Sovereignty without Illusion

8 Apr

Written By Miles Saltiel, Robert Armstrong & Dr Theo Zenou

Britain has started to take back control, but much of its sovereignty is still tied up in external systems across law, energy and defence. Brexit was only the first step.

This paper argues for finishing the job. It calls for stronger growth built on stable rules and competitive taxes, and for reversing a series of costly domestic policy mistakes. It sets out reforms to healthcare, pensions and land use aimed at restoring state capacity and unlocking growth.

It also makes the case for a more practical approach to trade, based on mutual recognition, and for a renewed focus on the Atlantic, backed by higher defence spending and rearmament.

This is a programme for the next government, offering a clear plan to restore British sovereignty, competitiveness and resilience.

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All prices were taken at close of business in London, 10 December 2025.

Authors

Miles Saltiel is a Senior Fellow of the Adam Smith Institute. His publications include A Manifesto for Lord Mandelson and After the Rose Garden, on dealings with the Trump administration; On Borrowed Time, which argued for the reform of “age-related” expenditures to relieve otherwise insupportable fiscal pressure; and No reason to flinch, which argued against insulating the NHS from reform by comparing it to equivalent regimes internationally. He led ASI teams whose proposals on Grexit and Brexit were shortlisted. He also wrote The UK’s €1tn Brexit Counterclaim for Civitas and What Just Happened?, about the 2008 financial crisis, for Policy Exchange.

He read PPE at Oxford and wrote his MA dissertation on Japanese business and government at Sussex. His early career was in tech corporate finance and recoveries, where he became number two in Marconi Projects. He subsequently moved into investment banking, joining the WestLB Group as Head of Equity Research, Emerging Markets, before leading London-based Tech Research, where he was voted one of the UK’s top fifty in the New Economy, and becoming the group’s senior tech investment banker.

Robert Armstrong is Director of the Institute for Free Trade, where he serves as author, researcher and manager of the secretariat, responsible for papers on environmental economics, public economics and international trade policy. He is also a Senior Advisor to the New Lines Institute for Strategy and Policy in Washington DC. He was formerly a staffer in the European Parliament in Brussels and Strasbourg, responsible for administrative and organisational affairs as well as constituency case-working and political events. He read PPE at Hertford College, Oxford.

Dr Theo Zenou is a Visiting Fellow of the Australian National University, having recently left his role as a Research Fellow at the Henry Jackson Society. He is the author of features, essays and reviews for the Economist, Financial Times, Guardian, Spectator, Times and Sunday Times, Times Literary Supplement, Washington Post, and others. He completed his PhD in history at Cambridge University, where he also taught undergraduates. He was formerly a Theodore Sorensen Fellow at the John F. Kennedy Presidential Library and a Visiting Researcher at Boston University. Prior to his doctorate, he worked in television and studied film and history at the Universities of Westminster and Edinburgh.

Acknowledgements

The authors wish to express their appreciation of the contributions of Jasper Ostle, Mitchell Palmer and Viggo Terling of the Adam Smith Institute; and Tom Mitchell of the Henry Jackson Society

Foreword

Britain is in a bad place. A dangerous place, too. The US is withdrawing from Western alliance structures just when we are at our most militarily depleted and financially exhausted. The world order that has existed since the Atlantic Charter of 1941, based on territorial integrity and the rule of law among nations, is crumbling, leaving us exposed.

Paradoxically, we should be in a stronger position than our neighbours. We are not tied to a declining trade bloc. We have unique links to the US, the Anglosphere and the wider Commonwealth. We have largely resumed the right to make laws that suit our interests. Yet we have shown no interest in exercising that right.

Brexit, on its own, did not add or subtract a farthing from our national wealth. Even if we allow our leaders the coronavirus in mitigation, their failure to do things differently has been striking. Outside the EU, we have stuck to - or exaggerated - the model that has turned Western Europe into the slowest-growing region of the planet: high taxes, high welfare spending, unaccountable bureaucracies, expensive energy, expansive interpretations of human rights. The previous government lacked the will to overcome the institutional resistance of the administrative state and the judiciary. The present one actively favours a bigger state and a more powerful standing bureaucracy.

Hence this paper, a unique collaboration among three think-tanks, that sets out a plan to do what should have been done in 2020, namely to make Britain solvent, competitive and democratic. To achieve these goals, we first need to fix the plumbing, and the pages that follow show what that would involve. Becoming properly sovereign means taking back regulatory control from the EU, the interpretation of human rights from the ECHR and energy policy from the COP process. It means shifting power from unelected officials to elected representatives.

In parallel, we need to tackle the legislative and regulatory causes of our lack of productivity, from intrusive employment laws to an unreformed healthcare system. We need to restore the effectiveness of our police and Armed Forces. We need to enable house building. We need to repeal a great many laws, some passed only recently, others dating back to the Blair/Brown years.

The authors show how to do these things, not with slogans or abstract policy statements, but with concrete legislative proposals. I hope that Opposition politicians with aspirations to office will read it - and perhaps some civil servants, too. There is, after all, no point in having recovered sovereignty if we refuse to make use of it.

Daniel Hannan | The Lord Hannan of Kingsclere

December 2025

Executive summary

We call for the UK to round off the job of bringing home its sovereignty, thoughtlessly outsourced since WW2. Brexit laid the ground to recover trade sovereignty from the EU, gilded, gelded and in consequence, all too given to gestures. This story is far from over. Constitutional and border sovereignty remain outsourced to international authorities, in particular the ECHR system; energy sovereignty remains outsourced to the COP process under the Paris Treaty; security sovereignty remains outsourced to the US, to whom our armed forces have become de facto auxiliaries. Hurricane Trump offers the occasion for the UK to correct these misadventures as well as the accumulation of home-grown challenges to sovereignty, specifically to:

remind ourselves that growth comes from stable regulation and taxation, presided over by a state which knows its limits and places priority upon competitiveness.
take a lead where the UK faces challenges in common with others, that is demography, fiscal vulnerability, other aspects of state incapacity, the “good problems” of peace and prosperity, and tech disruption;
rectify our own self-harming legacy of gesture-politics, pushing net zero and protected characteristics, plus more recent legislative misadventures in education, employment, housing and public law;
move on from the platitudes of levying taxes on, or withdrawing benefits from, those not on our team, instead turning public healthcare from a liability into an asset; reversing the bloat in the national balance sheet accumulated over the last century; reforming state pensions; and instituting land-use reform, with initiatives promising over £1.7tn of government receipts, representing 60% of public debt, as well as stimulating economic growth;
enter into case-by-case trade relations with those willing to do so, based on mutual recognition of standards; and rectify our own barriers to trade rather than getting on our high horse about the self-defeating policies of others; and
focus on the central strategic theatre of the Atlantic, resuming our role as an intercontinental broker; cultivating our interests in other selected theatres; raising defence spending to 5% of GDP on honest accounting; and re-arming for operational resilience, doubling the strength of the army to four combat divisions.

We take it that the current government is too troubled to act; and that change can only come from its successors, to whom we present a prospectus of legislative reform ready for blackletter drafting.

Section	Summary
1. Problematic demography	Britons just aren’t making enough babies. This hurts the economy and public finances. The technology coming up doesn’t help. So, we’ve doubled down on immigration. Outcome: intensifying social tensions.
2. Fiscal recklessness	High levels of debt, deficit and spending stymie animal spirits. We’ve had no growth for a decade. Instead, we’ve got public fragility, budget chaos and lost trust. A sterling or gilt crisis can’t be ruled out. Proposals from elsewhere focus on current expenditure and income. This paper prefers to look at the bloated public balance sheet.
3. Machinery of government	The Treasury, the Cabinet and Prime Minister’s Offices are all out of kilter Officials lack applicable skills. Ministers cannot appoint and promote their own people
4. Inopportune policy initiatives	The success story of UK energy has been shuttered. Hard-won improvements in education standards are threatened. Housing and labour flexibility is off the agenda. New hiring is stifled. Public administration faces new vexations. All add to failed experiments on equalities and human rights.
5. The “good problems” of eighty years of peace and prosperity	Eight decades of good times have left us comfy and complacent. Old infrastructure is creaking; new is beyond us. The NHS is on crutches. Public pensions are a black hole.
6. Technological disruption	Even if the AI boom turns to bust, its effects are upon us. It particularly threatens our surfeit of humanities grads. The country is scrambling to keep up. Our language may help but our energy policy is a catastrophe.
7. Recommendations for fiscal policy	Tax and spending reform are essential but won’t do the trick alone. Better to sort out regulatory hold-ups and slim our balance sheet. The big wins are land reform, turning the NHS from a liability into an asset and reforming pensions. Our proposals would pay off some 70% of the UK’s indebtedness. We also propose billion pound prizes for technologies reducing demand for immigrant labour.
8. Recommendations for machinery of government	Treasury modelling needs to be goosed up; picking on the OBR is self-destructive. Let’s heap rewards and honours upon civil servants who bring down costs permanently. Let’s take meddlesome NGOs off the board.
9. Overseas challenges	Brexit was a start, but the process is unfinished. We need to get over the grim internal quarrels. There remains much to do in trade and security.
10. The current trade emergency	Trump’s tariffs have set the cat among the pigeons. A high moral tone won’t do, as Britain spent fifty years hiding behind EU protectionism. Our initial position with the US itself is better than most. Domestic competitiveness counts for more than trade deals. Much can be achieved with mutual recognition agreements.
11. Strategic reliability	Realism about strategic supplies should not extend to reflex protectionism. The UK is lucky enough to have a global network from which we can qualify friendly sources.
12. Treatment of rivals	Britain should refrain from naïve anti-dumping measures. Domestic competitiveness counts for much. Sanctions rarely work.
13. The deregulation agenda	The UK needs to be a more attractive investment destination. This means predictable, pro-enterprise regulation and taxation; reliable law and order; and weaving competitiveness into every aspect of public policy, including immigration.
14. Defects of the post-WW2 trading regime	The big blocs have been gaming free trade for decades. Non-tariff barriers replaced duties, with Brussels a conspicuous offender. The Customs Union was rigged against our goods; the Single Market does nothing for services. The UK should avoid picking sides in future trade-wars.
15. Rebalancing legacy relations	The international legal system has broken down. The COP, EHRC, ICC and UNRC regimes have gone rogue. To recover sovereignty, the UK needs to be clinical.
16. Recommendations for trade	National policy should diversify goods trade with reliable friends; cultivate service trade with Mutual Recognition Agreements; bring back regulatory sovereignty to the UK and parliament; and cultivate local regulation which promotes competitiveness.
17. The UK’s security predicament	Brexit was only a beginning. The country has yet to set a clear course. The country should play to our strengths in hard and soft power.
18. Strategic priorities	Commitments to increase defence spend are welcome but smack of dodgy accounting. Britain needs to set our strategic priorities and arm up accordingly.
19. Strategic model	Vietnam offers a successful model of cultivating sovereignty amid stronger and unruly neighbours.
20. The North American pillar	The Atlantic is key to our security; the US our primary ally. This doesn’t justify reducing ourselves to Uncle Sam’s auxiliaries. The UK should build up our complement of planes, ships and drones. In the short run, the country cannot do without American supply, but we should build up domestic capacity.
21. The European pillar	As ever, the European continent offers both threat and support to the British Isles. Britain needs to join with our allies to offer more than tripwire deterrence. The army needs to double to four combat divisions. As European mercantilism continues to bedevil industrial co-operation, our stance should be constructive but robust.
22. Medium priority theatres	Australia and New Zealand are natural allies against Chinese expansionism. East and Southeast Asia likewise. The UK can also build on its strong position in the Gulf.
23. Low priority theatres	Save for the Falklands, the UK has little strategic interest in Latin America, Africa, or Central and Southern Asia.
24. Recommendations for foreign policy and security	The UK must pick its battles and see them through. It needs to develop clear messaging based on hard power. There are rewards in brokering between the US, EU and elsewhere. More money needs to be spent more wisely.

