-Xi Jinping

I have been meaning to write this for ages, but Dan Wang’s book Breakneck is really, really great.

His framing - the “engineering state” of China vs the “lawyerly state” of the US - has been so widely adopted exactly because he’s hit a nerve.

It’s a depressing book to read in Europe because of the endless references to how un-dynamic and bureaucratic even America is compared to China.

Dan, come to Europe - when it comes to bureaucracy, you ain’t seen nothin’ yet!

Wang makes clear the downsides as well as the upsides of the “engineering state” - including the horrific social engineering - his history of the one-child policy is harrowing - I had thought of it as mainly local officials fining and harassing people - in reality it was a horrific campaign of mass forced abortions.

But I want to dwell here on just one little bit of the book - about why and how China has become the dominant industrial power.

I just want to quote some snippets here in the hope you’ll go out and read it!

*******

Looking at these two countries, I came to realize the inadequacy of twentieth-century labels like capitalist, socialist, or, worst of all, neoliberal. They are no longer up to the task of helping us understand the world, if they ever were. Capitalist America intrudes upon the free market with a dense program of regulation and taxation while providing substantial (albeit imperfect) redistributive policies. Socialist China detains union organizers, levies light taxes, and provides a threadbare social safety net. The greatest trick that the Communist Party ever pulled off is masquerading as leftist. While Xi Jinping and the rest of the Politburo mouth Marxist pieties, the state is enacting a right-wing agenda that Western conservatives would salivate over: administering limited welfare, erecting enormous barriers to immigration, and enforcing traditional gender roles—where men have to be macho and women have to bear their children.

China is an engineering state, which can’t stop itself from building, facing off against America’s lawyerly society, which blocks everything it can.

Engineers have quite literally ruled modern China. As a corrective to the mayhem of the Mao years, Deng Xiaoping promoted engineers to the top ranks of China’s government throughout the 1980s and 1990s. By 2002, all nine members of the Politburo’s standing committee—the apex of the Communist Party—had trained as engineers. General Secretary Hu Jintao studied hydraulic engineering and spent a decade building dams. []

Xi Jinping studied chemical engineering at Tsinghua, China’s top science university. For his third term as the Communist Party’s general secretary starting in 2022, Xi filled the Politburo with executives from the country’s aerospace and weapons ministries. In the United States, it would be as if the CEO of Boeing became the governor of Alaska, the chief of Lockheed Martin became the secretary of energy, and the head of NASA was governor of a state as large as Georgia. China’s ruling elites have practical experience managing megaprojects, suggesting that China is doubling down on engineers—and prioritizing defense—more than ever.

The engineering state builds big in part because it is made up of self-professed communists who grew up admiring the soviet union. Communist Party leaders like Xi Jinping studied in an educational system steeped in Marxism. For them production was a noble deed to advance communism while consumption was a despicable act of capitalism. This party believes that only the state has the wisdom to invest in strategic megaprojects whereas consumers will waste money on themselves. It is hostile to ordinary people having much command of resources, which empowers an individual’s agency rather than the state’s.

Xi has forcefully pushed back against the idea that China needs more generous welfare. In a major speech in 2021, he said, “Even when we have reached a higher level of development… we should not go overboard with social transfers. We must avoid letting people get lazy from their sense of entitlement to welfare”.

Under Mao China practiced a more literal form of communism, with full control of the means of production. Deng Xiaoping pivoted away from that failed experiment. As Deng was fond of remarking, the defining feature of socialism was not economic redistribution but rather “concentrating resources to accomplish great tasks”

The engineering state is much more interested in promoting building and man manufacturing than services. China now has the capacity to produce around sixty million cars a year (one third electric, two thirds combustion), out of an annual global market of around ninety million cars sold. China’s domestic market absorbs less than half its production. China produces so much in part because every province wants to be an automotive production hub. The country has over a hundred automotive brands, most of them small, all fighting over sales . The competition is so fierce in part because auto companies receive extensive support from local governments, who all try to promote their champion through cheap credit and rebates to local companies.

Shenzen was China’s greatest boomtown and therefore, the world’s. Its population soared from three hundred thousand in 1980 to seven million in 2000 and eighteen million in 2020.

Foxconn’s manufacturing campus in the north of Shenzen occupies five hundred acres. The site has factories of course, and dormitories. It also has grocery stories, cafes, a fire brigade, a hospital, cinemas, swimming pools, and vendor-operated restaurants. The factory is the size of a city. The population peaks in early fall as production ramps up for the Christmas season. Dormitories fill up then, with up to six men or women crammed into one room. Assembly lines operated for three eight hour shifts a day; there is never a minute that factories aren’t producing iPhones. At the peak times three hundred thousand people work at Foxconn’s Shenzen campus.

Chinese officials climbed over each other to host a Foxconn facility . The salivated at the number of jobs and the amount of tax revenues the company could create for their jurisdiction, which could elevate them to higher office… []

In 2016 Henan “borrowed” workers from state-owned coal companies to meet the iPhone production surge. In 2017 the Financial Times reported that up to three thousand high school students had to work on assembly lines – a few of them for eleven hour days – and if they did not their school withheld their graduation diplomas. They were euphemistically called “interns” who assembled iPhones for “vocational experience.”

[Helen Wang worked] sourcing components for the first iPhone. In an interview Helen told me that her first thought on receiving an assignment was often “I need to build a city”. Construction on this scale was something that Apple, Foxconn and government officials did together. Helen told me that Shenzen conducted levelling operations along mountains to make land suitable for production.

A 2012 story in the New York Times reported that Apple needed to hire nearly nibne thousand industrial engineers in the earlier days of iPhone production. The company’s analysts expected recruitment to last nine months to hire that many engineers in the United States. In China they were able to do it in two weeks.

…the United States and China are inversions of each other. Americans expect innovations from scientists working at NASA, in universities, or in research labs. They celebrate the moment of invention: the first solar cell, the first personal computer, first in flight. In China, on the other hand, tech innovation emerges from the factory floor, when a new product is scaled up into mass production. At the heart of China’s ascendancy in advanced technology is its spectacular capacity for learning by doing and consistently improving things.

The fourteenth five-year plan released in 2021 demands that he manufacturing share of the economy stay constant. Manufacturing already accounts for 28 percent of China’s GDP, which is much higher than Germany’s 21 percent and Japan’s 20 percent, to say nothing of deindustrialized economies like the United States and the United Kingdom (both around 10 percent). Xi has repeatedly stated that he’s not interested in abandoning manufacturing for services. In authoritative speeches, Xi cited “certain Western countries” that forsook the real economy for the fictitious economy. No points for guessing which Western countries these might be. And Xi has declared that “the real economy is the basis of everything . . . so we must never deindustrialize.”

If an engineer in Shenzhen has an idea for a new product, it’s easy to tap into an eager network of investors. Shenzhen is a community of engineering practice where factory owners, skilled engineers, entrepreneurs, investors, and researchers mix with the world’s most experienced workforce at producing high-end electronics.

Silicon Valley used to be like this too, but now it lacks a critical link in the chain—the manufacturing workforce. The value of these communities of engineering practice is greater than any single company or engineer. Rather, they have to be understood as ecosystems of technology.

The American imagination has been too focused on the creation of tooling and blueprints. Andy Grove, the legendary former CEO of Intel, said it best in 2010: that the United States needs to focus less on “the mythical moment of creation” and more on the “scaling up of products”. Grove saw Silicon Valley transition from doing both invention and production to specializing only in the former. And he understood quite well that technology ecosystems would rust if the research and development no longer had a learning loop from the production process.

Bell Labs invented the first solar cell, and German companies produced solar production equipment. Beijing’s designation of solar as a “strategic emerging industry” invited Chinese companies to rush into this industry. Chinese companies bought German equipment and competed fiercely to make the most efficient solar cells. By the mid-2010s, Chinese companies figured out how to make all the German tools, as well as the entirety of the solar value chain. The plunge in solar power costs over the last decade has been driven less by breakthroughs in science—which is the United States’ strong suit—than by efficient production, which is China’s strength. The beneficiaries are not only the climate but also China’s national power.

Tesla’s presence jolted China’s electric vehicle market. China’s business community began using the term “catfishing” for what Tesla was doing in China. The idea was that introducing a powerful new creature into the domestic environment would make Chinese firms swim faster. That’s exactly what they did to raise their game. When Tesla vehicles started rolling out of the Shanghai Gigafactory in 2019, BYD saw its sales decline by 11 percent, while profits fell by 42 percent. But Tesla would eventually do the whole market a favor. As in the United States, the company’s audacious branding stimulated consumers to think of electric vehicles as more than high-powered golf carts. And Tesla made investments in China’s tooling ecosystem that other automakers exploited to produce better cars. BYD benefited as well, reporting record profits in 2023 and becoming the world’s largest electric vehicle maker. And even the Communist Party’s main newspaper praised how Tesla produced the “catfish effect” for Chinese firms.

It’s hard, I admit, to draw a straight line between the loss of, for example, television manufacturing in the United States through the 1980s to the stumbles by Boeing and Intel over the past decade. But if we think about technology ecosystems as communities of engineering practice, it makes sense that factory closures accelerated as process knowledge dissolved, prompting production problems and more job losses. And it also makes sense that Chinese workers went from merely assembling iPhones to producing some of their most valuable components as well. As one country lost its process knowledge, the other gained whole industries.

…in 2023, China added twenty times more coal-burning capacity than the rest of the world put together. It is serious about addressing issues in climate change, yes. But Beijing is not turning its back on its rich coal reserves. That also explains why China is so enthusiastic about electrifying the auto fleet: It would rather burn domestic coal than Middle East oil to power its cars.

The United States will not overcome the lawyerly society by debating the kinds of issues that law students thrill to: the correct ruling on any particular case or the personalities on the Supreme Court. I want to invoke the classic line by professor Grant Gilmore, in a text often assigned to first-year law students: “The worse the society, the more law there will be. In hell there will be nothing but law, and due process will be meticulously observed.”

Rather, I want Americans to experience what the previous generation of Chinese have felt: a sense of optimism about the future driven in large part by physical dynamism. Chinese who have experienced the country’s blistering economic growth over the past four decades look to the past with pride and to the future with hope. When residents of Chongqing or Shenzhen see a new cityscape unfold before their eyes, they expect the future to keep changing for the better.

Conclusions

Things I think the book brings out well are:

• How internal competition between Chinese state governments leads to a subsidy arms race and stimulates over production.

• How state-level governments promote local champions, on the one hand increasing competition between firms, but also leading to ever-greater subsidies.

• How China absorbs new technologies and firms and uses them to spur internal competition.

• The importance of economy-level scale and the industrial commons.

• The importance of leaning-by-doing and the long term unsustainability of the 1990s vision of “Designed in California. Assembled in China”

… but there is so much more in the book, including on Chinese society and the government’s unique relationship with the tech industry.

You can get it here - honestly, it’s great!

We’ve moved from the “Information Age” to the “Screen Time”.

As an MP I’ve visited a lot of schools - and I often ask kids what they did the night before. Some of the answers are horrifying: “four hours on YouTube,” or “six hours on TikTok”.

You don’t often get: “I was reading.”

James Marriott has nailed down the shift to “post literate age” and set out some of the consequences. In fact he has a book out soon - The New Dark Ages (which sounds jolly).

He’s written about this better than I will, but this really isn’t just a meme, or old people complaining about “the yoof of today”.

The trends are clear in the data. In the UK the share of children who say they enjoy reading has gone from over 58% in 2016 to under a third now. Children both enjoy reading less, and are less likely to actually read - the two are obviously strongly connected:

And this is a change which is still gathering pace - the biggest declines in reading enjoyment and daily reading are among the younger children who have spent longer in the TikTok world. They are much less likely to get the reading habit.

The same trends are there in other countries - here’s data for the number of books read for pleasure in the last year by U.S. 12^th graders (via Jean Twenge).

Basically, first TV came for books, and now screen time is hammering reading further:

The US has a longer run of time-use data than the UK, and you can see that time spent reading for pleasure is in decline among adults too. It shows you two things which might seem surprising.

• On the one hand there is individual polarisation: those who still read for pleasure read slightly more if anything, and the decline in time spent reading is all driven by fewer people reading for pleasure.

• On the other hand, there seems to be no social polarisation: the decline in the share of people who read for pleasure is hitting every group: more and less educated, rich and poor, black and white, male and female, city folk and country dwellers - and most age groups1.

It isn’t just the anglophone world either.

In the FT a while back Sarah O’Connor reported that:

“This month, the OECD released the results of a vast exercise: in-person assessments of the literacy, numeracy and problem-solving skills of 160,000 adults in 31 different countries and economies. Compared with the last set of assessments a decade earlier, the trends in literacy skills were striking. Proficiency improved significantly in only two countries (Finland and Denmark), remained stable in 14, and declined significantly in 11, with the biggest deterioration in Korea, Lithuania, New Zealand and Poland.

“Thirty per cent of Americans read at a level that you would expect from a 10-year-old child,” Andreas Schleicher, director for education and skills at the OECD, told me — referring to the proportion of people in the US who scored level 1 or below in literacy. “It is actually hard to imagine — that every third person you meet on the street has difficulties reading even simple things.”

The revolution will not be televised

I introduced this piece by treating the rise of short form video and the decline in reading as two sides of the same coin. And the two are linked in multiple ways. For starters, TikTok and reading books compete for time - you can’t do both.

They are also related in the same way that junk food and marathon running are related - having more of one might hinder your ability to enjoy the other - or certainly make the other unattractive.

But the smartphone / social media debate (which I have written about before) is only partly overlapping with the reading decline debate.

For starters, the decline in reading started before smartphones turned up. And initially the “world wide web” was mainly text - the 90s web couldn’t really handle video. In fact we hoped back then that we were going to be spending more time reading interesting stuff online, and less time watching brainrot TV.

YouTube only launched in 2005, and TikTok not till 2017. It has really been since then every social media platform has been trying to turn itself into a video platform.

And then there are different types of video. Broadcast TV is tanking fast, particularly among younger people. In 2019 71% of 16-24 year olds watched broadcast TV on average each week. By 2024 only 45% did.

And of course there are different types of reading too. There is probably something different about three hours of concentrated reading of a book compared to reading fragmented snippets of articles and microblogging sites like x.com.

Teasing apart the impact of all these different changes - less reading, less TV, more short form video is likely to be very difficult.

Why it matters

There are two different theories out there about why the decline of reading and the rise of the post-literate society might matter

• Worry number 1: Inability to read complex texts, and general cognitive decline. One category of worry is that people not in the habit of reading will struggle when they have to. When you are confronted with a complex text you will struggle or take things in more slowly. That might mean you learn practical things more slowly, whether you are studying engineering or reading the manual for a complex process. It might mean you can never really enjoy great literature. Connected to this is a more general concern that it might impede your general cognitive ability: that as well as being worse at reading, you might be worse at thinking as a result.

• Worry number 2: Moving us from a rational / discursive culture to an emotive, oral one. This is the idea that “the medium is the message” and that reading makes you think differently about the world. That reading encourages an analytical, discursive, rational way of thinking about things, while short-form video encourages an emotional, immediate, visceral non-rational way of thinking.

Let’s try and look at both.

Brain fade?

Worry 1 certainly has some data points to support it. I don’t just mean the endless anecdotal articles from university lecturers complaining that new students can’t bear to read anything of any length - though I am struck how many such stories there have been recently. (There are examples, here, here, here, and here).

Over at the FT John Burn Murdoch has brought together some of the evidence of a decline in cognitive performance since the launch of the smartphone - reversing the improvements of the twentieth century. It’s pretty stark:

Of course, there are some things potentially muddying the picture, like the global increase in migration to developed countries and the rise of self-reported mental health challenges across the west. But the numbers above are pretty striking and it is not at all obvious that these other factors can explain the changes well, or at all.

