total tokenised real-world assets have grown to around $35 billion.

In Europe, the MiCA framework is fully in force, encouraging banks to develop euro-denominated stablecoins and tokenised payment systems.

These changes are pulling crypto firmly into the mainstream. New laws and products are turning it from a speculative side-market into a functional part of how finance operates, supporting faster settlement, 24/7 payments, programmable transactions, and new ways of posting and moving collateral. Given the scale of global financial flows, even small efficiency gains could have very large economic effects.

Why the UK should matter

The City of London has been the world’s financial plumbing for centuries. It leads global foreign-exchange trading and financial-services exports. If trillions of pounds in assets and payments are going to be processed on new digital rails, the UK should be a hub for that activity.

Beyond the technology itself lies a wide services industry: custody, compliance, data, auditing, treasury management, and legal advice. Those are exactly the areas where the UK already excels. Capturing even a modest slice of the new market could mean billions of pounds in additional high-value exports each year.

What’s holding us back?

Right now, the UK debate is being led almost entirely by regulators. Every headline is about their concerns (financial stability, consumer protection, the risk of speculation), with no news on how the country is going to take advantage of the opportunity.

Government, for its part, has become a spectator. There are all the usual signals of activity - an APPG, a new taskforce - but these bodies rarely deliver tangible results, creating the appearance of action while the real policy energy still sits with the regulators, whose core job is to limit risk, even if they have been provided with ‘growth missions.’

The Transatlantic Taskforce for Markets of the Future, launched this year by HM Treasury and the US Treasury, is a good example. On paper, it’s meant to align UK and US thinking on digital assets, tokenisation and the next generation of capital markets. In practice, it looks more like a coordination forum than a strategy. Its discussions with industry have been constructive, but until the UK has its own clear domestic framework, which effectively coordinates relationships between HMT, the Bank of England, FCA and PRA, there isn’t much to align with. The US can come to the table with new legislation and live products; the UK turns up with consultations.

The FCA’s cautious stance has made it difficult for retail exchanges to operate. Binance stopped taking new UK customers. Revolut has struggled to expand its crypto products. Kraken’s co-chief executive told the Financial Times that British users are confronted with “cigarette-box warnings” and can’t access many of the features available in the US.

The Bank of England’s proposal to cap how much stablecoin individuals and businesses can hold is another example. No other major jurisdiction is proposing this, and there’s no timetable for removing the cap. As Lord Vaizey pointed out in the Lords, this kind of policy uncertainty makes the UK a less attractive place to build.

Bradshaw Advisory’s Senior Adviser and former Second Permanent Secretary at the Department for Business and Trade, Sir Crawford Falconer, put it bluntly:

“We seem to be suffering paralysis by analysis. Others like the EU and the US have managed to weigh the risks but still get their act together. We haven’t. If we don’t do the same, and fast, others will be eating our lunch and our financial services industry will be eating their dust.”

Without stronger political direction, these scattered efforts add up to caution rather than strategy. The UK risks being the country that hosts working groups while others host the markets.

The scale of what we’re missing

Stablecoins and tokenised assets are already handling hundreds of billions of dollars in transactions. Large global banks are building systems to use them for payments, settlement, and collateral. Every country that gives clear, proportionate rules is positioning itself to host this new infrastructure and the jobs and revenues that go with it.

If we continue to hesitate, the UK will end up importing these services rather than exporting them.

It’s almost Budget day in Westminster! How can you tell? So many kites have been flying from No.1 Horse Guards (mooting tax changes) that you can barely see the sun!

The Chancellor’s challenge is a £20-40bn fiscal gap: caused by poor growth, poor productivity, increased spending, high inflation, high borrowing costs, and an inability to cut spending without sparking a backbench revolt.

With two weeks to go, the most likely of the 100 plus money raising ideas floated by the Treasury seems to be an increase in income tax rates, but crucially done while cutting national insurance (NI) at the same time.

What is this ‘hokey-cokey’ fiscal approach all about? And what will it achieve? Before we answer that, first let’s set out some context and take a look at the state of the UK’s finances.

Follow the money

In the last five years, UK borrowing costs (the cost of 10-year UK gilts) has gone up by fifteen times - from 0.3% to 4.4% - meaning substantial costs for any new borrowing.

UK 10-year borrowing costs (source: Bloomberg)

The UK’s borrowing costs are now the highest among major developed economies:

The UK currently spends around £1.3 trillion (£1,279bn to be more precise) a year while bringing in £1.1 trillion (£1,141bn) in tax receipts. This means a deficit (gap between income and spending) of around £140bn. We need to borrow this from the financial markets, made up of individuals and companies that buy our debt for a certain ‘interest rate’ (or yield in the parlance). A ‘black hole’ of £30bn would be around 2.5% of current spending.