Legislative proposals

The recommendations of this paper require new legislation, where the authors stand ready to work up draft bills, orders in council and or statutory instruments, to achieve the following:

Table 1. Legislative recommendations

Proposed legislation	Rationale
A Derogation Act, to authorise the government to derogate forthwith from selected elements of the Trade and Co-operation Agreement with the EU, with a view to renegotiation.	Rebalance EU relationship See sections 9, 10, 14, 17 and 21.
A Machinery of Government Act to allow for performance-based rewards for civil servants, early retirement for non-performance, and lateral recruitment from the private sector; empower Ministers to appoint their own Permanent Secretaries and their first- and second-line reporters; including from outside the Civil Service; establish revised budgetary procedures, including a ten-year OBR horizon, exposure drafts for parliamentary debate and revived pre-Budget purdah; rebalance responsibilities as between the Treasury, the Cabinet Office and the Prime Minister’s Office; and reform unfunded pension obligations to government employees	Streamline government See sections 3, 5, 6 and 8.
A Prize Act establishing rewards of £1bn apiece for technologies taking 90% of the labour cost out of each of fruit-picking, nursing and social care.	Reduce demand for low-skill immigrants See sections 1 and 7.
A Public Law Act to codify and delimit bases for challenging civil and military official action; and establish public interest criteria for making such challenges; and end tax benefits/state funding for NGOs campaigning against public policy.	Rebalance relations between executive, judiciary and legislature See sections 3, 5 and 8.
A Public Safety Act to adjust police pay scales to reward frontline/operational skillsets; build 40,000 prison places; implement legal protections for officers; reallocate funding from welfare spending to policing; reduce the overheads of the Department of Justice and HMPS, consequent upon the repeal of the Equalities Act and the Human Rights Act; and repeal those sections of Health and Safety legislation thwarting public safety; as well as those sections of the Online Safety Act ,etc, diverting resources to non-crime hate incidents and online policing	Restore public confidence in policing and address the £250bn annual direct and indirect cost of crime See section 13.
A Regulation Act to establish a framework for the continuous review and simplification of legacy restrictions; make regulations subject to sunset clauses; and enable qualified private persons to call for the authorities to show cause for over-officious regulations, with a view to promoting competitiveness.	Reduce barriers to economic activity See sections 3, 5, 8 and 13.
A Right to Work Act, to remove the right to strike from professional healthcare workers; rebalance minimum wage laws; simplify, consolidate and set conditions, maximum levels and periods for welfare payments; and reform unfunded pension obligations to the general public.	Increase flexibility and quantum of labour supply. See sections 4, 5, 7 and 13.
Further legislation would be called upon to realise the market value of public pensions obligations. the public estate.	Reduce public balance sheet bloat and debt See section 7.
to repeal The Climate Change Act, 2008. The Equality Act, 2010. The Human Rights Act, 1998.	Remove barriers to competition in labour and product markets; and protect borders. See sections 4, 13 and 15.
to halt passage of (or repeal if passed) The Children and Wellbeing Bill. The Employment Rights Bill. The Public Office (Accountability) Bill. The Renters’ Rights Bill.	As above, correcting recent policy errors See sections 4 and 13.
to withdraw from The European Convention on Human Rights, 1950. The UN Refugee Convention, 1951. The Rome Treaty, 2002, establishing the ICC. The Paris Agreement, 2015, setting targets for decarbonisation.	Complete the formal repatriation of sovereignty See sections 4, 6, 13 and 15.
Healthcare reform calls for legislation or other action to confirm the lead of central government in strategic decision-making; reform NICE protocols, allowing for co-pay and permitting private or offshore procedures formerly disallowed as uneconomic; differentiate between procedures calling for UK provision, eg, GP, emergencies, beginning/end of life; and lifestyle/discretionary procedures qualifying for offshore provision; provide for patient data to be available to all qualified professionals; and for data, etc, to support the £1bn prize for technologies taking 90% out of the labour cost of nursing; and realise the value of future cashflows, bringing in insurers and other funders; real estate, bringing in professional groups, investors etc; and historic NHS data, bringing in other healthcare bodies.	Turn UK healthcare from a liability into an asset See sections 5 and 7.
Land-use reform calls for legislation or other action to deregister the green belts, relocating planning authority to new bodies with further powers to rewrite building and fire regulations impeding best practice and to revisit selected building listings; set aside the Crichel Down rules on compensation and S106 impositions on developers; authorise the regime for the capital instruments contemplated; and reform the tax regime bearing upon applicable developments.	Promote housebuilding and obtain public revenues from land appreciation See sections 5 and 7.

Table 2. Synopsis of threats to domestic sovereignty

Issue	Type	Consequences	Options to solve	Implications	Recommendations
Falling UK-born population	W	Adverse worker/dependent ratio	Increase capital; Increase immigration	No use for labour intensive occupations; Uncontrolled borders; social turmoil	Quaternary education; Prizes for new technology. All as section 7. Reform international constraints, as section 15.
Fiscal incapacity	W	Hampers government, distorts incentives	Raise taxes, cut expenditure - limited scope; Shrink public balance sheet and monetise assets - much scope as section 7	Unrealistic with current political configuration	Wait out election and a change of government. Have plans ready as sections 2 and 8; and table 1
Failings in machinery of government	W	Impossible to execute reform or even policy.	Reform of recruitment, promotion and other MoG elements as section 3
“Good problems”	W	Impossible to build houses or other infrastructure	Monetise land value appreciation as section 7
Tech disruption	W	Grad oversupply; Grid insufficiency	Quaternary education as section 7; Correct policy as section 13
Inopportune policy initiatives, specifically a. Energy	SI	Increased prices	Leave COP process
b. Housing c. Education d. Employment e. Public law	W	Reduced flexibility; Reduced standards; Reduced flexibility; Reduced flexibility	Halt/repeal legislation	As above	As above

Key: W = Widespread; SI = Self-inflicted

This table draws a distinction between issues which are widespread, where it is open to the UK to resume the reforming lead of the Thatcher era when British initiatives were taken up internationally; and those which are singular to the UK, whose reversal has few lessons for the international community. For expansion, please see sections 1 to 8.

Table 3. Synopsis of threats to trade sovereignty

Threat	Type	Consequences	Recommendations
Trump disruption and tariffs	LI	Uncertainty. Reduction in access to markets in US and (if general retaliation) elsewhere. But nb: biggest problems are domestic	Streamlined customs; Digital borders; Mutual recognition. All as sections 10, 12 and 13.
Strategic reliability of source	LE	Interruptions in supply-chain	Exclude high risk vendors; Diversify, including with domestic supply; Reduce NTMs with friendly countries; Stockpile; Align export controls. All as section 11
Embargos against adversaries	LE	Positive: alteration in conduct of target. Negative: interruption in supply	Diversify, including with domestic supply. As section 12
Regulation	LI	Affects investment flows	Revisit recent tax and regulatory impositions; Review regulatory quangos clinically. All as sections 5 and 13
Persistence of non-tariff measures/neo-mercantilism	LE	Markets closed or open only at higher cost and risk	Decline to retaliate; Press for subsidy notification; Align with OECD on state aid; Press for mutual recognition of standards; Reserve security carve-outs. All as sections 14 and 15
Legacy international relations	LE	Hamper domestic discretion	Take one by one; keep co-operation that works; Review ECHR and other international judicial regimes clinically; Repatriate appeals procedures. All as sections 14 and 15

Key: LI = Largely internal; LE = Largely external

This table draws a distinction between trade issues arising largely out of internal constraints, where action can take place without reference to third parties; and those which bring in the international community. For expansion, please see sections 9 to 15.

Table 4. Synopsis of security sovereignty, by theatre

Theatre	Priority	Formal engagement	National interest	Military mission	Lacunae
North America	High	NATO, CPTPP. Anglophone so Five Eyes & AUKUS	Bilateral trade, FDI, defence (vs Russia & China)	Joint ad hoc campaigns w US	None as UK forces currently de facto aligned as US auxiliaries. As sections 20 and 21
Europe	High	TCA, etc; NATO	Bilateral trade, FDI, defence (vs Russia)	Defend Eastern Front	Ground forces, platforms, logistics, C3I. As section 21
Antipodes	Med	CPTPP. Anglophone so Five Eyes & AUKUS	Bilateral trade, FDI, OOA defence (vs China)	Intelligence, support with expeditionary forces, joint exercises, patrols	Platforms, logistics, C3I. As sections 22 and 23
East & Southeast Asia	Med	GCAP, CPTPP	Bilateral trade, FDI, OOA defence (vs China)
West Asia	Med	Various bilateral, inc bases	Supply of oil, FDI, alleviate turmoil
Latin America	Low	Little formal	Supply of commodity minerals	Falklands protection (Med)
Africa	Low			None	N.A. As section 23
Central Asia	Low		Supply of rare earths
South Asia	Low		Trade, FDI

Key: High = High priority; Med = Medium priority; Low = Low priority

This table sets out the UK’s security, that is foreign policy and military, issues bearing upon sovereignty, by grouping geographic theatres under three levels of priority. For expansion, please see sections 17 to 24.

Domestic sovereignty - Miles Saltiel, Adam Smith Institute

1. Problematic demography

Britons just aren’t making enough babies.
This hurts the economy and public finances.
The technology coming up doesn’t help.
So, the country has doubled down on immigration.
Outcome: intensifying social tensions.

The central truth of UK demography is that we fail to reproduce ourselves. The Office for National Statistics (ONS) states that the UK’s total fertility rate (TFR) has remained below the replacement level of 2.1 children per woman for decades,¹ with the figures for 2023 (the most recent available) showing a level of 1.44 children per woman, lower than the 2022 figure of 1.49 and the 2022 Organisation for Economic Co-operation and Development (OECD) average of 1.5.² This trend is not unique to Britain but is particularly acute given the country’s reliance on a dynamic labour market and public services funded by the working-age population.

The high-road solution is to raise the capital-labour ratio, increasing productivity with technology. In theory, investing in capital, such as artificial intelligence (AI) and robotics, should compensate for a smaller workforce by enabling each worker to produce more output.³ In the event, however, the technology currently monopolising attention and investment is AI. This promises most in replacing manipulators of symbols, particularly in language-based roles, eg, administration, finance, law and media. This is a mixed blessing; see section 6 below. In addition, AI offers little to labour-intensive sectors, eg, hospitality, nursing, and social care, where human interaction and physical presence are essential. These last two are precisely where demographic pressures are most acute, with an aging population increasing demand in roles which cannot be easily automated.

These limitations have led the UK to rely on imported labour. Since the early 2000s, net migration has driven population growth and has helped sustain public and private services and economic activity in general.⁴ We discuss high and low quality immigrants in section 13 below. The country’s experience is that migrants have largely taken poorly remunerated jobs in agriculture, healthcare and hospitality, where domestic labour supply has been insufficient. Immigration has given rise to social and political frictions, fuelling debates over integration, national identity and resource allocation. In the most recent electoral cycle, these have become acute, contributing to the marginalisation of the two big political parties and the rise of Reform, which campaigns on platforms of reduced immigration and greater national control.⁵ Similar tensions apply in Europe and the US.⁶

Demography also has a direct effect on government finances, adding to the challenge of the state’s unfunded obligations to its future pensioners, estimated by the Office of Budget (OBR) to be £1.4tn,⁷ and to the public at large, where we use the OBR’s figures as a basis for a rough and ready estimate of £4.75tn.⁸ We return to this in section 7 below.

No government has succeeded in encouraging women to have more children, so we will not venture further into this dead-end. This leaves us with the problematic relations with International Law occasioned by migration, discussed further in section 15 below, with our proposals for blackletter legislation itemised in table 1 above; and the underlying issue of labour and skills insufficiency, which we discuss in sections 6 and 7 below.

2. Failings in state capacity - fiscal recklessness

High levels of debt, deficit and spending stymie animal spirits.
We’ve had no growth for a decade.
Instead, we’ve got public fragility, budget chaos and lost trust.
A sterling or gilt crisis can’t be ruled out.
Proposals from elsewhere focus on current expenditure and income.
This paper prefers to look at the bloated public balance sheet.

Analysis of twenty-one economies over the twenty years to 2024 confirms that growth varies inversely with the size of the state.⁹ The effectiveness of government is undermined by taking on too much, challenging the budget discipline which should be non-negotiable for three reasons:

It sets the political tone. The difficulties of the current Starmer administration show that when governments fail to manage public finances responsibly, there follow protests, policy reversals and a loss of legitimacy for the government of the day.¹⁰
It underpins macroeconomic stability. Sound budgetary practices help prevent inflationary pressures and reduce the risk of financial crises, which are essential for a stable economic environment.¹¹
It encourages capital investment by the private sector. Local investors are more likely to commit resources when they believe the government is managing its finances prudently.¹² Similarly, countries with a reputation for fiscal discipline attract more FDI.¹³

Reversing untoward levels of income and expenditure yields palpable economic dividends, with calculations that a fall in the government share of GDP of 5% is associated with an increase in growth rates by 1% per annum.¹⁴

In 2024-25, UK public income is expected to be £1.14tn, equivalent to £40,000 per household or 40% of national income. The trend has been on the up since the mid-1990s, when it was c31% of national income. The UK raised slightly more revenue relative to national income than the US, Japan and Australia, but less than Germany, Denmark and Norway. It raised below the average for OECD nations, ranking 24 out of the 33 members providing comparable data.¹⁵

In 2024-25, UK public expenditure is expected to be £1.28tn, some £45,000 per household or 44% of national income. This trend has been increasing since 1997-88, when it was c35% of national income, with spikes for the crash of 2008-09 and the pandemic of 2000-01. The UK spends a higher share of national income than the US and Japan, but less than Italy or France. It raised around the average for OECD nations, ranking 16 out of the 33 members providing data.[^16](Ibid.)

