Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the special
Speaker 1: edition of Marrin Talks Money, the podcast in which people
Speaker 1: who know the markets explain the markets.
Speaker 2: I'm Merri in Sunset Web.
Speaker 1: We are recording this episode today in front of an audience. Hello, audience,
Speaker 1: welcome at our Bloomberg headquarters in London. And we're doing
Speaker 1: that because it's a special day. On how you define special,
Speaker 1: it is the day after the long awaited budget, which
Speaker 1: I'm sure you all watched very carefully yesterday. So before
Speaker 1: we get onto introducing the guests, let me just take
Speaker 1: the mood of the room. Who felt better after the
Speaker 1: budget yesterday? Okay, So that's quite a lot of hands,
Speaker 1: a lot of people felt better, who felt worse?
Speaker 2: Okay? And of those of you.
Speaker 1: Who put your hand up and said you felt better,
Speaker 1: did you feel better because it wasn't quite as bad
Speaker 1: as you expected, that's all the hands. And did anybody
Speaker 1: feel better because it was really really great?
Speaker 2: Okay? For those of you who aren't in the room,
Speaker 2: not a single hand won't up.
Speaker 1: So there is obviously quite a lot to unpack here.
Speaker 1: We're going to unpack those announcements. We're going to look
Speaker 1: at the tag sites, look at the extra borrowing, and
Speaker 1: look at the smaller measures and what they actually mean
Speaker 1: for you right onwards.
Speaker 2: I'm very lucky today.
Speaker 1: I don't just have money to stilled author and Bloomberg
Speaker 1: writer John Steppeck. Obviously we have him most times. This
Speaker 1: is fantastic, but today we are extra lucky. We also
Speaker 1: have Stephanie Flanders, head of Economics and Government at Bloomberg
Speaker 1: News and head of Bloomberg Economics. And as an extra
Speaker 1: treat we have Andy King, who spent ten years at
Speaker 1: the UK's Office for Budget Responsibility, most notably as a
Speaker 1: member of the obr's Executive Budget Responsibility Committee, and who
Speaker 1: is currently especially partner at Flint Global. So welcome all
Speaker 1: of you, thank you, and he could possibly start with you.
Speaker 1: As we saw from the show of hands here we've
Speaker 1: got an audience that wasn't madly impressed. And when you
Speaker 1: look at the bear numbers, what you see is a
Speaker 1: massive tax rise, very significantly larger than anyone would have
Speaker 1: expected if they'd listened to any labor politician speaking before
Speaker 1: the election, much more than you might have expected if
Speaker 1: you'd believe the manifesto, A very sharp rise in spending
Speaker 1: both investment and current a tax to GDP ratio that's
Speaker 1: going to be one of the highest ever, a state
Speaker 1: spending ratio that is possibly one of the highest we've
Speaker 1: ever seen.
Speaker 2: And when you.
Speaker 1: Look out over the rest of the decade, really quite
Speaker 1: shockingly low growth numbers. We get to two percent next
Speaker 1: year on the forecast, but beyond that we're well below
Speaker 1: two percent into the end of the decade, and we
Speaker 1: average out the decade at one point five eight percent.
Speaker 1: And that's not GDP ahead, it's just GDP. So look
Speaker 1: at those bad numbers, it's hard to feel good about
Speaker 1: it on a big sweep. Is there anything that you
Speaker 1: can see there that makes you feel a little better? Well,
Speaker 1: this is a tone I'm planning to use the whole
Speaker 1: way through it.
Speaker 3: A very leading introduction, Thanks very much, you know, I mean,
Speaker 3: I thought that the show of hands really told the
Speaker 3: story there.
Speaker 4: What was it?
Speaker 3: Sixty percent unhappy? Forty percent could have been worse. And
Speaker 3: that's probably a decent outcome for this budget because the
Speaker 3: Chancellor's inheritance was a tax burden set to rise to
Speaker 3: the highest in decades, was a larger state than before
Speaker 3: the pandemic, but was a state that was the plans
Speaker 3: were to cut that back quite substantially, without any detail.
Speaker 4: On how that would be done.