None of this isolates the effect of reading specifically, or tells us whether it has protective effects. But the totality does seem to be hitting people’s ability to think.

Ragebait

That brings me to worry number two: that we are moving from a “cool” world of argument, careful reasoning and delayed judgement to a “hot” world of instant gratification, visceral emotion, fragmented and hysterical reaction.

These debates are not new.

In the late 1950s Richard Hoggart’s The uses of literacy worried that people had gone from reading serious, morally-improving stuff, to gorging themselves on “admass” - crappy, commercial, manipulative, Americanised, “candy-floss” rubbish.

In the 1980s Neil Postman worried further that we were “Amusing Ourselves to Death” by gorging on terrible TV, on which image and emotion dominated, and what little information there was was fragmented or superficial.

Some people will read this and say - here we go again, the oldies are in a moral panic. My view is that these previous observations were correct and the shift to short-form video on demand and even less reading is another step downward.

There’s no doubt that younger generations are getting less of their news from newspapers (including online) and more from social media - which is a lot more video heavy.

I think there is no question that the rise of new forms of media has played a role in balkanising our politics - people can get reinforcement of their views on tap and end up in algorithmic echo chambers. That could happen even in a world with only the written word. But I think that the shift from reading to video turbocharges all this.

There is a world of difference between getting your information from the six o’clock news and getting it from TikToks about Gaza, where there is no attempt at balance, no context and even greater focus on emotion. If you are interested in immigration, x.com will feed you more and more visceral content. Neil Postman argued that only in the printed word can complicated truths be rationally conveyed. I wouldn’t say only - but the printed word certainly lends itself better to “on the one hand, on the other” than a 10 second video clip does.

It is all tied up with broader cultural trends of course: TV got dumber too, and went from Civilisation to contemporary documentaries which seem to assume you have been lobotomised.

But there is something about the formula algorithm + short form video that is ruthlessly potent. And if you aren’t consuming anything offsetting - even handed, rational, concentration-requiring - that is even more so. And when I talk to young people in my constituency, the results on their world-views are stark.

Conclusion

At the moment I am helping our six year old to learn to read. It is not easy. Unlike talking, it doesn’t come naturally. It requires mental effort. I can feel it stretching and growing his brain.

One of the reasons that we (on the Conservative side) have been pushing the government so hard to ban smartphones from schools and get kids off social media is that there is enough evidence already to worry that young people are losing crucial skills, and suffering cognitively because of the decline of reading. Given how strongly the Labour government had set their face against the phone ban in schools I was really pleased we made them change their minds.

There are other positive changes. I’m glad to see that “World Book Day” in our kids’ school seems to be becoming a bit less about dressing up, and a bit more about, er, actually reading. One of the successes of the 2010 Conservative government was the introduction of Structured Synthetic Phonics (SSP) and things like the Year 1 Phonics check, which have seen English schools climbing the international league tables.

But given the cultural drift towards a post literate age, much more is going to be needed if we want to remain a literate people.

What would you do?

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But - I also travel about 2,000 miles a month on East Midlands Railway, up and down between Market Harborough and London.

I work away, and tap away on my laptop.

But I can also listen to things on headphones too.

And this year I have been travelling in a fug of beautiful choral music. The springtime fields have never looked better scrolling by.

The reason for this unexpected binge of sacred music is pure chance - I discovered a poll of choir directors & singers of their favourite pieces. This provided a motherlode of good recommendations, and opened up lots of avenues of exploration.

I’ve always had a soft spot for this kind of stuff1. But I can’t claim to know this world well, and the upside of that is there’s a lot of new territory to explore.

Reasons I love this stuff

I love it for multiple reasons:

First, I am a strong believer in the Lindy Effect, and if a tune is still being sung after hundreds of years, it is very likely to be fantastic. Thomas Tallis wrote If Ye Love Me in 1565, (the same year the pencil was invented). The fact that it is still popular now basically tells you that it is going to be amazing.

Second, there’s also something very pleasing about the way great tunes are shared around Europe and have mutated many times along the way. One tune can have multiple sets of words in multiple languages and, vice-versa, a text can turn into many pieces of music. For example:

• The traditional German tune Es ist ein Ros entsprungen has become in English both Lo, How a Rose E’er Blooming but also A Great and Mighty Wonder. It got its current melody in 1609, but the words have been kicking around in Christian hymns since at least the 8th century.

• Good King Wensleslaus is a story about a tenth century king of Bohemia, married up with a 13^th century carol (Tempus adest floridum) discovered by 19^th century English hymnwriter Thomas Helmore in a Finnish song book from 1582. Boom!

• All Creatures of Our God and King got well known because Vaughan Williams arranged it in 1906, but the melody is from 17th century German Easter hymn Lasst uns erfreuen, and the words are an adaptation of a Umbrian Italian text from St Francis of Assisi in 1225.

• Puer nobis nascitur, AKA “Unto Us Is Born a Son” was translated by an Edwardian monk, but first appears in the 14th-century German text the Moosburg Gradual, which in turn is a kind of Greatest Hits of French pieces from the 12th and 13th centuries… and so on.

Third, I also love it because the choir is both a living instrument, and an immortal one.

Sure, Fleetwood Mac were around for a long time and had a lot of personnel changes, but there are plenty of cathedral choirs that have existed for many hundreds of years. The choirs of York Minister, Hereford, Winchester, Rochester and Wells are all older then England.

And I like the fact that they have their own weird quirks and traditions. For example, take Salisbury Cathedral. When boys or girls qualify as full members they have a ritual involving bumping their heads on the “bumping stone”, which has worn away from hundreds of years of this sort of thing. These days they also gently bonk new members on the head with an ENORMOUS prayer book.

Kids are capable of much more than we think. My son (6) loves being allowed to use an axe to chop wood, and though I always worry for his tiny fingers, it is very good for his morale to be allowed to do this grown up thing.

Choirs are a hardcore example of that, where some of the finest and most complex music you can imagine is being performed by… a constantly-shifting ensemble of 7-to-13-year-olds - which is amazing when you think about it. Some of the music was also written by incredibly young people (of which more in a second).

Composers I didn’t know

There are many more2 reasons to love this music and there is so much more of it than I can describe here... but let me mention a couple of composers I didn’t know.

Herbert Sumsion (1899-1995)

I had never heard of him until this year. He is amazing. Having been a cathedral chorister from age nine at Gloucester Cathedral, he was paid to be the organist of a nearby church from age twelve. He later fought on the western front, and was organist of Gloucester Cathedral from 1928 to 1967. He was born in the year they sent they sent the first ever wireless telegraph message, and died when Take That went to Number 1 with Never Forget.

They don’t make them like that any more.

Malcolm Gladwell’s 2008 book “Outliers” popularised the idea a lot of success comes from people just having a really huge amount of practice (10,000 hours) and there definitely is something in that idea.

Sumsion was friends with Elgar, Gerald Finzi and Vaughan Williams, but has quite a distinctive sound of his own. Wikipedia tells me that: “Sumsion displays a fondness for parallel thirds in the accompaniment, detached bass lines, and the descending minor third in the melody.” Sadly I’m not musical enough to know what that means, but even I can hear he has a particular sound, and it’s wonderful.

They that go down to the sea in ships seems to be his most popular work, and it is gorgeous, with the organ and choir rising and falling with the stormy sea, providing a rare opportunity to hit the most gigantic pipes and really low notes on the organ that vibrate all your internal organs.

Sumsion wrote several settings of the Magnificat and Nunc Dimmitis, including versions in G major and A major. There are fabulous recordings by St John’s Cambridge, with magnificent choral leaps and lush, warm resolutions.

Loads of his other pieces are fantastic too. He had an amazing range. He could do everything from hair-stand-on-end sparsity (Psalm 102) to incredible warmth. He wrote amazing music for Watt’s Cradle Song, based on a text written two centuries earlier in 1715.

William Crotch (1775-1847)

Returning to my point about extreme amounts of practice, the unfortunately named William Crotch really did start young.

From Wikipedia:

“William Crotch was born in Norwich, Norfolk, to a master carpenter. Like Mozart, he was a child prodigy, playing the organ his father had built. At the age of two he became a local celebrity by performing for visitors, among them the musician Charles Burney, who wrote an account of his visits for the Royal Society. The three-year-old Crotch was taken to London by his ambitious mother, where he not only played on the organ of the Chapel Royal in St James’s Palace, but performed for King George III.”

That’s a strong start.

I was professionally interested to learn that:

“He may have composed the Westminster Chimes in 1793, which are played by Big Ben each time it strikes the hour.”

His produced settings of lots of psalms – they are all great. Psalm 123 “Unto thee lift I up mine eyes” is particularly amazing.

His best-known piece now seems to be “Lo, Star-Led Chiefs” from his oratorio Palestine, which is really pretty.

Michael Praetorius (1571 – 1621)

Writing at the start of the seventeenth century in Germany, but influenced by the trendy new sounds wafting over the Alps from Italy. He seems to be most famous for his setting of Es ist ein Ros entsprungen, though he didn’t write it - it is from a little earlier. He was incredibly prolific. In terms of secular music he wrote Terpsichore - a massive collection of 300 instrumental dances, many of the collected from all over Europe.

But the things I like most are his massive, massive… huge pieces of sacred music.

His setting of In Dulce Jubilo takes a gentle little tune and turns it up to 1,000.

The fast-paced Nun Komm der Heiden Heiland sounds like something from much later and sounds kinda like Bach, but a century earlier.

His accessibly-named collection Polyhymnia caduceatrix is full of fantastic tunes, but he also seems to have had a commitment to ordinary people making music and wrote a whole cycle for children - from which the stand out hit seems to be Wie schön leuchtet der Morgenstern, (though Bach’s version from a hundred years later seems to have eclipsed it)

Vaughan Williams (1872 - 1958)

I really love his famous works: The Lark Ascending… Fantasia on a Theme by Thomas Tallis, and his Pastoral symphony.

But I didn’t really know his sacred music. It’s fantastic - and I had never listened to it before.

He wrote fab settings of the Magnificat and Nunc Dimittis.

His versions of The Truth Sent From Above, O Clap Your Hands, We Sing For All The Unsung Saints, O Taste and See… All People That on Earth Do Dwell… they’re all great.

Conclusion

This is wonderful, gorgeous music. But it turns out it’s under threat, from financial struggles and the wider decline in mainstream Christianity.

The campaign group “Pipe Up for Pipe Organs” says that Britain is losing nine pipe organs a week. Cathedral schools are struggling too.

More positively, the CEO of the Cathedral Music Trust is visiting 100 choirs by bike to fundraise for choir music, and the Royal School of Church Music has a project to revive or establish 200 choirs.

These struggles are all the more reason that, having enjoyed hearing all this music by chance, I felt I should pass it on to you.

And any suggestions for further listening are very welcome!

Happy Easter!

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I went down on my hands and knees
Looking for trees,
Twin leaves that, sprung from seeds,
Were now too big
For stems much thinner than a twig.
These soon with chamomile and clover
And other fallow weeds
Would be turned over;
And I was thinking how
It was a pity someone should not know
That a great forest fell before the plough.

- Andrew Young

* * * * *

I nearly died before I lived. I was born (in the early hours of the morning) with the umbilical cord caught round my neck, and the midwife went into a massive panic.

It got untangled in the end, but I was pretty close to never knowing what Larkin called “the million-petalled flower of being here”.

No wedding day ceilidh. No first kiss. No seventh birthday fireworks. Never smelling newly cut grass, or fresh bread, or roasting coffee.

We are all lucky to have caught the bus to ever existing.

For some it’s a close-run thing. Our son (6) is the fruit of our eighth and was-always-going-to-be final round of IVF. When we did the pregnancy test, it was negative. We were heartbroken. But looking at it a little later (which you should never do) it showed a faint line. A tiny ribbon of hope in the wind.

We tested again the next day. A faint, just visible line. He caught the bus.

He sometimes drives us crazy, but this morning he was attacking me in the kitchen with a soft dinosaur, and he was happy because the tooth fairy brought him a pound, and I am so glad he is with us.

Say you were to ask me this very strange question: when did you try hardest not to drop something? I could answer easily.

After our daughter was born - after incredible endurance from my wife - our little daughter was cleaned up by the doctors, then given to me to carry back across the room, to snuffle on her mother’s breast. My first responsibility as a father.

I have never been so careful not to drop something.

She was only really a couple of handfuls then, but already wholly perfect.

* * * * *

Last night the House of Lords voted for an amendment which will decriminalise self-induced abortions all the way up the point of birth. So you will be able to kill a baby the day before it is about to be born, and face no legal consequences.

This is monstrous.

There is no magic that happens as you pass down the birth canal. There is no flash of light as your soul descends. There is no moral difference whatsoever between a baby the day before birth, and a baby a day after.

The thought that someone could poison or smash up the body of a baby and face no legal consequences is appalling. That’s an overused word these days so let me try again. The thought should make you sick.

Advocates for this appalling change play silly word games, but if the law banning late abortions is no longer enforced, it effectively won’t exist.

And everyone knows what is coming next. This amendment will result in horrific amateur home abortions. Some will be forced on women by men. But either way it will be horrific. And then the same people who advocated for this will then say we should “tidy up” the mess they made and allow the same things to happen in clinical settings too.

This is not even being done as a stand-alone new law, but as an amendment tacked on to the Crime and Policing Bill which the government originally said is intended to “protect the public and our town centres from antisocial behaviour, retail crime and shop theft”.

There have been no impact assessments, no public consultation, and almost no public debate. Polling shows people are overwhelmingly against abortion up to the day of birth. There were just 45 minutes of backbench debate on it in the Commons. But the law will be changed anyway.

The people pushing this - like Labour MPs Stella Creasy and Tonia Antoniazzi, are perfectly clear about where they stand. All conversations end in thought-terminating slogans, like: “my body my choice”. But this is nonsense. Yes, it is your body, but it also someone else’s body too. What about their rights?

Antoniazzi is at least perfectly clear. Times Radio host, Stig Abell asked her: “Any woman could end a pregnancy at any time, 35 weeks, 36 weeks, 37 weeks, without committing an offence. And you are comfortable with that?” Tonia replied: “Yes I am.”

Now, up to a point these things are debatable. When do you become a person? At the moment of conception? Or when you begin to think and feel, mid-way through pregnancy? Until last night the law had settled, uneasily, on the latter. But no one was pretending that full term babies were not people with rights. Until now.

One irony is that the government originally said that the Crime and Policing Bill would also “tackle the epidemic of… violence against women and girls that stains our society”.

Violence against girls? Now you can kill a baby girl and face no consequence. Perhaps your husband doesn’t want a girl. Unlucky her to have been dealt the wrong chromosome. The reason you kill the baby doesn’t matter, there will be no penalty.

Would this happen? It already is doing. The NHS says that there is clear evidence that sex-selective abortions are happening already in some communities.

None of this is abstract. In 2012 Sarah Catt was jailed for killing a baby at 39 weeks. The court said she took a “cold, calculated” decision for her own convenience and self-interest. She took pills at 39 weeks and gave birth, and never revealed where the body was. The court said she had a history of deceit and concealment. The judge said she did it because she thought the man with whom she was having an affair was the father.

From now on, that will be absolutely fine. There will be no prosecution for doing this.

* * * * * *

Most bad things happen not because people are like: “yay, let’s do something terrible”, but because we do what human beings are best at - we look the other way.

From the holocaust to the mass inhumane treatment of animals, people look the other way.