After peaking at 10% of GDP during the global financial crisis, the UK deficit narrowed but surged again during the COVID-pandemic, reaching 14.5% of GDP in 2020.¹⁶ While many OECD countries experienced similar spikes, the UK’s deficit remained above the OECD average in both crises.¹⁷ The upshot of these figures is that UK debt as a proportion of national income has increased continuously from c30% in 2011-12 to closing in on 100% at present.¹⁸

Gilt spreads, the difference in yields between UK government bonds and US Treasuries or German Bunds, capture the UK’s weakness. During the 2022 mini-budget crisis, they spiked, with the spread over bunds reaching 196 basis points on 1 September 2022 reflecting anxiety over unfunded tax cuts and fiscal credibility.[^20](Investing.com.) ¹⁹ Ten year gilt spreads reached new highs ahead of the recent budget and continue to reflect investor concern, at 166 basis points over Bunds and 36 basis points over Treasuries.²⁰

The risk of a crisis remains. In 1976, the UK was forced to seek IMF assistance, after a loss of confidence in fiscal policy and the pound.²¹ Comparisons with Greece in 2009 and Ireland in 2010, both of which faced sovereign debt crises, point to the dangers of high deficits and debt.²² ²³ Fears of adverse bond market reactions have tempered the positions of the UK government ahead of the budget²⁴ and of the leading opposition party in preparing for the next election.²⁵

Budget chaos has been exemplified by recent disruptions, culminating in the resignation of the Head of the OBR. Ministers no longer anchor fiscal policy in a steady framework, changing the rules often and seeking to keep manifesto promises which leave little headroom. The last budget pulled together measures which worked against each other, making it hard to claim a clear direction. When the OBR cut its growth and revenue forecasts, it sharpened doubts about the plan. Since then, ministers and officials have sent out mixed signals, and expectations have lurched from week to week. A clearer approach would give the OBR a ten-year view and require ministers to release exposure drafts of major tax and spending changes for Parliament to test. A restored pre-budget purdah would also reduce the noise that pushes policy off course.

The Campaign for a Better Britain has worked up tax and revenue responses to a sterling crisis, in particular reducing selected expenditures to 2019 levels; unspecified measures to reduce welfare spend and increase public sector productivity, various proposals on public sector and state pensions; and some pro-growth initiatives, notably reforming planning, reducing labour market barriers, rebalancing the tax regime and bringing down energy costs.²⁶

Policy Exchange has published proposals to rebalance the UK’s fiscal position, with means-testing, raising the state pensions age, freezing it and other benefits for three years, and various proposals to cut the civil service and reform healthcare. The authors note that their proposals bring down public expenditure from 45% of GDP to 40% over five years.²⁷

The approach of this paper is largely to look away from taxes and revenues to the national balance sheet in section 7 below; in particular transforming healthcare from an uncontrolled money-sink beset by parochial restrictions to a service qualifying as a strategic asset and deploying global resources, also as section 7 below, leading to our proposals for blackletter legislation itemised in table 1 above. The systematic failings of the Treasury, the foibles of the Labour party and the agony of Rachel Reeves make it impossible for our proposals to be taken seriously at this point. Instead, they form an agenda for the next government.

3. Failings in state capacity - machinery of government

The Treasury, the Cabinet and Prime Minister’s Offices are all out of sync.
Officials lack applicable skills.
Ministers cannot appoint and promote their own people.

Beyond fiscal management, state capacity depends on the alignment of public organizations and skill sets. Public institutions should be responsive to public opinion and the broader public good; instead, they have become beset by cultures and processes which hinder innovation and adaptability.²⁸

Dominic Cummings has written of the inefficiencies in the UK’s central government, making much of the imbalance between the Cabinet Office, Treasury, and Prime Minister’s Office; and ministers’ lack of control in choosing their permanent secretaries. He describes the Cabinet Office as “bloated, slow, and risk-averse”, arguing that its overlapping roles in coordination, strategy, and delivery lead to duplication and blurred accountability.²⁹ Cummings also points to the lack of project management skills across Whitehall, and the rotation of personnel across departments, arguing that these lead to inexpert decision-making and slow responses to challenges.[^32](Ibid.)

Recruitment and promotion are awry: the current Prime Minister is on his second Cabinet Secretary in eighteen months and was only recently rolling the pitch to replace him.³⁰ As of 2023, only 8% of Treasury staff had a STEM background, compared to 22% in the private sector.³¹ The quality of public information has stalled, with the ONS no longer able to furnish reliable statistics as a matter of course.³² High-profile failures, notably HS2, demonstrate the consequences of inadequate oversight and execution, leading to cost overruns and public dissatisfaction.³³

We join with the emerging consensus that the mechanics of British government have become sclerotic. The Trump administration clearly feels likewise about the set-up in Washington, though this doesn’t tempt us to follow the stirring example of Elon Musk’s DOGE. Instead, we present our reforms in section 8 below, leading to the proposals for blackletter legislation itemised in table 1 above. In an ideal world, these would be for the consideration of the current government, whose frustrations are apparent, but whose willingness to contemplate reform remains unknown. Failing this, they form an agenda for its successors.

4. Inopportune policy initiatives

The success story of UK energy has been shuttered.
Hard-won improvements in education standards are threatened.
Housing and labour flexibility is off the agenda.
New hiring is stifled.
Public administration faces new vexations.
All add to failed experiments on equalities and human rights.

In the last year, self-harming policies have made a bad situation worse. The UK’s climate policies, designed to accelerate decarbonization, have contributed to higher energy prices than our peers. Home-grown figures confirm that UK wholesale electrical prices stand at four times those in the US, around 2.5x Korea or Japan, and around 1.5x France and Germany.³⁴. The challenge is compounded by the country’s reliance on intermittent renewable energy sources, which complicates the management of base and peak load demand.³⁵ Of late, the government has recognised this in a back-handed way, with subsidies to industry.³⁶

British hydrocarbons should be a national success story. Reserves were last officially estimated in 2020. They then represented between twelve and twenty-five years at current rates of consumption, that is ten to twenty billion of barrels of oil equivalent (Bboe),³⁷ with consumption at 0.8 Bboe in 2023,³⁸ the last year for which we have figures. This is an underestimate: reserve calculations include assumptions about prices, depressed by Covid in 2020 and now 70% higher, with Brent crude averaging $71.3 per barrel this year, compared to $42 per barrel in 2020.[^42](Statistica) This means correspondingly more reserves would be economic.

The UK’s shift away from hydrocarbons has not been matched by investment in infrastructure or storage.³⁹ This leaves the grid vulnerable to price spikes and supply disruption. High energy costs increase production expenses, reduce profit margins, and prompt firms to relocate operations abroad. They also impair the competitiveness of energy-intensive sectors, such as AI datacentres, chemicals and steel. These adverse outcomes call for removing the straitjacket of the arbitrary net-zero targets enshrined in the Climate Change Act.

The good news is that small modular reactors (SMRs) are being explored to provide stable, low-carbon base-load power, with the US-UK Atlantic Partnership for Advanced Nuclear Energy providing for mutual recognition of design reviews and halving the time it takes for a nuclear project to get a licence to two years.⁴⁰

Other manifesto commitments have led to anti-growth initiatives elsewhere. The Children and Wellbeing Bill follows a flurry of self-serving research by the education lobby. This provides the pretext to reverse the autonomy of academies, which have been a success story, raising British scores internationally. Academies were introduced to foster innovation and responsiveness by granting schools greater discretion over curriculum and management; and by freeing them of the featherbedding arrangements characteristic of dealings between local authorities and the teaching unions. Reducing this autonomy risks a return to bureaucratic control, stifling local initiative and depressing educational outcomes.⁴¹

The Employment Rights Bill reduces the interval for employment tenure from 24 to six months, restricts workplace discipline and reduces the flexibility with which employers can organise the labour of their employees. This adds to the cost and risk of hiring, particularly for small and medium-sized enterprises. This is set to lead to less recruitment and labour flexibility, ultimately harming job creation and economic activity.⁴²

The Renters’ Rights Bill seeks to reduce landlords’ discretion to repossess properties and cap permitted deposits. These measures are intended to protect tenants but threaten to discourage investment in the rental market. The result is expected to be a reduction in supply, exacerbating housing shortages, driving up rents and impairing the flexibility of the labour market. ⁴³

The Public Office (Accountability) Bill lays the ground for new court challenges to government discretion, including “to act with candour, transparency and frankness” and replacing the common law offence of misconduct in a public office with a statutory offence.⁴⁴ This follows the expansion of public law over the last thirty years, leading the courts to challenge official conduct so extensively as to have the effect of second-guessing Parliament and obstructing public policy. This goes beyond longstanding doctrines of exceeding powers (“ultra vires”) to include such more subjective matters as irrationality (“Wednesbury unreasonableness”), together with an extensive view of procedural impropriety and the provisions of equalities and human rights legislation, this last addressed in greater detail in section 15 below.

These inopportune initiatives threaten the growth which all claim as their goal. They represent nods by the Starmer government to age-old Labour foibles as well as its union paymasters. It is unrealistic to imagine that they will be reversed by the current government. In this light we make proposals for its successor, as set out in sections 8, 13 and 15 below, leading to our proposals for blackletter legislation itemised in Table 1 above.

Flexibility is also undermined by Blair era initiatives which made no secret of their intent to bind future governments to the policy preferences of the day. The Equalities Act created a schedule of nine protected characteristics, less compelling fifteen years later. Their effect has been to reduce recruitment and promotion on merit, impair workplace discipline, make for mischievous litigation, and add to compliance costs which act as a barrier to entry for new firms. As touched on above, Britain’s high energy prices stem from the Climate Change Act, which committed the country to net-zero targets to which no other country has signed up. They shackle the UK with an energy configuration which makes no economic sense, as well further mischievous litigation hampering new infrastructure. Both these Acts qualify for repeal. So too the Human Rights Act, which we explore at greater length in section 15 below.

5. The “good problems” of eighty years of peace and prosperity

Eight decades of good times have left us comfy and complacent.
Old infrastructure is creaking; new is beyond us.
The NHS is on crutches.
Public pensions are a black hole.

The United Kingdom’s eight decades of peace and prosperity have brought high living standards but have also created a set of “good problems”: the structural challenges of affluence, demographic shifts, and entrenched interests. No doubt these issues are “first world problems”, but they threaten the UK’s fiscal sustainability and social cohesion.

Certain measures of consumption demonstrate prosperity. Car ownership reached 33.2 million vehicles in 2023, up from 28.7 million in 2010.⁴⁵ Britons made 93 million overseas visits in 2019, compared to 58 million in 2000.⁴⁶ Hospitality grew from 130,000 businesses in 2010 to 173,000 in 2024,⁴⁷ with restaurant expenditure rising from £72bn to £139bn over the same period.⁴⁸

These advances mask weaknesses elsewhere. In 2024, Britain’s inflation adjusted GDP per capita was £34,019, compared to £32,627 ten years earlier, representing real annual growth of 0.29%.⁴⁹ In 2021, 62.5% of UK households owned their own home, down from 64.3% in 2011; and 37.3% rented, up from 34.3%.⁵⁰ The average time to secure planning permission for major housing projects rose from 26 weeks in 2012 to 32 weeks in 2022.⁵¹The average new-build home size in England is now 76 square metres, the smallest in Europe.⁵² Average delays on the strategic road network have risen by nearly forty percent in the decade to 2025.⁵³

Incumbent groups defend entitlements. Homeowners benefit from restrictive planning laws that protect property values but limit new supply. Housing starts in the UK for the financial year 2024-2025 were the lowest since the financial crash and well below the average for any government since 1979.⁵⁴ The UK spent £277 billion on health and social care in 2022/23, accounting for 11.3% of GDP.⁵⁵ Employment in health and social work reached 4.5 million in 2023, or 13% of the workforce.⁵⁶ Even so, Quality-Adjusted Life Years (QALYs) have plateaued, with a rising prevalence of chronic conditions and mental health diagnoses.⁵⁷

The post-WW2 consensus on free-at-point-of-use healthcare is under strain.

The NHS monopoly on general practice has been eroded with private providers offering GP services throughout Inner London, together with Boots Direct and Asda dispensing prescriptions nationally.
Non-consultant hospital doctors have become proletarianized.⁵⁸ No surprise, as these days trainee doctors must learn their way around the NHS by gaming its algorithms, otherwise sending them to remote posts with unpromising prospects.⁵⁹
Costs, restrictive protocols and waiting lists are encouraging Britons to travel overseas for surgery, with some 523,000 doing so in 2024,⁶⁰ representing some 11% of all UK patients undergoing surgery that year⁶¹. Over the previous ten years such excursions increased at an annual rate of 24%.⁶²

These developments tell us that the UK’s healthcare model is running out of road. Piecemeal actions are all to the good, but it is now timely for the UK to undertake the thoroughgoing reform, as set out in section 7 below, leading to our proposals for blackletter legislation itemised in table 1 above.

