WEBVTT - Liz Truss on the 'Doom Loop' Engulfing the UK Economy 0:00:02.480 --> 0:00:17.759 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.079 --> 0:00:21.440 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.480 --> 0:00:23.799 I'm Jill Wisenthal and I'm Tracy Alloway. 0:00:24.120 --> 0:00:27.360 Tracy, we're recording this August twenty six, twenty twenty five. 0:00:27.440 --> 0:00:31.320 There's a lot going on right now, particularly in I guess, 0:00:31.680 --> 0:00:35.840 many big questions about macro and governance and all kinds 0:00:35.840 --> 0:00:37.880 of things in some of the richest countries in the world. 0:00:38.120 --> 0:00:40.360 That is certainly one way to put it. So just 0:00:40.440 --> 0:00:43.280 overnight we had headlines saying that Trump was going to 0:00:43.320 --> 0:00:46.520 fire Lisa Cook from the FED, and this obviously fits 0:00:46.520 --> 0:00:50.080 into the whole debate around central bank independence and how 0:00:50.159 --> 0:00:54.080 much influenced governments should actually have on central banks. And 0:00:54.360 --> 0:00:56.880 it turns out this is a debate that we've had 0:00:56.920 --> 0:00:58.720 before in other countries totally. 0:00:58.760 --> 0:01:01.280 And part of the reason I think is focused on 0:01:01.320 --> 0:01:03.520 the FED is the high level of interest payments and 0:01:03.560 --> 0:01:07.319 you'd like to see them come down. Speaking of interest payments, 0:01:07.360 --> 0:01:10.199 this morning, I saw the headline that the UK thirty 0:01:10.280 --> 0:01:13.680 year guilt is like at the highest in nineteen eighty nine, 0:01:13.680 --> 0:01:16.160 it continues to elevate. So for all the stress that 0:01:16.200 --> 0:01:19.560 we have here, all the fiscal pressure, inflationary pressure. It 0:01:19.600 --> 0:01:23.800 actually seems potentially worse elsewhere, although yes. 0:01:23.600 --> 0:01:26.560 I will say the pound is up against the dollar, right, 0:01:26.600 --> 0:01:29.960 so from a currency perspective, we're kind of doing worse. 0:01:30.040 --> 0:01:33.440 From a currency perspective. But there's a lot these things 0:01:33.440 --> 0:01:35.640 are global, is I think the point, and all of 0:01:35.680 --> 0:01:39.320 these anxieties and stresses. It's not just a US story. 0:01:39.240 --> 0:01:41.840 No, And obviously it's feeding into ball markets. And I 0:01:41.920 --> 0:01:44.440 cannot tell you how many notes we get on a 0:01:44.520 --> 0:01:47.039 daily basis about how governments can reduce the debt, how 0:01:47.040 --> 0:01:48.760 they deal with deficits and things like that. 0:01:48.920 --> 0:01:51.520 Right now, everyone to talk about this these days here 0:01:51.520 --> 0:01:54.040 in twenty twenty five, it got a lot of interest. 0:01:54.120 --> 0:01:57.080 Of course in twenty twenty two, after there is a 0:01:57.080 --> 0:02:01.000 famous spike in yields in UK guilt and maybe this 0:02:01.160 --> 0:02:04.280 sort of premonition of what a lot of rich countries 0:02:04.480 --> 0:02:06.360 would be dealing with. So I'm very excited to say, 0:02:06.400 --> 0:02:09.280 we really do have the perfect guest to speak about 0:02:09.320 --> 0:02:12.079 all of this today to understand some of the pressures 0:02:12.120 --> 0:02:15.760 facing rich developed economies. We're speaking with the right Honorable 0:02:15.919 --> 0:02:18.880 Liz Trust, former Prime Minister of the UK, author of 0:02:18.960 --> 0:02:22.079 the recent book ten years to save the West. Liz Trust, 0:02:22.120 --> 0:02:24.040 thank you so much for coming on odd lots, thrilled 0:02:24.040 --> 0:02:24.520 to have you here. 0:02:25.240 --> 0:02:25.880 Good to be on. 0:02:26.400 --> 0:02:28.240 I have a question. You know, when you see like 0:02:28.400 --> 0:02:32.520 thirty year guilt yields higher substantially than when you were 0:02:32.560 --> 0:02:35.320 the Prime minister and whenever one attacked you over the 0:02:35.360 --> 0:02:37.839 mini budget, do you feel some sense of like sort 0:02:37.880 --> 0:02:41.120 of vindication or happiness or is it all like despair 0:02:41.200 --> 0:02:42.280 for the state of your country. 0:02:42.840 --> 0:02:45.520 Well, I do feel despair for this date of my country, 0:02:45.520 --> 0:02:48.240 and it's in fact why I tried to do what 0:02:48.400 --> 0:02:51.080 I tried to do in twenty twenty two, because I 0:02:51.080 --> 0:02:53.399 could see the way things were going. I could see 0:02:53.440 --> 0:02:58.440 our economy was stagnant, that the tax revenue being generated 0:02:58.600 --> 0:03:01.360 wasn't enough to cover the amount of money the state 0:03:01.440 --> 0:03:06.000 was spending, and we needed to do something different in 0:03:06.120 --> 0:03:09.600 order to get out of a negative spiral. And what 0:03:09.760 --> 0:03:13.239 I see now is we're further down that negative spiral 0:03:13.840 --> 0:03:15.400 and we are heading. 0:03:15.040 --> 0:03:16.840 For a very very serious crisis. 0:03:16.880 --> 0:03:19.960 I said last year, I thought we were headed for 0:03:20.080 --> 0:03:24.960 an IMF bailout as Britain experienced in the nineteen seventies. 0:03:25.440 --> 0:03:29.120 I think that's even truer now. Than it was a 0:03:29.240 --> 0:03:32.200 year ago, and we're in an economic doom loop of 0:03:32.280 --> 0:03:38.880 higher taxes, lower growth, higher debt, and it's very difficult 0:03:38.960 --> 0:03:42.200 now to see the political way out of that. 0:03:43.080 --> 0:03:48.160 So how should governments actually announce or unveil large scale 0:03:48.240 --> 0:03:51.080 policy shifts because there does seem to be a some 0:03:51.280 --> 0:03:55.680 institutional constraint and then be the market reaction. We saw 0:03:55.760 --> 0:04:00.000 that this year in the US after Trump's Liberation Day announced, 0:04:00.320 --> 0:04:02.120 you know a lot of people were saying this was 0:04:02.440 --> 0:04:06.640 Trump's trust moment. How should governments actually go about I 0:04:06.640 --> 0:04:11.520 guess balancing the views of the market with you know, 0:04:11.920 --> 0:04:14.160 big scale change in terms of policy. 0:04:15.280 --> 0:04:17.960 I think the issue that I faced, and it is 0:04:18.000 --> 0:04:22.080 also the issue that Donald Trump faces in the United States, 0:04:22.680 --> 0:04:26.640 is a lot of the mainstream economic establishment do not 0:04:26.839 --> 0:04:31.520 agree with the policies that I was pursuing, and they 0:04:31.520 --> 0:04:34.240 don't agree with the policies that Donald Trump is pursuing. 0:04:34.760 --> 0:04:39.760 So you're operating in a hostile environment. In the UK's case, 0:04:40.040 --> 0:04:45.120 we have institutions that have become very divorced from government policy. 0:04:45.800 --> 0:04:48.279 In nineteen ninety eight, the Bank of England was made 0:04:48.760 --> 0:04:53.360 independent by Gordon Brown. Since then, I believe it has 0:04:53.400 --> 0:04:57.440 been pretty much unaccountable, So politicians have very little control 0:04:57.480 --> 0:05:01.640 over monetary policy, and what has happened is monetary policy 0:05:01.680 --> 0:05:05.760 has driven fiscal policy. It's very hard to coordinate between 0:05:05.800 --> 0:05:08.600 those two policies as a government because you don't have 0:05:08.760 --> 0:05:12.760 control of the leavers. Even more so, back in twenty ten, 0:05:12.880 --> 0:05:16.760 George Osborne established the Office of Budget Responsibility, which handed 0:05:16.800 --> 0:05:21.680 over huge powers to another unelected authority. It's a bit 0:05:21.800 --> 0:05:25.000 like the Congressional Budget Office, but it has more power 0:05:25.320 --> 0:05:28.960 within the British system. So what I was facing back 0:05:28.960 --> 0:05:35.120 in twenty twenty two was powerful institutions that didn't share 0:05:35.600 --> 0:05:40.240 my policy objectives. Now I believed, as the democratically selected 0:05:40.360 --> 0:05:42.800 leader of the country that I should be able to 0:05:42.839 --> 0:05:45.520 pursue those policies. It was what I was elected on it, 0:05:45.560 --> 0:05:48.360 in fact, it was what the Conservative Party elected on. 0:05:48.640 --> 0:05:51.880 But what I faced was resistant. So when you're talking 0:05:51.920 --> 0:05:56.440 about timing of policy announcements, it's not like you're operating 0:05:56.480 --> 0:06:02.240 on a clear creating in a stormy see where there 0:06:02.279 --> 0:06:04.880 are people out there who want you to fail, not 0:06:04.960 --> 0:06:07.480 just your political opponents, but also. 0:06:07.360 --> 0:06:08.799 The institutional opponents. 0:06:08.839 --> 0:06:12.120 And that is what Donald Trump faced with his tariff 0:06:12.680 --> 0:06:15.600 policies that he announced on Liberation Day. A lot of 0:06:15.640 --> 0:06:18.920 economists said they wouldn't work. A lot of people say 0:06:19.320 --> 0:06:22.919 said it would make the budget deficits in the US worse. 0:06:23.480 --> 0:06:27.960 And those policy makers are very influential with the markets. 0:06:28.360 --> 0:06:30.400 So in the case of the Bank of England, or 0:06:30.400 --> 0:06:32.800 the case of the people sitting on the Federal Reserve 0:06:33.480 --> 0:06:38.600 or civil servants within the Treasury, these people are out 0:06:38.640 --> 0:06:42.000 there creating their own waves. So I think that's the 0:06:42.000 --> 0:06:44.600 context you have to see what I was trying to do. 0:06:45.200 --> 0:06:47.520 First of all, I totally take your point about the 0:06:47.560 --> 0:06:51.000 sort of limitations of many mainstream economists, the bias of 0:06:51.040 --> 0:06:54.440 many mainstream economists, and we have many critics of mainstream 0:06:54.800 --> 0:06:58.039 economics regularly on the show. So that's a point well taken. 