Reeves’ Mansion House speech: a new approach to funding UK investment?

Much of the noise around the recent Budget has centred on those subjects with emotional resonance with the public: painful tax rises for employers (and, as it will undoubtedly be passed on to them, employees); devastating changes around agricultural property relief; higher inflation. But in her Mansion House speech last week, the Chancellor had an opportunity to return to her key policy priority for the coming years: that is, driving higher investment. And on this occasion, there was much to be welcomed.

Since 2022, Policy Exchange has been highlighting the enormous opportunity that UK pension assets offer our economy. The UK market is the largest in Europe and the third largest in the world with some £3 trillion in assets. This a deep source of potential finance for future investment, which if properly tapped could provide a sustainable source of funding for wealth-generating infrastructure, as well as secure incomes for savers in retirement.

To pick out some particulars, Policy Exchange has called for three big reforms over the last few years. Firstly, in Unleashing Capital, we made the case that our still highly fragmented pensions market should be consolidated so that pensioners might benefit from scale, and to make it easier for schemes to invest in alternative assets like capital projects.

Secondly, in Growing Pensions Capital, we argued that the regulatory framework for the increasingly large Defined Contribution (DC) pension market needs to be reformed so that it promotes return maximisation, rather than simply risk (and cost) minimisation.

And finally, in the Property Owning Democracy, Policy Exchange argued that a concerted effort was required to improve access to financial advice for the next generation of potential retail investors, and to support wider financial ownership in the UK.

The previous Chancellor made great strides across these agendas in his own Edinburgh and Mansion House reforms. Hunt’s reforms were praised by Reeves herself in her speech at Mansion House. And the policies she announced as part of that speech will build on that progress in a meaningful way.

Amongst other things, she committed the Government to consolidation in the local government and DC pension markets, she has announced a consultation on addressing the “culture of cost before value” to deliver better long-term returns, and she has pledged “transformational” changes to financial advice regulation. These are welcome interventions, and they will go some way towards improving the UK investment environment.

Nevertheless, there remains much more to be done. Policy Exchange has spoken about how much can be learned from the Australians about effective pension reforms. Part of the reason that their system works so well is the high levels of transparency, competition and contestability, in conjunction with regulatory objectives that focus on maximising returns. Such transparency is conspicuously lacking in the UK at the moment, and the present value for money framework privileges lower costs over high investment performance. We are delighted that the Government is looking at the Australian model; we think it can go much further in replicating its strengths here in the UK.

At a more macro level, additional action is still required if pension capital is to actually drive higher investment in the UK, rather than seeking better returns abroad. Some have spoken about mandating higher domestic allocations, but not only might this depress returns for savers – it also would not fundamentally address the reasons why overseas destinations are a more attractive prospect for capital. A far better approach would be to scrap stamp duty on shares and deliver a pump-priming programme of planning reforms. That is what pension funds themselves are telling us.

And finally, the Government should move forward with the previous Chancellor’s plans to introduce a portable pension pot that follows workers from job to job. It’s the system used in Australia, it gives the individual saver much more control and ownership over their pension investments, and it would likely support higher savings rates. It would undoubtedly be a technically challenging reform, but it’s the sort of serious reform that a government intent on delivering growth and with a huge parliamentary majority would undertake.

Pension reform should be at the core of any plan to transform the UK’s economic prospects. It’s not just about ensuring greater prosperity for individual pensioners – although that is of vital importance if we want people to have prosperous retirements without ever increasing fiscal burdens upon the state. It is equally about boosting the sort of investment that will permanently increase the productive capacity of our country such as transport and energy infrastructure, and funding that investment in a way that promotes wide-based prosperity and national economic resilience.

Reeves’s Mansion House reforms are a step in the right direction. But there is much more work still to be done.

President-elect Donald Trump has pulled off the biggest Republican victory since George H.W. Bush in 1988. The stage is set for the return of a Republican approach to national security at the most geopolitically consequential moment since the Cold War.

But what exactly constitutes a broad, common denominator ‘Republican’ national security approach today? Some of the answers can be found in Policy Exchange’s recent event series – which hosted four senior officials who are shortlisted for major roles in the next administration.

The broad GOP national security tent shares a particular interpretation of state power. This concept is of the traditional Realpolitik variety that Bismarck would have recognised: hard power, military dominance, and favourable balances of power.

All Republicans are united by the belief that Biden has resided over a loss of American power, although their causal explanations differ: for some, Biden has expended resources imprudently in Ukraine; for others, he has not supported global allies enough. But none of them pushes the neoconservative agenda, as defined say by ‘The Project for a New American Century’ that was supposed to be so influential in the administration of George W. Bush (2001-2009).

All these currently influential perspectives may seem contradictory, but they are two sides of the same coin: the U.S. is weaker because it has haemorrhaged credible deterrence. By restoring this ‘forward defence’, the U.S. will avoid future wars while preserving the conditions which bring it security and prosperity. Former National Security Advisor Ambassador Robert O’Brien succinctly expresses this as he calls for “the return of peace through strength”. It is thus clear that the accusation of ‘isolationist’ tendencies within the GOP is misguided. They do not propose a retrenchment, but a reconfiguration, of U.S. power.