It is early days, but similar conditions apply to retirement care, for which Britons are beginning to explore options in Malaysia, the Philippines and Thailand. These locations offer staff ratios higher and cost a fraction of those in this country, with fifty Thai establishments now approved by the UK government.⁶³ No figures are available for Britons taking this course, but the number of foreigners staying on a retirement visa in Thailand increased five-fold in 16 years, from just under 11,000 in 2005 to just over 52,000 in 2021.⁶⁴

Only a minority of public employees have fully funded pensions; most rely on pay-as-you-go schemes. The annual cost of unfunded pension promises is projected to reach £60 billion by 2030.⁶⁵ As noted above, the Net Present Value (NPV) of unfunded public sector pension obligations was estimated to be £1.4tn in 2024.[^70](Ibid.) We set out the big balance sheet numbers, which promise concomitant reward in section 7 below.

6. Technological disruption

Even if the AI boom turns to bust, its effects are upon us.
It particularly threatens our surfeit of humanities grads.
Britain is scrambling to keep up.
Our language may help but our energy policy is a catastrophe.

AI development has accelerated rapidly, with the performance of OpenAI’s GPT-4 and Google’s Gemini (formerly Bard) surpassing previous benchmarks in natural language processing, coding, and reasoning tasks.⁶⁶ This is despite the exhaustion of Moore’s Law, which predicts a doubling of computing power every two years: this has slowed in hardware but the deceleration has been offset by software developments.⁶⁷ For example, GPT-4’s parameter count exceeds 1 trillion, compared to GPT2’s 1.5 billion in 2019, reflecting a growth in complexity which for once justifies the hyperbole of exponential.⁶⁸ Nonetheless, claims of imminent artificial general intelligence (AGI) remain speculative,⁶⁹ and AI faces real-world constraints.

Data centre energy consumption is rising sharply; it is expected to consume 500 terawatt-hours (TWh) in 2025, up from 260 TWh in 2020.⁷⁰ It takes longer to build a power plant than a datacentre and it is not clear that the grid can cope.
The production of advanced chips relies on gallium and other rare earths, with supply chain vulnerabilities in sourcing and processing exposed by recent geopolitical tensions.⁷¹ We discuss sourcing in sections 11, 20, 22 and 23.
Capital expenditure is unsustainable: Google, AWS, Meta and Microsoft combined will spend over $300bn this year,⁷² which is roughly the same as the entire UK private sector.⁷³
Tech companies overwhelm their nominal regulators, particularly outside the United States. The European Union’s AI Act, passed in 2024, aims to set global standards for AI safety and transparency, but it is de facto unenforceable upon US-based firms.⁷⁴ Even in the EU, compliance is confusing and expensive, depressing tech activity.⁷⁵
Ambitions for “AI sovereignty” have proved futile. Open source models pioneered by Meta seemed like a solution, but now such models come from China, eg, DeepSeek and Alibaba’s Qwen, posing their own problems.

Even so, the financial markets have responded to the next new thing with their customary gusto: Nvidia’s market capitalization closed at 4.51tn on 10 December 2025, over 3x its level at the end of 2023. Small wonder that analysts have been warning for some time about an AI bubble akin to the dot-com era.⁷⁶

AI threatens employment, particularly among the UK’s excess of humanities graduates. The composition of graduates has shifted perversely over the past two decades: in 2022, 34% were in non-STEM subjects, compared to 28% in 2002.[^82](Ibid.) This statistic fails to capture the dilution of STEM degrees awarded by tier-two bodies. The median time for new graduates to secure full-time employment rose from 3.2 months in 2005 to 4.1 months in 2022⁷⁷ and 5.6 months in March this year.⁷⁸ Employers report skill mismatches, with graduates lacking the digital and analytical skills most in demand.⁷⁹ These reports may be anecdotal, but they point consistently to the need to rebalance the national skills-base and are endorsed by abated recruitment.⁸⁰

The explosion of AI-generated content has intensified disputes about intellectual property (IP). In 2023, over 5,000 copyright lawsuits were filed globally involving AI-generated works.⁸¹ Major jurisdictions are diverging: the US leans toward broad fair use, the EU emphasizes creator rights, and China is tightening state control over AI and IP.[^88](Ibid) This fragmentation complicates enforcement; at worst, it threatens innovation as companies navigate conflicting legal regimes.⁸²

Taxing multinational tech giants remains a major challenge. In 2021, the OECD brokered a global agreement (the “Two-Pillar Solution”) to introduce a 15% minimum corporate tax rate and new rules for allocating profits, but implementation is uneven.⁸³ In 2022, the UK collected £7.1 billion in digital services tax, but this is a fraction of the estimated profits shifted offshore by large tech firms.⁸⁴ The US, EU, and other major economies continue to debate enforcement and loopholes, with revenue-raising measures provoking retaliation.

The UK is in a similar position to its peers in the developed world, save that it has the advantage over our European neighbours of the English language and over the Anglophone group of a well-established FDI base as well as the recent deal with the US. Our great disadvantage is energy prices, which could be brought down by bringing in North Sea Oil and accelerating the SMR programme as discussed in section 4 above.

7. Recommendations for fiscal policy

Tax and spending reform are essential but won’t do the trick alone.
Better to sort out regulatory hold-ups and slim our balance sheet.
The big wins are land reform, turning the NHS from a liability into an asset and reforming pensions.
Our proposals would pay off some 70% of the UK’s indebtedness.
We also propose billion pound prizes for technologies reducing demand for immigrant labour.

Policy proposals - generally Reform is needed on a scale which is unrealistic with the current government; its successor should be prepared with “oven-ready” plans. In this light, we summarise our proposals below, leading to our proposals for blackletter legislation itemised in table 1 above.

Restoring fiscal balance: reform of tax and services vs asset monetisation Tax experts argue for rebalancing receipts and simplifying tax codes; partisans will always have something to say about taxing their pet black-hats (bankers, non-doms, pensioners, the 0.1%, testators), or withdrawing benefits similarly (immigrants, pesky kids, self-certified casualties, the feckless poor). Whatever the merits of these arguments, we regard them as de minimis. The potential to reform government finances lies in government’s balance sheet, which has been swollen by a lifetime of bloat. This makes it once again timely to shrink the government’s engorged holdings, last attempted by the Thatcher reforms. In 2004, the public sector estate was valued at £191.5bn ,⁸⁵ lending itself to straightforward realisation.

As noted in section 1 above, the net present value (NPV) of unfunded public pension obligations to former public servants is estimated at £1.4tn,⁸⁶ leading to an estimate of the NPV attaching to state pensioners of £4.75bn.⁸⁷ These lend themselves to sale to the insurance sector, on the basis of the accounting identity that the NPV equates to assets under management (AUM); and using a valuation metric based on four of the top five UK life insurers, with future public obligations eased by moving to contributory arrangements. After such a sale, the insurers would receive a stream of cashflows from the public sector, in exchange for providing the retirement benefits. We estimate the realisable value arising as follows:

Table 5. Market value of UK public pension obligations

	£bn	Notes
NPV of unfunded pension obligations
to former public servants	1,400	93
to state pensioners	4,750	94
Total NPV	6,150
Market value/AUM of adjusted panel of top five UK life insurers	6.1%	⁸⁸
Market value	375

If a new government can bring itself to challenge postwar dogmas, it can also take a strategic approach to healthcare, as follows, with our proposals for blackletter legislation itemised in table 1.

Turning healthcare from a liability to an asset

Public education: engage in a programme of professional and public information as to the benefits of reform.
Reform structure: internationalise provision; upgrade technology; realise fiscal benefit; and
Realise strategic benefit: include healthcare as a strategic element in international negotiations, specifically as to US technology, European funding and offshoring ad hoc.

This turns a liability into a fiscal, strategic and technological asset. The ASI has estimated the NPV of future healthcare spend to be £161bn, lending itself to realisation in a similar manner to public pensions.⁸⁹ Future revenue models could reduce cost and ease the public obligation by using copayments and offshoring, as well as combining self-payment, public subsidy, and insurance, eg, as Germany’s dual system.⁹⁰

In addition, the ASI has estimated the realisable value of the NHS estate as £124bn,⁹¹ leading to total sums realisable from healthcare of £286bn. We note that this makes for double counting of the sums set out above for the total public sector estate, which we regard as under-estimated. We err on the side of caution: we make no correction of under-estimates for the non-healthcare estate and recognise the double counting by deducting the £66bn for the healthcare estate shown in the official estimates.⁹²

In 2022, 1.2 million adults participated in government-funded further education and skills training, but only 8% were in digital or STEM fields,⁹³ as already noted, a statistic failing to capture the quality of the courses concerned. Linking welfare reform to “quaternary education” - our coinage for continuous adult retraining - is essential for a tech-driven economy. This lends itself to a mixture of self-payment, public subsidy, and insurance. We would also follow the precedent of the Admiralty’s prize for the solution to longitude; and institute attention-grabbing prizes - say of £1bn apiece - for technologies taking 90% of the labour out of each of agriculture, nursing and social care.

The most rewarding reform is land-use liberalisation. We make no apology for pointing to the Adam Smith Institute’s “Homes for All”, which would unlock £3.9tn of development gains in the London Green Belt, including £940bn in revenues for HMG.⁹⁴ These gains are available on reform of land-use; the proposal of “Collateralised Instruments Participating in The Appreciation of Land” (CAPITALs) is a mechanism to allocate them to developers, landowners, local authorities, communities and HMG, without incurring further public debt. The £3.9tn is attached only to the London green belt; extending reform to the country as a whole would liberate further uncalculated gains.

This is where the big balance sheet numbers add up. Table six shows that the opportunities exceed £1.7tn.

Table 6. Sums available to HMG after reform	£bn	*Notes*
Public estate	190	92
Public pensions	375	93 & 94
Healthcare	286	95-98
Land use reform	940	101
Less for double counting (1) and (3)	(66)	99
Total	1,725

This represents 68% of the UK’s outstanding debt at the end of 2024.⁹⁵ It would be foolish to pretend that these sums are realisable for the asking. Instead, they call for a programme of audit to confirm them, administrative reform to implement them and public and professional and public education to accept them. Their merit is that they don’t pick on anyone, with even NIMBY landowners and neighbours in for compensation from the CAPITAL scheme. They also offer the benefits of slimming down the state and honest accounting for its obligations. In addition, land-use reform offers the immediate growth stemming from new construction and a long tail of higher growth due to greater and more flexible endowments of land and labour. We have made no calculation for these.

8. Recommendations for machinery of government

Treasury modelling needs to be reformed; picking on the OBR is self-destructive.
Let’s heap rewards and honours upon civil servants who bring down costs permanently.
Let’s take meddlesome NGOs off the board.

A comprehensive reform agenda should address Treasury modelling; Cabinet Office performance; civil service incentives, recruitment and promotion; and the legislative framework underpinning public administration and thwarting executive efficacy.

Treasury modelling: revisiting elasticities and second-order effects. The Treasury’s economic models are central to fiscal policy and budgetary decisions, yet all too often they fail to anticipate the true impact of policy. For example, the Office for Budget Responsibility (OBR) and independent reviews have found that Treasury models frequently underestimate the dynamic effects of tax and spending changes, relying too much on static elasticities and not enough on behavioural responses or second-order effects.⁹⁶

Our criticism does not extend to the OBR, which comes in for a lot of stick from critics claiming that it has forced the Treasury into an undue aversion to growth.⁹⁷ This is ahistorical: the Treasury has always been risk-averse, with attempts to rebalance policy towards growth going back sixty years, to George Brown’s ill-fated Department of Economic Affairs.⁹⁸ This is futile: the evidence is that growth comes most reliably from sound money and deregulation, causing us to place weight on the probity of government accounting, where the OBR does a job akin to the US Congressional Budget Office.

General reform We propose turning poachers into gamekeepers: to drive reform, the government should offer bounties to civil servants who deliver major cost savings or efficiency gains, including comprehensive restructuring of the “command departments” of the Treasury, and the Prime Minister’s and Cabinet Offices. Early pensionable retirement or large pay-rises (as preferred) should be offered, complete with applicable honours (CBEs, knighthoods), to those making reforms which bring down expenditure and headcount permanently. Early retirement should also be offered, sotto voce and without bounties or gongs, to those resisting change, freeing up space for new talent and ideas.⁹⁹ This may be addressed by our proposals for blackletter legislation itemised in table 1 above. Co-opting NGOs into the audit process is also desirable, but inherently trickier as it runs the risk of regulatory capture.¹⁰⁰ This may also be addressed by our proposals for blackletter legislation itemised in table 1 above, to restrict NGO’s capacity to frustrate public policy.