Speaker 3: Now, my former colleagues at the GOBR, who are not
Speaker 3: allowed to make normative statements, did their very best to
Speaker 3: say that that was implausible, perhaps even impossible, And so
Speaker 3: what we saw yesterday was a replacement of essentially unrealistic
Speaker 3: numbers with at least possibly deliverable realistic numbers. And the
Speaker 3: difference was huge. As you say, seventy billion pounds going
Speaker 3: into public spending, most of that two thirds of that
Speaker 3: into public services, a third into public investment, a huge
Speaker 3: tax rise adding to what was already a huge tax
Speaker 3: rise baked in that had been announced in the budget
Speaker 3: since the pandemic, and strangely, it leaves the size of
Speaker 3: the state in five years time roughly where it is today.
Speaker 3: It's a decision not to reduce the size as opposed
Speaker 3: to increase it. Of course, it is much larger than
Speaker 3: it was pre pandemic. That's down to things like aging,
Speaker 3: down to things like their health troubles in the country,
Speaker 3: and the very important point at the end, it's because
Speaker 3: growth is weak and has been weak now for fifteen years,
Speaker 3: and is essentially expected to remain weak for another five
Speaker 3: and there are those who would say that the OPRS
Speaker 3: have been optimistic, not pessimistic about growth. But it is
Speaker 3: a very still a very challenging outlook. And I think
Speaker 3: that was my takeaway. You needed to do all of
Speaker 3: those things to get the public finances and public services
Speaker 3: on a path that can be delivered, but is still
Speaker 3: quite difficulty.
Speaker 2: And it is incredibly fragile the whole thing.
Speaker 1: So it is incredibly vulnerable to shifts in inflation, and
Speaker 1: we may see how inflation as a result of this budget,
Speaker 1: incredibly vulnerable to shift in interest rates and positive the
Speaker 1: positive part of this budget is very far out the
Speaker 1: idea that as a result of this kind of spending
Speaker 1: over the next five years, we'll see an uptick in
Speaker 1: GDP over the much longer term.
Speaker 2: And it is fragile, start right, it.
Speaker 3: Is it isn't you know? There are parts of this
Speaker 3: budget that unfortunately looked like those from pre elections. So
Speaker 3: fuel duty has once again been frozen only for one
Speaker 3: year for the fourteenth time, and you know, the fiscal
Speaker 3: targets have been changed. One is actually tighter and one
Speaker 3: is looser than those that were inherited. But there's only
Speaker 3: a tiny fraction of headroom against them. So any of
Speaker 3: those things you mentioned, or any decisions that are taken
Speaker 3: defense spending, say, they all will require either trade offs
Speaker 3: or will make you know, will make life difficult because
Speaker 3: because the outlook is challenging.
Speaker 1: I mean, there is no getting away from the fact
Speaker 1: that we've seen extraordinary changes in the role of the
Speaker 1: state and in the amount of debt we have in
Speaker 1: the UK over the last couple of decades. So if
Speaker 1: you go back to before the financial crisis, are debt
Speaker 1: DP race you collect correct me if I'm wrong, Here's
Speaker 1: definitely because you're the expect here was around thirty. It
Speaker 1: was about thirty I think thirty percent or so eighty
Speaker 1: eighty before COVID. Now we're up at one hundred and
Speaker 1: there's no I think any of us can see sort
Speaker 1: of credible reason to expect it full significantly from there.
Speaker 1: Back in the nineteen nineties, the state state spending was
Speaker 1: what around twenty eight to thirty percent of GDP, and
Speaker 1: now we're up into the high forties. You know, we've
Speaker 1: made some fairly extraordinary shifts. And when you look at
Speaker 1: a budget like this, can you see any way that
Speaker 1: we rowe back from those rather extraordinary.
Speaker 5: Now, if you make a substantial different change in the
Speaker 5: way you think about public services and the quality and
Speaker 5: the degree of generosity or adequacy of the welfare system,
Speaker 5: then you could take us back to those levels.
Speaker 4: I think it's a.