0:06:58.279 --> 0:07:02.600 When you unveiled your or mini budget, given the fiscal 0:07:02.640 --> 0:07:06.960 constraints or the perceived fiscal constraints, why tax cuts specifically 0:07:07.440 --> 0:07:10.760 and not also spending cuts. You know, there's so many 0:07:10.920 --> 0:07:14.400 different aspects of the UK spending situation, whether it's the 0:07:14.400 --> 0:07:17.360 triple lock pension. There's this thing that goes viral Twitter 0:07:17.440 --> 0:07:19.560 a lot about like how easy it is to get 0:07:19.640 --> 0:07:23.040 a free car, etc. Like why not first take aim 0:07:23.080 --> 0:07:26.240 at potentially low hanging fruit, or at least in combination, 0:07:26.960 --> 0:07:28.200 you know, spending cuts. 0:07:29.120 --> 0:07:31.800 Well, that is exactly what I sought to do. The 0:07:31.840 --> 0:07:35.000 package we were putting forward was a combination. It was 0:07:35.040 --> 0:07:39.200 actually not tax cuts, it was reversing a tax rice 0:07:39.560 --> 0:07:42.720 and I think that's a very important distinction. The biggest 0:07:42.800 --> 0:07:47.600 measure we wanted to take was keeping corporation tax at 0:07:47.680 --> 0:07:50.720 nineteen percent, not raising it to twenty five percent. And 0:07:50.800 --> 0:07:54.480 I believed, and I've since been proven right, that if 0:07:54.520 --> 0:07:57.840 you raise corporation tax to that level, you get less 0:07:57.880 --> 0:08:01.800 business activity, you get lower growth. Combined with the non 0:08:01.880 --> 0:08:05.640 dom tax that's been put in place or the removal 0:08:05.640 --> 0:08:09.440 of the non dom benefits, we've seen more millionaires leave 0:08:09.480 --> 0:08:12.800 Britain than any other country in the world per capita. 0:08:13.280 --> 0:08:14.720 So what we were. 0:08:14.640 --> 0:08:19.320 Doing, just on its own account, raising taxes at that 0:08:19.440 --> 0:08:22.920 juncture back in twenty twenty two was a bad idea. 0:08:23.680 --> 0:08:27.080 I believe that it would lead to lower economic growth 0:08:27.280 --> 0:08:31.080 and a higher deficit in the long term, and some 0:08:31.160 --> 0:08:35.199 economists agreed with me, But the economists working for the government, 0:08:35.280 --> 0:08:37.640 the Office of Budget Responsibility of the Bank of England 0:08:38.040 --> 0:08:41.160 did not agree with me, and they were keen on 0:08:41.200 --> 0:08:43.600 that policy, and in fact they forced me to reverse 0:08:44.120 --> 0:08:44.800 that policy. 0:08:44.920 --> 0:08:45.840 So that's one point. 0:08:46.200 --> 0:08:49.720 Second point on spending is we did try to reign 0:08:49.800 --> 0:08:50.440 in spending. 0:08:50.600 --> 0:08:53.120 So a particular thing I sought to. 0:08:53.120 --> 0:08:59.800 Do was increased welfare by wages not prices, because we 0:08:59.800 --> 0:09:03.000 were a very high inflation year in twenty twenty two. 0:09:03.440 --> 0:09:07.400 That would have saved seven billion pounds on the government budget, 0:09:07.400 --> 0:09:10.840 which has a significant amount. What I found was that 0:09:10.960 --> 0:09:14.440 conservative MPs were not prepared to vote for that. So 0:09:14.520 --> 0:09:18.760 even a relatively minor change which was simply not raising 0:09:18.800 --> 0:09:21.400 welfare as much as it was going to be raised, 0:09:21.920 --> 0:09:26.320 created a massive outcry on the conservative benches. So the 0:09:26.400 --> 0:09:30.800 answer on spending is it was politically not possible. Now, 0:09:30.880 --> 0:09:34.480 personally I would have liked to be even tougher on spending. 0:09:34.640 --> 0:09:37.160 I think we could have done that over time, but 0:09:37.360 --> 0:09:42.280 I had to think about what was politically realistic, and 0:09:42.360 --> 0:09:46.480 so what we had is spending constraint, not raising spending 0:09:46.520 --> 0:09:50.760 as much as was previously planned, keeping taxes low rather 0:09:50.760 --> 0:09:54.160 than raising them and choking off economic growth, which is 0:09:54.160 --> 0:09:57.080 what I thought it would do and was what actually happened. 0:09:57.679 --> 0:10:02.520 And then also supply side measures such as legalizing fracking 0:10:02.559 --> 0:10:04.920 in the UK making it easier to drill in the 0:10:04.960 --> 0:10:09.080 North Sea so that you stimulate the economy with supply 0:10:09.160 --> 0:10:14.360 side reforms. That was the overall package, and you know 0:10:14.400 --> 0:10:17.680 what happened. And you can compare my fiscal package with 0:10:18.400 --> 0:10:22.320 packages that Richie Soon acted during COVID or packages that 0:10:22.440 --> 0:10:27.440 Rachel Reves did, since my package was smaller even according 0:10:27.480 --> 0:10:31.000 to the estimates of the Office of Budget Responsibility, and 0:10:31.120 --> 0:10:35.040 yet it got a very different reaction. And this is 0:10:35.120 --> 0:10:40.800 because the economic establishment, the key figures in the treasurer 0:10:40.800 --> 0:10:45.160 in the Bank of England, have a bias towards a 0:10:45.240 --> 0:10:49.560 more Canesian approach. So I think it's important to note 0:10:49.559 --> 0:10:54.239 that this physical package was not any bigger than packages 0:10:54.280 --> 0:10:57.760 before or after. It just got a different reaction. I 0:10:57.760 --> 0:11:01.840 think the other important point to note about what happened 0:11:02.440 --> 0:11:05.880 in September and October twenty twenty two is the night 0:11:05.960 --> 0:11:09.480 before the mini budget, the Bank of England announced the 0:11:09.520 --> 0:11:13.400 sale of forty billion pounds worth of guilts. So I 0:11:13.640 --> 0:11:20.320 had a central bank who were making announcements that made 0:11:20.920 --> 0:11:23.760 our lives a lot more difficult the day before the 0:11:23.800 --> 0:11:27.960 mini budget, and since the guilt spike in twenty twenty two, 0:11:28.600 --> 0:11:31.920 the Bank of England have actually produced a paper saying 0:11:32.000 --> 0:11:35.760 that two thirds of that spiking gilts was down to 0:11:35.880 --> 0:11:39.600 their failure to regulate the pensions market. So there were 0:11:39.600 --> 0:11:42.280 lots of other things going on at the same time, 0:11:42.840 --> 0:11:47.400 but it was very, very convenient for the mini budget 0:11:47.440 --> 0:11:50.680 to be blamed for what happened. And as you pointed 0:11:50.679 --> 0:11:53.400 out at the beginning of the show, the guilt spike 0:11:53.600 --> 0:11:56.640 wasn't as high as it is now. So what I 0:11:56.679 --> 0:11:59.560 think is going on now is you can see the 0:11:59.600 --> 0:12:06.000 different treatment of a tax spending, high spending labor government 0:12:06.720 --> 0:12:11.120 from a conservative politician who's trying to pursue in my view, 0:12:11.200 --> 0:12:18.280 Laffer friendly tax freezes, supply side reforms, and spending restrain. 0:12:19.559 --> 0:12:24.679 If there's an institutional and market bias towards economic orthodoxy 0:12:24.760 --> 0:12:28.440 or Knesianism, as you just pointed out, why not try 0:12:28.440 --> 0:12:32.920 to adapt your budget or your economic policy to that 0:12:33.280 --> 0:12:36.080 reality because it did seem like, you know, you were 0:12:36.120 --> 0:12:40.640 sort of expecting the markets to adapt to your policy 0:12:40.800 --> 0:12:43.600 rather than vice versa. I guess I'm asking it's just 0:12:43.720 --> 0:12:46.480 is there a better way to try to communicate what 0:12:46.520 --> 0:12:48.000 you were doing at the time. 0:12:49.160 --> 0:12:51.520 Well, I'm a believer in democracy and I think it's 0:12:51.559 --> 0:12:58.040 democratically elected politicians that should decide policy, not unelected central 0:12:58.080 --> 0:13:03.120 banks and a network there's the IMF for World Bank, 0:13:03.320 --> 0:13:08.320 the central banks meeting regularly. They are far too powerful 0:13:08.360 --> 0:13:13.480 in my view at deciding what countries economic policy should 0:13:13.480 --> 0:13:14.240 be and they. 0:13:14.080 --> 0:13:15.160 Have not been effective. 0:13:15.240 --> 0:13:16.800 You know, if you look at the Bank of England's 0:13:16.840 --> 0:13:20.240 record over the past ten years on things like inflation, 0:13:20.840 --> 0:13:26.800 on economic growth, it's been extremely poor. And I fundamentally, 0:13:27.360 --> 0:13:34.840 you know, why should democratically elected politicians cow tao to 0:13:34.920 --> 0:13:39.880 what unelected officials want when we're the people who are 0:13:39.920 --> 0:13:43.320 held to account for the success of failures of the policy. 0:13:43.360 --> 0:13:46.679 And what is happening now is Rachel Reeves is very orthodox. 0:13:47.280 --> 0:13:50.800 She's a former Bank of England employee. She's essentially taking 0:13:50.880 --> 0:13:53.400 dictation from the Bank of England and the Treasury about 0:13:53.400 --> 0:13:56.360 what she should do and we can see the results 0:13:56.400 --> 0:13:59.400 of that. And what is happening is we are going 0:13:59.400 --> 0:14:01.480 to reach an end point where the country runs out 0:14:01.480 --> 0:14:05.000 of money and then we will have a major crisis 0:14:05.559 --> 0:14:07.959 and we will have to think differently. I just think 0:14:08.000 --> 0:14:10.520 it's very sad it's got to that point. This was 0:14:11.280 --> 0:14:15.480 obvious from where we were in twenty twenty two. But 0:14:15.600 --> 0:14:19.600 as I've said, the economic orthodoxy proved very powerful and Frankie, 0:14:19.600 --> 0:14:22.160 what is the point of wanting to become Prime minister 0:14:22.800 --> 0:14:25.320 if you're simply going to go along with the failing 0:14:25.440 --> 0:14:29.440 orthodoxy that has put your country in the problems it 0:14:29.520 --> 0:14:31.480 is already, which is where we were. 0:14:32.360 --> 0:14:34.600 You know, you mentioned that the Bank of England wasn't 0:14:34.640 --> 0:14:39.160 really independent from HM Treasury until Gordon Brown's chancellorship in 0:14:39.200 --> 0:14:43.160 the nineteen nineties. Do you think that arrangement still works 0:14:43.520 --> 0:14:48.000 or would you perhaps call for reform where maybe the 0:14:48.040 --> 0:14:51.040 Treasury regains some of its influence over the central bank. 0:14:51.320 --> 0:14:53.720 I think the Bank of England needs to be accountable 0:14:53.760 --> 0:14:57.360 to politicians. I think the current system doesn't work. This 0:14:57.480 --> 0:14:59.760 is why I'm very sympathetic to what Donald Trump is 0:14:59.800 --> 0:15:04.840 saying about the Fed. Monetary policy is incredibly important. It 0:15:05.000 --> 0:15:09.520 determines the allocation of assets within society. And what we've 0:15:09.520 --> 0:15:14.479 seen in Britain is we've seen people who have property, 0:15:14.680 --> 0:15:18.840 who have capital have done very well out of the 0:15:19.480 --> 0:15:21.960 low interest rates that the Bank of England and the 0:15:22.520 --> 0:15:26.560 easy money the Bank of England has created over the 0:15:26.600 --> 0:15:30.760 past fifteen years, and we're seeing young people struggle to 0:15:30.800 --> 0:15:33.640 get on the housing market. We are seeing it real 0:15:33.680 --> 0:15:36.200 effects in the economy of the Bank of England's policies, 0:15:36.280 --> 0:15:40.160 and as a Democrat, somebody at leaves in democracy, I 0:15:40.240 --> 0:15:43.320 just think it's wrong that people should be making those 0:15:43.360 --> 0:15:48.120 decisions and not accountable to the elector. And it's also 0:15:48.320 --> 0:15:52.440 very difficult, as I found as Prime Minister, to combine 0:15:52.520 --> 0:15:55.320 fiscal and monetary policy if you don't hold one. 0:15:55.160 --> 0:15:55.840 Of the leavers. 