In 2024-25, the OBR calculated UK debt to be equivalent to 96% of national income. That is £2.8 trillion or £98,000 per household. That is a lot of debt!

In terms of day-to-day spending, around half of all spending goes on the NHS, social care and welfare (including pensions):

• £310bn on welfare and benefits

• £205bn on health and social care

• £95bn on education

• £60bn on defence

• £28bn on transport

• £20bn on the Home Office

• £12bn on homes and communities

• £7bn on environment, food and farming

• £105bn on debt interest payments (more than education or nearly three times transport spend)

Tax the rich?

In the run up to the budget, following her failure to cut welfare spending, the Chancellor has faced calls from her backbenchers to raise taxes on the rich. Over the summer, ‘JUST RAISE TAX’ was proudly run on the cover of the New Statesman. During his brief moment in the limelight this summer, the forever wannabee Labour leader, Andy Burnham’s new ‘Mainstream’ group also called for wealth taxes. Further to the left, the charismatic populist leader of the Green Party has also been banging the drum to raise taxes on the super rich. Is this a silver bullet or are we missing something?

Firstly, most of our tax receipts come from three sources: income tax, national insurance and VAT. Together they account for £650bn of revenue or around half of all tax and duties taken in by the UK.

29% of all income tax is paid by the top 1% of earners and around 10% is paid by the top 0.1% of earners.

In overall terms, the Treasury produces something called ‘distributional analysis’ that shows the impact of taxes and public spending across different income groups. As you can see from the chart produced at the Spring Statement (March 2025), two points stand out:

1. 60% of the population (the first six deciles) receive more in welfare and public services than they contribute through the tax system.

2. The top decile (i.e. 10% highest earners) pay about 60% of their net income in taxation (in all its forms) and receive just over 15% back from public services/welfare.

According to the Sunday Times Rich List there are 156 billionaires or billionaire families in the UK who are estimated to have c.£700bn or so in wealth. Let’s imagine we were somehow able to get hold of 100% of this money (extremely unlikely as billionaires are very mobile and good at moving money around) would only keep the country running for a mere six months. Then what would we do? Say instead we take 10% of the billionaire’s wealth and get £70bn, that still leaves the UK in a deficit of £70bn a year we need to borrow or raise from somewhere else.

There is a fundamental mismatch between how much people think things cost (for example the asylum hotels which cost about £3bn a year) or where the money could come from (e.g. billionaires) and how much money the country actually needs if it wants to keep a state the size we have now and not cut anything.

The rich - rightly - already carry more of the tax burden than the poorest in society. But the UK now finds itself in a very precarious position with taxes on median workers actually low by historical standards and significant pressure on the highest earners. When 10% of your income tax is reliant on 0.1% of workers then clearly if they are pushed too far and decide to leave the country it opens up an eye-watering gap in revenues.

While screaming ‘tax the rich’ and thinking all our money can be found from ‘someone else’ is back in fashion, the truth that our politicians are not currently willing to say out loud is that the most reliable and highest revenue raising measures are ‘broad based’ i.e. take a bit of a wide group of people.

NI down, income tax up

So why is the Chancellor reportedly planning to raise every income tax band by 2% and at the same time cut national insurance by 2% - ‘the 2% switch’. Why would she do this? Wouldn’t it cancel itself out?

The first misconception is that national insurance has some special ‘ringfenced status’ and goes directly into your state pension pot while also funding the NHS. This is complete nonsense. National insurance is just another tax which politicians of various stripes have pretended goes directly into the NHS or state pension - it doesn’t. It is also a tax not paid by those above state pension age.

Because of sneaky political manoeuvring over the years, national insurance has also grown in importance by bringing in more and more revenue as a share of GDP. This means how it operates and who it impacts are more important. See the chart below from the Resolution Foundation.

According to the Office for National Statistics there are nearly 1.5million pensioners in work, past the state retirement age and hence not paying NI. This presents an attractive opportunity for a desperate Chancellor.

By raising income tax and cutting NI (the 2% switch) she can try to make the argument that she has broadly stuck to her manifesto promises (not to raise NI, income tax and VAT) because it would not impact most ‘working people’. It’s effectively a tax on pensioners who are still in work or earning substantially from their pensions/rental income and the self-employed.

The Resolution Foundation calculates that this 2% switch will raise around £6bn extra per year for the Chancellor while allowing her to try and argue (will be received with mixed opinions) that she’s kept to the spirit of her manifesto promises.

But when we follow the money, we know raising £6bn extra a year still leaves the government with as much as £30bn still to find.