It is on the means of re-acquiring this deterrence that Republicans split. This divergence stems from a fundamental disagreement over the nature of contemporary geopolitical conflict.

The first camp is defined by the belief that interstate conflict is systemic, and so the U.S., which is implicated in an alliance system across the world, cannot always pick its battles. According to this analysis, the West is pitted against a multicontinental ‘new axis’ of ‘revisionist’ powers united by the desire to reconfigure world order. Advocates of this view, including former Secretary of State Michael R. Pompeo and former Deputy National Security Advisor Matthew Pottinger, point to evidence of growing adversarial cooperation amongst America’s adversaries – Chinese purchases of Russian and Iranian energy to sustain their economies; North Korean troops in Ukraine; and the Iranian drones and Chinese dual-use components flowing into Russia’s war machine. During his event at Policy Exchange, Pompeo criticised those Republicans who do not appreciate the “connectivity” of world order. For him, they fail to see that American interests are implicated everywhere.

The second camp rejects this connectivity. They instead advocate drawing down American security commitments elsewhere to focus on pinning China down in its backward. The staunchest proponent of this approach – which we may call a ‘compartmentalist’ approach to geopolitical conflict – is Elbridge Colby, former Deputy Assistant Secretary of Defense for Strategy and Force Development, and mooted in some quarters as future National Security Advisor to Vice President-elect JD Vance. Colby does acknowledge the ‘new axis’, but he is willing to abnegate responsibility for other regional security architectures due to his belief that primary U.S. interests are not at stake.

From these different analyses of conflict arise two secondary contentions: on the nature of deterrence; and on the nature of alliances.

For Pompeo and O’Brien, the credibility of deterrence is universal. In other words, it must apply everywhere – or else it will exist nowhere. Both highlight the Middle East as a case study, rationalising 7 October as the product of an Iranian regime which became emboldened and enriched after four years of appeasement. Both also made the same observation that Russia did not take any Ukrainian territory during Trump’s first presidency. For both, the causal linkage is clear, and the deduction simple: the West’s enemies study our words and actions, drawing conclusions about our competence and readiness for war. Sending a message to one means sending a message to all.

Colby disagrees. Rather than construing deterrence as a system-wide construct, he espouses what he calls “differentiated credibility”. This form of deterrence is ‘positionable’, resembling a finite number of chips on a board to be shuffled around and stacked. In a “world of bad choices”, the U.S. must prioritise whom it deters. This is possible because, to his mind, our adversaries are blinkered and preoccupied with their own region: “China is looking at the decision about Taiwan… through the lens of the regional military balance vis-à-vis the United States in Asia.” He thus demands a (re)prioritisation – rather than expansion – of military capabilities.

Alternative theories of alliance flow from these concepts of deterrence. Those such as Pompeo who interpret conflict as systemic, and deterrence as universal, perceive the holistic value of deep-rooted and lasting allies. They interpret the longevity and depth of the Transatlantic Alliance as a source of American strength, to be called on when the moment requires.

In contrast, ‘compartmentalists’ are sceptical of such enduring benefits. For Colby, an ally’s importance does not exceed a “business-like or pragmatic point of view”. As conditions evolve and needs change, so too do interstate partnerships. Given his belief that Europe can only make “marginal contributions” to the Indo-Pacific balance of power,[1] there is little reason for the U.S. to invest in our defence.

This faultline is at the heart of the most vexed issue in the battle for the soul of Trump 2.0’s approach to national security: under the looming Chinese shadow, how should the U.S. allocate its limited resources to Ukraine, or NATO, or Israel and the Sunni Gulf, or partners in Asia? In each case, the dividing line is over the function of alliances, and the sources of American strength.

The verdict of these debates will reverberate across the globe. In the Indo-Pacific, Pottinger sees increased U.S. support for Asian partners such as South Korea and Australia as essential to curbing China. Colby, meanwhile, has euphemistically suggested that the U.S. should “overhaul” its military presence in South Korea, and that he is “quite sceptical” about AUKUS given U.S ship-building constraints.

The same is true of Europe. Pompeo’s prime concern is to buttress the continent’s stability, “crucial” as it is to U.S. security. O’Brien would continue to support Europe, but he also takes umbrage, à la Trump, at those trade partners – including the EU and Germany – who have run up large surpluses with the U.S. The working assumption in European capitals must be that Trump 2.0 will reduce spending on European security, or impose tariffs to adjust trade balances – or both.

The Middle East is another point of contention. Pompeo and O’Brien offer unwavering support for Israel in its showdown with Iran, and the latter condemned the UK’s decision to suspend 30 weapons licences to Jerusalem – implying that a future Trump administration might re-evaluate our position in the F-35 programme. Both men place great importance on bringing Saudi Arabia into the Israeli-Gulf pact to counterbalance against Tehran. This contrasts with the ‘compartmentalists’ who view Israel as an ally but, as with Europe, one that must become more self-sufficient.

These are all live issues which will be thrashed out internally during the presidential transition. For the UK, the prudent way to spend the intervening period is by contingency planning for all probable outcomes.