0:15:56.280 --> 0:15:58.320 So yes, I think it's got to change, and I 0:15:58.360 --> 0:16:01.520 think there is a reckoning coming for the central banks, 0:16:02.040 --> 0:16:05.720 not just in Britain but also in the United States, 0:16:05.760 --> 0:16:10.640 also the ECB. The current system does not work, and 0:16:10.720 --> 0:16:13.040 I think one of the reasons that the Bank of England, 0:16:13.680 --> 0:16:16.360 I would say sabotaged what I was trying to do 0:16:17.240 --> 0:16:20.960 is I was a critic of central banks before I 0:16:21.000 --> 0:16:23.240 became Prime Minister. I'd been very clear that I thought 0:16:23.240 --> 0:16:25.760 the Bank of English record was not good, that the 0:16:25.800 --> 0:16:28.240 Treasury should have much more of a role in setting 0:16:28.240 --> 0:16:31.960 the mandate for the Bank of England, and they didn't 0:16:32.080 --> 0:16:34.280 like their power being challenged. 0:16:50.240 --> 0:16:51.720 First of all, I want to say, I think your 0:16:51.800 --> 0:16:56.000 point about the sort of the political impossibility of or 0:16:56.040 --> 0:16:59.240 the political at least difficulty of spending cuts is really 0:16:59.280 --> 0:17:03.400 important that you had the Tory majority obviously, and even 0:17:03.520 --> 0:17:05.720 what you described as sort of modest cuts to the 0:17:05.800 --> 0:17:08.159 rate of growth is spending, couldn't get the votes. Like, 0:17:08.320 --> 0:17:10.960 I think there's a very telling issue and raise a 0:17:11.000 --> 0:17:14.760 stress about the ability of any democracies to do difficult things. 0:17:15.040 --> 0:17:19.000 Sitting aside, maybe what's politically capable in the next parliament. 0:17:19.240 --> 0:17:22.919 Should the next parliament revisit questions such as either the 0:17:22.920 --> 0:17:26.480 triple pensions or free point of use at the NHS. 0:17:27.400 --> 0:17:30.399 So, just on your point about political possibility, I think 0:17:31.520 --> 0:17:34.840 the only thing that is politically possible at present, or 0:17:34.880 --> 0:17:37.679 certainly was in twenty twenty two, was to try and 0:17:37.760 --> 0:17:41.600 restrain the growth of spending and to grow the economy 0:17:41.640 --> 0:17:43.679 faster than that. And I think that is what just 0:17:44.160 --> 0:17:46.920 that is my Trumpite strategy is in the US you've 0:17:46.960 --> 0:17:51.639 got to outpace the growth of public spending sure with 0:17:51.880 --> 0:17:55.680 economic growth. I think that is only possible. What you've 0:17:55.720 --> 0:17:59.359 just said about actually spending cuts is when there is 0:17:59.400 --> 0:18:01.159 some kind of well, so this. 0:18:01.040 --> 0:18:03.520 Is what I'm saying. So you mentioned you said last 0:18:03.600 --> 0:18:06.280 year that you were worried that the UK could need 0:18:06.320 --> 0:18:08.600 another IMF bailout. There were headlines I think of the 0:18:08.640 --> 0:18:11.520 news just in the last week of some economists talking 0:18:11.560 --> 0:18:14.120 about that again. Okay, like, if this is what we're 0:18:14.119 --> 0:18:16.000 talking about, I mean, if this is real and we're 0:18:16.000 --> 0:18:18.159 talking about the UK essentially being at the point of 0:18:18.440 --> 0:18:21.880 needing an IMF bailout, is it time to look at 0:18:21.880 --> 0:18:25.359 these sort of core pillars of existing spending levels. 0:18:26.160 --> 0:18:28.280 Well, you can see what's been going on in Parliament, 0:18:28.320 --> 0:18:31.800 which is the Labor Party tried to put through some 0:18:31.920 --> 0:18:35.520 modest welfare cuts and there was a massive rebellion by 0:18:35.600 --> 0:18:39.040 Labor MPs. Even though they have a huge majority in parliament, 0:18:39.359 --> 0:18:43.000 they could not get through some pretty minor changes, smaller 0:18:43.040 --> 0:18:45.080 by the way, than the amount I was proposing in 0:18:45.119 --> 0:18:47.920 twenty twenty two. I think it was only worth about 0:18:48.000 --> 0:18:51.560 four billion pounds. They could not get that through their 0:18:51.600 --> 0:18:56.280 current parliamentary party. And all of the evidence what happened 0:18:56.280 --> 0:19:00.639 in Greece, what happened in Ireland where spending cup programs 0:19:00.680 --> 0:19:04.240 have been achieved, or Argentina is another good example, have 0:19:04.400 --> 0:19:08.280 come after a crisis. I think that's deeply regrettable. But 0:19:09.440 --> 0:19:13.800 I can't see certainly with the current parliament serious spending 0:19:13.800 --> 0:19:17.679 cuts happening until Britain runs out of money. 0:19:18.119 --> 0:19:20.600 I'm going to ask Joe's question just in a slightly 0:19:20.640 --> 0:19:23.199 different way. But if you were back in government today 0:19:23.359 --> 0:19:28.040 and guilt yields are where they are, what specific tradeoffs 0:19:28.240 --> 0:19:32.800 between spending and taxes tax cuts would you be willing 0:19:32.880 --> 0:19:35.760 to make and what trade offs do you think are 0:19:35.800 --> 0:19:38.120 actually politically realistic. 0:19:39.080 --> 0:19:41.439 Well, the issue now is that taxes have got so 0:19:41.680 --> 0:19:45.400 high that they're checking off economic growth, and we're seeing 0:19:46.200 --> 0:19:51.119 millionaires leaving the country, We're seeing businesses closing down. I 0:19:51.119 --> 0:19:53.399 think the easiest thing and the most sensible thing to 0:19:53.440 --> 0:19:57.160 do straight away is all the supply side stuff, abolishing 0:19:57.280 --> 0:20:02.080 planning regulations, taking on the environ our mental NGOs, getting 0:20:02.119 --> 0:20:05.359 on with fracking, using north sea oil, maybe using our 0:20:05.400 --> 0:20:07.920 coal reserves. I think those are the types of things 0:20:08.560 --> 0:20:11.719 that can be done relatively quickly and would have an 0:20:11.720 --> 0:20:18.040 impact in terms of spending. Of course, our welfare state 0:20:18.080 --> 0:20:21.000 needs to be reformed. I think something like over sixty 0:20:21.000 --> 0:20:24.320 percent of Britain's budget is a combination of the National 0:20:24.359 --> 0:20:27.040 Health Service and welfare and those are the. 0:20:27.000 --> 0:20:28.719 Two areas that need to be fixed. 0:20:28.720 --> 0:20:31.400 But I don't think there's any room for maneuver now 0:20:31.440 --> 0:20:36.080 on taxes. I think that raising taxes has proved already 0:20:36.119 --> 0:20:40.400 to be counterproductive. Doing it even more will simply make 0:20:40.440 --> 0:20:43.399 the UK even more unattractive for investors. So you've got 0:20:43.440 --> 0:20:47.480 to focus on supply side. Make it much easier to 0:20:47.520 --> 0:20:51.719 build things, make it much easier to frack, make it 0:20:51.800 --> 0:20:54.320 much easier to hire people, all of those kind of things. 0:20:54.840 --> 0:20:57.600 And you have to have spending cuts where you can. 0:20:57.800 --> 0:20:59.960 But as I've said, I've tried myself to get spending 0:21:00.400 --> 0:21:01.040 through Parliament. 0:21:01.800 --> 0:21:03.840 It's it's not easy. 0:21:04.720 --> 0:21:08.040 I'm going to ask the really ignorant American question that's 0:21:08.080 --> 0:21:10.840 sometimes so forgive me if this comes off as blind, 0:21:11.440 --> 0:21:13.800 just so I'm just getting it out there. But is 0:21:13.840 --> 0:21:15.480 there a cult of the any trust in the UK? 0:21:17.320 --> 0:21:18.200 There has been. 0:21:18.440 --> 0:21:21.840 I think the cult is wearing thin, but you know 0:21:21.920 --> 0:21:24.679 there has been a cult. I think people are recognizing 0:21:24.680 --> 0:21:27.720 though that the outcomes are not good. You know, if 0:21:27.760 --> 0:21:31.200 you compare British health outcomes with other countries, I don't 0:21:31.200 --> 0:21:34.399 think the American system is anything to aspire to. But 0:21:34.440 --> 0:21:41.040 if you look at countries Germany, if you look at 0:21:41.040 --> 0:21:44.600 countries like Germany, France, Japan, you know they managed to 0:21:44.680 --> 0:21:48.879 achieve better outcomes with similar levels of funding. So I 0:21:48.920 --> 0:21:53.960 think everybody in Britain recognizes that it's not working as 0:21:54.000 --> 0:21:57.840 it's currently constituted. But it is such a big and 0:21:57.960 --> 0:21:59.240 deep issue to resolve. 0:21:59.560 --> 0:22:00.239 It really is. 0:22:00.720 --> 0:22:04.000 Joe, Remind me to tell you my NHS horror story 0:22:04.080 --> 0:22:08.520 later on. Everyone has one. On the plus side, it's free, right, 0:22:09.480 --> 0:22:09.840 all right? 