9. Overseas challenges

Brexit was a start, but the process is unfinished.
The nation needs to get over the grim internal quarrels.
There remains much to do in trade and security.

In the following sections, we turn to international relations. Brexit delivered formal independence from the European Union, but this turns out to be necessary rather than sufficient. The truth is that the UK has failed to grasp Brexit’s opportunity to resolve its economic, political and social challenges. The country is left with persistent bitterness between Brexit’s supporters and opponents, no longer the most bitter national division,¹⁰¹ but its persistence among more than half of the population is all too reminiscent of the Dreyfussards and anti-Dreyfussards of late 19th-century France.¹⁰² The resulting atmosphere hampers consensus on national priorities.

It is true that Brussels beat us up badly, not least because at the time the country and its institutions were so fragmented. Several issues remain messy, notably the Northern Ireland Protocol, designed to avoid a hard border on the island of Ireland, but which creates unsought regulatory and political complexities.¹⁰³ Further regulatory alignment, such as to phytosanitary standards,¹⁰⁴ as well as the role of the European Court of Justice (ECJ) in dispute resolution, also remain contentious, with the EU’s negotiating objectives always capable of escalation.¹⁰⁵ In section 21 below, we argue that the UK should focus more clearly on its priorities, realise the strengths of its bargaining position and establish a legal framework for a reset with the EU which serves its purposes in the Derogation Act set out in table 1 above.

After its most recent dealings with the EU, Britain had better luck in bilateral talks with the US, where it was free of the fall-out from the Brexit era.¹⁰⁶ This has allowed for successful agreements, for example on data centres¹⁰⁷ and nuclear reactors.¹⁰⁸ We discuss this in section 10.

Other aspects of relations with the US are less happy. As table 3 and section 20 point out, our land forces have been largely reduced to auxiliaries to US war-making, with independent operations hampered by reliance on American logistics and C3I. The UK also remains vulnerable to chokepoints in global supply-chains, presided over by the US.¹⁰⁹ ¹¹⁰ The precedent of Brexit, however tortured, paves the way to independence in these matters.

Finally, several areas remain only partially addressed, if at all. The UK’s future role in “out of area” defence operations and global trade frameworks is still evolving, with much depending on the outcomes of ongoing negotiations and the willingness of other states to engage with Britain as an independent actor. We discuss this in sections 18 to 22.

The UK’s unpleasant experience of Brexit shows that legal independence is only a beginning; it lays the ground for greater flexibility, if our leaders have the gumption to take it. We elaborate upon trade in sections 10 to 15, with proposals in section 16; and on security in sections 17 to 23, with proposals in section 24.

Trade sovereignty - Robert Armstrong, Institute for Free Trade

10. The current trade emergency

Trump’s tariffs have set the cat among the pigeons.
A high moral tone won’t do, as Britain spent fifty years hiding behind EU protectionism.
Our initial position with the US itself is better than most.
Domestic competitiveness counts for more than trade deals.
Much can be achieved with mutual recognition agreements.

Trump’s tariffs have injected instability into the global system.¹¹¹ Then again, his disruptive manner and unapologetic commitment to America First follows the more or less universal post-Doha mercantilism, elaborated in Section 14 below. Nobody’s hands are clean. For decades, the UK played its own part as a subscriber to Brussels’ brand of protectionism.

Trump’s universal levies and targeted reciprocal tariffs have triggered retaliation, reinforced regional blocs, and raised the cost of cross‑border commerce. This has imposed immediate penalties upon the UK, as a medium-sized open economy, specifically demand shocks and supply rerouting. In addition, traders face policy uncertainty: for example, the full extent of Trump’s tariffs have not stood up to legal challenge, with the Supreme Court ruling against them.¹¹²

Trump has responded with universal tariffs under different legal doctrines. This makes the earlier deal between the UK and the US less attractive, though its swift negotiation demonstrated the advantages of an independent trading policy.¹¹³ A deal was more forthcoming for the UK than for Europe, as the UK was free of the constraints of European agriculture or automotive trade, offered a slightly friendlier stance toward US tech giants, and benefited from Trump’s personal affection for the UK. Even so, it was not a comprehensive deal and left tariff barriers in place.

In September 2025, a second round of agreements were signed, including the UK-US Technology Prosperity Deal.[^121](Ibid.) Starmer and Trump negotiated the aligning of standards, synchronisation of regulators and joint research funding in AI, civil nuclear and quantum. The deal requires the UK to end reliance on Russian nuclear fuel by the end of 2028, but will coordinate fusion policy, where the UK is a global player,¹¹⁴ creating interoperable standards, together with a benchmarking taskforce in quantum computing.

Faster licensing reduces policy risk and the option value of waiting. This brings forward private investment in generation and in energy-intensive digital infrastructure. Standards interoperability reduces coordination failures and network fragmentation, which is critical for platform technologies with large spillovers. Supply-chain de-risking lowers required returns on projects in strategic sectors. This is a deregulating, supply-side agreement which bolsters the UK’s stake in strategic industries of the future, exactly the kind of deal the country should seek to strike elsewhere.

Beyond this, the damage of a trade shock can be mitigated domestically. Domestic taxes, rules and restrictions are more significant than international barriers. According to the Growth Commission, energy prices, an oversized state, employment rules, and a lack of corporate dynamism combine to explain Europe’s average growth rates of barely 1% per annum over the last 20 years.¹¹⁵ Meanwhile Britain’s export trade is five points above its long-run average of around 27%.¹¹⁶ It is our domestic policy that most lets us down. We must focus on non‑tariff facilitation and the big bottlenecks at home, so as to make the UK a predictable and effective participant in re‑shoring supply chains. This means streamlined customs, digital borders and mutual recognition. At a minimum, the UK should unilaterally recognise the accreditation bodies of all fellow developed economies. In almost all cases (except when production standards are clearly and obviously lacking or do not attempt to regulate in an equivalent way) Britain should unilaterally recognise developed economies’ standards as equivalent such that they can be sold in the UK without further requirements. A key objective of trade negotiations would be to attempt to receive the same recognition reciprocally, such as was achieved in the Australia–New Zealand Trans-Tasman Mutual Recognition Arrangement (TTMRA).

The trade crisis is not without silver linings. Trump has, in many cases, forced third countries to blink first when it comes to non-tariff barriers, an issue to which we return in section 14.

11. Strategic reliability

Realism about strategic supplies should not extend to reflex protectionism.
The UK is lucky enough to have a global network from which we can qualify friendly sources.

We turn to the domestic issues which have been flushed out by recent events. First, here are the principles from which our proposals flow:

Open trade famously adds to peace and prosperity. Classical liberals like Frédéric Bastiat argued that when commerce flows freely, conflict is less likely.¹¹⁷ Modern empirical work confirms that deeper trade ties reduce the probability of militarised disputes.¹¹⁸ This makes trade a security instrument: it ties nations together in mutual benefit and raises the cost of aggression.
Trade is also a more durable engine of development than aid.¹¹⁹ Countries, like South Korea, that plugged into global value chains grew faster and built institutional capacity, whereas the sustained aid dependency, found throughout Africa, has entrenched poor governance. Buying from poorer nations creates jobs and transfers know-how; it is a practical, dignifying development policy.

To what extent must openness be tempered by realism? The pandemic, Russia’s war, and abusive practices by authoritarian states have provoked calls for protectionism , with a view to rectify specific supply‑chain vulnerabilities.¹²⁰ We take a pragmatic view. The case for friendshoring is not blanket protectionism. It is targeted resilience where substitution is difficult, national security is implicated, or single‑supplier dependence invites coercion. The UK’s removal of high‑risk vendors from 5G illustrates the distinction,¹²¹ welcoming low‑risk consumer imports while excluding suppliers that pose systemic security risks. To discipline choices, decision-makers should separate strategic from non‑strategic goods and ask three questions:

Is the input indispensable?
Is it hard to substitute quickly?
Could a hostile state plausibly weaponize it?

Where the answers are yes, the nation should diversify toward allies or build minimal home capacity; elsewhere, stay open. As always, the best way to diversify is by removing barriers with our allies, rather than building barriers against potential rivals. While our trade in goods with the EU is already as good as it could plausibly be, gains are achievable with the US. For as long as the EU struggles with its internal non-tariff barriers,¹²² better prospects beckon with Canada, Australia and New Zealand.¹²³ These would also safeguard supply of strategic goods and rare earths, as well as deliver growth. Table seven sets out where the UK is vulnerable.

Table 7. Analysis of UK’s trade vulnerabilities

Critical Sector/Good	Major External Source(s)	UK Exposure	Indicative Policy
Active pharma ingredients	China/India	High	Dual-sourcing; domestic contingency contracts
Advanced semiconductors	Taiwan/East Asia	High	Allied stockpiles; design strength; export-control alignment
EV batteries/materials	China; DRC (cobalt)	Moderate	Allied supply deals; onshore cell assembly; buy finished Chinese EVs
Natural gas/LNG	Norway, United States (LNG)	Low	Development of own resources; storage; energy deals with allies
Rare earth elements	China (processing concentration)	High	Allied sourcing (Greenland, Australia); recycling; limited UK capacity
Telecom network kit (5G)	(Historically) China	Moderate	High-risk vendors excluded; diversify suppliers

There is an argument that western interests should accelerate commercial forays into Central Asia (known collectively as the ‘Seven Stans)’¹²⁴. The idea is that such inroads will displace some Russian and Chinese influence (with its Belt and Road initiative across the continent), who otherwise will absorb the region deeper into their sphere of influence, and provide the region with independent strategic flexibility of its own. Even so, we argue below that Britain is so remote from this part of the world that it makes better sense to have signed the recent supply deal with Greenland;¹²⁵ follow the US, which has just done likewise with Australia;¹²⁶ and build on Canada’ signature of the Critical Minerals Production Alliance.¹²⁷ Establishing independent supplies of rare earths also calls for developing processing outside China, which currently has nearly 90% of global capacity.¹²⁸

As elaborated later in this paper, South East Asia offers more plausible strategic rewards. UK participation in CPTPP and closer UK‑US tech alignment embed us in a supply‑chain network of trusted democracies.¹²⁹ This follows the central concept in this doctrine, as indeed this paper, of sovereignty.

12. Treatment of rivals

Britain should refrain from naïve anti-dumping measures.
Domestic competitiveness counts for much.
Sanctions rarely work.

It does not, however, follow that trade with strategic rivals should be restricted more generally in the name of sovereignty. For example, Chinese manufacturers have been subsidising exports of electric cars, as well as solar panels and other high value manufactured goods. It sells them to the British consumer at a fraction of their production cost.¹³⁰ This is not Chinese strategic brilliance but the fallout of a domestic price war. Britain’s best response is simply to buy the kit; happily, the government has reached the same conclusion. Subsidies for British consumers of non-strategic goods is a gift horse which we needn’t spend too much time looking in the mouth: take the free money!

Nor should Britain delude itself that it can increase domestic production without throughgoing reform of our domestic economic conditions, not least energy prices and environmental laws, as discussed in sections 4 to 6 above. Beyond this the nation should diversify, invest and strike deals more widely, as well as continue trading with rivals where it serves our interests. Government must also rebuff those who continue to support tariffs to privilege their chosen industries – they amount to a sanction on our own economy. After all, when the UK (or China)¹³¹ embargo our enemies in wartime, we don’t do it, as Lord Hannan points out, expecting to nurture their infant industries or protect their supply-chain independence. We do it to damage output, damage production capacity and create costly logistical challenges. So why, Hannan asks, would we do to ourselves at peace what we do to our enemies at war?

Sanctions will remain a tool of first resort against aggression, but table eight shows that they bite hardest when coalitions are broad and targets are trade‑dependent, as with South Africa. Used without such conditions they can entrench regimes.¹³² When they are used against countries with whom little trade takes place, or where significant trade barriers already exist, the evidence shows few examples of sanctions working.