This exercise must be conducted in the same language as that used by Republicans – the language of global conflict, deterrence, and alliance. This means adopting the same realist grammar of hard power, transaction, and priorities. The UK Government’s championing of a maximalist interpretation of international law above strategic interests – as with the Israeli weapons suspension and decision to transfer sovereignty of the Chagos Islands to Mauritius – appears incompatible with the Republican worldview. Reports that Trump’s team disagreed with the Chagos decision serve as a wake-up call about the need to think differently in order to preserve currency in the American-British relationship.

It is only by engaging with the worldview of Trump 2.0 that we can hope to fit into it – let alone shape it.

New Head of National Security Unit, Marcus Solarz Hendriks

[1] From Elbridge Colby, Strategy of Denial: American Defense in an Age of Great Power Conflict, (Yale University Press, 2021).

When Rachel Reeves stood up in the Commons on Wednesday as the first Labour Chancellor in 14 years and the first ever female Chancellor, she faced a myriad of challenges. Chronic levels of underinvestment – both public and private – had been holding back economic growth since the financial crisis more than 15 years ago; public services were starting to crumble, particularly in the health sector, when getting a GP appointment had started to seem like an almost Herculean task. Yet at the same time, she had inherited both a tax burden and debt levels that were already at historically high levels. And all this in the context of the previous reckless Truss budget, still reverberating around the financial markets, making every move just that bit more risky.

Key to squaring the circle was unlocking the country’s economic growth and starting to rebuild the nation’s infrastructure. According to World Bank data, total UK investment as a proportion of GDP has been lower than every other G7 economy in almost every year over the past 30 years. Faring  particularly poorly was public sector investment – and it was due to get worse. Plans set by the previous Conservative Government at the Spring Budget 2024 were for public investment to fall from 2.6% of national output in 2023-24 to 1.7% in 2028-29.

So perhaps it wasn’t that surprising that alongside her tax-raising measures, Reeves proposed changes to the Government’s self-imposed fiscal rules to allow for public investment to rise. On the one hand the rules governing borrowing for public investment were loosened (but the time-scale for resuming a downward profile shortened), while on the other, the rules governing current spending were tightened, giving some comfort to financial markets that the brakes on spending hadn’t been totally removed. The seemingly technical change to the definition of public sector debt to include financial assets and liabilities, such as the student loan book, saw the Government giving itself licence to lift capital spending by up to £25 billion a year.

So will the greater capital investment help turbo-charge growth?  At first sight, the figures produced by the Government-sponsored Office for Budget Responsibility look disappointing.  The growth of the UK economy over the next few years are strikingly similar to that forecast just six months ago under the previous Conservative government. While there is a slight boost from fiscal loosening in the first couple of years offset by slightly slower growth later in the Parliament, growth rates look nothing like the 3% seen in the 1990s and early 2000s, before the financial crisis.

Why? Largely because, the OBR says, the positive effects of higher investment are more or less offset by dampening impact of higher employers’ national insurance contributions, which will feed through into wages. In addition, there is a real chance that higher borrowing could push up interest rates and lead to less private sector investment than there otherwise would have been.

Arguably, however, that short-term analysis misses the point. This budget can only be seen as step one among several designed to boost growth over the longer term.

The only way of telling a sensible economic story is to view the rise in capital spending as a downpayment on a longer-term vision for the UK economy, one in which over time the productive potential of the economy rises. Indeed, the OBR itself acknowledges that  over 10 years higher public investment should encourage more private investment and increase the underlying rate of growth of the economy.

But whatever the theory says, the fact is that poorly targeted investment will have a much less positive impact on the economy than investment targeted at those areas which underpin economic growth – skills, R&D, innovation and transport infrastructure linking people to jobs, for example. In other words, money needs to be spent well.

Hence the importance of plans for an Office for Value for Money, alongside the ten-year capital plan and the industrial strategy due to be published next year. Another important plank in the strategy will be five year Departmental capital plans that are extended at every Spending Review every two years, allowing sensible decisions to be made over priorities, gaps to be identified and addressed. Departments will also be told to publish business cases for major projects and programmes in a bid to increase transparency.

And any increase in public sector investment can only be one part of the broader package of economic reforms.

Phase Two of the economic plan therefore must therefore have two prongs. First, there needs to be an acceleration of reforms to the planning system, a greater emphasis on promoting competition, and reforms to the regulation of utilities to promote greater private sector investment and economic growth (full disclosure: I am Chair of Water UK which has been arguing for more investment). Some of this has already been touted.

Second, and just as importantly, there needs to be a recognition that the demands on the state are currently on a one-way upward trend, leading to an every-increasing pressure on public spending and a rise in the tax burden. For that to stabilise and start to reverse, one part of the national renewal narrative needs to be the rebuilding our social as well as our economic infrastructure. Of course, there is a chance that the injection of cash into the NHS will help do just that.  There needs to be a concerted effort to tackle worklessness and encourage more people into the workforce. That in itself would increase economic growth.

But the challenge goes even further than that. The demands on front-line care have become so intolerable, that only a focus on prevention will reduce demand and stabilise the sector overall. Such as strategy could involve more care for elderly or sick relatives enabled in the home or, for example, a greater use of community groups in battling loneliness or encouraging physical activity.  It would see a revival of the Sure Start programme and help for young mothers to support each other and their families. It could see housing policy adapted to facilitate people with caring responsibilities to leave nearer to each other. Rebuilding needs to come from the bottom up as well as the top down.