0:22:09.960 --> 0:22:10.640 You know, I want to go. 0:22:10.600 --> 0:22:12.720 Back to cost you it costs you in other ways? 0:22:13.160 --> 0:22:15.760 True, I agree, say true, I want to go back 0:22:15.800 --> 0:22:20.560 to something you said about the economic orthodoxy leaning towards Keynesianism. 0:22:20.960 --> 0:22:22.800 Why do you think that is? Like, why is that 0:22:23.080 --> 0:22:27.840 the dominant economic policy framework at the moment, given that, 0:22:28.240 --> 0:22:30.280 as you keep pointing out, you know, a lot of 0:22:30.280 --> 0:22:33.880 people would argue that it hasn't actually yielded good outcomes 0:22:33.880 --> 0:22:35.480 for the developed world. 0:22:35.880 --> 0:22:38.960 In the eighties, we had some very successful supply side 0:22:39.000 --> 0:22:44.439 policies both Thatcher and Reagan increased economic growth, increase the 0:22:44.480 --> 0:22:49.879 strength of our respective economies, And when the Soviet Union collapsed, 0:22:49.920 --> 0:22:52.680 I think we all thought free market capitalism had won 0:22:53.480 --> 0:23:00.880 low taxes, restrained spending, supply side economics, and I think 0:23:00.960 --> 0:23:04.800 people in favor of those policies took their foot off 0:23:04.840 --> 0:23:10.760 the pedal, and that allowed more left wing economics to 0:23:11.240 --> 0:23:15.399 gain traction. And since then, I think we've seen it 0:23:15.440 --> 0:23:20.400 in universities, in the Treasury, in the Bank of England, 0:23:20.520 --> 0:23:28.720 but the Kanesian economics has become much more prevalent. And 0:23:29.720 --> 0:23:33.920 whether it's the Office of Budget Responsibility or the CBO, 0:23:34.280 --> 0:23:37.639 they're looking at economics through a Kinesian lens. And I 0:23:37.640 --> 0:23:40.720 think it is a big question about how on Earth, 0:23:40.800 --> 0:23:44.800 after seeing the success of those policies and now seeing 0:23:44.840 --> 0:23:49.440 the failure of Kanesian policies, anyone could possibly think these 0:23:49.480 --> 0:23:51.960 policies are right. But they proved very hard to shift. 0:23:52.000 --> 0:23:54.800 And I think the left of politics have been very 0:23:54.840 --> 0:24:00.000 successful at capturing institutions. I think they've captured large parts 0:24:00.119 --> 0:24:05.240 the bureaucracy, the university's, large parts of the media. There 0:24:05.400 --> 0:24:10.800 was in Britain there has not just talking about these 0:24:11.560 --> 0:24:14.840 the events of twenty twenty two. There's not been real 0:24:14.880 --> 0:24:17.399 analysis of what happened and what the Bank of England 0:24:17.480 --> 0:24:23.520 did and how the institutions behaved. It's something that is 0:24:23.560 --> 0:24:27.560 not talked about. And I think the level of economic 0:24:27.680 --> 0:24:31.280 literacy in the media has also got lower, and certainly 0:24:31.280 --> 0:24:35.120 British politics just gets reported as a pantomime rather than 0:24:35.520 --> 0:24:36.880 an analysis of the issues. 0:24:38.359 --> 0:24:41.160 There's much you say about the media, the way reporting 0:24:41.359 --> 0:24:44.960 is done that I probably am quite sympathetic with. Actually, 0:24:45.200 --> 0:24:48.480 would you ever join reform if the Conservatives can't pass 0:24:48.640 --> 0:24:52.879 modest slowdowns in the pace of welfare increases, if you 0:24:52.920 --> 0:24:56.440 know labor obviously hesitated issues, would you join reform? 0:24:57.000 --> 0:24:59.920 I'm not really thinking about party politics at the moment 0:25:00.119 --> 0:25:03.760 because my whole experience of being in government, and I 0:25:03.800 --> 0:25:06.760 was a government minister for ten years before I became 0:25:06.840 --> 0:25:10.560 Prime Minister, was that the power was not in the 0:25:10.600 --> 0:25:13.359 hands of the politicians. The power is in the hands 0:25:13.400 --> 0:25:17.160 of the bureaucrats. So even if Nigel Frage gets elected 0:25:17.200 --> 0:25:20.520 in twenty twenty nine, and currently he's the Booky's favorite 0:25:20.560 --> 0:25:26.000 to get elected, if the bureaucracy isn't changed, if there 0:25:26.040 --> 0:25:29.720 isn't fundamental change to the way Britain is run, nothing 0:25:29.760 --> 0:25:31.000 will alter I mean a lot of them. 0:25:31.040 --> 0:25:35.000 Presumably presumably a breakup of the I mean, right, like 0:25:35.040 --> 0:25:37.800 that's the idea, Right, there's no prospect of breaking up 0:25:37.840 --> 0:25:41.800 the bureaucracy unless there's like genuinely something new that happens politically, 0:25:42.200 --> 0:25:44.240 like that would be their argument right, that of brand 0:25:44.280 --> 0:25:46.560 new party taking power is the only way that there 0:25:46.600 --> 0:25:49.040 could be some sort of deep institutional shakeup. 0:25:49.480 --> 0:25:52.359 Yes, in some ways that's true or could be true. 0:25:52.359 --> 0:25:55.479 There's no reason why the Conservative Party couldn't do a 0:25:55.520 --> 0:25:59.560 deep institutional shakeup. But the Conservative Party has to acknowledge 0:25:59.560 --> 0:26:02.520 what went for fourteen years. You know, why didn't we 0:26:02.560 --> 0:26:05.920 solve the immigration problem, Why didn't we solve the growth problem? 0:26:06.280 --> 0:26:08.679 Why didn't we solve things like the free speech problem? 0:26:08.720 --> 0:26:13.879 The answer is we didn't reverse the institutional changes. Tony 0:26:13.920 --> 0:26:16.879 Blair mate and I talked about how he made the 0:26:16.920 --> 0:26:20.800 Bank of England unaccountable. He also made the judiciary unaccountable 0:26:21.320 --> 0:26:23.600 with things like the Human Rights Act and the Constitutional 0:26:23.600 --> 0:26:24.080 Reform Act. 0:26:24.200 --> 0:26:27.600 So until the Conservatives acknowledge that. 0:26:27.400 --> 0:26:31.800 That is why we failed to deliver an office, that 0:26:31.960 --> 0:26:35.400 is true about the Conservative Party. But if you look 0:26:35.440 --> 0:26:38.680 at the two Trump administrations, Trump one and Trump two, 0:26:39.760 --> 0:26:47.280 in Trump won, there was less recognition of the institutional 0:26:47.359 --> 0:26:49.840 change that was required in the US, and we're now 0:26:49.840 --> 0:26:53.080 seeing more of that from Trump. So my point is, 0:26:53.119 --> 0:26:56.439 whoever is in office in twenty twenty nine needs to 0:26:56.560 --> 0:27:02.080 understand that the British state needs to be fundamentally shaken up. 0:27:02.359 --> 0:27:05.040 Otherwise nothing is going to happen. And I make that 0:27:05.200 --> 0:27:08.439 argument to all parties. Interestingly, there are even people in 0:27:08.480 --> 0:27:12.760 the Labor Party backbench MP's who are saying the Bank 0:27:12.800 --> 0:27:16.160 of England's independence needs to be removed. They're saying get 0:27:16.240 --> 0:27:18.680 rid of the Office of Budget Responsibility because they can 0:27:18.720 --> 0:27:22.320 see the types of policies they want pursued are not 0:27:22.480 --> 0:27:23.960 possible with the current setup. 0:27:24.840 --> 0:27:28.439 Since we're talking political parties, and on this note, you 0:27:28.440 --> 0:27:32.480 know there maybe there is some consensus on specific economic policies, 0:27:32.520 --> 0:27:35.239 as you point out, but we've had this back and 0:27:35.280 --> 0:27:38.920 forth between Conservatives and Labor for many, many years now. 0:27:39.040 --> 0:27:44.520 How do you actually go about building consensus around economic policy, 0:27:44.720 --> 0:27:48.000 especially at a time when you know people would describe 0:27:48.000 --> 0:27:52.000 our current environment as relatively turbulent and guilt yields are 0:27:52.040 --> 0:27:52.560 where they are. 0:27:53.760 --> 0:27:56.920 I would say there's a bad economic consensus between Labor 0:27:56.960 --> 0:28:01.120 and the Conservatives at present, which is nobody is saying, 0:28:01.600 --> 0:28:05.000 apart from me a few others, nobody is. 0:28:04.960 --> 0:28:07.399 Saying that the institutions need to change. 0:28:08.160 --> 0:28:11.960 The Conservative Party are also wrapping themselves in we need 0:28:12.000 --> 0:28:14.679 to respect the independent Bank of England. We need to 0:28:14.760 --> 0:28:18.560 listen to the Office of Budget Responsibility. They're not prepared 0:28:18.600 --> 0:28:23.879 to take on the economic establishment. Neither are the Labor Party. 0:28:23.920 --> 0:28:29.640 And we're in a situation where the policies these institutions 0:28:29.880 --> 0:28:36.240 believe in are failing, and they're manifestly failing. Guilt rates 0:28:36.240 --> 0:28:39.640 are now much higher than they were back in twenty 0:28:39.680 --> 0:28:44.440 twenty two, Unemployment is up, our energy prices are the 0:28:44.520 --> 0:28:47.560 highest in the world, and the industry is closing down. 0:28:47.800 --> 0:28:54.520 These policies are manifestly failing, yet nobody is challenging the 0:28:54.600 --> 0:28:57.280 fundamentals of the economic institutions. 0:28:57.960 --> 0:29:00.240 You know, I'm gladly brought up free speech because I'm 0:29:00.320 --> 0:29:03.640 interested in that as well. And of course, you know, 0:29:03.680 --> 0:29:06.560 again in the West, I think free speech, liberal speech 0:29:06.600 --> 0:29:08.760 norms are good, and so I worry about when I 0:29:08.840 --> 0:29:12.920 see them failing in various countries or friends and neighbors. 0:29:13.120 --> 0:29:16.680 Palestine Action seems like a bunch of like crusty old hippies, 0:29:16.680 --> 0:29:20.240 And I know they defaced a plane, but they're listed 0:29:20.240 --> 0:29:22.760 as a terrorist group in your country. People can get 0:29:22.800 --> 0:29:25.320 arrested even just for saying support them, And I think 0:29:25.320 --> 0:29:27.800 they're like a terrorist group basically, like on the same 0:29:27.880 --> 0:29:30.760 level of as like isis which I think most people take, yes, 0:29:30.840 --> 0:29:33.040 that is a genuine terrorist group, like what is going 0:29:33.080 --> 0:29:33.440 on there? 