I am no exception. I wonder how much of the meat I have eaten in my life was raised in conditions of grotesque cruelty? I have never marched to stop the war, although several of our recent wars have brought nothing but utter disaster. And I have generally tried to stay out of the abortion debate. I would rather not think about it.

But this is now ridiculous. Murdering people is bad, and there is no debate that these babies who can now be killed are people, just like you and me.

Am I not a man and a brother? I am not a religious person, but I do think killing babies is bad.

Never mind the fact that they can think and feel. They can live. These days three in ten babies born at 22 weeks will survive. By 26 weeks it is 80 percent - and rising.

* * * * *

While they were at it last night, the Lords also voted to keep abortion pills-by-post, and rejected plans to return to requiring a medical assessment to prevent coercion.

We already know that this is being abused by bad men. In December 2024, Stuart Worby was jailed after spiking a woman’s drink and ending the life of her unborn child at 15 weeks gestation using abortion pills obtained through the pills-by-post scheme.

We also know pills-by-post is causing real problems. A FOI request in 2022 to six ambulance services found a 64% increase in ambulance call-outs from women concerned after taking abortion pills. A study found that 10,000 women, or 1 in 17, of those who took abortion pills at home prescribed by the NHS, required hospital treatment in 2020.

* * * * *

In January new data showed that the number of abortions in England and Wales had risen to a record high in 2023 - a 10% increase on the previous year. That brought the total to just under 300,000 a year across the UK - equivalent to the population of a city the size of Leicester every year.

Number of abortions, residents of England and Wales, 1969 to 2023

Someone said that abortion should be “safe, legal, and as rare as possible”, but it is no longer rare. We are close to one abortion for every two births.

I have written before about offering more support to people who want to have children. But it isn’t the number of people that conceive that has gone down. Compared to 1968 we have a quarter fewer births, but actually more conceptions. Abortion makes up the difference.

When I look at the charts above, I think of the lines from Andrew Young that I quoted at the top.

It was a pity someone should not know
That a great forest fell before the plough.

300,000 people a year never get to be born. More than ten million lives have been ended this way since 1967.

They could have lived, but will never get to see the sun rise, never taste ice-cream and never feel a hug.

Left alone they would have mainly grown and lived. But they had no voice, and we took that all away from them.

The clinching argument in the 1960s for the legalisation of abortion was to avoid “back street” and home abortions.

But now the advocates of further liberalisation are backing DIY abortions in order to push on with their agenda: pills by post with no checks, and no prosecution for late abortions as long as you do it yourself and no clinician is involved.

This will lead to disasters and then the advocates of it will come back for more.

I voted against these changes and will vote to repeal them if I get a chance.

I don’t have many original thoughts to add to this long-running and emotive debate.

But one thing I think is missing is this.

There are loads of people who would like to adopt a baby. Particularly among those who cannot have children - which is a growing group as we all delay having kids.

The number of people who would adopt a baby is larger than those who would adopt or foster grown children. The people who take on bigger children are heroes and deserve medals.

But there are many people who don’t feel able to do this, but are longing for children and would adopt a baby. Meanwhile there are women who are pregnant and don’t feel they can bring up a child.

There must be a way to solve one problem with the other? To offer people the support they need to have a baby and a home for him or her to live in and be loved in? Shouldn’t people be given that choice and offered the help to make it?

People say that every child should be a wanted child, but there are many people who want and don’t have. My former colleague Michael Gove recalls how his adoptive mother told him: “You didn't grow under my heart, you grew in it”.

I know quite a few people who had the same love from an adoptive parent.

I think we have massively lost our way here. There are lots of things that are complicated, but killing babies is wrong.

There are lots of people who were on the road to life, but will never get to live. But they have no voice and we - including me - don’t like to think about it. So we look the other way.

That’s got to change.

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This is a very bad result, but no great surprise, because of three things the government have done.

• First, the government massively tightened employment regulation with the employment bill - this makes older more tested workers relatively more attractive. Why take on someone that may not work out if you won’t be able to get rid of them without huge costs?

• Second, Labour have massively hiked tax, and surprisingly have done so in a way that targets low wage workers. Younger people tend to earn less, so again they have borne the brunt. Reeves now admits there is a “valid argument” this was a mistake. No kidding.

• Third, Labour’s manifesto said: “Labour will also remove the discriminatory age bands, so all adults are entitled to the same minimum wage”. There have been different rates of the minimum wage for adults ever since it was set up in 1999, and for good reason. This pledge effectively told employers that wage costs for younger people would continue to rise faster than average.

Add it all up, what you get is higher youth unemployment.

U turn ahoy?

The government is now trying to execute a classic Starmer “partial U-turn”. The Treasury are briefing that they are retreating from plans to align the minimum wage, but the PM is insisting the policy hasn’t changed.

And having hiked tax across the board, Pat McFadden will announce on Monday that employers will receive a £3,000 taxpayer subsidy for hiring under-25s who have been on Universal Credit (UC) for more than six months.

One thing to note here is the difference in scale between the takeaway and the “giveaway”. The chancellor aimed to raise £25 billion from her across-the-board increase in Employers NI on low paid workers in Budget 2024. And a further £12.4 billion from her real terms increases in Income Tax at Budget 2025.

Longer term youth unemployment is certainly a growing problem. ONS say the number of 18-24 year-olds unemployed for over a year has grown from 86,000 when Starmer came to power to 121,000 now.

The offsetting action isn’t remotely on the same scale.

In total there are 274,000 people under 25 who have been unemployed for over 6 months. If 10% get a job over the next year that will cost £82 million in wage subsidies. So that’s a:

• £ 37,400,000,000 tax increase versus a

• £ 82,000,000 wage subsidy

We can generate different numbers if we look at UC claims, but the point remains, the tax takeaway alone is several orders of magnitude larger than this offsetting bung.1

The big squeeze

New Labour were careful to avoid setting a single rate to avoid youth unemployment. That lesson seems to have been forgotten, and is being re-learned the hard way.

Labour’s rash pledge to end different rates of the minimum wage was also really strangely timed, as differences in how much people earn per hour have been getting a lot smaller over the last 30 years, and the gaps have become particularly small among younger people.

This wage compression holds true whether we look at the gap between the top 90% and the bottom 10%, or at the gap between the top 80% and the bottom 20%, or whatever ratio you choose. This compression of earnings gaps is true at all ages.

We can look at the same data in a different way, by looking at the ratio of earnings between earning groups over time2.

An 18-21 year-old in the top quarter of earnings for his or her age group used to earn 50% more per hour than someone in the bottom quarter in 1997. Now they earn just 15% more.

Among over 50 year-olds, someone in the top 10% used to earn four times more per hour than someone in the bottom 10%. That is now more like three times as much.

Kicking the can

Torn between its rash manifesto pledge and the reality of rising youth unemployment, the government is kicking the can for now, with small bungs and delays to its policy on the minimum wage.

The Low Pay Commission Report which came out last month says:

“We have debated how to balance the Government’s ambition to lower the NLW age to 18 with its desire to avoid causing youth unemployment. In light of youth labour market conditions, we judge it better to take a cautious approach and backload the increases needed to reach alignment.”

Our proposed pathway to meeting the Government’s ambition is to reduce the NLW eligibility age to 20 in 2027. The evidence, including our consultation, suggests that the labour market treats 20 year olds differently to 18 and 19 year olds, and that around 70 per cent of 20 year olds are already paid at or above the NLW. Thereafter we also propose that 18 and 19 year olds will move together so that the NLW age will be lowered to 18 in 2028 or 2029. However, all of this will be subject to economic conditions and Government policy towards young people at the time. We will consult further with stakeholders on this approach.

They note that for young people the minimum wage is now very close to the average wage - it is 81% of the average for 18-20 year-olds.

Conclusion

On the Conservative side we opposed the tax increases and the damaging elements of Employment Bill. We have proposed funding 100,000 more apprenticeships for 18-21 year olds by reducing the number of low quality “debt trap” degrees.

In contrast, at present the government has created a big problem but is offering only small solutions.

Employers are still being told that if they plan to take on young people they can soon expect them to be being paid the same as 40 year olds.

The triple whammy of higher tax, much more regulation and the attempt to flatten wages has clearly increased youth unemployment in the UK compared to other countries. And this was all before the war in the Middle East. If we are going to end the tragedy of youth unemployment, the government needs to stop coming out with fiddly small policies - and have a much bigger rethink.

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The civil service is a weird mix. You have a bunch of people who are amazing and not paid much. And you have a bunch of people who are not good and should have been managed out ages ago. I worry that too often the good people leave not just because they are underpaid relative to their ability, but because they are sick of carrying the people who shouldn’t be there.

Other countries do better. Surely the vision has to be a civil service more like that in Singapore: a smaller number of better paid, much more effective people.

Excess people in the civil service don’t just fail to add value. They often subtract it. The devil makes work for idle hands to do, and there is a connection between regulatory bloat and having a large low-quality workforce. If you have a lean, focussed high-IQ team, you are more likely to get on with core business, rather than have people who spend their time pumping out unnecessary initiatives or EDI nonsense.

There are multiple issues with the civil service. There is incredible churn. Because you generally can’t get promoted in place, the Treasury has faster turnover than McDonald’s. Over one fifth (20.8%) of civil servants in the Treasury left the Civil Service or Department in 2024-2025.

Too often an official would just be getting good at a brief and I would turn up at their desk to find they had been replaced again with a newbie. The Fulton Report (1969) complained about the cult of the generalist but I’m afraid it is still there. Efforts to build specialist professions in finance, project management etc have light years to go. The Civil Service Commissioners act like gatekeepers and the service has far too few people coming in from outside. Where people have spent more of their career outside it makes a big difference and it’s not a coincidence that some of the best people I met in government had done that.

But in this piece I want to focus on performance management. Let’s start with recent history.

Performance art

Concerned about these issues, the Cameron government in 2012 brought in measures to strengthen performance management.

This Civil Service Reform Plan, spearheaded by Francis Maude, warned that “exceptional performance is too rarely recognised and underperformance not rigorously addressed”.

There were two bits to the plan.

• For the Senior Civil Service, it brought in a system requiring each department to identify the top 25% and the bottom 10% of performers.

• And for the rest of the civil service (the less senior people) it encouraged something similar - and several large departments adopted a similar arrangement for their lower (“delegated”) grades.

Unsurprisingly, this “enforced distribution” model, proved deeply unpopular with the unions who argued that it was discriminatory and harmful to staff wellbeing.

By 2017 it was already in retreat as departments began to drop formal percentage targets for delegated grades, and in 2019 forced distribution was officially abandoned for Senior Civil Servants as well.

So we now have two systems in place. Senior Civil Servants are assessed by all departments using four box ratings: ‘Exceeding’, ‘High Performing’ ‘Achieving’ and ‘Partially Met’, with a recommended “expected distribution”.

Delegated grades, meanwhile, have since 2019 operated under a “flexible Performance Management Framework” which effectively allows departments to determine their own performance management system.

The current government says that this reform “has enabled departments to adopt a Performance Management approach to best suit their organisational and cultural needs”.

Is this just fancy code for “we’ve let them give up”?

I went to investigate, by firing off a barrage of 150+ Parliamentary Questions.

I had to do this because amazingly, no department has published its current approach. The information obtained reveals just how much performance management is deteriorating.

All must have prizes

When asked how many staff achieved the top performance rating in each department, it became clear that several departments have more or less entirely abandoned efforts to track performance.

The Home Office, for instance, explained that they had “introduced a no-rating performance management system for delegated grades in 2021 in line with external good practice”. Likewise, at DEFRA, the minister noted that “end-year performance ratings were removed for most staff in April 2023”.

DCMS and MCHLG have both since adopted a “rating-less system” for performance management. The Department for Education explained that they do not “operate a performance management system that includes ratings”, and DWP say their approach “does not involve employees below the Senior Civil Service being assigned a performance rating”. You get the idea.

Others like the Department for Business and Trade were unable to answer because delegated grades in their department are assessed by just two ratings: ‘Met’ and ‘Not Met’.

Meanwhile, at the Treasury, the “high performance category,” defined as “delivering exceptional performance” has limited value, given that nearly a third (30%) of all delegated grades were awarded this rating last year.

Can 30% really be “exceptional”?

Naturally, these “rating-less” departments were unable to answer my question on the number of staff promoted according to their performance marking the previous year.

But even where departments had retained some form of rating system, these marks had apparently no bearing on promotion decisions. And that’s supposed to be the point: money and promotion should follow appraisal and performance management.

But that’s not happening. At the Department for Business and Trade for instance, having ‘Not Met’ as your rating puts you in the bottom two per cent of performers in the department. And despite this, two civil servants in that bracket were promoted up a grade the following year.

And of the 576 promotions awarded by DBT in 2024/2025, a third of recipients (194) didn’t have a performance rating in the previous year.

Similarly, at the Department for Transport there were at least six people whose performance was rated as ‘developing’ (the euphemistic bottom ranking) who were still awarded a promotion. While for 81 of the 282 who were awarded that year, there was no performance rating from the previous year on record.

No one expects… the Spanish Archer?

OK, so if we aren’t managing for high performance, are we at least managing out the real duffers?

Another question I asked was on the number of poor performance cases recorded, and the number of staff who had left as a result.

The best data is provided by the Department for Transport. Across its core department and its agencies, there were over 100,000 performance reviews conducted in 2024/25, with 822 of these leading to unsatisfactory performance ratings. A separate question on the number of concluded cases disciplinary or performance related cases, revealed that there had been 58 ‘Managing Poor Performance’ cases concluded in that year, with only 2 dismissals as a result of poor performance (0.01% of the FTE proportion).

To put this in perspective, there were 25 civil servants who died in service in the department in the same period. So you are twelve times more likely to die than be removed for poor performance.

Sadly, this pattern is replicated across departments: a tiny proportion of civil servants fall into the lowest performance category or are subject to formal performance management procedures, and very few of these cases result in dismissal.

The Department for Culture, Media and Sport, for instance, has recorded just 61 formal performance cases over the past five years. Of these, 11 employees were either dismissed or resigned, representing roughly 1 per cent of its headcount over that period.

Similarly, at the Treasury, 2,057 reviews were completed in 2024/25, with only 28 poor-performance markings recorded. The department is unable to specify precisely how many of those individuals were dismissed, on the grounds that the number is so small it would risk breaching data protection rules. We do know though, that in no year since 2020 have more than five staff been dismissed for poor performance. The Treasury generally attracts high-flyers, but still.

Neither DHSC nor DfE could provide data on the number of dismissals as a result of poor performance, though in both cases the number of staff who were flagged for poor performance was miniscule.

At DHSC there were 2,820 end-of-year ratings in 2024/25, with fewer than 10 deemed unsatisfactory or below (0.35%). This is a very small risk indeed. For statistical context for every three members of staff given a bad rating, one will die by drowning.

DfE conducted 73,035 “monthly check‑in conversations” in 2024/25, where under performance was recorded in only 516 of these (0.7%).

An honourable mention must also go to the Medicines and Healthcare products Regulation Agency (MHRA), where despite 1,272 performance reviews taking place last year, not a single staff member was dismissed for poor performance. In fact, not a single member of staff has been dismissed for poor performance in the last five years in an organisation employing 1,456 FTE staff.

From PQ 87060 - https://questions-statements.parliament.uk/written-questions/detail/2025-10-31/87060

Sacking long term staff is hard. The easiest time to move out someone who isn’t working out is when they are still on probation.

But to my questions about the number of staff who did not retain their employment following their probation - or had their probation extended - there was a similar story.

For DSIT, “dismissals in relation to probation failure since DSIT’s inception occurred during years 2023-25 and totalled 2 members of staff.” From 2023-2025, there were 1520 entrants to the Civil Service who joined this department.