Rt Hon. Ruth Kelly is a Senior Fellow at Policy Exchange. She has served as Labour Secretary of State for Transport, Secretary of State for Communities and Local Government, Secretary of State for Education and Skills and Minister for Women and Equalities, as well as holding ministerial roles in HM Treasury.

It may horrify us that Vladimir Putin can call an international conference and the leaders of China, India, Brazil, the UAE, the UN and many others of the BRICs+ all willingly turn up. But this is not an aberration but part of a plan to sideline us and our allies in the club of democracies often referred to collectively as ‘The West’. And in our casual use of “The Global South” to bracket ‘The Non-West’ we have been complicit in that. It is deliberately being used by Putin and Xi, and others, to undermine our position with the countries we have so clumped together. It is time to stop using the term. 

The label “The Global South” might be useful conversationally, as a shorthand for all those nations who might not share our NW European, Atlanticist view of the World’s problems. Even then it should have quotation marks around it in admission of its limits as a useful analytic term.

When it gets used in official Government communication justifying policy changes with genuine strategic implications then we should take notice, and ask questions. The Foreign Secretary’s public statement explaining why he had decided upon ceding to Mauritius the sovereignty of the Chagos Islands, and its hugely important military base on Diego Garcia, gave the following justification:  

“…it undermined our international standing. We are showing that what we mean is what we say on international law and desire for partnerships with “the Global South”. This strengthens our arguments when it comes to issues like Ukraine or the South China Sea.”

In testing this rationale, one must ask to what extent “the Global South” can be considered to have been positively influenced by the UK’s assumed gesture of magnanimity and understanding of their shared concerns and interests. The issue itself has been hotly debated, and the true position of the US in this deal remains opaque. But the thinking behind it should be analysed as it may well underpin future foreign and security policy decisions by this administration and its executive. 

A new paper for Policy Exchange comprehensively explores the provenance, life and utility of “The Global South” as a concept and useful lens by which to view the bloc of countries that comprise the majority of the World’s population. Unsurprisingly, it tells us as much about ourselves as about those nations with whom we treat. And it suggests we are not helping ourselves, in fact we are being counter-productive.

Membership of “the Global South” is somewhat malleable. The use of ‘South” suggests a geographic coherence, yet we exclude Australia which is very definitely in ‘our’ club of aligned nations, while arctic Russia is clearly a sponsor of the ‘South’. Indeed that that is a major current concern is revealed in the Foreign Secretary’s acknowledging Ukraine in his justification. And, ditto, China in his nod to the South China Sea – is that P5, nuclear armed, economic superpower aligned with, even a member of, “the Global South”? What of North v South Korea?

If we simply measure economic clout as a measure of emerging nations, then we find that other assumed members include emerging superpowers with advanced Space programmes: India. Or are members of our Euro-centric alliances even as they have polities and a World View different to our own: Turkey. Many nations we include in our club of enlightened, democratic, European neighbours have lower GDP per capita than some of “the Global South”. Puerto Rico is richer per capita than Spain and Portugal.

Nor can we consider nations of “the Global South” to be unified in their approach to a range of global issues, as the conflicts between its members reveal clearly. Understanding these differing individual positions well is the necessary bedrock of successful diplomacy and intervention. Throwing them together casually looks careless – and inhibits clear, strategic thinking on our part.

For what we are left with is a grouping whose only essential, defining characteristic is ‘not like us’. In this its rationale shares a similar, and troubling, provenance with the now largely discredited term ‘BAME’ for Black and Minority Ethnic Britons. As many ethnicities pointed out, there was as much difference, perhaps more, between them as between ‘black’ and ‘white’. The only differentiator was ‘not white’, and for those minorities doing better than some white social groups this grouping appeared patronising; it was in reality white condescension cloaked in altruism.

And that is the problem with using “The Global South” as a foreign policy framework for dealing with a hugely diverse group of peoples. It patronisingly lumps them together, it has shades of “The Third World” de nos jours, and its users can be taken to be not so subtly saying ‘these are people who need our enlightened help’.

 This latter point is revealed in commentary from African nations where a common trope is “the Chinese bring us infrastructure, the Europeans bring us lectures”. These sentiments are being weaponised against us by China and Russia, who play up that sense of “The Global South” being historically disadvantaged and so quite justified in demanding post-colonial reparations whether ever colonised or not. Indian political parties now promote themselves as champions of the oppressed “Global South”. All this plays to and preys on Western ideas such as Critical Theory. One result is the organised ‘lawfare’ we saw in action to persuade us to give up the Chagos Islands to a Chinese ally.

Engaging widely and creating global partnerships is a necessary part of addressing immensely serious global challenges. We could help ourselves by treating and respecting all actors as individuals, and dropping unhelpful and divisive collective labels such as “The Global South”. In so doing we might get more respect, not through signalling our own virtue but by acknowledging, understanding and defending where necessary vital national interests. We should not be giving others a stick with which to beat us.