0:29:33.920 --> 0:29:37.400 Well, they did attack a military base and they are 0:29:37.480 --> 0:29:40.880 advocating for terrorism in the UK. 0:29:41.840 --> 0:29:45.080 They deface a plane and then also people get arrested 0:29:45.200 --> 0:29:47.280 or in trouble for saying that they support them. 0:29:47.720 --> 0:29:51.320 They are clearly a problematic organization. And there are lots 0:29:51.320 --> 0:29:54.800 of organizations in Britain that are allowed in the UK 0:29:55.000 --> 0:29:58.760 that aren't actually allowed in many Arab countries. So I 0:29:58.760 --> 0:30:02.640 think it's right that we down on these organizations. I 0:30:02.680 --> 0:30:07.000 do think when people you know, I am a pro 0:30:07.040 --> 0:30:09.760 free speech person. I'd love to have the First Amendment 0:30:09.840 --> 0:30:14.360 here in Britain. I support both people I agree with 0:30:14.400 --> 0:30:17.200 and people I don't agree with having a lot more 0:30:17.240 --> 0:30:20.720 free speech. And it is a travesty that we've just 0:30:20.760 --> 0:30:23.680 seen Lucy Connolly released from jail who put out a tweet, 0:30:23.720 --> 0:30:27.680 deleted it four hours later and was sentenced to thirty 0:30:27.720 --> 0:30:28.640 one months in prison. 0:30:29.200 --> 0:30:30.760 That is absolutely ludicrous and. 0:30:30.720 --> 0:30:34.160 I think we've become an international laughing stock. And it 0:30:34.280 --> 0:30:37.080 is an attempt and Kirs Starmer is very clear about this. 0:30:37.600 --> 0:30:42.240 It is an attempt by the authorities to suppress what 0:30:42.360 --> 0:30:44.880 people are talking about and I think that's a very 0:30:44.960 --> 0:30:49.320 dangerous thing for a society, For a society to go down. 0:30:49.760 --> 0:30:52.400 All of these things really worry me. In the Lucy 0:30:52.480 --> 0:30:56.120 Connolly example, so she tweeted and I understand that she 0:30:56.200 --> 0:30:59.160 deleted it, but she tweeted about setting a hotel on fire. 0:30:59.160 --> 0:31:01.800 I mean that is our arguably a call to violent action. 0:31:02.200 --> 0:31:03.920 Like how would that be different? Would you feel the 0:31:03.920 --> 0:31:05.480 same way if someone said, look, you know, we should 0:31:05.480 --> 0:31:08.600 set a synagogue on fire. Is that free speech? Well? 0:31:08.800 --> 0:31:12.360 I think what she said would not have been deemed 0:31:12.680 --> 0:31:16.000 a violation in the US because it wasn't. I don't 0:31:16.000 --> 0:31:18.880 believe she was talking about a specific you go out 0:31:18.920 --> 0:31:21.400 and do this now, it was a general statement. It 0:31:21.440 --> 0:31:24.160 was obviously a terrible thing to say, and she has 0:31:24.240 --> 0:31:27.440 said sorry for that. I think there's a question about 0:31:27.960 --> 0:31:29.760 whether or not in the US that would have even 0:31:29.800 --> 0:31:31.440 been a crime at all, and even if it is 0:31:31.480 --> 0:31:35.680 a crime, whether it merits a thirty one month prison sentence. 0:31:35.760 --> 0:31:40.520 When we have people caught with child pornography being let 0:31:40.520 --> 0:31:42.680 off with no jail time at all, I mean you 0:31:42.840 --> 0:31:46.160 probably heard the expression two tier Britain. But what is 0:31:46.160 --> 0:31:49.680 happening is people are being let out very early for 0:31:49.800 --> 0:31:53.200 crimes like child rape, and yet put in prison for 0:31:54.760 --> 0:31:56.840 things that they write on Twitter, and those are two 0:31:56.920 --> 0:31:58.440 different categories in my opinion. 0:31:59.040 --> 0:32:02.120 You mentioned the first mention, then how would you reform 0:32:02.360 --> 0:32:05.960 I guess speech rights in the UK if you were 0:32:05.960 --> 0:32:06.720 in power again. 0:32:08.080 --> 0:32:10.720 We came up with free speech, freedom of the press 0:32:10.760 --> 0:32:14.600 back in sixteen ninety five, and it was a historic 0:32:14.640 --> 0:32:17.560 British liberty. We had the Bill of Rights of course 0:32:17.560 --> 0:32:22.080 sixty to eighty nine, which then the United States built 0:32:22.080 --> 0:32:23.960 on that with your Bill of Rights and so on. 0:32:24.240 --> 0:32:27.600 So these liberties are there in the British constitution. The 0:32:27.600 --> 0:32:30.960 problem is all of the laws that have been passed since, 0:32:31.240 --> 0:32:34.160 most notably the Online Safety Act. So what we need 0:32:34.200 --> 0:32:39.760 to do is restore Britain's historic liberties with a great 0:32:39.840 --> 0:32:45.400 restoration bill that sweeps away all of this legislation that 0:32:45.480 --> 0:32:48.960 has tied the country and knots. And I've talked about 0:32:49.840 --> 0:32:54.360 our problematic institutions, the problems with the judiciary, the problems 0:32:54.360 --> 0:32:57.720 with free speech. This is all down to very poor 0:32:57.800 --> 0:33:01.440 quality legislation that is essentially handed power that used to 0:33:01.440 --> 0:33:05.160 sit in the hands of the individual British citizen or 0:33:05.200 --> 0:33:09.200 the British Parliament. It's handed those power to unelected bureaucrats. 0:33:25.160 --> 0:33:29.520 Basically, my entire professional career, your party has been in 0:33:29.520 --> 0:33:32.160 power except for you know, the last ten minutes or 0:33:32.160 --> 0:33:34.360 so in Labor and Cure Star mar. 0:33:34.480 --> 0:33:35.680 Doesn't feel like ten minutes. 0:33:36.080 --> 0:33:38.920 Maybe it just feels like it over here because it 0:33:38.920 --> 0:33:41.960 feels like a lot of the rot. You describe the 0:33:42.080 --> 0:33:44.920 route that you perceive in your country, Almost so much 0:33:44.960 --> 0:33:48.760 of it seems to have taken place under Conservative government. 0:33:49.200 --> 0:33:51.280 Why is that? And why would anyone, you know, and 0:33:51.320 --> 0:33:54.320 they're thinking about the next election, why would anyone think 0:33:54.360 --> 0:33:56.600 that if there's so much route was allowed to happen 0:33:56.720 --> 0:33:59.560 under the Tories, that the Tories should be given another 0:33:59.640 --> 0:34:00.320 chance power. 0:34:01.600 --> 0:34:03.840 So I think the rots has sort of built up 0:34:03.840 --> 0:34:08.239 over time. So I talked about the development of the bureaucracy. 0:34:08.280 --> 0:34:12.800 You had the Atle government which socialized Land, which created 0:34:12.840 --> 0:34:15.640 the NHS, which created the welfare state. A lot of 0:34:15.680 --> 0:34:18.840 our problems go back to that government. But what was 0:34:18.920 --> 0:34:25.200 very important about the Blair government is this taking power 0:34:25.239 --> 0:34:27.960 that was in the hands of Parliament and putting it 0:34:28.000 --> 0:34:34.320 in the hands of unelected bodies, bureaucracies, the Bank of England, 0:34:34.360 --> 0:34:38.920 the judicial appointments, Commission, all of this plethora of people 0:34:39.040 --> 0:34:42.080 offcom who are now making the decisions about free speech, 0:34:42.600 --> 0:34:45.520 These pleasure of people who have not been elected now 0:34:45.719 --> 0:34:48.160 de facto run our country. And the big mistake the 0:34:48.200 --> 0:34:52.520 Conservative Party made was not reversing that. And this was 0:34:52.560 --> 0:34:55.640 because at the time David Cameron said he wanted to 0:34:55.640 --> 0:34:58.200 be the heir to Blair, you know, who wanted to 0:34:58.239 --> 0:35:00.840 be fashion of all the Conservatives, be modern. But I 0:35:00.880 --> 0:35:04.400 think it was a huge error and the Conservative Party 0:35:05.040 --> 0:35:08.239 lost its soul. That's what happened in the pursuit of power, 0:35:08.280 --> 0:35:11.799 in the pursuit of trying to be modern, the Conservative 0:35:11.840 --> 0:35:13.880 Party lost its soul. And I think it's an open 0:35:13.960 --> 0:35:18.200 question about whether or not the Conservative Party can get 0:35:18.280 --> 0:35:22.880 it sold back or be replaced. But certainly you know 0:35:22.920 --> 0:35:28.680 where we are now. Not enough people are saying what 0:35:28.880 --> 0:35:33.080 really went wrong over those fourteen years, But the Conservative 0:35:33.120 --> 0:35:37.200 Party failed to take on the bureaucracy. These were not 0:35:37.239 --> 0:35:41.239 the Conservative Party's policies. They were just policies that we 0:35:41.320 --> 0:35:42.200 didn't object to. 0:35:43.920 --> 0:35:49.000 Related to Joe's point, when you think back to certain 0:35:49.040 --> 0:35:53.480 moments in Britain's economic history, so for instance Brexit, the 0:35:53.640 --> 0:35:56.319 argument then was that if we get rid of all 0:35:56.360 --> 0:36:00.040 this EU regulation, the UK economy will be free to 0:36:00.040 --> 0:36:03.279 flourish and prosper. And I think in the nineteen seventies, 0:36:03.320 --> 0:36:06.120 you know, Anthony Barber instituted some tax cuts as well, 0:36:06.400 --> 0:36:09.600 right before inflation hit, I think twenty five percent or 0:36:09.600 --> 0:36:15.080 something like that. Why should the UK population have confidence 0:36:15.200 --> 0:36:20.000 that a growth focused economic policy, one that features you know, 0:36:20.080 --> 0:36:24.560 big tax cuts and deregulation, will actually drive economic growth. 