The Department for Transport revealed that they recorded “fewer than five staff members who were recruited into the Civil Service and did not pass their probation, and were subsequently dismissed, since DBT was created in 2023”. The Department saw 2540 staff recruited into the Civil Service in this time.

DESNZ revealed that no-one had failed probation. There “is no evidence in the data held in the DESNZ HR Oracle system of any employee being dismissed during their probationary period.” This is despite the fact that there have been 840 entrants to the Civil Service who joined this department since its creation in 2023.

Manage your way out of this

So why are these numbers so low? In large part, it’s down to the lengthy and complex procedures that managers must navigate before anyone can be dismissed for poor performance.

Obtained via FOI, the Department for Business and Trade’s dismissal policy sets out a 10-step process, requiring a determined manager to pursue the cause through two written warnings, four formal meetings, and “regular performance discussions” during this period.

Meanwhile, the Home Office provided a flow chart of their dismissal procedure (which was shared by several other departments), illustrating the hoops managers must jump through to dismiss an underperforming colleague.

To make things harder still appeals can be lodged at pretty much every stage of the process. Guidance from DBT dictates that an employee “has a right to one appeal per stage of the procedure”, which are the first written warning, the final written warning, and the decision.

And yet despite all these opportunities to appeal a decision, DBT was subject to nine unfair dismissal claims between 2023 and 2025, while civil service statistics show that there were only 60 dismissals in total over the same period.

Given the time and workload required to navigate this process, and the risk that any decision could be overturned by an appeal or subsequent legal action, many managers conclude that it is simply not worth attempting to remove underperforming staff.

It makes you sick

I always think the amount of time people have off sick is (other things equal) quite a good proxy for morale and performance management. And when we look at the data we can see both the attempt to get a grip after 2010 and the way that petered out before the pandemic and started to backslide after it. (This data excludes the effect of Covid absences).

If we look by department, it is not obvious why the number of days lost to sickness is so much higher in some departments than others. Sure, there are differences in structure which matter - DWP and Justice have far more frontline staff included in their totals. But it is not obvious why the Home Office should be so much higher than say the Cabinet Office, or why the Welsh equivalent of Ofsted should have 50% more sick days than its equivalent in England. We can see absence is higher in lower grades, among women and older staff, but it is not obvious that composition explains away much of these differences.

There is an overlap between sickness and longer term disability. I found that among staff who have declared their disability status:

• 24% of DWP staff identify as disabled (based on 92% declaration rate).

• 19% of DEFRA staff identify as disabled (84% declaration rate)

• 18% of MOJ staff identify as disabled (81% declaration rate).

And there’s also a feedback loop between registering as sick and the difficulty of sacking people.

When threatened with the sack people say they are disabled and claim discrimination under the Equality Act.

• Between 2020 and 2025, 607 Employment Tribunal claims were lodged against the MOJ under the Equality Act (the majority relating to disability) and 244 claims were lodged for unfair dismissal.

• DWP has seen 413 claims lodged against the department between 2022 and 2025. Of these, 312 relate to the Equality Act only.

• The Home Office has had 205 Employment Tribunal claims in the last 5 years (01/10/2021 to 30/09/2025). (It has refused to break this down)

• The MOD has had 187 claims lodged against it since 2020, including 134 under the EA. Equality Act claims have risen consistently from 4 in 2020-2021, to 39 in the current year up to November.

Conclusion

Fourteen years on from Maude’s report, the Civil Service appears to be backsliding on the challenges he identified. The Conservatives have promised to reduce Civil Service numbers by 132,000 (back to 2016 levels) saving £8 billion. But this can only be the start of an overhaul.

Today top performers still go largely unrecognised, and promotions do not rely on performance. Meanwhile poor performance is hardly registered, and when it is, the levers to dismiss staff on this basis are effectively out of reach. The losers from this are the public, taxpayers - and the civil servants who are not getting the rewards they deserve and carrying people they shouldn’t have to.

Taxpayers have a right to expect a more efficient and better run Civil Service, and that is what we need to deliver.

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“Real wages have risen by more in the first 18 months of this Labour Government than in the first 10 years of the Tory Government.”

Keen observers will immediately spot what is going on here.

Ten years on from 2010 is… 2020, and the depths of a global pandemic.

So if we do a point to point comparison then… well, you can tell exactly what she is up to here.

Let’s look at the chart. Reeves “ten years” comparison (in pink below) neatly coincides with the mid-pandemic low point. If you compared just a few more months on into the recovery (say “eleven” years) the story would be totally different. As would rolling on to 2024 (in grey). Hence her selection of “ten years”.

In reality neither 2010 or 2020 mark turning points in the wages data.

The coalition government came to power about halfway through the big fall in earnings that followed the massive recession. Following bubbly financial sector growth from 2000-2008, real wages were falling fast way before Cameron and Clegg ever set foot in the rose garden. The economic turning points were March 2008 and 2013-14 ish, but then those don’t fit the political narrative Reeves wants to weave.

On this data, the trend between 2014 and 2024 and the trend between 2024 and 2026 are basically indistinguishable.

But it’s also worth also understanding what this measure she is quoting actually is. “Average Weekly Earnings” sounds like the wages of the average Joe. Nope!

It is an economic concept measuring all earnings divided by all employees. Its main merit for economists is that it can be produced quickly.

But it tells you little about what is happening to most people. If a few bankers make out like bandits, but your average person sees no increase, it will still go up.

And if unemployment falls and there are more employees, what tends to happen is that the people joining the workforce (from welfare or because they are young) tend to have lower earnings and drag the average down (the so-called “batting average” effect). It doesn’t distinguish part and full time jobs. If more part time women enter work (say because of welfare reform) that will drag down the average.

So, let’s look at some other measures of earnings that actually try to get at the experiences of normal people. The Annual Survey of Hours and Earnings is the flagship ONS measure, with a huge sample size. It lets you look at different people, not just an economic variable.

I have given index values below so you can see the relative trends. You can see that it was lower earners who took a bigger hit in the period from 2008-2010, and that people in the lower half of the income distribution saw stronger growth after that - something that Reeves didn’t mention for some reason.

And of course, what really matters is how much you actually have after tax. While Reeves is clobbering lower earners with large tax increases, the previous government oversaw an unprecedented increase in the personal tax allowance from £6,500 to over £12,000, further boosting the take home pay of lower earners on top of the increase shown above.

And the statistics above still don’t capture the batting average effect.

Before the election we had seen real wages growing since 2014 - and there has relatively been little difference since.

The difference was that wages were rising even as we brought more and more people into the labour market, but now that is over, with HMRC data (which starts in 2014) suggesting employment is now falling.

For all of Reeves dishonest attempt to pretend there has been some great acceleration in wage growth, her statistic ignores the fact that for many people, their wage growth is now zero, because they don’t have a job.

This is particularly true for young people.

The wage growth we saw under the last government was happening even as lots of young people (who have lower wages) left unemployment and joined the workforce.

They almost certainly dragged “average” wage growth down through a batting-average effect, but in the real world them getting a job was a good thing/

Now the reverse is true, and we should remember that wage growth is currently being flattered by the fact that lots of young people are no longer in the data because they can’t get a job. Amazingly, youth unemployment in the UK is now higher than in the eurozone, where rigid labour markets have long led to high youth unemployment.

Why? We all know. By targeting her biggest tax increase on low paid workers and jacking up labour market regulation at the same time, Reeves has brought Europe’s youth unemployment disaster across the Channel.

Conclusion

This is a nonsense stat from Reeves, and most people will immediately understand why.

It is a bit like when Labour MP Tris Osborne says ‘unemployment was higher on average under the Conservatives’. It is technically true, but extraordinarily misleading.

Wages took a massive hammer blow from the 2008 recession, and that went on for a long time - but Reeves wants to count that as a failure of the coalition government.

Of course we would like wages to grow faster, but there has been ongoing real growth since 2013-14 ish, which is all the more surprising given the massive blows from the 2020 global pandemic and 2022 Ukraine/energy crisis.

And there are a lot of things about the recent history of earnings growth that are not widely understood, and really don’t fit Reeves’ political narrative.

If I were Reeves I would be doing less boasting about the UK labour market right now - and more to fix the unemployment problem.

Postscript - HMT have messed up.

The government didn’t publish the usual Red Book alongside the Spring Statement but they did publish a web page giving sources for some of the things she said.

Confusingly, this says the Chancellor said something different to what she actually said, something which is not correct on any reading. (If you work at the Treasury and are reading this you need to change your website.)

I don’t know whether officials have been arguing the toss with the Chancellor or whether there was a last-minute change of plan but the Treasury website says the Chancellor said thirteen years. I checked the video back, and she definitely said ten.

If we go into the dataset that the Treasury have linked to it is not the case that real wages only grew £5 over thirteen years. That’s just wrong.

Whoops. HMT, please correct!

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As most readers of this blog will know, spending on SEND has gone up pretty dramatically over recent years, including under the Conservative government, following the Children and Families Act 2014.

The goal of the SEND plan is to start to bring that spending under control.

That is not at all a bad thing to do in principle, but the question is how to do this in such a way that children who really do need extra support don’t lose out - and that we don’t just create more problems further down the line.

I’ve seen this first hand. One of our two children has benefitted from some help with a really wonderful SENCO and it has been hugely valuable. And there are other people who are much more needy than us.

Saving money… but only in the next Parliament

The core of how the plan will save money is that the government will amend the law to restrict access to Education, Health and Care plans (EHCPs), which set out what extra help children with special needs are entitled to. Only the “most complex needs” will get education, health and care plans (EHCPs) by 2035. But the difficult measures to restrict EHCPs don’t start until 2029, coincidentally the year of the next General Election. Funny that.

Things will get more expensive till then.

The DfE estimates that the percentage of pupils with an EHCP will continue to rise initially - from 5.3 per cent in 2024-25 to 7.7 per cent in 2029-30 - before dropping to 4.7 per cent by 2034-35.

They have published a document supposedly setting out how they arrived at these numbers. But there is no methodology I can see. The document does say that “by 2035, 15-20% of pupils will have an Individual Support Plan” and that the proportion of pupils in special schools will fall from 2.5% to 2.2% over the next Parliament. But it is not at all clear how they have arrived at any of these numbers, or how much money this is intended to save.

What’s clear is that all the action in terms of saving money is being pushed into the next parliament. The nice stuff is now, the hard stuff after the election.

This raises a massive question about the DFE’s finances before then. Regular readers will remember that Rachel Reeves left DFE holding the baby for £6 billion of funding pressures which are to be transferred from local authorities to the DFE.

As the OBR has noted:

“the Government has announced that from 2028-29 the cost of SEND provision will be fully absorbed within the existing RDEL envelope. The Government has not set out any specific plans on how this pressure, which we estimate at £6 billion in 2028-29, would be accommodated within the existing RDEL envelope. If it were fully funded within the Department for Education’s £69 billion RDEL core schools budget in 2028-29, this would imply a 4.9 per cent real fall in mainstream school spending per pupil rather than the 0.5 per cent real increase planned by Government.” (OBR EFO Nov 2025, p122)

We now know the government isn’t really planning to save money by 2028-29.

The DFE are going to get £3.5 billion extra in 28/29, reopening their Spending Review settlement - but that is offset by the existing £6 billion pressure they previously got. So there is a £2.5 billion funding gap.

DFE could hope that spending on more mainstream provision for send now might reduce LA pressures, but that is a bit of a punt.

So where is the money coming from? We shall have to see how the numbers stack up.

A blank cheque?

The government says that there will be individual support plans (ISPs) covering a broader group than EHCPs. The goal here is to control spending by shifting numbers from EHCPs to ISPs. But how much will be available to fund these ISPs? We won’t find out until 2028 or 2029, after the legislation is passed.

Government is planning to create “approximately” seven different packages of support. It says that some will be mapped on to familiar descriptions of complex SEND, while others will support a group of children with different or no diagnosis but who require similar support. But these specialist provision packages - and the funding bands associated - will only be published by 2028.

A key detail is the funding cap on all these packages - if the caps are set too low, it will simply be impossible to fund the work that is supposed to be done. The DfE had already announced that independent special schools will be subject to national price bands, in a government clampdown on “spiralling” fees. If these are set too low it will simply destroy independent special schools which are looking after some of the most severely disabled children. But TES reports that we won’t see these funding rates until 2029 (potentially after the next election). The National Association of Special Schools has made this point about a blank cheque:

banded funding and capped prices will be in place for all special school and specialist college placements. In the absence of any sense of how these categories will be constructed, nor of the funding that will be attached to them, schools and families are given a headline message that will leave them anxious about whether special schools will be able to afford to provide the support that they know is transformative for children.

As well as driving down the number of pupils with an EHCP, the other way the reforms will saving money is to water down the EHCP.

If parents feel they have been unfairly denied an EHCP, they will still be able to appeal to a tribunal. But unlike under the current system, the tribunal will not be allowed to demand that local authorities send a child to a particular school, giving councils far more control over where SEND children are educated. This will probably save money - but the politics of this will be very hard after 2029: parents won’t get the support they want or may be offered something far away from home.

Those receiving the most specialist support will be entitled to an EHCP. But the way these are issued will also change - and in a way that is not clear at the moment. A child’s provision will be agreed before an EHCP is issued. This provision will be based on a “statutory entitlement” outlined in what the government are calling a “specialist provision package”. The council will then issue an EHCP, while the school will issue a more detailed IPS. So what exactly is the EHCP actually doing in this new system? I heard one Labour MP say today that children don’t always get the support promised in an EHCP. Okay, but won’t that be more likely to happen if their legal weight is watered down? Isn’t that in fact… the point of what the government is doing?

The basic issue is this: the government is going to ask MPs to vote for a completely new system, but almost all of the important details of it will only be agreed after that legislation is passed. So we are being asked to sign a blank cheque.

More to do for schools

The white paper proposes a new system of tiered support. Individual schools will be asked to do quite a lot more themselves.

The teaching unions have said the resources the government are offering to do all this work within schools is not enough. The NEU say:

“it is too small. It only equates to a part-time teaching assistant for the average primary school and two teaching assistants for average secondary schools. This is not enough to make schools more inclusive.“

The NASUWT teaching union says:

“this new funding is barely a drop in the bucket of the investment necessary to drive real improvement in schools.”

Some heads are making the same point. Katie Barry, headteacher at St George’s Church of England Community Primary School in Lincolnshire, tells Tes that “the move away from EHCPs towards school-led plans raises my concerns about potential increased pressure on already stretched mainstream schools”.

This new proposed system does seem to be loading a lot more work and bureaucracy onto individual schools. Will they actually be able to cope?

In addition the government have a plan to reassess the need for extra help when children transition from primary to secondary and to sixth form - this sounds reasonable in principle, but the danger is that it creates a lot of friction and cost for no real savings - in many cases parents will be re-fighting battles for support that they have just been through, and that the process costs more than it saves.

The schools white paper

The schools white paper is full of micro-announcements and new targets - some of which are fine. There is a plan to change the funding formula which I will have to come back to.

There are a couple of things in there that are concerning though. There is a big push for “inclusion” rather than suspension or expulsion of children who don’t misbehave - there is so much ideology pushing in this direction already, and I worry that it means more disruption and danger to kids and teachers doing the right thing.

Questions we need answers to

1. What does this plan mean for mainstream school funding, and what’s happening with the rest (the other £2.5bn) of the £6 billion pressure?

2. How are MPs supposed to reassure themselves they aren’t signing a blank cheque, given the lack of detail on what will replace the current system, and what funding rates will be?