Air Marshal Edward Stringer CB CBE, Senior Fellow at Policy Exchange and former Director-General of the Defence Academy

[Image: Andrew Stutesman]

Britain and Russia set out their stalls this week at the Commonwealth and BRICS summits, in a competition to court global opinion. And there was one clear winner.

As an isolated Keir Starmer still fends off mounting demands for slavery reparations, Vladimir Putin smugly hosted 36 world leaders – as well as the UN’s Secretary-General – to bring about the end of Western hegemony. While British representatives engaged in discussions around climate change, health justice, and gender inclusivity, the leaders of Russia, China, India and Iran advanced de-dollarisation initiatives and beckoned a ‘new world order’.

This juxtaposition brings to light the growing perception that the British Government is out of touch with the character and major trends of an evolving world order. That’s because it is – stemming from a misinterpretation of the drivers of a shifting geopolitical landscape.

This fundamental analytical failure is embodied in Labour’s ‘Global South’ foreign policy agenda. Per this analysis, Britain is haemorrhaging global influence because we have displayed a selective commitment to the ‘rules-based international order’. Appalled by our hypocrisy, countries across Africa, Asia and Latin America are leaving the West’s flock – firing a Parthian shot as they go by gravitating towards our adversaries: China and Russia.

The solution, according to Foreign Secretary David Lammy, is for Britain to course-correct and lead by example once more. This explains the suspension of weapons licences to Israel, the flurry of humanitarian aid packages committed to Africa in recent weeks, and the decision to transfer sovereignty of the Chagos Islands to Mauritius.

However, this approach will bear little fruit across the so-called ‘Global South’. The reason for this, as Policy Exchange’s report The Myth of the ‘Global South’: A Flawed Foreign Policy Construct shows, is because the ‘Global South’ does not really exist. It is instead an artificial composite of states – with no historical, geographical, economic or political basis – which are guided by, and acting upon, their individual material interests.

There is absolutely nothing unusual about this. Throughout history, nations have sought to navigate their environment in a manner conducive to their security, prosperity, and freedom. Contrary to the ‘end of history’ narrative, this did not change after the end of the Cold War. It was simply the conditions which changed, as the US – supported by its Western partners – reached the apex of its power. Under American hegemony, there was little to be gained by not playing ball.

This is no longer the case, as rival poles increasingly destabilise the previous geopolitical equilibrium. In this context, non-aligned states – some tentatively, others audaciously – are shopping around and hedging their bets. They feel enabled and emboldened to accept Chinese largesse, and to sign ‘security for resources’ deals with Russia – knowing full well that hesitant Western powers feel unable to do anything about it. It is for this reason we saw the leaders of Turkey – a NATO ally – and India – a member of the ‘Quad’ security partnership alongside the US, Japan, and Australia – pay Putin a visit this week. This central geopolitical fact also explains why the bonhomie and limited good-will gestures of Commonwealth summits will not translate into geopolitical advantage, unless – as Policy Exchange’s new report One Family: Harnessing the Strategic Potential of the Commonwealth argues – the association is imbued with greater strategic ambition.

One of Lammy’s peculiarities is that his diagnosis is correct: that ‘hard power’ interests are dictating non-aligned state behaviour. But his solution – to double down on ‘soft power’ – is wrong. Our strategy must be based on the rules of the game, not the one we wish were in play. The Myth of the ‘Global South’ proposes what that strategy might entail.

First, we must stop basing strategy and foreign policy on the framework of the ‘Global South’. It is a meaningless, generalising concept which obfuscates the material drivers of state behaviour. What’s worse, it promulgates a narrative – ‘Global Southism’ – which exists to drive a wedge between us and the rest of the world. As Russia and China now actively promote ‘Global Southism’ as a ‘clash of civilisations’ battle stacked against us, we do nothing but harm ourselves and help our adversaries by granting it legitimacy.

Second, we must develop specific regional approaches in place of ‘one-size-fits-all’ frameworks. What is happening in Africa is not the same as what is happening in Central Asia or Oceania. A complex geopolitical environment demands specificity and nuance. This calls for bespoke regional strategies, new counter-disinformation units to track and rebut Russia’s rampant anti-Western invective, and establishing a diplomatic presence in all strategically important ‘Southern’ states.

Third, we must work alongside our global partners to present the non-aligned world with counteroffers to those of Russia and China. Alone, we cannot compete with Beijing’s economic heft, nor neutralise Moscow’s sprawling disinformation networks. Together, we can overwhelm both.

This week’s international gatherings serve as a serious wake-up call. We must heed it to arrest the slide towards a future we wish to avoid.

The Government has now passed its first 100 days in power, rocked by the departure of Sue Gray and the sense of a crisis reset with a critical budget ahead.

Setting aside the politics or the rights and wrongs of any of the policies the Government has been pursuing, how successful have Ministers been in getting their way, and what opportunities could the post-Gray reset hold out?

I co-authored for Policy Exchange a paper Getting a Grip on the System – working as a former senior civil servant with co-authors who had worked as Labour and Conservative SpAds.

We described the ways in which Ministerial power has waned over the past forty years; to courts, arm’s-length bodies and to the Civil Service, and how it needs to be restored. Ministers can give power away, and delegating to experts can seem tempting, but the results have been mixed, and, whatever happens, Ministers can never escape accountability when things go wrong.