0:36:25.160 --> 0:36:28.120 Well, I think the important thing to note about Brexit 0:36:28.280 --> 0:36:31.120 is we haven't got rid of any of those European laws. 0:36:31.920 --> 0:36:36.080 They're still on the British statute books. So laws that 0:36:36.160 --> 0:36:39.680 protect bats and news still on the statute books. Laws 0:36:39.680 --> 0:36:43.400 that tell you how your can opener should work are 0:36:43.400 --> 0:36:45.760 still on the statute books. We still have the working 0:36:45.840 --> 0:36:49.680 time Directive, we still got all of those laws. So 0:36:50.520 --> 0:36:52.839 this goes back to the problem you were talking about 0:36:52.880 --> 0:36:57.600 the Conservative Party. The Conservative Party is fundamentally split between 0:36:57.760 --> 0:37:02.239 people who want Britain to be you know, Singapore on TEMs, 0:37:02.280 --> 0:37:07.799 you know, a free trading go getting country, people who 0:37:07.840 --> 0:37:10.200 wanted it to be part of Europe and want to 0:37:10.200 --> 0:37:14.360 be part of the you know, European lots of labor 0:37:14.440 --> 0:37:18.680 laws protecting people environmental red tape, all of that stuff, 0:37:18.880 --> 0:37:22.120 and that issue has never resolved within the Conservative Party, 0:37:22.160 --> 0:37:26.120 which is why you know, you saw prime ministers being deposed, 0:37:26.200 --> 0:37:29.200 why you have the debate within the Conservative Party. And 0:37:29.280 --> 0:37:32.080 I think if you look at the Brexit vote in Britain, 0:37:32.160 --> 0:37:35.279 fifty two percent voted for Brexit, forty eight percent didn't, 0:37:35.680 --> 0:37:40.600 so Brexit was not delivered as the public intended. I 0:37:40.640 --> 0:37:43.440 mean the biggest case in point is of course immigration, 0:37:44.440 --> 0:37:50.160 where the Boris Johnson government failed to invact allowed immigration 0:37:50.360 --> 0:37:54.560 to increase huge amounts, which has had a very negative effect. 0:37:55.120 --> 0:37:58.000 You know, since you mentioned party politics in the UK 0:37:58.239 --> 0:38:01.960 and the split within the Conservative Party, again ignorant question here. 0:38:02.000 --> 0:38:05.040 I do get the impression that the Conservatives just like 0:38:05.120 --> 0:38:07.640 all seem to hate each other more than the members 0:38:07.680 --> 0:38:10.520 of the Labor Party and the nineteen twenty two Committee, 0:38:10.520 --> 0:38:12.400 which I still like have to Wikipedia every once in 0:38:12.440 --> 0:38:14.240 a while to remember what that is, and they're always 0:38:14.239 --> 0:38:17.160 like scheming against each other. Is there like a deeper 0:38:17.200 --> 0:38:20.480 culture of just internal hate in the Conservative Party than 0:38:20.520 --> 0:38:21.000 the Liberal right? 0:38:21.040 --> 0:38:21.640 I would say. 0:38:22.160 --> 0:38:24.680 I would say the problems that the Conservative Party go 0:38:24.840 --> 0:38:28.919 back to where Margaret Thatcher was defenestrated and the sort 0:38:28.960 --> 0:38:32.560 of Tory wets and the you know, the Thatch Rights. 0:38:33.160 --> 0:38:36.319 But if you compare it to American politics, you know, 0:38:37.239 --> 0:38:39.600 if you look at the split between people like Trump 0:38:40.120 --> 0:38:43.919 and people like Dick Cheney or the sort of Bush Republicans, 0:38:44.320 --> 0:38:49.560 it's a very similar ideological divide. But what is different 0:38:49.600 --> 0:38:52.960 in America is that Trump has basically taken over the 0:38:53.040 --> 0:38:58.560 Republican Party, whereas in Britain the kind of the left 0:38:58.600 --> 0:39:00.879 of the Conservative Party is still in control of it. 0:39:01.280 --> 0:39:04.000 That's the difference. Well, there is going to be a 0:39:04.000 --> 0:39:07.400 political realignment, and you can see it in America. You know, 0:39:07.960 --> 0:39:12.240 Republicans are now getting votes from low income people, people 0:39:12.239 --> 0:39:16.000 in rural areas. The Democrats are dominating in the sort 0:39:16.040 --> 0:39:19.640 of liberal cities. That's exactly what's going to happen in 0:39:19.640 --> 0:39:23.200 Britain at the next election. It's just the Conservative Party 0:39:23.280 --> 0:39:26.359 hasn't really got its head around which of those two things. 0:39:26.360 --> 0:39:26.680 It is. 0:39:27.960 --> 0:39:30.239 So one of the things that seems to be happening 0:39:30.440 --> 0:39:33.920 in many developed countries at the moment is everyone wants 0:39:33.960 --> 0:39:38.280 to boost their own domestic manufacturing sector. And I believe 0:39:38.320 --> 0:39:40.520 you've spoken about the need for this in the UK 0:39:40.640 --> 0:39:44.640 book four. When I think about the British economy. I 0:39:44.760 --> 0:39:47.640 usually think there's a pretty big monopoly when it comes 0:39:47.760 --> 0:39:50.080 to let's call it intellectual. 0:39:49.560 --> 0:39:53.239 Jobs, services, finance office, journalisms and journalism. 0:39:53.400 --> 0:39:54.960 Yeah, that kind of thing. 0:39:55.480 --> 0:39:59.080 But when I think about British manufacturing, you know, it's 0:39:59.239 --> 0:40:03.319 it's an island with a relatively small population compared to 0:40:03.640 --> 0:40:06.920 some other places in the world and high taxes. As 0:40:06.920 --> 0:40:10.920 you've been pointing out, what would make Britain actually competitive 0:40:10.960 --> 0:40:14.080 when it comes to manufacturing at a time when everyone 0:40:14.200 --> 0:40:17.640 seems out to compete in the same field. 0:40:17.880 --> 0:40:20.200 Well, the number one thing is energy prices need to 0:40:20.200 --> 0:40:22.759 come down. They're the highest in the world. They're four 0:40:22.800 --> 0:40:27.239 times the United States. If you are a car manufacturer, 0:40:27.280 --> 0:40:31.960 steel manufacturer, it's incredibly hard to compete. So that has 0:40:32.040 --> 0:40:35.040 to change. We have to make it much easier to 0:40:35.040 --> 0:40:36.880 build things in Britain. If you want to build a 0:40:36.880 --> 0:40:38.799 new factory, it takes far too long. So there are 0:40:38.840 --> 0:40:42.760 all of those sort of supply side policies. 0:40:42.880 --> 0:40:43.880 That need to change. 0:40:44.239 --> 0:40:48.279 I think Britain we de industrialized pretty much earlier than 0:40:48.280 --> 0:40:49.000 any other country. 0:40:49.040 --> 0:40:49.640 You can see the. 0:40:49.560 --> 0:40:53.799 Same thing now happening in Germany and continental Europe. I 0:40:53.800 --> 0:40:57.160 think it's important to do, or you can to maintain 0:40:57.160 --> 0:41:00.640 a manufacturing base because a lot of industry like AI, 0:41:00.680 --> 0:41:06.279 for example, requires high levels of energy. It requires other 0:41:06.400 --> 0:41:09.560 industries that it can sort of feed off if you like, 0:41:09.719 --> 0:41:13.920 So if you just become I talked about Singapore and 0:41:13.960 --> 0:41:16.880 seams earlier, but Singapore's a relatively small countries so it 0:41:16.880 --> 0:41:18.319 can afford to be a trading hub. 0:41:18.560 --> 0:41:19.759 Britain is a country. 0:41:19.480 --> 0:41:22.440 Of seventy million people. I think you can't rely on 0:41:22.520 --> 0:41:25.920 services alone. I think you have to produce the full gamut. 0:41:25.960 --> 0:41:29.120 I'm very worried that we're losing our last steel blast furnace. 0:41:29.680 --> 0:41:33.359 What we learned during COVID is you are seriously up 0:41:33.360 --> 0:41:37.160 against it if you are relying on China for pharmaceuticals. 0:41:37.760 --> 0:41:41.080 These are the types of industry that Britain. 0:41:40.719 --> 0:41:42.360 Can excel in and does excel in. 0:41:42.600 --> 0:41:46.360 I mean, our biggest manufactured export to the United States 0:41:46.400 --> 0:41:49.560 is cars. We do produce good, high end cars that 0:41:49.600 --> 0:41:54.200 people want to buy. So there are opportunities for British manufacturing. 0:41:54.200 --> 0:41:58.640 It's just been made very very hard by high energy 0:41:58.640 --> 0:42:01.480 prices and are planning rules. 0:42:01.760 --> 0:42:04.719 I take your point about certainly about energy prices and 0:42:04.760 --> 0:42:07.319 planning rules. Many people are having the same discussions here 0:42:07.800 --> 0:42:11.160 to my mind, and Tracy mentioned the fairly small population 0:42:11.640 --> 0:42:13.280 scale is incredibly. 0:42:13.000 --> 0:42:15.840 Well, I was seventeen, okay, okay. 0:42:15.360 --> 0:42:18.840 Okay, Well you know China has, however, hundreds of millions 0:42:18.880 --> 0:42:21.040 just in the manufacturer But yes, I take your point, 0:42:21.080 --> 0:42:25.080 not that small. But did Brexit harm scale capacity because 0:42:25.120 --> 0:42:28.040 to my mind, if we're thinking about okay, mass production 0:42:28.480 --> 0:42:31.239 at efficient level, so that it's like genuinely competitive, so 0:42:31.280 --> 0:42:34.000 that it's not some sort of you know, government subsidized 0:42:34.239 --> 0:42:38.239 albatross that just exists as a make work industry, it 0:42:38.360 --> 0:42:42.000 strikes me that sheer scale of market is very important, 0:42:42.040 --> 0:42:44.600 and it feels to me like Brexit has shrunk the 0:42:44.640 --> 0:42:46.160 scale of that market. 0:42:45.920 --> 0:42:48.080 For these I mean, there's no there's no evidence that 0:42:48.160 --> 0:42:52.399 exports to Europe have gone down after Brexit, and in fact, 0:42:52.520 --> 0:42:55.440 you know, the different trade deal we got from the 0:42:55.480 --> 0:42:59.160 EU presents the UK with some opportunities because we have 0:42:59.239 --> 0:43:02.440 lower tariffs in some areas with the United States than 0:43:02.480 --> 0:43:05.920 the EU does. But I think the other big factory 0:43:05.960 --> 0:43:08.759 in manufacturing is so much of it is becoming automated 0:43:09.400 --> 0:43:12.520 that it makes economic sense for goods to be produced 0:43:12.520 --> 0:43:15.799 close to market because you're no longer getting the advantage 0:43:15.800 --> 0:43:19.240 of a massive labor cost differential. So I think it's 0:43:19.280 --> 0:43:22.280 it's just a natural progression of modern economies that more 0:43:22.480 --> 0:43:24.919 manufacturing is going to be done closer to home when 0:43:24.920 --> 0:43:27.840 you've got a much more automated process. 