Table 8. Effect of sanctions

Country, timeline	Context	Sanctions	Intended effect	Actual outcome
North Korea 1950s onwards	Development of nuclear weapons, human rights abuses	UN and unilateral sanctions on trade, arms, finance	Force denuclearisation and regime reform	Regime endures for over 70 years; continues nuclear testing; widespread poverty; state uses ‘siege’ narrative to justify control
South Africa 1959–1993	Apartheid	Trade and investment embargos; sporting links cut	Dismantle white supremacy	Regime endured for 34 years, then reformed voluntarily
Cuba 1960 onwards	U.S. response to Cuban Revolution and expropriation of U.S. assets; alignment with USSR	Comprehensive U.S. trade embargo; travel and financial restrictions	Force regime change and promote democracy	Regime endures for over 60 years; used embargo as justification for repression and economic hardship; limited reforms but no political liberalisation
Iran 1979 onwards	Hostage crisis; later nuclear proliferation and regional proxy activity	U.S., EU, UN sanctions on oil, finance, and technology	Halt nuclear programme and weaken regime	Regime endures for 46 years. Severe inflation, reduced exports; temporary compliance under JCPOA (2015) later reversed; regime survived and used sanctions as nationalist rallying point
Israel — Informal BDS 2004 onwards; Mooted officially 2023–2025	Violence in West Bank and — of late — Gaza	Informal sanctions against companies. Some official sanctions against individuals	Limit action by settler and abate violence	Policies endure, subject to recent ceasefire. BDS campaign affects public opinion, but not Israeli policy. Official sanctions against State unenacted.
Russia — Crimea 2014 onwards; Ukraine 2022 onwards	Annexation of Crimea and full-scale invasion of Ukraine	Coordinated Western sanctions on assets, banking, culture, energy, sport, technology and travel	Deter aggression, weaken war economy, isolate regime	GDP contracted initially (−2.1% in 2022) but stabilised; $78bn USD energy export losses, trade rerouted to China, India; import substitution and state support cushioned impact; regime endures, war continues
Qatar 2017–2021	Saudi-led bloc accused Qatar of supporting terrorism and Iran	Regional blockade (border closure, trade and travel bans)	Force foreign-policy concessions	Short-term disruption; Qatar diversified supply chains, built new alliances with Turkey and Iran, achieved food self-sufficiency; blockade lifted 2021 without major concessions
China 2020 onwards	Mass detention and forced labour in Xinjiang	Targeted sanctions on officials; import bans on forced-labour goods	Deter repression and signal human rights costs	Minimal behavioural change; China retaliated with countersanctions; internal control policies intensified

Even when these conditions are met, many regimes survive on the siege mentality provoked by Western measures. The Cuban communists have survived another generation because they could blame the West for their own failings. From the Uyghur genocide to Russia’s invasion of Ukraine, sanctions have been overestimated as a coercive tool upon states. Sanctions upon individuals close to the regime have exacted a much stronger toll on their targets.

13. The deregulation agenda

The UK needs to be a more attractive investment destination.
This means
- predictable, pro-enterprise regulation and taxation;
- reliable law and order; and
- weaving competitiveness into every aspect of public policy, including immigration.

Britain must return to being the most attractive investment destination in Europe. That requires a lower, simpler tax burden, predictable regulation tailored to innovation, faster planning and dependable energy at competitive prices, as touched on in section 4 above, and the reset of police priorities discussed below. Capital, talent and ideas go where frictions are few and returns are high.

The UK has taken one step forward for every four or five steps back. Concrete positive steps include permanent full expensing,¹³³ but are outmatched by own-goals from corporation tax increases, the new Employment Rights Bill, employer National Insurance rises, the abolition of the non-dom regime, the expansion of regulation and environmental quangos¹³⁴ and the engorgement of welfare and state sector wages and pensions that has led to calls to “just raise tax” and hit investment even harder.

The current level of minimum wage is hurtful to the country and those it was meant to help. It was introduced in 1999 at £3.60 per hour,¹³⁵ equivalent to just under £7.00 today. At the current level of £12.21,¹³⁶ it keeps unskilled youngsters out of the employment which would begin to train them for adult life,¹³⁷ also contributing to evasion by way of employment in the shadow economy, representing at least 8% of GDP.¹³⁸ It brings regulation into disrepute and should be repealed. At the same time repealing the Employment Rights Act will have the effect of restoring the threshold for strike action to the previous level.

The number of people economically inactive due to long-term sickness reached 2.8 million in early 2024, up from 2.0 million in 2019.¹³⁹ The number of people receiving Personal Independence Payment for mental health conditions rose from 350,000 in 2015 to over 1.1 million in 2023.¹⁴⁰ Apologists for welfare argue that these figures represent alterations within a generally stable total fraction of the unemployed. By contrast, the Office for Budget Responsibility suggests that they are the perverse outcome of ill-managed bureaucratic processes.¹⁴¹ Estimates of overall benefit fraud have increased from £0.9bn in 2005-06 to £7.4bn 2023-24.¹⁴² These defects patently qualify for reform.

The UK also needs a policing and justice reset. The high-profile debacles of recording non-crime hate incidents, together with headline arrests for social media posts which break no law, have done nothing for public confidence. The real job is to reduce the social and economic cost of crime.[^151](Ibid.) More than £170bn of direct costs of crime are supplemented by a further £80bn in estimated losses due to behavioural changes by businesses. The cost of opportunities forgone due to the fear of crime, of consumption or investment opportunities not taken must also be added to the cost of a loss of faith in institutions and the damage to a high-trust society. Having crime and trust indicators moving in the right direction is key to reversing what has become an historically low economic optimism index of minus 72¹⁴³, as well as being a desirable end in itself. Unfortunately, the evidence is that spending increases on tackling crime tend to focus on process, growing overheads rather than operational capacity.¹⁴⁴

Reform bills are necessary to replace officious and obsolescent rules with frameworks which take account of recent developments and are applicable to UK conditions. The guiding spirit should be the promotion of competition.

Promotion of competition

Remove barriers to enterprises seeking to enter new markets;
Remove barriers to hiring and promotion based on economic contribution to employers;
Promote personal skillsets aligned with enterprises; and
Create physical and regulatory infrastructure making for labour and enterprise flexibility.

This applies to agri‑tech, AI, clinical trials, fintech, welfare and workers’ rights. Having these indicators moving in the right direction is key to reversing what has become an historically low economic optimism index of minus 72.¹⁴⁵ As to clinical trials, the UK healthcare market is too small for big pharma to detach itself from the lengthy processes of the US Food and Drugs Administration, which is the lead healthcare regulator. The UK’s objective should be mutual recognition of standards, as discussed elsewhere in this paper.

Britain has begun to understand that immigration is a challenge as to both quality and quantity. Improving the quality of a smaller number of migrants will pay economic dividends and restore lost confidence that a multicultural society can benefit Britain. The last few years have established that controlling low-skilled immigration and asylum shopping is necessary for social stability. This will give both home-grown talent and skilled migrants the confidence to invest their lives in Britain. It is also a prerequisite to deliver the AI, high-tech, and quantum industry that Britain’s international agreements show to be the country’s targets. These measures will restore the UK’s appeal for global headquarters, R&D labs and advanced manufacturing.

14. Defects of the post‑WW2 trade regime

The big blocs have been gaming free trade for decades.
Non-tariff barriers replaced duties, with Brussels a conspicuous offender.
The Customs Union was rigged against our goods; the Single Market does nothing for services.
The UK should avoid picking sides in future trade-wars.

We now turn to international arrangements. The post‑1945 GATT/WTO system cut tariffs but eventually failed to keep pace with new trade distortions. The Doha Round stalled, while the WTO Appellate Body’s paralysis removed credible enforcement, particularly after China joined the organisation, as cases sent to the Appellate Body failed to obtain final judgements. Since the collapse of the Body around 2019, new WTO dispute filings have fallen to roughly one-third of their previous level.¹⁴⁶

In the vacuum, non‑tariff barriers and industrial subsidies have surged, often compliant in form but protectionist in effect. Beyond compliance, many states are in flagrant violation of WTO rules. China has been for decades, with 65 WTO disputes.¹⁴⁷ So too the European Union with its innumerable non-tariff barriers, unsupported by objective evidence. Trump’s tariffs almost certainly violate GATT Articles I (Most Favoured Nation rules) and II (Bindings), as there is unlikely to be a valid exception to justify them.

Globally, neo‑mercantilism has returned, for example China’s state‑capitalism and India’s higher tariff regime. In 2023, global trade volumes expanded by just 0.2%, slowing growth to the lowest level in 50 years outside of a recession.¹⁴⁸ Trump’s tariffs and subsidies complement the EU’s strategic autonomy agenda. Europe’s common market in goods contrasts with its failed internal market in services and its long-standing tendency toward regulatory protectionism, for example, carbon border adjustments and subsidy races.¹⁴⁹ The result is fragmentation into competing blocs and managed trade. New trade dogmas have emerged, such as Brussels’ ambition to be a “regulatory superpower”, though EU officials have been conspicuously silent in the face of American observations that they would have done better to become an “innovation superpower”.¹⁵⁰

Trade Restrictive Instruments (TRIs) have been wielded defensively for decades. Mario Draghi has warned of “regulatory overreach”, which constrain competitiveness.¹⁵¹ He points to IMF reports showing that the EU’s internal barriers are equivalent to a tariff of 45 per cent for manufacturing and 110 per cent for services¹⁵². Calculations published by the EU itself show that internal and external barriers for competition are identical in 104 of 115 measures, telling us that by this measure the Single Market is close to unavailing all round.¹⁵³ OECD commentary also points to excessive regulatory burdens, with persistent TRIs within the EU, which rigged the Customs Union against the UK while the country was a member, with many still applying.¹⁵⁴ Policymakers must address these while maintaining market confidence with disciplined fiscal and monetary policy: the self‑inflicted loss of credibility increases the effect of external shocks.

The UK lacks the heft to resolve these international problems alone. Would that it could. Protection shifts costs to consumers and downstream industries, invites retaliation, and distorts investment. According to our own Trade Remedies Authority, UK steel safeguard tariffs raised domestic input prices by around 10–15 % in 2023,¹⁵⁵ burdening downstream manufacturers such as automotive and construction.

It will not pay to ‘pick a side’, much less to introduce protectionist barriers of our own or continue on our recent form of taxpayer bailouts for failing industry. A better course for the UK is “defensive liberalism”: pressing for enforceable subsidy-notification clauses in the CPTPP accession review and future UK-Japan upgrades; or aligning with the OECD’s 2023 “Guidelines on Competitive Neutrality” to discipline state aid.¹⁵⁶ The UK should also extend the Mutual Recognition Agreement (MRA) model pioneered with Australia and New Zealand to cover services and conformity assessment with Canada, Singapore and the EFTA states, reducing non-tariff barriers via trusted-partner frameworks.¹⁵⁷ “Defensive liberalism” should be subject to narrowly‑tailored security carve‑outs, provided there really is evidence that rivals will use our reliance against us, while keeping markets broadly open.

15. Rebalancing legacy relations

The international legal system has broken down.
The COP, EHRC, ICC and UNRC regimes have gone rogue.
To recover sovereignty, the UK needs to be clinical.

The cornerstone of Britain’s defence remains NATO and the Five Eyes intelligence sharing agreement, as well as industrial joint-ventures, including AUKUS and the Typhoon fighter.

Less happily, the country finds itself beset by post‑war treaties which have come to constrain democratic choices without delivering reciprocal benefit. A recent report by Policy Exchange states that the European Court of Human Rights has overstepped the Convention’s original limits, being “constantly transgressive” of its original boundaries¹⁵⁸. The Strasbourg Court’s “living instrument” doctrine has taken the Convention beyond its intended meaning¹⁵⁹. Jack Straw and David Blunkett once supported the Human Rights Act but now argue that the ECHR regime reaches too far into UK affairs¹⁶⁰. Lord Sumption and others warn that Strasbourg has abused its jurisdiction, imposing rulings on the UK against the will expressed by Parliament at the time of legislation.¹⁶¹

Nowhere is this overreach more evident than in immigration, where judges invoke Strasbourg routinely to block the removal of illegal migrants and foreign criminals by stretching Article 8, the right to family life, beyond anything contemplated by its original signatories. Meanwhile UK magistrates have been found to act coincidentally as barristers for immigrants, undermining the rule of law.¹⁶² This tells us that the problem is therefore not just the court in Strasbourg, but our own courts who weaponize the treaty against an executive with a democratic mandate.

In Britain’s constitutional tradition, Parliament, not Strasbourg, is the ultimate guarantor of rights. The Human Rights Act’s attempt to “bring rights home” was illusory: in practice it transferred authority to judges to second-guess elected officials, in many cases allowing them to project their own politics into the enforcement of law.

The Policy Exchange paper argues that essential rights can best be safeguarded through clear Acts of Parliament. It is not necessary to create a single replacement or ‘Bill of Rights’ in British law, which may repeat many of the same mistakes without clear advantages. Instead, human rights can be preserved in UK law through precise statutes, preventing judicial misinterpretation. This approach would avoid the open-ended adjudication that invited overreach under the Human Rights Act. The Government proposes to restrict the discretion of judges in these matters, but it is not clear that this initiative will survive legal challenges.¹⁶³ If not, leaving the Convention becomes inevitable.

Fears that such a course would tarnish Britain’s reputation or imperil rights are misplaced. The UK will remain a liberal democracy; our tradition of protecting liberty predates the ECHR and will continue without it. There is nothing rogue about choosing to uphold rights through our own statutes instead of a supranational court; nor would leaving signal an authoritarian turn: Britain’s robust Parliament, free press, and civil society will ensure rights remain secure, arguably more secure than today. Britain may stand almost alone in Europe outside the Convention, but that would reflect confidence in our institutions. Objections on the grounds of international reputation and the Good Friday Agreement have been authoritatively rebutted.¹⁶⁴ All that is required is the meagre diplomatic skill to communicate our reasons for leaving and our continued assent to the generality of the rules-based international order.