3. Why are funding rates only being set out in 2029?

4. Why is the government able to give quite precise numbers on how many children will have an EHCP in future, but not any real methodology on how it arrived at these numbers?

5. Are teaching unions and heads wrong to say that the resources aren’t enough for mainstream schools to do all the extra work that is proposed?

Further reading

TES: How is Labour planning to reform SEND?

TES: Schools White Paper: the sector reacts

Schools Week: Schools white paper: What is happening to EHCPs under SEND reforms?

NASS: NASS warns SEND reforms erode rights and let costs dictate

Guardian: Fewer children in England to get EHCPs by 2035 under Send overhaul.

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This is the third in a series of posts on welfare reform. Part one, on the growth of spending is here, and part two, on the growth of large claims, is here.

By the end of this Parliament Britain will be spending £177 billion on working age welfare, up from £97 billion in 2020. Where is it all going?

I mean, like, physically where in the country?

DWP does not make it easy to see where benefit spending is going.

So in this post I have pulled out data and calculated spending on each of the largest working age benefits - Universal Credit, and working age spending on Housing Benefit, Disability Living Allowance (DLA) and Personal Independence Payments (PIP)1.

Putting these together lets us make a kind of welfare atlas of Britain.

There are other benefits, so our map doesn’t capture all working age spending.

But I have about £119 billion of spending in the map below, and overall DWP says spending on people of working age and children was just under £140 billion in 2024/252. So it is not perfect, but should be a reasonable approximation3.

Let’s start by looking at local authorities, then we’ll zoom in further.

Local authorities

You can see immediately that welfare spending is intensely concentrated in urban areas. Spend per working age person is nearly three times higher in places like Liverpool, Glasgow and Birmingham than it is in some of the home counties and affluent east midlands.

Even though we aren’t looking at all welfare spending here, the spend in the large urban authorities is huge - there are several local authorities in the billion-pounds-a-year club or just outside:

And these are individual local authorities. “Manchester” in the chart above is just the city centre - Greater Manchester is actually £6.3 billion.

West Yorkshire gets £4.7 billion, Merseyside £3.6 billion and West Midlands Combined Authority a cool £7.1 billion.

Given that these numbers are an underestimate because I haven’t included all the small fiddly benefits, the total spend is likely to be more more like £3.9 billion in Birmingham now.

And given the expected growth, that is likely to rise to just under £5 billion by the start of the next parliament. Even somewhere like Bradford (which isn’t that big) will be approaching £2 billion a year. This is serious money.

Opportunity costs

And that brings me to the point of this post. Why should you care, beyond curiosity? Two reasons.

First, thinking about the sums going to particular places helps us think about the opportunity costs of welfare spending.

The other day Number 10 briefed out that following their defeat by Labour backbenchers they will not be making any further attempt at welfare reform in the near future. So the bills will keep on rising, to £177 billion a year and beyond.

But these national numbers are so large they are hard to get your head around.

It’s easier to think about what a billion quid a year could potentially do to boost growth and opportunity in some of the places above. You could have tax breaks to get big investors into County Durham and Sheffield. London Boroughs like Enfield, Brent and Newham have 50-60 thousand pupils in their schools. They could have class sizes of two or three. With £15 billion over a decade Leeds could finally build its tram without requiring any Whitehall approval. (The tram was recently cancelled by central government for the umpteenth time).

As part of Starmer’s latest relaunch, No.10 briefed out the other day that they would “pump billions” into poorer areas. The truth is government already does “pump billions” into poor places. It’s just in a form (benefit spending) that has not revived their underlying economies.

The second reason I think this data is interesting is to think about how and why welfare dependence can be so much higher in some places than others. The differences with a city or a neighbourhood can be huge.

So let’s zoom in more and look at that.

The constituency level

Sadly, because Scotland doesn’t produce data on its newly devolved benefits below the level of the local authority, we will have to home in on just England and Wales in order to have a fair comparison.

At this level we can see that while Sheffield may have high benefit spending per head in the map above, The constituency of Sheffield Hallam does not. And while Birmingham has high spending, within the city, Sutton Coldfield constituency doesn’t - and so on.

Again, I think it is useful to think about the opportunity cost at this level too.

Tottenham, Brent East and Birmingham Ladywood receive half a billion pounds a year from these benefits alone. What could you do to revive such a small area with half a billion a year? And there are lots of other constituencies in the £400-£500m a year range

It’s also interesting to think about the transfers between places as a result of all this. Tottenham constituency alone gets more than the constituencies of Sheffield Hallam, Wetherby and Easingwold, Harpenden and Berkhamsted, York Outer, Westmorland and Lonsdale, Henley and Thame, and North East Hampshire put together.

Looking at the Constituency level also lets us do some political analysis.

Unsurprisingly, the Conservatives see a lower share of the vote where welfare spending is higher - and Labour sees a higher share. The Lib Dems have a mix, but they do much better in the middle class areas with low spending. Reform do better where benefit spending is higher. The greens do a bit better in higher welfare areas, while the independents (who were mainly Gaza independents in 2024) did best in areas with high welfare spending:

Neighbourhoods

We can continue to zoom in, but things get harder. Frustratingly, the neighbourhood level data for DLA and Housing Benefit is on a different basis to that for UC and PIP.

So let’s just look at UC and PIP spending.

Here’s London. Again, note that the variation between places has gone up - because we’re looking at smaller areas. People used to talk about living on the “wrong side of the tracks”. Well, the river Lea in north London marks a sharp boundary between two very different social worlds when it comes to welfare.

People in Enfield, Edmonton, Tottenham and Stamford Hill are claiming easily twice as much as people on the other side of the river in Woodford, Chingford and Loughton.

Why does this matter? It shows the limits of access to jobs as an explanation for social differences. These are people are living in the side by side same city with pretty similar access to jobs, but in very different social worlds. While access to opportunity and good jobs is part of the story about high welfare claims in some places, these massive variations show that there is a lot more going on too.

There are, of course, multiple dimensions to what’s going on here. Education, housing, employment patterns and so on. One dimension is ethnicity. The two patches of higher welfare claims north of the Thames in the map above coincide with two areas with a higher black population. And the same is true in Lewisham. But then that correlation is less pronounced in Southwark and Lambeth, so there’s more going on than just ethnicity.

In the 1980s there was a lot of discussion about the “inner cities”. One thing that is notable is that the very centres of our largest cities are now not where you find high welfare spending.

Over recent decades there has been resurgence in the very centres of our large cities with young professionals and some students moving in. But this revival has not extended very far outside the very centres of the city, and the welfare map shows this.

Here is just UC spend per working age person in Birmingham, Leeds and Manchester. As you can see, the very centres of the cities are lighter - the darker green areas indicate larger benefit payments per head. Payments in the very centres are less than £50 per head, but immediately outside the centre it is more like £200 per working age person.

So you can see that our city renaissance doesn’t go far beyond the city centres. 10 minutes out from the centres people are claiming a lot of benefits. It is different for smaller cities which have seen less revival - for example, Bradford has large payments in the very centre too.

Conclusions

Before coming to office in 1997 Tony Blair promised to cut what he called “the bills of social failure” - and while the welfare bill actually went up on his watch, at least his argument was right - taxpayers’ money that you are spending mopping up problems is money you aren’t spending on preventing those problems.

Obviously we can’t just overnight shift all of the large bill for working age welfare into more productive uses. But over time we need to control welfare spending if we want to have the money for other things that can get the economy moving.

I have written before about getting growth going in poorer places and spreading opportunity. People sometimes moan about poor places receiving lots of taxpayers’ money - but the truth is that that money often comes in a form (welfare) that doesn’t help change their trajectory. It may even compound it in some cases.

The Starmer government is showing how limited the room is for tax increases, with the economy sagging most in the sectors hit by the biggest tax hikes. More tax increases will be counterproductive. So if we want the firepower to fix broken places, we need to look to control spending instead. If we could cut the ever-growing welfare bill then maybe we could get somewhere.

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The Household Benefit Cap was introduced in 2013. It was one of a suite of measures taken by the last Conservative government to rein in welfare spending. The idea is that benefit claimants who could be working should not be able to get more in benefits than someone similar can earn by working.

But, because the cap was quite a controversial idea at the time, the idea of “someone who could be working” is baked into the design of the cap in a very generous way.

• First, the household is exempted from the cap if someone in the household gets one of 16 exempting benefits. (I have put the list at the bottom). So, for example, if your child gets DLA, or your partner gets PIP, then the whole family is exempt from the cap. (A different design would have been to exclude those benefits from the calculation, rather than triggering a blanket exemption).

• Second, if you have been in work for more than 12 months there is a “grace period” of 9 months before the cap kicks in.

• Third, You are exempt if the family (in total) earns £722 a month (£8,664 a year) or someone in it works more than 16 hours.

As of the middle of last year, just under 120,000 households have their benefits capped. But how many are exempted from the cap?

Sadly, on that question - and all other aspects of the cap - the government is refusing to answer our Parliamentary questions:

• How many people get more than the cap? The government won’t say.

• How many people are exempted from the cap as a result of each exemption? The government won’t say.

• How many people are exempted from the cap because they earn enough? The government won’t say.

• How many people leave the benefit cap for different reasons? The government won’t say.

• How many people are in the grace period? The government won’t say.

• How many people will become subject to the Household Benefit Cap following the removal of the two-child limit? The government won’t say.

You get the general idea. They are being distinctly non-forthcoming.

Obviously they have the data, but they claim it is “too expensive” to work it out.

The government does publish the numbers flowing on and off the cap. But they do not provide a meaningful breakdown of these flows, never mind the levels.

All we can see is that just 8% of people who did flow off the cap in the first half of 2025 did so because their earnings rose to exempt them. Whether the other 92% leavers started claiming fewer benefits or (I suspect) got themselves onto an exempting benefit we cannot say from the published data - and when asked, the government is… (you guessed it) refusing to answer.

So... how many households are claiming more than the cap?

In the face of the government’s stonewalling, we are forced into some vigilante statistical analysis.

If we use the published data from the long-running Family Resources Survey (FRS) we can look at the total amount of benefits claimed by non-pensioner families, and compare that to the cap level for that kind of family.

Crucially the word “family” has a special meaning in DWP stats - the technical term they use is “benefit units”. That’s because a “household” can contain “multiple benefit units”, whereas a benefit unit is the specific group of people (claimant, partner, and dependent children) whose income and circumstances are assessed together for a single benefit claim. If grandparents live with a nuclear family, they will likely be in a different “benefit unit”.

If we look at all state support, then there are 1.9 million non-pensioner benefit units getting more than the benefit cap for that household type.

This is not the same as the number who are currently using one of the exemptions to the cap as currently designed - as it is not even supposed to cover some of these benefits. Still, this gives some sense of the number of families getting larger benefit payments.

While an overestimate in one way, it is an underestimate in another - the Family Resources Survey is known to undercount benefit receipts as people forget what they have had. Just under a fifth of actual spending doesn’t show up in the FRS.1

So how much are the exemptions costing taxpayers?

The government does publish how much the cap reduces the incomes of those currently affected, and with 124,000 households having their benefits reduced by a mean average of £256 a month that implies that in a static sense (even ignoring incentive effects) the current cap is saving taxpayers about £380m a year.

A policy that would bring the much wider number of families claiming larger amounts into scope would potentially save a lot more.

Households

Now let’s flip and look at “households” in the normal meaning of the word. Particularly where people have extended families, there can be several “benefit units” in a household.

The chart below is in real terms - but as you can see, even after you strip out the impact of inflation, the number of working age2 households getting large sums is going up.

The number of big claims rose in the Blair years, stabilised after the introduction of the benefit cap and other reforms, but has started to increase again more recently.

The FRS data is quite laggy - but I suspect that we will see that rising trend is (at the very least) continuing. It is more likely to increase as the impact of things like the end of the two child cap and other measures kick in.

Those exempting benefits - particularly sickness and disability benefits - have seen large increases in the numbers claiming, and these increases are forecast to accelerate.

For example, the numbers on DLA/PIP rose from 3.2m in 2010/11 to 4.4m in 2023/4, the last year of the chart above. But more to the point DWP forecast numbers to 6.7m by 2030/31, which will continue to erode the scope of the Household Benefit Cap.

The current setup and exemptions strongly incentivise people to get onto one of the exempting benefits.

I am very struck that where people are particularly likely to have large claims (expensive central London) we see that a greater share of UC claimants are claiming the health element. This is striking because in general London has a smaller share of UC claimants on the health element (because the population is much younger). You can see that as the dark blue blob in the middle of London below. This seeming anomaly may be a reaction to the household benefit cap.

You think this is too cynical? I’m afraid people always learn to work the system and how to answer questions to claim successfully - indeed for a small fee there are various websites that will tell you how to do this.

That, in combination with a relentless series of legal challenges by activist groups tend over time to weaken controls on spending.

The history of incapacity benefits is a good example of this tendency. Over the last 15 years we have gone from less than 10% being put into the highest payment category to 80% getting it - shown in dark orange below:

Conclusion - we need to restart welfare reform

Is welfare reform impossible? No - under the last Conservative government we did control spending, and up to the pandemic spending on working age welfare fell in real terms - the only sustained period in which this has been true in my lifetime. Welfare spending didn’t return to the level of 2012/13 until 2024/25.

But to do this we needed to reform on all fronts. We slowed benefit uprating, tightened caps on housing benefit spending, reformed incapacity benefits, extended conditionality, (including through Universal Credit, which asked non-working spouses of claimants to work for the first time), we cut the spare room subsidy, and introduced the two-child benefit cap. Under Starmer this is being dropped or eroded away, and so the bill is forecast to rise in real terms by nearly £20bn a year over this parliament - roughly as much as we spend on the police in England.

The Household Benefit Cap is only one part of the picture obviously. We need to fundamentally reform sickness and disability benefits - indeed last year Number 10 were making the case for this, but folded at the first sign of unrest from Labour MPs.

We must restart the process of welfare reform - we can’t afford not to. And that has to include the Household Benefit Cap.

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Annex: The Exempting Benefits

You’re also not affected by the cap if you, your partner or any children under 18 living with you gets:

• Adult Disability Payment (ADP)

• Armed Forces Compensation Scheme

• Armed Forces Independence Payment

• Attendance Allowance

• Carer’s Allowance

• Carer Support Payment

• Child Disability Payment

• Disability Living Allowance (DLA)

• Employment and Support Allowance (if you get the support component)

• Guardian’s Allowance

• Industrial Injuries Benefits (and equivalent payments as part of a War Disablement Pension or the Armed Forces Compensation Scheme)

• Pension Age Disability Payment

• Personal Independence Payment (PIP)

• Scottish Adult Disability Living Allowance (SADLA)

• War pensions

• War Widow’s or War Widower’s Pension

In fact, over the 5 years from 2025/26 to 2029/30, the government is now planning to spend £36.4 billion more on benefits than they had planned to only a few months earlier.

The difference is shown in the chart below as the little grey gap.

But it isn’t really that little. Spending in 2029/30 alone is now predicted to be nine and a half billion a year higher than it was in the spring forecast. That’s a lot of extra taxpayers’ money over just a couple of months. Overall, between Spring Statement on 26 March and Budget on 26 November, Reeves lost about £150m a day.

What’s going on? It’s not just revolting Labour MPs.

By 2030/31 working age welfare will cost £177.5 billion a year, or about a billion pounds every two days. For context, we spend about £20 billion a year on the police in England and Wales, and about £15 billion a year on NHS GPs in England. While in real terms spending on welfare was roughly the same in 2024 as in 2012, the projected growth is a real terms (i.e. faster than inflation) increase.

Stripping out inflation, in today’s money, spending will have increased by £15.6 billion over the five years from 2025/26 to 2030/31.