0:43:28.800 --> 0:43:32.000 Since we're talking trade and exports, the UK was one 0:43:32.040 --> 0:43:34.680 of the first countries I think to sign an agreement 0:43:34.719 --> 0:43:38.480 with the Trump administration on tariffs. Would you have signed 0:43:38.480 --> 0:43:41.480 that so quickly or would you have perhaps pushed back 0:43:41.520 --> 0:43:45.000 a little bit more, given you your emphasis on boosting 0:43:45.080 --> 0:43:47.080 manufacturing domestically within the UK. 0:43:47.880 --> 0:43:51.719 I did actually praise Kirsedtarma for the deal at the time. 0:43:51.760 --> 0:43:53.480 I was one of the few people to praise it, 0:43:54.160 --> 0:43:57.000 and I said, because I've got experience of negotiating with 0:43:57.040 --> 0:44:00.600 the first Trump administration. Bob Loiheiser said, I know how 0:44:00.600 --> 0:44:03.600 difficult it is, and I thought the UK got a 0:44:03.640 --> 0:44:07.080 good deal, and so it has proven that the EU 0:44:07.160 --> 0:44:09.919 has actually got a worse deal than the UK got. 0:44:09.960 --> 0:44:11.960 So I thought he was right. He was right to 0:44:12.000 --> 0:44:12.279 do that. 0:44:12.880 --> 0:44:14.239 And I want to see. 0:44:14.480 --> 0:44:17.560 Well, we are paying lower tariffs than the EU. 0:44:17.440 --> 0:44:21.440 Is, so just on a relative basis compared tor on 0:44:21.480 --> 0:44:24.200 an absolute basis, you're still paying terroriffs. 0:44:25.280 --> 0:44:29.000 Yes, But what Trump has done the with all of 0:44:29.000 --> 0:44:32.719 his trade deals around the world is essentially reset the 0:44:32.719 --> 0:44:35.600 World Trade Organization. I think it was one of the 0:44:35.640 --> 0:44:41.360 biggest errors that of American foreign policy when Clinton allowed 0:44:41.800 --> 0:44:45.440 China to join the World Trade Organization on developing country terms, 0:44:46.040 --> 0:44:49.720 and that has had in my view, it's helped boost 0:44:49.800 --> 0:44:54.200 China's economy. China is an autocratic, authoritarian regime. I think 0:44:54.239 --> 0:44:57.840 that was a disastrous policy. What Trump is trying to 0:44:57.880 --> 0:45:02.800 do is reset at that, and that has inevitable consequences 0:45:02.840 --> 0:45:06.360 for all of America's trading partners. But knowing what I 0:45:06.440 --> 0:45:09.840 do about the Trump administration, I thought the deal kissed 0:45:09.920 --> 0:45:11.640 Arma Gott was a good deal. 0:45:12.239 --> 0:45:14.279 Potentially one thing that could I. 0:45:14.239 --> 0:45:19.279 Don't praise him very often, by the way praise I figured. 0:45:19.000 --> 0:45:22.000 That's one thing that theoretically could be done to lower 0:45:22.160 --> 0:45:25.920 energy prices for in many places would be a resolution 0:45:26.360 --> 0:45:29.120 of the war in Ukraine. And I'm curious when you 0:45:29.160 --> 0:45:32.759 look at either Trump's pursuits or what Keir Starmer has said, 0:45:33.000 --> 0:45:35.839 do you see other paths? Were you the Prime minister now, 0:45:35.840 --> 0:45:39.440 what would you be pushing for in that particular conflict. 0:45:39.719 --> 0:45:42.759 Well, I want what I want out of that conflict 0:45:42.880 --> 0:45:46.959 is I want Putin not to have been rewarded for 0:45:47.120 --> 0:45:51.080 his appalling invasion of Ukraine. So what we don't want 0:45:51.280 --> 0:45:54.200 is him, or indeed shi Jingping to get the signal 0:45:54.640 --> 0:45:57.360 from the resolution of the Ukraine conflict that this was 0:45:57.400 --> 0:46:04.640 a this invasion was somehow justified or worth it. I 0:46:04.719 --> 0:46:09.880 want Russia to be contained because I still believe that 0:46:10.640 --> 0:46:12.640 they have expanded its instincts. 0:46:13.800 --> 0:46:16.080 Just going back to the Mini Budget for a second, 0:46:16.320 --> 0:46:19.000 one of the components of that was government support to 0:46:19.120 --> 0:46:22.600 offset higher energy prices, and that was also one of 0:46:22.640 --> 0:46:25.719 the things that seemed to spook markets, This idea that 0:46:25.760 --> 0:46:29.160 the UK government would be fiscally on the hook to 0:46:29.280 --> 0:46:33.280 compensate for astronomical energy prices at the time that seemed 0:46:33.320 --> 0:46:36.879 to be expanding at an enormous rate. If you were 0:46:36.880 --> 0:46:39.560 going to do it all over again, would you have 0:46:40.000 --> 0:46:43.480 possibly included some sort of mechanism to maybe limit the 0:46:43.520 --> 0:46:48.680 cost or avoid the sense that the UK was basically 0:46:48.760 --> 0:46:52.239 bailing out its population in some way. 0:46:52.400 --> 0:46:55.319 It's important to note that the Energy package was one 0:46:55.360 --> 0:46:59.440 thing that wasn't reversed, so that was not the policy. 0:47:00.200 --> 0:47:03.120 The policy that I was forced to reversed, and that 0:47:03.280 --> 0:47:07.640 was made pretty clear to me pretty much through threats 0:47:07.840 --> 0:47:12.080 was the corporation tax increase. The energy policy remained in place. 0:47:13.000 --> 0:47:16.160 The energy policy remained in place. And the point about 0:47:16.200 --> 0:47:20.440 the energy policy was it was not a subsidy that 0:47:20.600 --> 0:47:24.000 happened automatically. It was only when energy prices reached a 0:47:24.000 --> 0:47:27.480 certain level. And I believed it was right for the 0:47:27.520 --> 0:47:30.560 government to do that because the government had failed to 0:47:30.800 --> 0:47:34.960 ensure adequately cheap energy was supplied. 0:47:35.480 --> 0:47:36.239 But what I was. 0:47:36.200 --> 0:47:41.480 Doing in tandem with that policy of essentially ensuring people 0:47:41.520 --> 0:47:46.280 against very high energy prices was getting on with fracking, 0:47:47.560 --> 0:47:52.719 licensing new north sea gas reserves so the prices would 0:47:52.719 --> 0:47:55.840 never get that high. So it was an insurance against 0:47:55.840 --> 0:48:00.080 prices going high to give consumers and businesses confidence to 0:48:00.160 --> 0:48:04.399 invest whilst we sorted out the supply that had been 0:48:04.480 --> 0:48:08.960 so badly failed by previous governments. That was the intention 0:48:09.080 --> 0:48:11.200 of the policy, and as I've said, the policy wasn't 0:48:11.239 --> 0:48:15.759 reversed by my successor. The policy that was reversed was 0:48:15.800 --> 0:48:19.240 getting on with the fracking. So you had the energy 0:48:19.280 --> 0:48:22.319 insurance policy but not the fracking policy. Those policies were 0:48:22.360 --> 0:48:26.279 designed in tandem so that we can make sure that 0:48:27.120 --> 0:48:30.200 businesses in the country weren't spooked by the threats of 0:48:30.239 --> 0:48:34.200 having a sky high energy prices. And by the way, 0:48:34.280 --> 0:48:37.239 if the energy prices had got that high, there would 0:48:37.280 --> 0:48:39.200 have had to be some kind of package to deal 0:48:39.239 --> 0:48:41.800 with them. Anyway, what I was doing is giving people 0:48:41.920 --> 0:48:45.000 notice so they had the confidence to invest. 0:48:45.360 --> 0:48:46.440 The energy package was. 0:48:46.440 --> 0:48:49.799 Actually announced because very sadly, her Majesty the Queen died. 0:48:50.239 --> 0:48:53.000 It was announced a few weeks beforehand. It wasn't announced 0:48:53.000 --> 0:48:56.040 at the time of the mini budget. The thing that 0:48:56.360 --> 0:48:59.920 the economic establishment really objected to in the mini budget 0:49:00.080 --> 0:49:02.880 of the taxes, it was that, you know, it was 0:49:02.960 --> 0:49:04.480 not raising corporation tax. 0:49:04.800 --> 0:49:05.719 That's what they didn't like. 0:49:07.200 --> 0:49:09.360 I just have one last question. You know, Tracy and 0:49:09.400 --> 0:49:12.400 I work in public, though not as public is having 0:49:12.440 --> 0:49:15.800 been the Prime Minister of the UK. We live in 0:49:15.880 --> 0:49:19.120 this age where people, you know, stories go insane, and 0:49:19.160 --> 0:49:22.719 people love to see someone publicly humiliated. And it just 0:49:22.760 --> 0:49:25.080 seems to me that the UK press in particular is 0:49:25.120 --> 0:49:28.200 a bunch of jackals. But that's just my impression over here, 0:49:28.239 --> 0:49:29.360 even relative to the pressure. 0:49:29.480 --> 0:49:32.120 So it's funny when Americans come over and they don't 0:49:32.160 --> 0:49:34.799 realize what they're like, and I'm like, you ain't seen 0:49:34.800 --> 0:49:37.160 nothing until you dealt with the UK press, and they 0:49:37.200 --> 0:49:40.120 always ga, Liz, you were right, you're about these people. 0:49:40.200 --> 0:49:42.160 I just see in the headlines it's I don't know, 0:49:42.200 --> 0:49:45.040 it seems obvious to me. What's your lesson takeaway? How 0:49:45.040 --> 0:49:48.120 do you move past a period of one's life like that. 0:49:49.400 --> 0:49:51.640 Well, I didn't really see it like that. I just 0:49:51.680 --> 0:49:55.319 see that the British press needs to change. And I'm 0:49:55.320 --> 0:49:58.800 a big support of independent media. I think the British 0:49:58.800 --> 0:50:02.160 press is coverage of e Can is appalling. I think 0:50:02.200 --> 0:50:05.359 their coverage of politics is skin deep. I don't think 0:50:05.360 --> 0:50:08.600 they've done anything to analyze the sort of failings of 0:50:08.640 --> 0:50:14.920 the British state, and I think there won't be serious. 0:50:15.080 --> 0:50:17.560 We don't just need to change the bureaucracy in this country. 0:50:17.680 --> 0:50:21.719 We need to deal and change the press. And people 0:50:21.760 --> 0:50:24.920 are now turning off the BBC. You know, they're turning 0:50:24.960 --> 0:50:30.360 off the mainstream media because they can see that the truth. 0:50:30.239 --> 0:50:31.080 Isn't being told. 0:50:31.120 --> 0:50:34.040 And there used to be a golden age I guess 0:50:34.040 --> 0:50:36.480 in journalism where people cared about the truth. I'm afraid 0:50:36.520 --> 0:50:39.040 they don't now. Friends of mine who are journalists just 0:50:39.080 --> 0:50:41.640 say their editorial conference is about how many clicks their 0:50:41.719 --> 0:50:45.239 article gets, and it's you know, I just think that's pathetic. 0:50:46.080 --> 0:50:48.880 Well, these are the tensions of being a journalist in 0:50:49.040 --> 0:50:51.680 modern times. But I have one more question. It's just 0:50:51.719 --> 0:50:55.840 going back to some technical aspects I guess of economic policy. 