We urged Ministers to reject calls to upend the traditional constitution by giving the Civil Service statutory independence or strengthening independent accountability arrangements. Ministers’ prime accountability should be to Parliament and MPs’ accountability to the voters directly. We urged more Special Advisers, both political and policy focused, to help support Ministers, who are vastly outnumbered by an official machine with entrenched perspectives of its own.

We noted how Ministers could extend their ability to influence key appointments in the Civil Service and recommended statutory changes, increasing Ministerial power to give strategic direction to arm’s length bodies. We called on them to be wary about committing to plans and targets they inherit, and to put the spotlight on public sector leaders to explain and come up with plans to reverse the collapse in productivity which poses such a dire threat to the Government’s delivery ambitions.

So how do the first 100 days match up to this? It is fair to say the picture is mixed, and at times contradictory. The reset holds out a significant opportunity.

The start of a new government is often a period of maximum danger, with Ministers feeling obliged to mark a new course and honour promises they may have made in opposition. Both 1997 and 2010 saw governments implementing changes like Freedom of Information, fixed term Parliaments and restrictions on SpAd numbers which Ministers subsequently came to regret.

The run up to this election saw a whole series of commissions making recommendations about statutory independence for the Civil Service, new ethics regimes and suchlike. It is encouraging that little of this made its way into the manifesto and even less into the Kings Speech; we will see what the promised Ethics and Integrity Commission looks like.

The Kings Speech was surprisingly thin, dominated by technical legislation carried forward from the last government. It did see some depressing continuity in the fondness for new bodies and regulators; an Industrial Strategy Council, GB Energy, a Football Regulator and an Armed Forces Commissioner. The role of the OBR has been further strengthened, introducing yet more external scrutiny to government spending plans.

The new, much vaunted, ‘mission boards’ seem to have had a slow start, and the top Whitehall roles are still in the process of being filled. In a couple of areas, however, the Government did move rapidly to undergo the sort of ‘bring out your dead’ exercise we recommended. The Treasury work on the inherited ‘black hole’ is a possible example, though details of the exercise are sketchy and its prime focus is political. More striking has been the Secretary of State for Health and Social Care, Rt Hon Wes Streeting MP commissioning the Darzi report on the NHS. This has cast a grim light on the state of the service, with Streeting declaring the NHS ‘broken’. It has also started the debate about productivity, enabling Ministers to push back at the idea that additional resource is all that is needed. The fact that senior NHS figures are already briefing their unhappiness at the language used, but that the Secretary of State is not retreating, looks encouraging. In contrast, other areas like policing have seen a reversion to old input measures – promising 13,000 new officers with little curiosity about why police productivity has crashed in recent years.

Ministers have shown some ruthlessness in ensuring they get their people rapidly into post; aided by some inept late stage decisions from the last Government, like leaving two vacancies in the Equalities and Human Rights Commission unfilled. Non-Executive Directors have been removed from many departments, to be replaced presumably by those with a closer relationship to current Ministers, which we support.

The Secretary of State for Education, Rt Hon Bridget Philipson MP, secured the removal of the chair of the Office for Students, and also abolished ESFA, which oversaw school academies, bringing the work into the department. We also welcome the fact that the new Skills England will be based within the Department under close Ministerial control. She has even been prepared to hold up the commencement of inherited legislation on free speech on which she had doubts, demonstrating some ruthlessness in the process, though the final decision remains apparently subject to consultation (and a judicial review). The Secretary of State for Justice, Rt Hon Shabana Mahmood MP, meanwhile, has ‘started the process’ of removing the Chair of the CCRC in whom she has declared no confidence. This may prove to be a test case; Policy Exchange recommended clearer powers for Ministers to be able to remove leaders of arm’s length bodies.

The biggest appointment issue has obviously been the series of controversies about individuals with Labour links, either as activists or donors, appointed to roles in the Civil Service through the ‘exception process’. This has given rise to a rapid review by the Civil Service Commission.

The people appointed seem highly credible individuals who would have been suitable to be brought in as SpAds or appointed as Senior Policy Advisors to the sort of extended private offices we recommend in Getting a Grip on the System. If the internal briefing is to be believed, the incoming Government, perhaps Starmer and Sue Gray personally, seem to have been sceptical about the number of SpAds and have allowed some pretty ungenerous financial terms to be offered, in many cases less than Advisers had been paid in opposition. Ministers, however, want people they trust supporting them, and an artificial constraint in one area just led to more pressure to have these people appointed anyway, putting excessive pressure on Civil Service processes. This is another example of how politics cannot really be banished from the system, and it would have been better to welcome the contribution these individuals can make and create a distinct new role for them.

To sum up, for all the political gloom, administratively the first 100 days show a mixed picture. There are some important precedents for a future government, and some lessons learned about the risks of trying to depoliticise government business. Power may not have shifted dramatically back to Ministers, but the past pattern of concessions early on in a new administration has not yet been seen either. For those who prefer politics to technocracy, it could have been worse.