This growth in spending partly reflects policy choices like the defeat of benefit reforms by Labour MPs and the ending of the two-child benefit cap (though “choice” is a funny word for two things Starmer used to oppose).

But it also reflects rising levels of worklessness and wider deterioration in the forecasts. The OBR explains that working age welfare is being driven up by:

Higher benefit uprating, which increases spending by £3.1 billion in 2029-30. Roughly half (£1.6 billion) is explained by higher CPI uprating for working-age benefits, with the rest mostly due to higher earnings increasing triple lock uprating for pensions (£1.4 billion).

Higher unemployment in the first half of the forecast period, which increases universal credit spending by £1.8 and £1.2 billion in 2026-27 and 2027-28, before tapering off to a £0.5 billion increase in 2029-30.

Higher disability caseloads and average awards, which increase spending by £1.4 billion in 2029-30. Most of this is driven by lower exit rates from PIP and attendance allowance (£0.9 billion), which the latest DWP data shows have fallen substantially since the onset of the pandemic.[]

Policy measures, which increase spending by £9 billion in 2029-30. These include the reversal of the tightened gateway for PIP at Spring Statement 2025 and the extension of winter fuel payment eligibility announced in the summer, which increase spending by £4.0 billion and £1.7 billion respectively. They also include the removal of the two-child limit, costing £3.1 billion.

These changes - higher benefits multiplied by more people claiming them - are spread across different benefits. There are five main benefits where most of the unexpected and increased spending is concentrated:

What’s driving all this growth in spending?

In future posts I will come back to the reasons why we are seeing more people on benefits, and growing claim amounts from people on benefits. The short answer is a combination of:

1. A labour market reeling from higher taxes and more regulation,

2. A series of benefits where people have learned how to play the system, (“system learning” in the jargon) and people have become more likely to seek a claim,

3. The growth of mental health claims, particularly among younger people.

In this post I am not going to get too into the detail of these three drivers, except to say that they overlap and combine. But here are some examples of what I mean.

On the first - the economic outlook - I’m particularly struck by the increase in youth unemployment, which is now above Euro area levels for the first time in a long time.

These days, now that Jobseekers allowance is a thing of the past, the impact of rising unemployment shows up in terms of increased numbers expected on Universal Credit (shown in the chart below). But a worsening economy also drives up numbers of claimants of other benefits too. By the end of the forecast there are over 700,000 more people claiming those five benefits I mentioned above, compared to what the government expected in spring 2025.

On “system learning” and increased willingness to claim, you can see that cleanly by looking at the explosive growth of DLA for children, which is now forecast to rise past a million claimants and hit eight billion in spending.

These aren’t people who are looking for jobs (because they are children) so we can see this growth in the numbers claiming isn’t just about a worsening economy.

And what is driving that rise in numbers and spending on Child DLA? We can see what people are claiming for when they come to the end of Child DLA at 16 and have to seek mandatory reconsideration if they want to stay on benefits. We can see how mental health conditions have been driving the increase:

Conclusions

I have made the case before that the choices facing Britain are going to get a lot tougher because of the ageing society.

The kinds of numbers I have included above are pretty stark. But these trends are not inevitable. As we have seen before, welfare design and wider economic policy can make a huge difference. What goes up can come down, and vice versa.

And if we want to have the money to spend on things like health, without self-defeating tax hikes that would simply damage the economy, then we are going to have to deal with the ballooning bill for working age welfare spending.

That is not going to be easy, and right now things are going the wrong way under Reeves really fast.

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PS - And another thing!

In one way the statistics above don’t capture the full extent of spending and subsidy, on working age benefits, because the figures above are net of subsidies for social housing. Those subsidies are pretty big - particularly in London, where about a quarter of households are in social housing.

The gap between private and social (council house) rents has got bigger over recent years so the implicit subsidy is greater. 83% of households in new social lettings last year received some form of housing-related benefit, so this subsidy mainly shows up in the form of apparently lower (measured) benefit spending. One recent attempt to cost out the total value of the subsidy from lower social sector rents put it at just under £20 billion a year for general needs (i.e. non-sheltered) social housing, concentrated in places like London.

OK, I’ll stop now.

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Partly for the soaring pictures of Teesdale in the snow and the Vaughan Williams soundtrack… But mainly just for the incredible resilience and stoicism of the farmers, making a living in extraordinary circumstances.

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The government has been conducting and consulting on what it calls the“Fair Funding Review 2.0” to overhaul outdated needs assessments using up-to-date data — including deprivation, population projections, and cost variations in service delivery. It replaces formulas that sometimes used decades-old data. So far so good.

But of course “fairness” is subjective - and you may not be surprised to learn that under Labour’s new funding formula and funding settlement, councils in Labour-run urban areas (e.g., Manchester, Birmingham, London boroughs) are receiving significantly more grant funding.

The way Labour have cheated this is very crude.

Last year Labour overlaid the old formula with what it repeatedly described as “one-off Recovery Grant”.

This was a bung to Labour’s urban heartlands and was supposed to be abolished after the new “fair” funding formula came in.

But despite torturing to formula to get the outcome they wanted, Labour ministers have not still been able to make it spit it out the outcome they want.

So that supposedly “one-off” grant to their mates has now been made permanent. The biggest winners from it are Birmingham, Leeds, Liverpool, Manchester, Bradford and Sheffield.

As the Institute for Fiscal Studies has pointed out,

“It is difficult to see a principled basis for these decisions other than to achieve an overall allocation more in line with the government’s subjective judgement. Government should avoid such formula bypasses becoming a habit.”

As well as a new formula, government is “resetting” the business rates retention system.

The last Conservative government introduced an arrangement where if councils agreed to growth and building in their area, they kept a share of the upside in terms of the extra business rates.

Why? In a purely “needs-based” system of the kind that Labour tends to favour, councils suffer no downside if they do things which are anti growth - the formula will compensate them for being poorer. And they get no upside if they allow building, which often unpopular locally - because the formula will punish them.

Under the “reset” Labour have whipped away the gains councils were getting from business rates retention. As the document puts it euphemistically, the new system will “better align funding with need across the country.”

All above-baseline growth in business rates revenues, which councils have been able to retain since 2013–14, will be redistributed away.

As well as business rate retention, there was a similar formula element for approving new homes called the “New Homes Bonus” which is also being phased out. I think this is a mistake.

This is bad for districts that have seen growth, and bad for incentives, but also unfair.

The shire district I live in is currently run by a Lib-Lab-Green coalition, but has also been Conservative. I recall one planning application for a large logistics shed.

The meeting had to be held in an aircraft hangar because so many people wanted to come. Councillors of all parties got screamed at… then yelled at in the car park afterwards… then had to do the whole thing again a few months later because of a technicality, and get screamed at again.

It was a pretty rough experience. And it now turns out they won’t even get any upside for their trouble.

Meanwhile councils that bugger up growth (say by demanding absurd levels of council housing on all developments) will be rewarded with more cash because they make themselves poorer. Not for the first time, Starmer’s government has revealed itself to be uninterested in incentives.

Winners and losers

What’s the upshot of all these complex changes?

First, here are all the councils with lower tier responsibilities only.

Lower tier councils typically account for a small share of the spending in their area but a lot of the stuff people actually notice most: rubbish collection, recycling, Council Tax collection, housing, planning applications, leisure, parks etc. They are taking a massive beating. Some are really going to struggle1.

Now, let’s have a look at all the councils with lower tier responsibilities - both unitary (single tier) councils and the lower tier. You can see the difference between the urban and rural areas pretty starkly. A lot of those things that people really notice are going to be tough to deliver in the shires.

Last but not least, hear are all the councils with upper tier responsibilities - unitaries and county councils where they exist.

These are the councils that do social care, so this is where the bigger money is. They also do transport and have coordinating functions for education, libraries etc.

At this level the distribution is more even, but you can still see that urban-rural gap. Thought the settlement is higher, the growth of pressures from social care will likely mean that it doesn’t feel like a land of milk and honey for councils.

The measure used in the maps above is “core spending power”, which includes an assumption that the council will be increasing council tax at the maximum permitted rate. In most of the shires almost all of the growth is coming from council tax, rather than a government grant.

As the County Council Network have pointed out:

“many of our councils will see their government grant cut and the simple fact remains that county taxpayers, the length and breadth of this country, will foot the bill for these reforms. At least 90% of CCN member councils’ much-vaunted increase in total ‘core spending power’ will come from presumed council tax rises of 5%, we estimate.

“It is abundantly clear that recent changes to the original government proposals have disproportionately benefitted London and metropolitan boroughs at the expense of all county and rural areas. The continuation of the Recovery Grant and the removal of ‘remoteness’ from almost the whole funding formula will mean hundreds of millions of more funding will be diverted from rural to urban areas over the next three years. These last-minute changes, implemented against the available evidence, raises serious questions over whether ministers are unfairly cherry picking which councils benefit from extra funding.

“Overall, the three-year settlement outlined today will be extremely challenging and will leave many of member councils facing a substantial funding shortfall over the course of this parliament. It is simply unrealistic to expect them to provide vital care services while receiving deep reductions in government grant and more councils may now have to apply for exceptional financial support.”

The District Councils Network say

“The measures set out in The Fair Funding Review 2.0 will also punish the councils most successful at housebuilding and at growing their local economy, despite these being Government priorities. The reforms end the bonus paid to councils when new homes are built – despite councils’ extra costs from providing infrastructure and services to new residents – and they take away the extra business rates received by councils for boosting their local economy.

The impact of the changes is likely to be felt by millions of people in the form of cuts to services including housing, waste collection, town centre regeneration and parks. Councils are also likely to scale back services which prevent illness or social problems including leisure centres and homelessness prevention, impacting on other parts of the public sector.

This is happening at a time of local government reorganisation, which will lead to upheaval and lead to financial risk for councils and services.”

The Institute for Fiscal Studies have a useful analysis here.

This chart shows how shire districts in green on the left are taking a pounding while urban areas on the right gain.

Conclusions

The government have made their choices, and residents will feel the effects.

• I worry that they have trashed incentives in a way that is unfair and will be bad for growth.

• They have nakedly overridden the idea of funding being based on a formula, in order to help their Labour mates.

• I also think that some shire districts are going to really struggle, and while they are a smaller share of funding in two tier areas, they deliver many of the things people notice most.

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James Callaghan to Cabinet, 17 November 1974

Will no-one think of Nick, 30?

Rachel Reeves certainly hasn’t. Her Budget delivered yet another sound walloping to the long-suffering hero of the social contract meme.

Check out the list:

• As a higher rate taxpayer Nick’s income tax up is up £658 as a result of the three-year freeze to income tax and National Insurance thresholds.

• This builds on the hit from last year’s lowering of NI thresholds, which already cost him £300.

• As a recent graduate his student loan repayments are up £239 as a result of the freeze to repayment thresholds.

• Nick’s dream of being able to save up for a house is bit further away, with a 2% increase in the tax on savings income.

• Nick’s rent up is likely to go up too - as the OBR point out, the government’s new ‘landlord tax’ is very likely to be passed on to Nick, because it “will likely reduce the supply of rental property over the longer run. This risks a steady long-term rise in rents”

As Nick doomscrolls on the train on the way in to work from his rented shoebox, he may not be heartened by the headlines:

• “Reeves spares 110 council houses worth over £2m from mansion tax” …

• “Families on benefits can be better off than those earning £70k” …

• “Reeves eases benefits rules for teenagers with ADHD”

Indeed, following the various policy decisions in the Budget spending on non-pensioner welfare spending will increase by 41% over this Parliament1.

Nick sometimes wonders whether he should ask for a 41% salary increase too.

No wonder so many of Nick’s pals are off to warmer places2. ONS have revised up figures for emigration - it turns out that 650,000 more British people have emigrated than ONS previously thought over the last couple of years. Of the nearly 1m British emigrants over the last four years, most are Nick’s age3.

Meanwhile, the people arriving tend to earn significantly less than Nick does.

Poor old Nick. We might all miss him if he goes. The Treasury most of all. Perhaps we should cut the guy a break?

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Amazingly, the results show that wait times have become significantly worse. We’ve gone from one third to two thirds of all driving test centres being fully booked out.

Compared with the last data from September 2024, waiting times have increased in every region. In the Midlands and South West England the average wait has risen to by three and a half weeks. In Scotland and the North East, the average wait time is now five and a half weeks longer.

Appointments are released on a rolling 24-week basis. If there are no tests available at a centre, you just can’t book anytime in the next six months. So the chart below is telling you that centres are now more or less fully booked out in all regions:

Zooming in on the last 13 months, waiting times in London and the South East, and in the Midlands and the South West, have remained extremely high, even closer to the upper limit of 24 weeks. Meanwhile, in Scotland and North East England, and Wales and North East England, average wait times have risen more sharply, nearing that same level.

What is likely happening here is the build-up of pressure in the South is spilling over into the North, Wales and Scotland. I have personally heard stories of young people forced to travel great distances to secure a test slot, as well as of tests being booked anywhere they can be found simply so they can later be exchanged for cancelled slots closer to home (I know someone in London who recently booked in the far north of Scotland for that reason)

In September last year, 76 out of 241 driving test centres were fully booked (31.5%). In October last year it was 112 out of 325 centres (34%). By October 2025, that number had ballooned to 214 out of 319 centres (67%).

This means that we have gone from one third to more than two thirds of all test centres that are fully booked out.

From Lerwick to Penzance, the whole country is more or less booked up now:

With many test centres in the South already pinned at the 24 weeks maximum (and so unable to worsen further), the most significant increases are now occurring in rural areas, where overspill demand is pushing up waiting times.

In response, the DFT have announced various classic Whitehall wheezes. A tiny number of military driving examiners have been asked to work on civilian tests. The department seems very focussed on tackling the symptoms of the problem: The DFT say they are “Allowing only learner drivers to book their own tests, not instructors on their behalf… Restricting driving test bookings to two changes before they must be cancelled and rebooked”. These are the classic displacement activities Whitehall loves to engage in when not facing up to an underlying problem.

Whatever the government are doing, it isn’t working. The DFT have put out a jaunty video saying they are “cutting driving test wait times”, but in reality waits are increasing.

It will soon be six years since the Covid pandemic. Yet young people can’t get on with their lives or get jobs because the DFT can’t get its act together to provide a basic state function. What a shambles.

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We now know that Reeves knew all along she wasn’t facing a big black hole.

The OBR told her on 17 September that the downgrade in productivity forecasts was offset by tax rich growth and inflation.

Despite that, the Treasury were happy to stoke the idea that there was a huge black hole that would mean that income tax rates would have to rise.

Why did they stoke this?

Simple: they wanted, on Budget day, to be able to reveal “more-positive-than-expected numbers” and then announce that there would be no change in rates - a nice budget “rabbit”. Hurrah!

It is hard to overstate how dishonest the government were.

On 5 November, we now know that Reeves knew that the OBR were forecasting billions of headroom against the government’s fiscal rules…but she still went on TV with an unprecedented pre-budget to create the impression that big tax rises were coming because of a deterioration in the public finances.

At no point in the process did the OBR have the government missing its fiscal rules by the large margins the government were briefing journalists about. (Remember the black hole of 20 billion or even 30 billion they told journos about?)

Reeves even argued two weeks before the budget:

“It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending.”

She said this, though she knew it wasn’t true - here is the balance she was looking at in successive forecasts:

Why did they announce no rate increase beforehand? At some point someone in HMT panicked that markets might react badly to this last-minute surprise, and so reversed course - which really did spook the markets.