Other states are likely to appreciate British leadership in denouncing international treaties which have been contaminated by untoward developments.¹⁶⁵ ¹⁶⁶ Multilateral forums, including the ICJ, WTO and UN bodies, deliver uneven value when enforcement depends on the very powers most likely to breach norms, for example, the panel adjudicating Chagos contained judges from China and Russia, neither bannermen for territorial integrity and neither disinterested in the outcome. A pragmatic audit is needed to:

retain and reform where benefits are real and reciprocal¹⁶⁷,
leave or rebuild where they are not, including potential plans for a D-10 of democratic cooperation; ¹⁶⁸) or
hang on, where withdrawal offers no palpable benefit, even in such ineffective bodies as the WTO¹⁶⁹.

16. Recommendations for trade

National policy should
- Diversify goods trade with reliable friends.
- Cultivate service trade with Mutual Recognition Agreements
- Bring back regulatory sovereignty to the UK and parliament.
- Cultivate local regulation which promotes competitiveness.

We argue that Britain should remain open and safe by diversifying supply chains and nurturing a credible strategic industrial base where it matters most. The country should work bilaterally to secure better trade terms for the UK and pivot to mutual recognition agreements (MRAs) as the basis of future UK regulation. MRAs offer much for a medium sized nation with an independent trade policy. The OECD estimates that reducing non-tariff barriers through regulatory cooperation can raise services trade by up to 12% across advanced economies.¹⁷⁰ The UK specialises in educational, legal, consulting, and financial services and should seek to avoid picking a side in any cross-Atlantic trade war.¹⁷¹ Legal and professional services are worth £68bn annually, and yet a comprehensive MRA on qualifications with just the EU could recover a third of the £11bn fall in services trade with the bloc since 2019.¹⁷² MRA’s such as the UK-Switzerland Services Mobility Agreement (2023) and those in the UK-Australia FTA have in total secured recognition for 35,000 UK professionals. As the bedrock of a trade strategy with the USA, CPTPP and the European Union, the numbers would be significantly larger.

The nation should control what we can, for example, domestic barriers and frictionless trade facilitation, while using alliances and comprehensive deals to neutralise external tariff shocks. Policymakers should keep cooperation that works; reform, park, or leave arrangements that don’t. The objective is to ensure that the UK’s ultimate legal authority returns to Parliament and the people. Government delivery has been thwarted by legal novelties. In this light, we propose that the UK renounces treaty commitments which have outrun their purpose, and which have become the wherewithal for mischievous litigation, specifically the UN Convention on Refugees, which is ill-equipped to handle economic migration disguised as asylum claims, combining with the EHRC to create “pull factors” that encourage the danger and illegality of small boat crossings of the English Channel. A programme of domestic repeal will embrace the Human Rights Act, the Climate Change Act and the Equality Act. This last will also enable the introduction of arrangements for immigrants to accept monetary or regulatory consideration in return for waiving litigation.

Long‑run prosperity rests on the simple bargain set out in section 2 above: reliable rules and low taxes and a harmonious society in exchange for investment, innovation and jobs. A skills-rich economy requires greater freedom and specialisation. We see these priorities as challenging the shibboleths of the current government, so it will fall to new leaders to enable the country to implement the programme set out in our proposals for blackletter legislative reform itemised in table 1 above.

Security sovereignty – Dr Theo Zenou, Henry Jackson Society

17. The UK’s security predicament

Brexit was only a beginning.
The country has yet to set a clear course.
The country should play to our strengths in hard and soft power.

The UK Government has demonstrated its lack of strategic nous with its incoherent response to current events in the Middle East. The Labour party has never given to warmongering and has now become definitively gun-shy. It remains mesmerised by Blair’s support for Bush’s Iraq invasion as sold under a false prospectus and leading to adverse security and humanitarian outcomes. It overlooks the worse results after Miliband bounced Cameron into renouncing Obama’s “red lines” in Syria. Such an outlook does the country no favours.

More generally, Brexit gave Britain free rein in world affairs, but has not yet translated into a clear foreign or defence policy. Government after government, whether Conservative or Labour, have rolled out slogans instead of coherent doctrines. Over the last decade, there has been talk variously of “global Britain”, of “progressive realism”, of “post-Brexit realism”, of “the reset with Europe” and of becoming “a science superpower”.

These leave the impression that the country is clutching for straws, rather than a sense of ambition and potential. The question now facing a sovereign Britain is where to go next. The choice is not unconstrained. The onus is to pursue the strategy where the country is best placed to succeed, and where it can build on existing strengths.

The stakes are high as the international order is changing.¹⁷³ The United States, though still the leading global power, is retreating: its recently published National Security Strategy calls for Europe to “take primary responsibility for its own defence”.¹⁷⁴ The paper is lukewarm about NATO, at worst paving the way for running it down. This would be particularly challenging to the UK, as Europe’s other leading multilateral institution is the EU, with whom military collaboration would run into crippling domestic headwinds. Meanwhile, China is growing more aggressive; Russia threatens European security and the European Union is divided. In addition, much of the Global South, from the Association of Southeast Asian Nations (ASEAN) to the Gulf Cooperation Council (GCC) countries, is pursuing non-alignment.

As Sir Jeremy Hunt, the former Foreign Secretary, argues in his new book Can We Be Great Again?: “now is precisely the wrong moment to retreat it into our shells.”¹⁷⁵ He is right. Britain is still a major player on the world stage. It is a key member of NATO, AUKUS and the G7. The country plays a central role in the Five Eyes intelligence network, has military bases in 42 countries¹⁷⁶ , while the Royal Navy is number one in Europe¹⁷⁷ and top ten globally.¹⁷⁸ The City of London, remains one of the world’s top financial centres. When it comes to soft power, from music and film to universities and even the Royal Family, Britain still punches above its weight, perceived internationally as number three for influence, number one as a destination for American migrants and, among those aged from 18 to 34, number three as generally attractive and number two for trustworthy institutions.¹⁷⁹

18. Strategic priorities

Commitments to increase defence expenditure are welcome but smack of dodgy accounting.
Britain needs to set our strategic priorities and arm up accordingly.

The Government’s pledge to raise defence spending to 3.5% of GDP by 2035 is a step in the right direction,¹⁸⁰ but Britain must see rearmament all the way through.¹⁸¹ This means advancing promptly to a spend representing 5% of GDP, without the creative accounting apparently intrinsic to the recent NATO pledge.¹⁸² In addition, increased spend means little without a clear direction. As “a medium power with extra clout”, to use John Kampfner’s term, Britain cannot afford to act universally.¹⁸³ Prime Minister Pierre Mendès France expressed the same idea in epigrammatic French: “gouverner, c’est choisir” - to govern is to choose.¹⁸⁴ So what should Britain choose - and what decline? Hereunder, we set out Britain’s strategic options under three heads, in order of significance.

High priority

The Atlantic, that is North America and Europe

Medium priority The Antipodes East and Southeast Asia West Asia

Low priority Latin America Africa Central Asia South Asia

19. Strategic model

Vietnam offers a successful model of cultivating sovereignty amid stronger and unruly neighbours.

Britain can learn from Vietnam’s “bamboo diplomacy”. The phrase was coined by the late Vietnamese President Nguyễn Phú Trọng to describe Vietnam’s strategy of maintaining relations with rival powers while prioritising Vietnamese sovereignty. Foreign policy, Trong said, required “strong roots, stout trunk and flexible branches”. It should be “soft and wise but still persistent and resolute; flexible and creative but consistent, valiant and resilient against all challenges and difficulties”.¹⁸⁵ This remains of utmost importance to Vietnam as it seeks to deepen ties with both the US and China.

Britain’s position is not identical, in that it is firmly part of the Western alliance. But it sits within it at a time when its two key pillars, the US and the EU, are drifting apart.¹⁸⁶ This is an opportunity for Britain, if it is willing to take it. It has the potential to act as a broker between the two, helping bring them together and smooth out differences.

20. The North American pillar

The Atlantic is key to our security; the US our primary ally.
This doesn’t justify reducing ourselves to Uncle Sam’s auxiliaries.
Britain should build up our complement of planes, ships and drones.
In the short run, our forces cannot do without American supply, but we should build up domestic capacity.

The US remains Britain’s most important strategic partner. As noted above, the two are founding members of the Five Eyes intelligence sharing partnership. They deploy and exercise together as a matter of course. BAE Systems has privileged access to US contracts. None of this will change, regardless of who is in office. Under Donald Trump , however, the US is becoming increasingly transactional.¹⁸⁷ Britain must demonstrate practical value, if it wants to remain relevant to Washington.¹⁸⁸

Part of that value lies in Britain’s ability to continue to deploy alongside the US, with forces integrated across a wide range of missions. The Royal Navy operates a carrier strike group, while the Royal Air Force contributes strategic airlift and refuelling capacity.¹⁸⁹ British special forces work closely with their US counterparts.¹⁹⁰ The downside is that save for certain intelligence operations, special forces and whatever independent projection may be achieved from the uncompleted carrier fleet, Britain’s forces have been relegated to an auxiliary to Uncle Sam.

This is partly for lack of equipment, ie, the command, control, communications, computers and intelligence (C3I) capacity which allows forces to communicate and make critical decisions in real time, ie, aerial radar platforms, drones and satellites; plus logistics, ie, the airlift to get forces into position and keep them supplied.

It is also for lack of numbers. In 2023, a senior US general acknowledged the position, reportedly telling Defence Secretary Ben Wallace that the British Army is not a “tier one” fighting force and is “barely” even tier two.¹⁹¹ This is not free-riding; it is no ride at all. However much the nation’s strategists trust our transatlantic ally, such capacity falls well short of sovereignty. So never mind about sovereignty: merely to remain a credible partner, Britain must expand its capabilities. Investment in future technology is crucial. Palantir’s Greg Little and the Hudson Institute’s Bryan Clark recently argued:

“The winner in tomorrow’s war won’t be the side with the best missile. It’ll be the one with the best system to build the next missile.”¹⁹²

The 2025 National Security Strategy recognises that the country must “increase the sovereign strengths that underpin our national security.”¹⁹³ This means not just C3I; and logistics, but also the propulsion systems and electronics for independent airframes and satellites. This embraces Tempest, the UK’s next-generation fighter jet, which will replace the Typhoon and keep Britain at the forefront of the technology of aerial combat. Its importance goes further: Tempest sustains a skilled workforce in Britain and anchors Britain’s position as a top-tier defence industrial power with live international collaborations. Continued investment is essential to preserve these sovereign capabilities and maintain long-term influence.¹⁹⁴

The Navy needs frigate screens as a defensive layer to shield aircraft carriers from ship-to-ship, air-to-ship and submarine-to-ship attacks. This means accelerating the delivery of type 26 and 31 frigates, reinstating the type 32 class, and plugging the gap by holding out the tin-cup to lease such mothballed ships as the US Navy might be hanging on to and be willing to release for the UK to refit in double-quick time.

Platforms are not the end of the story: the post-Ukraine defence landscape favours adaptable, cheap drones. HJS Research Fellow, Andrew Fox , argued in his 2025 report on the future of warfare:

“Western militaries must shift procurement away from a few ‘crown jewel’ assets towards a balance of high-end platforms and large numbers of affordable, expendable systems.”¹⁹⁵

Drones also matter as they protect high-end platforms: the Navy has begun to use drones to detect incoming swarms or other attacks that threaten defensive screens. In addition, they can act as decoys. By the same token, the UK must invest in counter-drone defence, especially given the ease with which Russian drones have infiltrated the air space of its European neighbours.”[^205](Ibid.)

Overall, the UK faces the paradox of increasing its immediate reliance upon the US as a source of supply for (eg) long range airlift, satellite and airborne C3I, plus defensive platforms for naval operation, while exerting itself to develop indigenous spare and maintenance capacity and the technology and production capacity for eventual replacement. We turn to land forces below.

Canada. The country is North America’s perennial parenthesis, with a strategic profile differing from its southern neighbour, upon whom it has been a complacent free-rider for decades. Now it too feels bereft after the turmoil introduced by the present US administration: it is casting about for security in a world made more uncertain.¹⁹⁶ First, it must solve its self-inflicted problems, principally decision-making over-delegated to its constituent provinces; and self-defeating hydrocarbon policies, which have locked the country into the US as a single purchaser; and prevented it establishing a strategic role, replacing Russia as a supplier to East Asia and Europe. It is for Canada’s own government to grapple with these problems: the recently enacted Bill C5 is a start.¹⁹⁷ Over the short run, the country’s energy resources make it a natural home for datacentres, for those leary about US locations; over the long run, it offers unexploited lodes of rare earths.¹⁹⁸ Of late, Canada’s PM, Mark Carney, has given a lead in defining the dilemma of medium-sized powers in the current conditions of trade and security turbulence and in promoting improved relations between them. The UK’s role is to push things along, by promoting relations between Canada cum CPTPP and the other side of the Atlantic, if the EU can be prevailed upon to lift its gaze.