Stephen Webb is Head of Government Reform and Home Affairs at Policy Exchange. He was formerly Director at the Home Office and Cabinet Office

In 1975, in the wake of a fourth Tory election defeat in five contests, an event about the future of the Right would have concentrated on the Conservative Party.  In 1997, in the aftermath of what was then the worst Tory defeat in the twentieth century, the same would have happened.

2024 is different not only because of the scale of the Conservative defeat in July, greater even than in the age of Tony Blair, but because of the continued unwinding of the two party monopoly – which began before the era of Margaret Thatcher, but (100) now appears to be rapidly gathering speed.

Small parties of the Right sat in Parliament alongside the Tories, in the form of Ulster Unionist and National Liberal parties, for most of the last century.  However, the Conservatives never faced a potential major rival.  They now do so in Reform.

Furthermore, elements of the Liberal Democrats, in the form of a new generation of supporters of the ideals of the Orange Book, can legitimately be viewed as part of the Right.  And after all, the Liberal Democrats were governing in coalition with the Tories as recently as 2015.

The inaugural event of Policy Exchange’s Future of the Right programme recognised this challenge to two-party dominance, evident now in trends on the Left as well as one the Right, by including in its five person panel a Reform MP, Rupert Lowe, as well as a Conservative one, Katie Lam.

The other three members of the panel were: James Kanagasooriam, the Chief Research Officer of Focaldata;  Charles Moore, Thatcher’s biographer and former editor of the Daily Telegraph; and Rachel Wolf, co-author of the 2019 Conservative general election manifesto.

Inevitably, the event featured some Conservative-Reform crossfire, though certainly not enough to turn the event into a narrow one concentrated on party rivalries rather than a broader one about regenerating the right culturally as well as electorally.

Indeed, Lowe presented Reform as a new force that will replace both the Conservatives and Labour.  That raised a more profound question than whether he’s right – namely whether, if the new party will indeed prove so all-encompassing, it can truly be considered a party of the Right at all.

Kanagasooriam said that it isn’t one – at least in terms of its economic programme, but suggested that both parties sit on the Right in a broader sense: the Conservatives in terms of what the Right has become, and Reform in the sense of the Right as much of it used to be.

Wolf, speaking first, set out the parameters within which much of the discussion took place.  And Moore, who spoke last (with reference to Thatcher leadership’s), essentially completed them.  There was agreement among most of the panel that the Tories deserved to lose the last election.

Wolf argued that the Right needs a programme that will address the fundamental problems facing the country.  Moore held that the Right hasn’t collectively done so since the days of Thatcher, tending instead to preoccupy itself with image rather than message.  And content.

To sum it up, the Right, if it is to change the country for the better rather than simply clock up future election victories, must get serious – and face up to challenges that politicians tend, for reasons of electoral self-preservation, to duck, such as that of demographic decline.

Lam said early in the event that the Conservatives have no automatic right to govern.  In doing so, she recognised that the future of the Right is, to an extent that many other Tories perhaps don’t appreciate, is up for grabs, as next year’s local elections in England may remind us.

A question left hanging in the air is whether Reform, in economic terms, moves leftwards as it seeks to challenge Labour in the north-west and north-east – which would imply support for high levels of spending on health, parts of the welfare state and pensions.

If so, the Conservatives and at least some Liberal Democrats would be left to more convincingly champion the smaller state, lower taxes, less regulation and the broad economic agenda that the Right has championed since at least the end of World War Two.

And to address inconvenient fundamentals such as the need to maintain our international security alliances, reform our public services, build the houses we need and ensure that the demographic challenge is recognised rather than ignored – or simply wished away.

With Dr Zareer Masani’s death last week, the country has lost a fine historian and academic. Born in Bombay in 1948, Dr Masani moved to Britain in the early 1970s and lived there for the rest of his life. He spent two decades as a current affairs producer for the BBC before moving on to work as a historian. Amongst other things, he served as a member of Policy Exchange’s History Matters advisory board. Notably, Masani defended controversial monuments shortly after the initial Black Lives Matter protests of 2021.

Above all else, Masani should be remembered for his moral and intellectual courage in the face of an ideology which sought to alter and denigrate our understanding of our shared past. In 2013, after the President of India’s BJP Party, Rajnath Singh, denounced the widespread use of the English language, Dr Masani published a biography of Thomas Babington Macaulay, the politician, intellectual reformer and promoter of English on the subcontinent. He argued that despite recent ‘decolonising’ revisionism around Macaulay’s views, he “is still celebrated as a saviour by many Dalits [formerly “untouchables”] who believe that his progressive educational ideas freed them from caste tyranny.” Masani reminds us that Macaulay was an intellectual who brought positive public policy to India, some of which still plays a role in the country today.

Masani was not afraid to write on hotly contested topics. He often clashed with members of the Indian political elite – but was always driven by his research, not by ideological preconceptions. His final article for The Daily Telegraph in June criticised Hindu Nationalism and challenged its account of Mahatma Gandhi’s legacy. He was fiercely critical of the neglect of India’s historical treasures and a strong advocate against restitution; arguing that the Elgin Marbles, Koh-i-Noor diamond and Amaravati Marbles all belong in Britain.