As the former Chief Economist of the Bank of England Andy Haldane has pointed out:

“We’ve had month upon month of speculation - fiscal fandango, basically. And that’s been costly for the economy. It’s caused paralysis among business and consumers. It’s the single biggest reason why growth has flatlined, it’s been grounded in the second half of the year”

What the Budget really does is not plug an imaginary black hole - but increase spending (mainly on welfare) and increase tax.

In 2028/29 you have:

• £5.5 bn forecast deterioration

• £11.3 bn more spending

• £26.1 bn tax increase

And the spending figures are actually worse than they look, because of two further attempts to be too clever by half.

Fiscal fantasy football

Lying about how bad the forecast was is only one way the government has tried to be too clever by half.

To increase the headroom on her fiscal rules Reeves has done two things.

First, she has said that £6 billion of spending pressures on Special Educational Needs (SEND) will be “absorbed” by departments from 2028/29 on - i.e. the Department for Education.

As the OBR noted, no offsetting savings have been identified

The OBR note that:

If it were fully funded within the Department for Education’s £69 billion RDEL core schools budget in 2028-29, this would imply a 4.9 per cent real fall in mainstream school spending per pupil rather than the 0.5 per cent real increase planned by Government.

Bridget Phillipson has so far said three contradictory things about this.

• First the Guardian reported that Phillipson has told Labour MPs that the cost won’t be met by DFE but elsewhere in government. This simply raises the question - where is it coming from then?

• The Guardian also report that DFE are saying that “changes to the system would substantially bring down the growth of the Send budget”. But DFE are wary of telling Labour MPs this - they are on the edge of a welfare-style revolt against these potentially-controversial reforms already.

• On the media Phillipson claimed that this is an issue for the “next spending review.” But the £6bn hit is in 28/29. That’s firmly in this spending review and her budget for that year is already set (£109.2bn across early years, schools, FE and HE)

So that’s a mess.

The other thing Reeves has done to flatter the numbers is to reopen the spending review to and announce £1.4 billion of (completely unspecified) cuts, and then £4 billion and £4.9 billion of unallocated savings in the two years after the next election. Funny that.

As the OBR note

In 2028-29, the final year of the Spending Review, the government has reduced RDEL by £1.1 billion, more than explained by a £1.4 billion reduction to the overall envelope which has been allocated across non-NHS departments

After the end of the current Spending Review period in 2028-29, as is usual there are no departmental spending allocations and instead the Government sets an overall assumption for total RDEL spending. In the Budget, the Government has stated that it intends to reduce total RDEL spending that will be allocated to departments by £4.0 billion in 2029-30 and £4.9 billion (a 0.8 per cent reduction in the RDEL envelope) in 2030-31 compared to the assumption set at Spring Statement 2025.

Apart from anything else, this further dents Bridget' Phillipson’s claim that the Treasury or other departments are going to suck up her £6 billion bill. Not only are they not going to do that, there are another £1.4 billion of unexpected savings which some unknown departments (potentially including DFE) are going to have to find.

Slow hand clap

The two big moves in this budget were to:

• increase income tax: in a way that Rachel Reeves said last year would “would hurt working people” and breach her manifesto promise

• …in order to fund benefit spending: caused by the government’s defeat on welfare reform and decision to end the two child cap (which the government previously said was unaffordable).

The OBR note that:

Relative to the March 2025 forecast, welfare spending is expected to be higher across the forecast with the difference reaching £16 billion by 2029-30.

as a result of “higher benefit uprating… higher unemployment… higher disability caseloads and average awards… higher pensioner awards and caseloads [and] policy measures”. Only 1.7 billion of this is the Winter Fuel u-turn.

You’re only making it worse

In the end, the whole attempt to bait-and-switch and try and manage expectations to expect an income tax rate rise didn’t work.

People like the IFS still pointed out that the government had broken its promise not to increase national insurance and income taxes. Polls show that people thought the budget was unfair, and would make them worse off.

Labour’s manifesto said they would increase spending by £9.5 billion a year by 2028/29.

But spending is now forecast to be £179 billion a year higher in 2028/29 than the forecast Reeves inherited. In other words, she’s increased spending 18 times more than she said she would. That is why your taxes are going up.

The price is of dishonesty is really dumb tax rises. Raising thresholds in real terms is a regressive way to raise tax - compared to raising rates, people on lower incomes pay more. More than 1.7 million workers will be dragged into either paying tax for the first time or pushed into a higher band.

As the Resolution Foundation have pointed out, a 1p tax rise would have raised the same amount of money but been less costly than freezing thresholds for anyone with an income below £35,000, and all but the top 10% of the income distribution are worse off because of opting for threshold freezes over rate rises.

That makes it a surprising policy for a notionally social democratic government.

But it is only doubling down on what Reeves did in April, cutting national insurance thresholds. The government wanted to spin that was only paid by employers.

But the OBR said 76% is passed through into lower wages. So someone on £13k loses £500. Someone on £9K loses 5% of their income.

So for the second time in a row, a government that came to power promising not to increase tax on working people has increased tax in a way that is actually targeted on low income working people.

They have done this not because they think it is a good policy, but because they think they can fool people that they aren’t breaking their promises.

But as the polls show, no-one is fooled. What a mess.

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This means that if you are claiming UC and have one child you get £3,500 a year on top of your other benefits, and if you have two you get £7,000 extra, but if you have further kids you won’t get more money from UC. You will still get extra Child benefit though, as the two-child limit does not apply to Child Benefit.

The most recent DWP statistics show that in April 2025 there were 453,600 Universal Credit households that were not receiving the child element for at least one child because of the policy.

Despite being announced a decade ago, this is a policy still rolling out, because it only applies to births after 2017.

There were 651,300 households on UC with three or more children - so far the households affected by the policy represents 72% of all households with three or more children claiming UC.

This proportion has been increasing over time, as more households with three or more children include a child born on or after 6 April 2017. As this share grows and benefit levels grow, the policy is forecast to save taxpayers £3 - 4 billion a year.

The total number of Universal Credit or Child Tax Credit households or with three or more children has been falling quite substantially since the limit was introduced, down by about 200,000 in the last five years - the blue line below. Studies also show it has also raised employment rates a bit.

Who’s affected by the limit?

Of the UC households affected by the policy, just over half (251,830 or 54%) of households affected by the policy are single households and just under half (217,960 or 46%) are couple households.

Most have three children. Obviously there are more children for whom the parents don’t get additional UC payments in larger families:

There are more households affected in urban areas, with greater numbers of claims shown in a darker colour below:

The benefit cap

One issue to look out for in the Budget is the interaction with the overall Household Benefit Cap. This separate measure was introduced to stop people living in expensive areas from making very large benefit claims. There are currently 120,000 households subject to the household benefit cap. If the two child limit in UC is abolished, and the benefit cap rates are unchanged, more households will hit the Benefit Cap limits.

The exact interaction of the two child limit and the Household Benefit Cap is not straightforward to work out.

The benefit cap currently only applies to households that work less than 16 hours a week. 59% of households affected by the two child limit have someone in some kind of work, and most of them would be exempt from the Benefit Cap. On the other hand 194,000 have no-one in work, so could be affected by it. The affected households breakdown like this:

• Single, one earner: 101,280

• Single, no earners: 150,550

• Couple, two earners: 57,400

• Couple, one earner: 117,140

• Couple, no earners: 43,420

But on top of that the Benefit Cap also has a long list of exemptions. Still, we can assume that more people will hit the cap if the two child limit is abolished, and I suspect this will become the next campaigning focus for the Labour left.

I assume that Reeves will not change the Benefit Cap - any increase would score as a further wider cost on top of the £8.5 billion a year of extra spending caused by the summer’s welfare u-turn plus the u-turn on two child limit.

Conclusion

Polls show that by a margin of more than two to one people think the two child limit should be kept. This includes a large majority of Labour and Lib Dem voters. In recent weeks I have heard Labour people making the argument that there will be educational gains from ending the cap, but a recent IFS study finds no evidence of an effect.

On Wednesday Rachel Reeves will say that she has “no choice” but to once again break her promises and raise tax again. The reality is that this is a choice she is making, not least that she can spend more on benefits.

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I have some new data from an FOI request I made to HMRC, which gives us more up-to-date and granular information on how much migrants in the UK are earning.

The long and the short of it is that the decline in non-EU migrant average earnings that we have seen since the new immigration system was introduced has remained.

This matters, because the number of EU nationals working in the UK has declined over recent years, while the number of non-EU nationals has increased rapidly (see annex below), nearly doubling since 2020.

The new data allows us to compare migrants’ earnings to UK nationals of the same age. It shows us that median earnings for migrants of working age (aged 22-64) fell back relative to the earnings of UK nationals after the introduction of the new migration system, and they remain lower:

Obviously the migrants who were already here and earning more in 2021 didn’t suddenly all disappear - so to drag down the average in this way, the new arrivals since 2021 have to have been earning significantly less.

This is a very bad result because:

• Census data (the last good data on employment rates) showed that employment rates for people born outside the UK were also lower.

• Given the UK problems with housing and infrastructure, we really need migrants to be earning a large premium on natives to offset the negative effects of adding more people on productivity and living standards. I have written before about this - adding more people pushes up housing costs, and further congests public services and infrastructure). So having migrants on average earning less than UK nationals of the same age is really not great for living standards.

HMRC normally produce the data without any age breakdown. And some people will say we should not compare like-for-like - a key argument that migration advocates make is that migrants are more likely to be working age, so more likely to be earning.

But there are several things to say about this.

First, there is just something a bit strange about comparing completely different people. For example. In the published HMRC data 9% of the UK nationals they have data on are under age 22, compared to just 3.3% of the non-EU nationals and 0.1% of the EU nationals.

Young people under age 22 earn far less (about 40% of what prime age people earn) and so drag the UK average down. We can of course make this comparison and ignore this difference in composition, but doing so it conceals as much as it reveals.

Second, the argument that migrants were more likely to be working age was probably more meaningful for policy in the past than it is now. During the peak period of EU migration from the mid-2000s to the late 2010s we did for a time have what seemed to be a ‘circular’ model of migration - there were a lot of single Polish guys who came, worked hard, didn’t go to the doctor much, and then left again.

But the mix under the new system is very different - people are now coming from much poorer countries and are much more likely to stay for good. So we should now be more interested in their likely long term earnings trajectory rather than just a snapshot at one moment in time.

If non-EU migrants are earning less than similar people of the same age and if they are then going to stay for good and ultimately retire here, that has big (negative) implications for their fiscal impact over the whole life cycle.

53% of households pay in less in tax than they tax out in public services and benefits, according to ONS. So we want to make sure that people who come are high earners if we want them to be net contributors.

Staying on

I have written before about changing staying-on rates for students. As the ONS has noted:

More non-EU+ students and their dependants have been staying longer, and nearly 1 in 2 transitioned to a different visa type after three years from YE June 2021; an increase from 1 in 10 after three years from YE June 2019.

The same growth in staying on is also true more broadly.

As a piece for the Migration Observatory notes: “Attrition rates are considerably lower among non-EU employees who entered the workforce between 2020 and 2023, reflecting the change in non-EU migration patterns post-Brexit. In other words, non-EU employees became more likely to stay in the employee workforce in this period.”

Of those who came to the UK and started working here in 2017, 33% had gone within three years. Of those who arrived in 2021 the exit rate was half that - just 16%. So we should be more interested in the likely long term trajectory of there migrants earnings.

Catching up?

The Migration Observatory piece I linked to above makes the point that migrants earnings increase relative to the (all-age) average the longer they are in the country. And part of the story about the recent decline in the average is indeed surely about having lots of new low earning new migrants.

But this more optimistic story about migrants’ earnings “catching up” still doesn’t try to compare migrants’ earnings to people of a similar age - instead they compare to a whole economy average, which includes much younger people. We would expect their earnings to increase relatively as they get older, as well as being in the country longer.

But the Migration Observatory data also shows that none of the cohorts who have arrived each year since 2014 have seen their earnings catch up with established UK workers who were already present when the HMRC data starts in 2014 - this is also a disappointing result, which suggests to me that we should aim for a higher earning mix.

Conclusions

This newer FOI data shows how off-track migration policy has been. We want any people we allow to come here to be the sorts of people who are very highly skilled and so earning significantly more than UK peers. But at present the median non-EU employee is actually earning less than people of the same age.

That means existing citizens are getting the downside from further pressure on housing, infrastructure, public services and the capital stock, but are not (currently) on track to get a massive fiscal gain to offset or justify that.

Previously you could argue that the within age-group comparison I have shown here mattered less, because more migration was temporary. But as the mix has shifted to more people staying for good, so making a like-for-like comparison matters more.

Even doing a “snapshot” analysis of the fiscal impact of migrants is tricky enough. For what it’s worth, all the historic studies listed by the Migration Observatory suggest non-EU migration has been a net fiscal negative. The Migration Advisory Committee have promised to return to this tricky issue of “life cycle” fiscal analysis in future publications, and having seen the data above I think looking at migrants’ earnings by age must be an essential part of that.

Everything I have written above is looking at the median earnings too. If even the median non-EU migrant is earning less than UK nationals of the same age, that implies half of people are earning even less than that. That in turn suggests to me that there is plenty of scope to reduce migration by making it more selective, and far from being negative for the economy, the overall effects on living standards would be positive.

While I expect migration numbers to fall over the coming years (partly because of the 2023 reforms), the policy moves the government are making are mainly in the wrong direction.

Abandoning plans to tighten the family route will mean more people coming with with low or no earnings. Plans for a EU mobility deal would by definition allow people to come who currently wouldn’t earn enough to meet the requirements for a work visa. The abandonment of Rwanda has left the government with no plans to reduce asylum, and claims have increased to a record high - this is the worst form of migration from an economic point of view, and many of those currently being granted asylum are really mainly motivated by the desire to move to a higher income country.

I have said it before and I will say it again: a more selective approach would be better for living standards.

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Annex -

Number of employments held by EU and non-EU nationals (source: HMRC)

2. Rachel Reeves said she is ‘confident’ that economic growth will deliver ‘money for our public services without increasing taxes’. REEVES: ‘I am confident the prize at the end of that is economic growth and with economic growth comes more money in the pockets of working people, better jobs in all of our communities, and money for our public services without increasing taxes because the tax receipts come in from a growing economy’ (BBC Newscast Podcast, 23 September 2024).

3. Rachel Reeves said she wanted to ‘protect’ working people from tax increases. REEVES: ‘Well, we made a commitment in our manifesto around working people, and we said because we understood the cost of living pressures that working people were facing, we were not going to increase the basic higher or additional rates of income tax, National Insurance or VAT. We want to protect working people. We also made a commitment to cap corporation tax at its current rate for the duration of this Parliament, and we will stick to our manifesto commitments’ (BBC Radio 4, Today, 23 September 2024).

4. Rachel Reeves said Labour will not raise taxes on working people. REEVES: ‘But we made a commitment in our manifesto that we’ll be sticking to, which is that we don’t want to increase taxes on working people and we will be keeping income tax, national insurance and value added tax at the rates they are for the duration of this Parliament, I would like taxes on working people to be lower, but I believe that you can’t make promises without being able to say where the money is going to come from’ (Bloomberg, 5 August 2024).

5. Rachel Reeves said people will have more money in their pockets under Labour and she wanted to ‘bring the tax burden down’. REEVES: ‘I want to bring that tax burden high, down because I want to make Britain the best place to start and grow a business, and I want working people to keep more of their own money in their pockets, and that’s what people will have with this new Labour Government’ (Bloomberg, 5 August 2024).