Other likely and trialled measures that build on the 2% switch seem to be:

• an increase in the national insurance paid by those who are members of LLPs (raises £2bn according to CenTax),

• measures to reduce the amount of pensions contributions allowed via ‘salary sacrifice’ (raises £2bn according to government estimates),

• and raising self-employment national insurance rates (could raise between £1-8bn depending on what measures are taken) and increasing the rates of dividend tax (raises £0.4bn per 1% rise according to the IFS).

All in all, taking the most optimistic estimates from a tax raising point of view, these measures would result in still needing to find around another £10bn in revenues.

Whether these come from either savings, or even more tinkering with the tax system remains to be seen. But until the decision is made, we will not be able to afford the public services we have gotten used to over previous decades.

The world after 2 April 2025 is very different to the one before. President Trump’s self-styled ‘Liberation Day’ has shattered the free trade consensus of previous decades, replacing it with a return to a more transactional, realpolitik order. The consequences have hit balance sheets and demand a new corporate strategy from businesses.

The new rules of the game

While an issue by issue approach to trade will always be needed, the new geopolitical order demands a more complex, strategic approach to strengthen security and trade between Westminster and Washington. Businesses have a role to play.

Where things stand

While the initial ‘US-UK Economic Prosperity Deal’ provided some stabilisation, uncertainty remains on a number of issues:

• Steel and steel derivatives: the reduction to zero duties for the UK has not been implemented and the US’ expansion of the 25% steel tariff to so-called ‘steel and aluminium derivatives’ products will hit a wider range of products and appliances.

• Pharmaceuticals: the initial US-UK agreement broadly indicated a preferential status for the UK would prevail. Instead, the threat of a 100% US tariff is being employed to extract UK concessions on pharmaceutical pricing.

• In other sectors such as ‘large trucks’, manufacturers are also unable to rely on the presumption of a previously mooted 10% tariff.

The new reality is that the old rules of the game no longer apply. We have crossed the rubicon.

What will happen next?

Looking at the road ahead, two moments stand out:

1. The application of the Carbon Border Adjustment Mechanism (CBAM) by the UK (and the EU)

While it is not yet clear what the impact will mean for US exporters to the UK, past comments by US businesses suggest they are concerned. Therefore a realist would assume Washington will respond with disproportionate force.

2. The US Supreme Court’s upcoming adjudication of the International Economic Emergency Powers Act (IEEPA)

If the Court decides the President did not have the power to apply the tariffs, expect more chaos to follow. Will we see repayment? Will new tariffs replace them? Whatever happens, a calm return to the status quo is unlikely. Oral arguments have just started with the Supreme Court having until July next year to issue its verdict.

There is no reason to simply play defence

While ongoing efforts are being made by the UK government to manage these issues, UK sectors and producers should not be passive.

Inspiration can be taken from the civil aircraft sector, which stabilised its zero tariff status. The UK’s ability to secure better arrangements reflects our unique political and security based relationship with the US. This strength can be used by businesses to further improve the trade and security relationship.

Trade and security are now one and the same

Economic and national security have always been inseparable. Today, our infrastructure and firms are being increasingly targeted by adversaries and hostile states. Our supply chains are being manipulated. Corporate and state sponsored espionage, and cyber attacks are on the rise.

As close allies the US and UK benefit from standing together. And greater trust should translate into greater trade opportunities.

If we get critical sectors like technology right first, then others should follow.

Making digital and technology absolutely priority in the US - UK relationship

The US is the global leader in tech. But the UK is the second largest digital exporter: 90% of our global financial services exports were delivered digitally, while 85% of telecoms, computer and information services exports were digital.

US companies already export just under $70 billion in digital services to the UK and they have been growing at around 10% per annum. Over 3 million US jobs are dependent on that business.

The recent US - UK Memorandum of Understanding is a start. But key issues that need to be addressed include:

• Consolidating the US-UK data bridge.

• Revising the UK’s digital services tax - where it is clear that the US Administration wants to revert to this.

• Aligning governance frameworks on AI, quantum and cyber - looking at either harmonisation or at least mutual recognition.

• Sorting out copyright regimes to ensure we are attractive for the tech and AI sector.

• An approach on matters like data mining and data privacy that incentivises investment.

• Collaboration on R&D and skills - for example in nuclear - that can enable the energy intensive needs for these sectors.

Building on the special relationship

If the US and UK can deepen cooperation in trade and security in critical sectors like technology, the same approach can be applied to other crucial areas such as pharmaceuticals, rare earths and critical minerals. This then will set a framework for not only other sectors, but the rest of our allies to follow.

The age of globalisation and free trade is over and a new age of strategic partnership based on trade and security has begun. Businesses must adapt, or get left behind.

Read more about Bradshaw Advisory’s UK-US strategic alliance with the top US lobbying firm, Akin here.