Masani’s work was instrumental in broadening the debate around Britain’s historical legacy. Today, universities are actively considering the ‘decolonising’ of curriculums; authorities are debating the removal of statues of historical figures from public squares; and other institutions – including the National Trust – are considering how to address their links to past wrongs. Across the board, the speed and scale of what is happening is striking – as institutions seek to insulate themselves from the charge of ‘being on the wrong side of history’. Masani’s authoritative and unpartisan recollections of Britain’s Imperial past are more desperately needed than ever. His book, Indian Tales Of The Raj, reminds readers of the complexities of Britain and India’s shared history, and the difficulty of arguments which seek to eradicate nuance in search of a simple narrative.

Masani’s work will help to ensure that future debates about history are rooted in evidence and historical fact. He was a fierce critic of attempts to politicise recollections of the past and repeatedly warned against the uncritical acceptance of Edward Said’s “unhistorical prejudices towards the British” in both India and Britain. It is hoped that many of our own academics learn these lessons.

He leaves behind a legacy marked by his passionate engagement with history as his contributions continue to influence discussions on how history is taught and understood in the UK. Masani’s scholarship will continue to shape an important area of historical debate. From his more personal writings, like his family memoir And All is Said: Memoir of a Home Divided to his biting historical tomes: Indira Gandhi: A Biography, Indian Tales of the Raj and India from Raj to Rajiv, it is vital that students of history and the British Empire continue to read his work.

Policy divergence was the theme of Michelle Bowman’s remarks at Policy Exchange this week. Following the pandemic, most major economies had largely comparable experiences of inflation, given similar supply shocks and interventions to support demand. But Bowman, a Governor of the Federal Reserve and former Kansas Banking Commissioner, was clear in her assessment that the macroeconomic policies of the United States and of advanced economies in Europe, particularly the UK, were likely to differ considerably in the coming months.

In the UK, one of the few bits of good news for the Government in recent months has been the inflation figures. CPI fell to the Bank of England’s target rate of 2% this month, down from a peak of 11.1% in October 2022.

There is a broader debate about how much credit the Government might claim for this trend. Nevertheless, a good deal of optimism has been generated about a potential cut in the bank rate. And though these hopes were disappointed at June’s meeting of the Monetary Policy Committee, it is likely that rates will be trimmed at the next opportunity in August.

On the other side of the Atlantic, the picture looks rather different. The annualised core CPI rate has remained stubbornly high at 3.8% in May. And in her speech on Tuesday, Bowman offered words of caution about the prospects for inflation – and on the Bank’s policy – for the forthcoming months.

Productivity growth and supply side improvements in the US far outweighed those experienced in other advanced economies, and these have had a restraining effect on inflation in the years since the pandemic. But in Bowman’s estimation, further such improvements are unlikely. And given a tight labour market, international supply chain shocks and the vast amount of fiscal stimulus that has been pumped into the American economy under the Biden administration, a cut to the Fed’s policy rate seems unlikely in the immediate term.

In Bowman’s mind, all of these trends suggest a divergence in US monetary policy from that being pursued by the ECB or the Bank of England.

But there was another more general point of divergence implicit in Bowman’s speech that is worth drawing out, principally because it will be a key driver of productivity and growth in the coming years. And that is the respective approaches of the US and European countries towards regulation and risk.

Ironically, Bowman seemed to consider this a point of potential convergence. She identified discussions about the Basel III reforms – which concern the capitalisation requirements of banks – as an instance in which the US might be drifting towards a more European, risk-averse approach to financial markets regulation. Risk appetite is a pendulum she contended, and she was clearly concerned that some of the regulatory trends in the US had swung potentially too far in the “safetyist” direction. Many American commentators and academics share Bowman’s concerns.

But the truth is that a cultural gulf remains between US and UK regulatory policy, and this is only likely to widen, should Keir Starmer be elected next week and Trump secure a second term this autumn. “Securonomics”, the philosophical framework underpinning Labour’s plans for the economy, is premised on a larger, more “active” state, which is committed to ensuring the security of individuals, households and businesses across the UK. Achieving that level of security by eliminating risk and uncertainty will require a more interventionist regulatory state. And an increased stock of regulation itself creates new, unintended risks.

A Trump presidency by contrast is likely to target deregulatory measures, and can point to quite considerable successes in stemming the proliferation of regulations in the US during the previous Republican administration. At the state level, Governors in Idaho, Floria, Virginia, Arizona and so on have shown admirable imagination and political courage in bearing down on the stock of regulation they are responsible for.

This discrepancy matters from the standpoint of growth. Starmer is likely to have very few levers to pull in order to stimulate growth in the next Parliament, given the fiscal constraints. Regulatory reform, however, as Policy Exchange has long argued, is a powerful way to reduce the burden on British businesses, increase productivity, and reduce prices for consumers. Even if Bowman is correct, and the American risk appetite is diminishing, it surely remains a more supportive environment and culture of innovation and enterprise that our own, and one which we would do well to learn from.

Good progress has been made by the previous Government on financial services regulation in both the Edinburgh and Mansion House reforms. It is vital that whoever takes up residence in Downing Street next is similarly committed to re-engineering our regulatory framework to support widespread prosperity in this country. Such efforts will be essential if we are to start bridging the productivity gap with the Americans.

James Vitali is Head of Political Economy at Policy Exchange