6. Rachel Reeves said she would ‘stick to’ her promise to not raise income tax, national insurance or VAT. STUDIO: ‘Can you at least rule out further changes to pension tax relief in the budget, as is being mentioned or suggested in some papers?’ REEVES: ‘I’m not going to write a budget on this program, but the commitments we made in our manifesto not to increase national insurance, vat or income tax and also the triple lock, our commitments in our manifesto stand. We will stick by those but there will be more difficult decisions to come in the budget because of the inheritance that we now face ’ (LBC, 30 July 2024).

7. Rachel Reeves said that the commitment not to raise taxes on working people still stands – after claiming there was a £22 billion blackhole in public finances. STUDIO: ‘And you said, more difficult choices to come in the autumn statement is the manifesto pledge on income tax, VAT and National Insurance. Is that still ironclad, or does this revelation of the black hole change things immediately?’ REEVES: ‘The commitments, all the commitments we made in our manifesto, still hold. I said that taxes on working people are too high, and that’s why I made that commitment in our manifesto, not to increase income tax, national insurance or VAT I stand by those commitments’ (Sky News, 30 July 2024, archived).

8. Rachel Reeves said she would not raise taxes on working people. REEVES: ‘I said that taxes on working people are too high, and that’s why I made that commitment in our manifesto, not to increase income tax, national insurance or VAT I stand by those commitments. I repeated them at the dispatch box yesterday’ (Sky News, 30 July 2024).

9. Rachel Reeves said she wants to see taxes on working people be lower. REEVES: ‘I want taxes on working people to be lower’ (CNBC, 29 July 2024).

10. Rachel Reeves said it was ‘not true’ that Labor would put up taxes. STUDIO: ‘You’re going to have to put up taxes aren’t you?’ REEVES: ‘Well, that’s not true. National Insurance stayed at the rates it was for the first term of the Labour government. We made a commitment not to increase income tax, National insurance or VAT for the full term of, a Labour government for a simple reason’ (BBC News, 5 July 2024).

11. Rachel Reeves said Labour will not increase taxes on working people. REEVES: ‘That is why I have restated our commitment not to increase taxes on working people—there will be no increases in income tax, national insurance or VAT. That is the commitment on which we campaigned in this election, and I stand by that commitment’ (Hansard, 29 July 2024, Vol. 752 Col. 1047).

12. Rachel Reeves said there was ‘no need’ to increase taxes ‘beyond the limited increases that [Labour have] already set out’. REEVES: ‘Well, look, we’ve made that commitment about the key taxes that working people pay income tax, National Insurance and VAT. But there is no need to increase any taxes beyond the limited increases that we’ve already set out’ (The Times, What I Wish I’d Known, 21 June 2024).

13. Rachel Reeves said she doesn’t ‘wake up in the morning thinking, how can I tax people more’. REEVES: ‘I’m not going to write five years worth of, of of budgets. But I’ve been really clear that I don’t see the way to prosperity as being through higher taxes. I see it through higher growth. I don’t wake up in the morning thinking, how can I tax people more’ (The Times, What I Wish I’d Known, 21 June 2024).

14. Rachel Reeves said she is going to focus on growth not ‘fiddling around on tax rates’. REEVES: ‘I guess, you know, if I do become chancellor, where is my focus going to be? Is it going to be on fiddling around on tax rates, or is it going to be on doing the things to unlock growth and it’s going to be focussed on growth. That is what I’m going to come into the Treasury with a single minded determination to do, because if we can fix that, if we can get our economic growth rates up, we can achieve so many of the things that I came into politics to achieve’ (The Times, What I Wish I’d Known, 21 June 2024).

15. Rachel Reeves said aside from the tax rises she set out in the general election Labour didn’t ‘need to raise’ any additional taxes. STUDIO: ‘You haven’t ruled out increasing the taxes that you said you believed in increasing when you were a backbencher. You haven’t ruled out an increase in capital gains tax. You used to believe it was a good idea. You haven’t ruled out an increase in inheritances...’ REEVES: ‘We don’t need to increase any of those taxes. We’ve set out the taxes...’ (BBC Radio 4, Today, 19 June 2024).

16. Rachel Reeves said there will be ‘no increases in income tax, national insurance or VAT’. REEVES: ‘Working people are by definition those people who go out to work to earn their income. They’ve had a tough time these last 14 years. We want to make it a bit easier, which is why we said there’ll be no increases in income tax, national Insurance or VAT for the duration of the next parliament because we don’t want to make life even harder for working people who have been hard hit by this Conservative government’ (BBC Radio 4, Today, 19 June 2024).

17. Rachel Reeves said Labour’s plans will break the UK out of a ‘high tax, low growth’ loop. REEVES: ‘He’s seen that we have changed, but he’s also saying that the Conservative Party have changed at the become a high tax, low growth party. We need to break out of this. And that’s what our plans will do’ (BBC Breakfast, 19 June 2024).

18. Rachel Reeves said she will not increase ‘income tax, national insurance or VAT for the duration of the Parliament’. REEVES: ‘I have committed that we will not increase, the Labour government will not increase income tax, national insurance or VAT for the duration of the parliament if we win the general election in four weeks time, that is my pledge to working people’ (LBC, 5 June 2024).

19. Rachel Reeves said she will not raise taxes on working people. REEVES: ‘Absolutely clear that Labour will not be putting up taxes on working people’ (ITV News, 5 June 2024).

20. Rachel Reeves said there will be ‘no increase in income tax, national insurance or VAT’ if she is Chancellor. REEVES: ‘I’ve made the promise no increases in income tax, national insurance or VAT if I am Chancellor of the Exchequer. Rishi Sunak lied last night. He lied about Labour’s policies’ (ITV News, 5 June 2024).

21. Rachel Reeves said she ‘will not raise taxes on working people’. ‘If I become Chancellor, I will not raise taxes on working people. That is my promise to you’ (Rachel Reeves, Twitter, 5 June 2024).

22. Rachel Reeves said she will ‘not be raising taxes on working people’. ‘The Prime Minister lied. Labour will not be raising taxes on working people’ (Rachel Reeves, Twitter, 5 June 2024).

23. Rachel Reeves said she ‘didn’t come into politics to raise taxes on working people’. ‘I didn’t come into politics to raise taxes on working people. Labour will not put up your income tax, national insurance or VAT’ (Rachel Reeves, Twitter, 4 June 2024).

24. Rachel Reeves said Labour’s plans ‘don’t require any further increases in taxes’ other than the tax rises set out in Labour’s manifesto. STUDIO: ‘Now at the event here in Derbyshire. You just said that there are no additional tax rises needed beyond the ones that are set out. How long does that promise last for?’ REEVES: ‘Well, our manifesto sets out what we would like to do in the next Labour government and all of our promises. The 40,000 additional appointments a week in the NHS, the 6500 additional teachers in our schools. All of those are fully costed and fully funded. They don’t require any further increases in taxes’ (Sky News, 28 May 2024).

25. Rachel Reeves said she wanted taxes to be ‘lower’ and ‘income tax and national insurance wont go up’. REEVES: ‘So I want taxes on working people to be lower, but I’m not going to make commitments without saying where the money is going to come from. But I can make the commitment that income tax and national Insurance won’t go up under a Labour government’ (GB News, 28 May 2024).

26. Rachel Reeves said she is not in the ‘business’ of ‘tinkering’ with tax rates. REEVES: ‘The Tories have taken taxes to their highest level in 70 years, with 26 tax increases in this Parliament alone. I’m not in the business of tinkering with tax rates’ (Sky News, 28 May 2024).

27. Rachel Reeves said Labour’s manifesto was not about ‘more tax increases and tax changes’. REEVES: ‘That is what our manifesto is all about. Not more tax increases and tax changes, which is the Conservative way now’ (Sky News, 28 May 2024).

28. Rachel Reeves said she ‘voters can have confidence’ that Labour’s plans do not require further tax rises than those they have set out. REEVES: ‘There is nothing in our plans that require any further increases in taxes. I have confidence in that. Voters can have confidence in that...’ (Sky News, 28 May 2024).

29. Rachel Reeves said she had ‘no plans for increased taxes’. REEVES: ‘Well, we have no plans for increased taxes. And indeed we said at the weekend that for the duration of the next Parliament, there will be no increases in income tax and national insurance. I would like those taxes to be lower. But I’m not going to make any unfunded commitments to cut taxes without being able to say where the money’s going to come from’ (Sky News, 28 May 2024).

30. Rachel Reeves said people should not be worried that Labour will take money out of their bank accounts by putting up tax. STUDIO: ‘Rachel Reeves, reports that savers are taking money out of their accounts before a Labour government. Are they right to be worried?’ REEVES: ‘No. A Labour Government is determined to grow the economy and to ensure that people have more of their own money in their pockets. And after 14 years of an economy that has flatlined, 25 Tory tax rises and public services that are on their knees, it’s time for change in Britain’ (GB News, 5 January 2024).

The government have been briefing against the CPS, saying that they could have gone ahead with the prosecution. But the CPS letter makes it clear that was impossible.

We already knew that the government decided not to give the CPS what it needed.

Today we learned they told CPS were instead going to agree with the defendants, destroying any hopes of a successful prosecution. The CPS say:

On 14 August 2025 a meeting took place between our counsel team, a CPS lawyer and the DNSA. In that conference, the DNSA told counsel that he would not state in evidence, if asked, that China posed a risk to our national security at the material time, either in open Court or in a private session. He would also not accept that China was opposed or hostile to the interests of the United Kingdom at the material time. He would accept, if asked, that China was not an enemy in the ordinary meaning of the word, and would not answer the question, if asked, whether China is an enemy within the meaning of the OSA. He would say that is a matter for the jury.

Wow.

The whole castle of lies the government has built is coming crashing down.

Lie 1

Starmer has repeatedly told the Commons that Matt Collins, the Deputy National Security Adviser, declined to describe China as an enemy because it was not the “policy position” of the last government

On 7 October the PM told journalists on his India trip:

“what matters is what the designation was in 2023, because that’s when the offence was committed… As a prosecutor, I know that if you’re going to prosecute a case like this, it is what was the situation at the time that matters. You can’t prosecute someone two years later in relation to a designation that wasn’t in place at the time…

But the DPP says today that is categorically not the case, and now how the law works here:

The requests made by counsel asked about the actual threat posed by China during the relevant period. The test was therefore positively not what the then Government was prepared to, or did, say in public about China (whether framed as its policy or otherwise, and whether as a matter of fact true or not), but rather whether China was - as a matter of fact - an active threat to national security.

Lie 2

The Prime Minister said “yes” when asked if only the DNSA had anything to do with this, and said he hadn’t discussed his evidence with anyone. But the CPS make it clear there were multiple discussions about what the DNSA would say:

Lie 3

The Prime Minister said: “There was no further submission of evidence, one way or the other, after any discussion in September” (he was referring to the meeting on 1st September)

But the CPS met say they met the Deputy NSA on 9 September to request more from him - and he said no.

Lie 4

After the original Sunday Times report, Home Secretary Shabana Mahmood originally denied the 1st September meeting had taken place.

She said: “I don’t recognise that reporting about a meeting, I’m not aware of any such meeting taking place.” (Telegraph, 5 October)

The Prime Minister’s Official Spokesman (PMOS) also told journalists this meeting had not happened. The PMOS “denied that there was a meeting in which National Security Adviser Jonathan Powell said China would not be classed as an enemy in submitted evidence”. (Guido Fawkes, 6 October)

It was not until Thursday 23 October that the Solicitor General admitted this meeting took place:

“There was a meeting on 1 September in relation to this matter”

Lie 5

The Attorney General implies in his letter tot he joint committee that the CPS asked him on 3 September not to share the news that the prosecution was to collapse “any further” or with ministerial colleagues.

The DNSA and NSA say in their letter they were not allowed to tell ministers:

But the CPS say they expressly allowed him to inform Ministers:

“at the point a decision to offer no evidence was made, the Attorney General was informed, together with the reasons for it. This took place on 3 September 2025. Later that day, I met with the Cabinet Secretary and likewise informed him of the decision and the reasons for it. It was agreed that he might inform a limited group, including some ministers. An outcome of that meeting was that I decided that a further meeting between the DNSA and counsel should take place, to make absolutely certain that the DNSA had been given a full opportunity to state his position. That further meeting took place on 9 September (as noted above) following which the prosecution position was confirmed.”

Lie 6

Right from the off the government has tried to pretend it didn’t know why the trial collapsed, and had nothing to do with it.

On 15 September Security Minister Dan Jarvis said it was an “entirely independent” decision by the CPS to drop the prosecution. He said he was “unable to talk” about the reasons for the decision or “speculate on the reasons”.

“…he is asking me about decisions made by the CPS that are entirely independent of Government. This was an independent decision made by the CPS, and it is not for any Government Minister to speculate on the reasons behind it.”

“Government Ministers should not speculate on the reasons provided for a particular decision by the Crown Prosecution Service, which is independent of Government.”

“I am not able to talk about why the CPS has decided to make this decision.”

“The decision was communicated this morning. This was an independent decision, but I give him and others an assurance that we will, of course, look incredibly closely at it.”

But we now know there was no surprise at all. The CPS letter lays out months of warnings that the government’s position was undermining the prosecution. CPS say:

• On 26 February 2025, following receipt of the DNSA’s second statement dated 21 February 2025, which fell short of answering the question whether at the relevant period China was an active threat to national security, investigators were asked to establish whether the DNSA would discuss risks beyond economic risks. The same day, the answer came back that the DNSA did not feel that he could elaborate any further in this format, but if asked about it in evidence he would be “prepared for it”.

• In May 2025, the Cabinet Office was approached by investigators on the CPS’s behalf to ask whether the DNSA would be willing to put into a “closed” statement (that is, a statement with a security classification which would not be given in open court) matters that he considered to be too sensitive for inclusion in his open statements.

• On 3 July 2025, a meeting took place between our specialist CPS prosecution team and a civil servant from the Cabinet Office. The question posed by counsel: “comment on whether China is a State which, during the period 31 December 2021 to 3 February 2023, posed an active threat to the UK’s national security” was repeated. A discussion took place as to what the DNSA would and would not be able to say.

• On 10 July 2025, in a follow up to that meeting and following a conversation with counsel, the Cabinet Office were told by email that: “After reflecting on the suggested wording “active espionage threat”, we do not consider that this alone goes far enough for the purposes of s.1. OSA 1911. To prove the offence the jury would need to be satisfied so that they were sure that, at the material time, China was an enemy. That China was an active espionage threat would not be sufficient without examples which adequately demonstrate the nature and extent of the threat, such as to ground a finding that China was an enemy.” A further witness statement was provided by the DNSA on 4 August 2025.

• On 14 August 2025 a meeting took place between our counsel team, a CPS lawyer and the DNSA. In that conference, the DNSA told counsel that he would not state in evidence, if asked, that China posed a risk to our national security at the material time, either in open Court or in a private session. He would also not accept that China was opposed or hostile to the interests of the United Kingdom at the material time. He would accept, if asked, that China was not an enemy in the ordinary meaning of the word, and would not answer the question, if asked, whether China is an enemy within the meaning of the OSA. He would say that is a matter for the jury.

• On 9 September 2025, a second conference took place with counsel and the CPS. In the conference, the DNSA confirmed to counsel that, in relation to the 2021 -2023 situation, he would not say that China was an active threat. Successive governments had declined to categorise it as such. He would be unable to say it was an explicit threat, but it would not be a ‘no’. If counsel were to ask anything outside the four corners of the statements, the DNSA would not go there.

Conclusion

As someone who is sanctioned by China I feel betrayed.

The British government not only wouldn’t help prosecute these men but sabotaged the prosecution by telling the CPS they would agree with the defendants.

Ever since they have spun and lied and misdirected and gaslighted in the most shameful way.

But now the castle of lies is collapsing. There is more to come.

Soon the only question will be: who is resigning for this?

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