21. The European pillar

As ever, the European continent offers both threat and support to the British Isles.
Britain needs to join with our allies to offer more than tripwire deterrence.
The army needs to double to four combat divisions.
As European mercantilism continues to bedevil industrial co-operation, our stance should be constructive but robust.

A stronger military would give Britain more sovereignty. At the same time, it would also make Britain a stronger partner to the US. That, in turn, would strengthen Britain’s role as a transatlantic broker. But to be credible, the UK must also take its relationship with its immediate neighbours seriously. Europe is the region where Britain can most immediately deploy its armed forces, whether through NATO or bilateral defence arrangements. The hostilities in Ukraine remind us of the proximate threat of Russia. Any serious security policy must also put Europe at the top of the list, with implications for land forces.

At present, Britain plays a role on NATO’s eastern flank, with some 2,600 troops and 730 vehicles deployed in Eastern Europe.¹⁹⁹ It is also helping train the next generation of Ukraine’s armed forces. More than 50,000 recruits have passed through UK-led training camps, making it one of the biggest efforts of its kind anywhere in the world.²⁰⁰ It is not, however, clear that this makes up for Britain’s inability to put boots on the ground, with current headcount a fraction of the US Marine Corps, let alone the American Army.²⁰¹ ²⁰² According to figures released by the Ministry of Defence in 2024, the British Army has fewer than 19,000 troops ready for deployment in combat.²⁰³

Britain needs to offer more than tripwire deterrence, in order to demonstrate a community of commitment to its allies, as well as to provide military options other than an immediate escalation to nuclear exchanges. This means it must field an army commensurate with its obligations, calling for a mixture of armoured brigades, for conflict in the European context, and strike and mechanised brigades for long-range mobile expeditions. This adds up to four mobilizable divisions: two to deploy and two to backfill for enduring operations, with three divisions the minimum. This is a sizable increase from the current doctrine of two divisions. In addition, new technology, particularly drones, should be integrated for reconnaissance, defensive and offensive capacity. In short, it is vital that the army be properly manned, equipped and organised in a way that allows for force projection in NATO and elsewhere. General Staff and other guidance should also add to tactical flexibility with less restrictive rules of engagement. Government should raise morale with legislation providing indemnity for veterans in good standing.

Britain is also key to rebuilding Europe’s defence industry. It should support efforts to keep strategic capabilities in Europe and encourage large-scale production of drones and missiles. It should also back a shared R&D push for key technologies like microchips, satellites and sensors. This would benefit British defence firms and embed Britain further in Europe’s defence architecture, all the more desirable when the US appears to be stepping back.

There are, however, risks in putting all Britain’s eggs in a brand new basket. This is illustrated by recent dealings with the EU itself. Following the acrimony of Brexit negotiations, the Government has sought to reset relations, signing a UK-EU trade deal and a UK-EU Security and Defence Partnership (SDP) in May 2025.²⁰⁴

Critics have pointed out that the UK made concessions without getting much in return. For example, EU access to British waters for fishing was extended until 2038, far longer than expected. This was to give away a bargaining chip better retained for future negotiations.²⁰⁵ Similarly, the Security and Defence Partnership was sold as a breakthrough but there is a strong argument that it is more symbolic than substantive.²⁰⁶ As RUSI’s Ed Arnold put it,

“the SDP included no tangible deliverables or milestones.²⁰⁷”

Moreover, UK access to the EU’s Security Action for Europe (SAFE) €150bn defence procurement scheme remains up in the air.²⁰⁸

This means that neither of these examples are game changers on their own. Indeed, taken together, they point to a bigger issue. British diplomacy struggles with effective bargaining. Britain should identify its negotiating strengths, using them to get what it wants. For instance, it could offer concession on tuition fees to students, or passporting rights to banks from selected geographies. If policymakers are willing to go beyond legacy dogmas in healthcare, as section 7, there is business to be done with the US in technology, Europe in financing, and Asia in offshoring.

To exercise sovereignty in any meaningful way, Britain must identify core national interests in trade and defence and go after them with focus, not to say a degree of bloody-mindedness. As identified in section 9 above, a preliminary step will be a Derogation Act to serve as a legal framework asserting the government’s intentions. A framework beyond the EU already exists: selected European countries participate in intelligence sharing with the Anglophone Five Eyes network, as an extended Fourteen Eyes.

22. Medium priority theatres

Australia and New Zealand are natural allies against Chinese expansionism.
East and Southeast Asia likewise.
The UK can also build on its strong position in the Gulf.

Beyond the Atlantic, Britain must be clinical: it cannot be everywhere. It must focus on regions where its presence makes a difference. Three stand out: the Antipodes, East & Southeast Asia and West Asia.

The Antipodes. The region remains a natural ally for Western interests in balancing Chinese ambitions in the Pacific, complementing East and Southeast Asia (see below) The first pillar of this relationship is the Five Eyes intelligence sharing scheme. It is notable that New Zealand continues to participate in this, at odds with its general neglect of formal security relations. The second pillar is the AUKUS submarine contract which cements naval and logistical relations between the three nations. Australia is spreading its wings with a conceptual pact embracing Japan, the Philippines, Australia and the US,²⁰⁹ the “Nakamal” treaty with Vanuatu,²¹⁰ and the “ Pukpuk” treaty with Papua New Guinea.²¹¹ Britain’s objective should be to draw New Zealand into a more active role and to cultivate already strong relations with Australia, with programmes of joint exercises and eventual Pacific logistical hubs, if not outright bases.

East & Southeast Asia. The UK has intense mutual economic ties with Japan, which together with South Korea and the ASEAN bloc sits athwart global trade routes leading to geopolitical competition with China. Japan and South Korea are unequivocally committed to Western interests. (So too, Taiwan, but the UK is unlikely to want to make explicit commitments in such a risky theatre.) Malaysia and Indonesia are hedging. The Philippines under Bongbong Marcos is leaning towards the West but support is not guaranteed.²¹² Britain should engage these middle powers directly, pursuing deeper cooperation on trade, maritime security and cyber resilience. We see such overtures as promising, as the region is wary of being overly dependent on any one of the great powers, whether China, Russia or the US.²¹³ Britain offers CPTT and ASEAN countries options as they seek partners.

Security and economic ties already exist. Japan, South Korea and Taiwan are junior intelligence-sharing partners with the Fourteen Eyes network. In 2023, Japan became a party to the Global Combat Air Programme (GCAP) , to develop the Tempest supersonic stealth fighter.²¹⁴ In 2024, Britain and ASEAN launched an Economic Integration Programme as well as a plan of action. The focus is on “promoting open trade” and “developing financial services.”²¹⁵ In 2022, Britain and Australia committed £25 million to the “regional resilience” of Southeast Asia²¹⁶. This modest beginning should be a stepping stone for further initiatives. Southeast Asia is a maritime region, which makes Britain well positioned to lend its expertise in maritime security and cyber security, also with a view to joint exercises and patrols. On the other hand, as noted above, the UK’s lack of independent logistics surveillance and C3I capacity does it no favours; it also needs to build out its carrier fleet with fuller force protection and projection.

West Asia. The Gulf is geographically and economically strategic, as well as a source of FDI. The UK also has an intense interest in alleviating the region’s propensity to export turmoil. The Gulf Cooperation Council (GCC) states are rising powers. Britain already has a footprint in the region: a naval base in Bahrain, access to Duqm in Oman, air operations out of Qatar and troops stationed in Cyprus. The UK is currently running three core operations: Kipion maritime security in the Gulf, Shader against Daesh in Iraq and Syria and Prosperity Guardian in the Red Sea to keep shipping lanes open.²¹⁷ Regional relations must take account of the complications posed by Israel, which trades defence technology with the West. In addition, it is the only nation in the region which is recognised as a junior partner of the extended “fourteen eyes” intelligence-sharing network.

If Britain acts promptly and effectively, it can recover the reputation its recent wobble has put at risk. This would enable the country to capitalise on the position in the Gulf it has cultivated, to promote joint defence procurement and investments. It should also stand ready to participate in patrols to maintain innocent passage through the Bab el-Mandeb Strait and the Straits of Hormuz. Here too, the UK would benefit from building out its forces, but much of the capacity is already there: now to use it.

23. Low priority theatres

Save for the Falklands, the UK has little strategic interest in Latin America, Africa, or Central and Southern Asia.

Latin America. The continent is not altogether removed from great power rivalry but is too remote for Britain to play a useful part. It is not a major trading partner for the UK and has little value as a strategic supplier, offering only commodity minerals. Britain cannot, however, altogether overlook the continent as it has a continuing commitment to defend the Falkland Islands. For this it needs its tripwire garrison and the deterrent of expeditionary deployment.

Africa. The continent is not key to British strategy. The UK lacks major mutual economic interests with Africa. Its ability to operate on the continent is also limited, save for participating in patrols of the Bab el-Mandeb Strait, touched on above. Africa may, however, become more central to European foreign policy in decades to come since migrant flows into Europe are likely to increase.

Central Asia. The five Stans have always been remote from Britain’s security and economic interests and remain so now. There are weak arguments for cultivating them: to make trouble for Russia and China, or as a source of the rare earths which otherwise threaten to be monopolised by China. We take it that rare earths may be sourced more effectively from Greenland,²¹⁸ if not Australia²¹⁹ and eventually Canada.²²⁰ So steer clear: bilateral trade is always welcome, but any deeper entanglements are beyond our means.

South Asia. India is a source of FDI and skilled migrants into the UK and is on an upward economic trajectory, but the scope for a security partnership with Britain remains limited. The relationship between the two countries continues to be complicated by historical sensitivities, and India’s doctrine of non-alignment makes it wary of getting too close to the West. It is, however, unlikely to open its arms to China, which it perceives as an existential rival. This means that the region is not a strategic theatre for the UK, not least as India would not welcome too much involvement in the region from the former colonial power.

24. Recommendations for foreign policy and security.

The UK must pick its battles and see them through.
It needs to develop clear messaging based on hard power.
There are rewards in brokering between the US, EU and elsewhere.
More money needs to be spent more wisely.

To thrive amid global disorder, Britain must pick its battles and stick to them. The main lesson of the last few years is that coherence and consistency have been under-rated, despite being the central underpinnings of a successful foreign policy.

Britain must communicate its priorities to the international community, also making sure to play its best cards to maximum effect. This will ensure that other actors on the world stage pick up our signals accurately and act accordingly.
Britain needs to act as a transatlantic broker, which will allow it to occupy a pivotal role in the Western alliance and become more valuable to both the US and the EU/NATO member states. Beyond, the country must cultivate relations where there is the most room for progress and where it can have maximum impact. Think the Antipodes, East and Southeast Asia and the Gulf.
Britain must raise its defence spending to a realistic level, that is 5% of GDP, defining defence expenditure narrowly. Future security calls for a minimum of three combat divisions - four for choice; plus accelerated procurement of logistics, platforms and C3I infill, immediately off-the-shelf from US suppliers, but ultimately from home grown sources, including drone and counter-drone technology.

Conclusion

The advent of President Trump has shaken us up, obliging the UK to re-examine domestic, trade, foreign and security policy.

The country’s relationship with the US will survive President Trump’s jibes that our Prime Minister is “no Churchill”, but it will take more than just words. Meanwhile, other international commentators are beginning to speak of the UK as a failing state. This is sufficiently close to “failed state” to smack of hyperbole. Nonetheless, it carries a disagreeable amount of truth: demographic change which threatens social unity, baked-in fiscal imbalance, ineffectual public administration, incumbents thwarting change, flagship health service in disarray, technological turbulence, trade and foreign relations up in the air and complacent security, presided over by a governing party which finds it difficult to take military responsibility.

Our proposals pay these problems the compliment of treating them with the seriousness they deserve, that is to

forge trade relations with reliable partners on the basis of mutual respect;
identify competitiveness as a primary objective;
invest in the military and our allies;
liberate the value locked up in suburban land;
rebalance the role of the judiciary;
reform the machinery of government;
reform the public balance sheet, including “off-balance sheet” pension obligations;
take back sovereignty from international bodies; and
turn healthcare from a liability into an asset.

None of this will be easy. The alternative is a national calamity, which follows Hemingway’s account of bankruptcy, as already happening slowly and threatening to happen quickly.

Appendix

Appendix 1

Appendix 2

Appendix 3

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These are estimated on the following bases (see Appendix 1).↩︎
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Responsibility

Miles Saltiel, Robert Armstrong & Dr Theo Zenou