0:50:56.280 --> 0:51:01.799 So you've criticized the OBR for you know, it's forecasts 0:51:01.840 --> 0:51:05.640 that end up influencing or you know, perhaps even dictating 0:51:05.840 --> 0:51:09.439 government policy. I guess My question is, you know, when 0:51:09.440 --> 0:51:13.960 you think about a pro growth economic agenda that also 0:51:14.120 --> 0:51:18.600 relies on forecasts about future growth. And when we talked 0:51:18.600 --> 0:51:22.799 to Stephen Myron from the Trump administration earlier this year, 0:51:22.960 --> 0:51:25.560 that was one takeaway from our conversation was how much 0:51:25.600 --> 0:51:29.600 the Trump administration was really betting on economic growth picking 0:51:29.680 --> 0:51:32.359 up in order to offset some of the stuff it 0:51:32.400 --> 0:51:37.799 was doing it. But why should people have confidence in 0:51:37.880 --> 0:51:41.719 the growth forecast but not have confidence in you know, 0:51:41.880 --> 0:51:43.280 OBR forecasts. 0:51:43.440 --> 0:51:46.120 But the point about the OBR, and this has been 0:51:46.239 --> 0:51:52.320 proven by history, is that they overestimate how much raising 0:51:52.400 --> 0:51:55.279 taxes will bring in in revenue because they don't take 0:51:55.719 --> 0:51:59.279 the full account of the depression and economic activity, and 0:51:59.320 --> 0:52:05.160 they estimate the impact of supply side reforms like planning 0:52:05.280 --> 0:52:06.800 or fracking or whatever else. 0:52:07.480 --> 0:52:11.400 And there are two answers. 0:52:11.480 --> 0:52:16.359 This one is there are better economists out there, and 0:52:17.160 --> 0:52:19.919 I think the government, as was the case prior to 0:52:20.040 --> 0:52:23.720 twenty ten, the government should have the ability to hire 0:52:23.760 --> 0:52:29.279 the economists that they believe are right. I don't think 0:52:29.280 --> 0:52:31.920 my homework should be marked by somebody doesn't agree with me, 0:52:32.080 --> 0:52:33.200 which is what was happening. 0:52:33.640 --> 0:52:34.680 I think that's just wrong. 0:52:34.840 --> 0:52:37.320 If people don't like what I'm saying and they don't 0:52:37.440 --> 0:52:40.800 like the policies, they can vote me out at an election. 0:52:41.320 --> 0:52:44.800 But I wasn't even allowed to try the policies because 0:52:44.800 --> 0:52:47.279 the people marking my homework said no. I mean, that's 0:52:47.360 --> 0:52:50.080 the bottom line. But the second thing is I think 0:52:50.160 --> 0:52:54.080 we're far too reliant on forecasts. You can't predict the future, 0:52:55.160 --> 0:52:59.120 and trying to say which is what the UK system 0:52:59.160 --> 0:53:02.160 does that five years out we know exactly what the 0:53:02.239 --> 0:53:02.719 debt is. 0:53:02.680 --> 0:53:04.080 Going to be is rubbish. 0:53:04.239 --> 0:53:07.600 You know, we don't know what if Donald Trump imposes 0:53:07.680 --> 0:53:11.040 huge tariffs, what if the UK strikes a trade deal 0:53:11.080 --> 0:53:15.120 with India? You know what if there's a discovery of 0:53:15.120 --> 0:53:18.120 a new technology that totally transfer You don't know what 0:53:18.160 --> 0:53:21.600 the future is going to look like. And my economics 0:53:21.680 --> 0:53:23.600 is based on first principles. I know that if you 0:53:23.680 --> 0:53:26.719 put up taxes too high, people won't go out to 0:53:26.760 --> 0:53:30.600 work anymore. I know that if you make energy prices cheaper, 0:53:31.160 --> 0:53:33.440 businesses are more likely to invest in Britain. 0:53:33.560 --> 0:53:36.080 The problem with these forecasts, and this is. 0:53:36.520 --> 0:53:40.840 Another criticism of British economic media, The problem with forecasts 0:53:40.960 --> 0:53:44.359 is that people become focused on whether the numbers right 0:53:44.400 --> 0:53:48.080 in the forecast, rather than the fundamental principles of what 0:53:48.120 --> 0:53:49.520 makes the successful economy. 0:53:51.120 --> 0:53:53.520 Trist so great to chat with you, someone we wanted 0:53:53.560 --> 0:53:55.560 to have on the show for a very long time. 0:53:55.880 --> 0:53:58.279 Great that we've made it happen, and I'm appreciate your 0:53:58.280 --> 0:54:13.840 coming on. Thank you, Tracy. I'm so glad we finally 0:54:13.880 --> 0:54:15.680 got to interview this trust. 0:54:15.760 --> 0:54:17.600 We finally did it. I think it was a good 0:54:17.600 --> 0:54:19.759 time to do it, actually, because yes, you know, there's 0:54:19.800 --> 0:54:22.279 a lot of overlap with the Trump administation at the 0:54:22.280 --> 0:54:25.839 moment and what trusts experienced in twenty twenty two. 0:54:26.040 --> 0:54:28.279 Yeah, yeah, no, I mean there was a lot that 0:54:28.400 --> 0:54:30.920 I found to be interesting there, you know what I think, Actually, 0:54:31.960 --> 0:54:35.080 maybe the most interesting thing to me is thinking that Okay, 0:54:35.280 --> 0:54:37.799 in the US we have these multiple branches of government, right, 0:54:37.840 --> 0:54:39.759 so the president wants something, but Congress is going to 0:54:39.840 --> 0:54:41.880 veto it or ken veto it, especially if it's a 0:54:41.880 --> 0:54:44.800 different party in power. Obviously that's not the dynamic of 0:54:44.920 --> 0:54:47.839 UK with the parliamentary system. And yet even in the 0:54:47.840 --> 0:54:51.400 parliamentary system, to hear this, Trust described the fact that 0:54:51.680 --> 0:54:54.360 what she describes is even modest cuts to the increase 0:54:54.400 --> 0:54:57.320 in welfare weren't palatable to the members of her party, 0:54:57.440 --> 0:54:59.320 let alone the opposition, which of course never going to 0:54:59.400 --> 0:55:01.719 vote it for but in her party. I find that 0:55:01.800 --> 0:55:05.560 to be a very striking comment about the difficulty that 0:55:05.920 --> 0:55:09.400 you know, electoral democracies have in bringing back huts. 0:55:09.400 --> 0:55:09.480 Well. 0:55:09.560 --> 0:55:10.120 Absolutely. 0:55:10.280 --> 0:55:12.680 The other thing that kind of caught my eye or 0:55:12.719 --> 0:55:15.080 my ear was when we were talking about tariffs, and 0:55:15.360 --> 0:55:19.680 you know, Liz said that she had praised the deal 0:55:19.719 --> 0:55:22.719 that the UK struck with the Trump administration because it 0:55:22.840 --> 0:55:25.759 was less than what the EU was paying. And it's 0:55:25.800 --> 0:55:29.040 interesting to me that like countries seem to be competing 0:55:29.120 --> 0:55:31.680 with each other. You know, the Trump administration in some 0:55:31.719 --> 0:55:35.359 respects has been kind of successful in that getting its 0:55:35.400 --> 0:55:37.760 trade partners to compete with each other for the lowest 0:55:37.800 --> 0:55:40.160 deal rather than to, you know, try to compete on 0:55:40.200 --> 0:55:43.319 an absolute basis for lower tariffs per se. I thought 0:55:43.360 --> 0:55:44.160 that was interesting. 0:55:44.400 --> 0:55:47.160 I also think it's interesting, you know, this sort of 0:55:47.680 --> 0:55:49.560 I find myself having a lot of sympathy with this. 0:55:49.920 --> 0:55:53.040 It's sort of like anti democratic aspects of entities like 0:55:53.080 --> 0:55:55.960 the OBR or in the US, the OMB, and these 0:55:56.040 --> 0:55:59.520 ideas that okay, they have one set of assumptions about 0:55:59.520 --> 0:56:03.960 how Paul works, and the idea that like they have 0:56:04.000 --> 0:56:06.880 a formal role, and you know, there's there is a 0:56:06.920 --> 0:56:12.560 certain undemocratic element. I think of these sort of institutions 0:56:12.880 --> 0:56:16.800 that either they not necessarily with a formal veto, et cetera, 0:56:17.280 --> 0:56:20.000 that aren't elected. I have sympathy for that opinion. 0:56:20.160 --> 0:56:23.080 It certainly seems like they can act as an institutional 0:56:23.120 --> 0:56:25.919 restraint on the government. But some people would argue that 0:56:26.200 --> 0:56:31.640 maybe that's a good thing, an independent body looking at 0:56:31.680 --> 0:56:34.080 economic policy and monetary policy. 0:56:33.760 --> 0:56:35.920 Right, yeah, I mean that's the thing. And look, it's 0:56:36.000 --> 0:56:38.480 very striking that she said, really she does not accept 0:56:38.520 --> 0:56:41.360 the premise the Bank of England should be as independent 0:56:41.400 --> 0:56:43.040 as it currently is, and that you know, the idea 0:56:43.120 --> 0:56:44.840 is to your question, folding it back in with the 0:56:44.840 --> 0:56:46.200 Treasury is very striking well. 0:56:46.239 --> 0:56:48.719 Also the line about you know, not wanting to have 0:56:48.800 --> 0:56:51.560 her homework marked by someone who doesn't believe in it. 0:56:51.600 --> 0:56:53.839 I'm sure all of us as students would have liked 0:56:54.200 --> 0:56:57.240 to choose our own teacher who was creating our homework, 0:56:57.320 --> 0:56:59.680 but we don't get to for obvious reasons. 0:56:59.640 --> 0:57:00.000 We don't. 0:57:00.200 --> 0:57:00.920 Shall we leave it there? 0:57:00.960 --> 0:57:01.640 Let's leave it there. 0:57:01.719 --> 0:57:04.000 This has been another episode of the aud Thoughts podcast. 0:57:04.400 --> 0:57:07.720 I'm Tracy Alloway. You can follow me at Tracy Alloway. 0:57:07.320 --> 0:57:09.840 And I'm Jill Wisenthal. You can follow me at the Stalwart. 0:57:09.920 --> 0:57:13.080 Follow our guest Liz Trust. She's at Trust Liz. Follow 0:57:13.160 --> 0:57:16.520 our producers Carmen Rodriguez at Carmen armand dash Ol Bennett 0:57:16.520 --> 0:57:20.040 at Dashbot and kill Brooks at Kilbrooks. For more Oddlots content, 0:57:20.080 --> 0:57:22.280 go to Bloomberg dot com slash od Lots with the 0:57:22.360 --> 0:57:25.400 daily newsletter and all of our episodes. You can chat 0:57:25.400 --> 0:57:27.240 about all of these topics twenty four to seven in 0:57:27.320 --> 0:57:30.080 our discord Discord dot gg slash. 0:57:29.800 --> 0:57:32.800 Outlines and if you enjoy Odd Lots, if you like 0:57:32.840 --> 0:57:36.200 it when we dive into British politics and economic policy, 0:57:36.240 --> 0:57:38.600 then please leave us a positive review on your favorite 0:57:38.600 --> 0:57:42.120 podcast platform. 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