Speaker 5: Little bit odd to focus on this budget in isolation
Speaker 5: and focus on that debt number in isolation. You know,
Speaker 5: the budget caps. As Andy has said, the budget came
Speaker 5: at the beginning of a parliament when I imagine nobody
Speaker 5: was expecting it to be a give away a budget
Speaker 5: it never is, and when it had been very widely
Speaker 5: flagged that there was a complete disconnect between sort of
Speaker 5: the realistic spending plans and the level of taxes that
Speaker 5: people had committed to on either side. And I think
Speaker 5: actually the polls suggests that no one everyone did, in
Speaker 5: fact expect the Labor government to raise taxes more than
Speaker 5: was indicated in the manifesto, and that would also be
Speaker 5: the case for the Conservatives if they'd wen't.
Speaker 4: I think so.
Speaker 5: I think it has to be placed in the context
Speaker 5: of where we are, what the plans were like before,
Speaker 5: and I think the very tough challenges I mean Andy's right,
Speaker 5: I mean, for me, this just told us how much
Speaker 5: you have to do just to begin to narrow the
Speaker 5: gap between what we want as a nation in terms
Speaker 5: of our welfare services and our public services, and how
Speaker 5: much we're willing to pay for it. And it's a
Speaker 5: very common thing that people talk about the gap. But
Speaker 5: you know that is why we're going up. It is
Speaker 5: an all time high, even slightly higher tax ratio than
Speaker 5: it would have been under the previous government's plans.
Speaker 4: Or you could put it.
Speaker 5: You could say we're moving towards the European average because
Speaker 5: we actually want European style public services, and that's a choice.
Speaker 5: But I think it sort of shows you you can
Speaker 5: do all of this. You can spend another seventy billion,
Speaker 5: of which forty billion came from higher taxes, and still
Speaker 5: only be sort of as Andy said, sort of paying
Speaker 5: for what you need right now.
Speaker 4: At the most basic level.
Speaker 5: The other thing you look at in isolation is the
Speaker 5: rise in debt, and I think, to look at what's
Speaker 5: happened to our growth and what's happened to our debt
Speaker 5: as a country without looking at the global context, and
Speaker 5: what's happened to the debt of every single advanced economy.
Speaker 5: I mean Germany, I think truly is the exception in
Speaker 5: not having seen a more than doubling of its I
Speaker 5: think it's even Germany has seen a doubling of its debt,
Speaker 5: but it's still relatively let low. Every other country has
Speaker 5: seen a move either beyond one hundred percent of GDP
Speaker 5: or closed one hundred percent of GDP. As we know,
Speaker 5: the US debt trajectories even more unsustainable, but with a
Speaker 5: stronger growth underpinning it. So this is not to say
Speaker 5: that you know, everyone else a terrible so we get
Speaker 5: to be terrible too. But I think that we're clearly
Speaker 5: our country has responded to similar challenges and has sort
Speaker 5: of had to run up debt in response to that.
Speaker 5: Whether we can can I think that your right to
Speaker 5: highlight the weak growth picture, but it is it is
Speaker 5: over the piece, no weaker than it was looking before
Speaker 5: and has been since the Global financial crisis. It is
Speaker 5: fundamental to the narrowness of the choices we face that
Speaker 5: we not be able to get that productivity growth rate,
Speaker 5: long term productivity growth rate back anywhere close to where
Speaker 5: it was before the Global financial crisis. But I mean
Speaker 5: that too, is a shared challenge, and I think at
Speaker 5: least we have a very clear effort to invest over
Speaker 5: the next five to ten years in an effort to
Speaker 5: try and move the dial on that. And I would
Speaker 5: say I think the officer budget Responsibility is optimistic in
Speaker 5: some way areas because it's been proved wrong on its
Speaker 5: productivity forecast for a very long time. Where it was
Speaker 5: quite negative I think was on the impact of public
Speaker 5: investment on private investment and on the broader capacity of
Speaker 5: the economy. As they say themselves, there's perfectly possible that
Speaker 5: that public investment will crowd in private investment. They're assuming
Speaker 5: it won't, and they're assuming, in fact it's a one
Speaker 5: for one for trade off. We could in the US
Speaker 5: it was learned that you could make room.
Speaker 4: Through those kind of investments. We'll see, we'll see.
Speaker 1: So if it had to be done, best done quickly,
Speaker 1: and was employer national insurance the right way to do it,
Speaker 1: do you think? I mean that puts quite a burden
Speaker 1: on businesses. And if you add up employer national insurance
Speaker 1: rises and you add that to the rise in the
Speaker 1: minimum wage, you've got a lot of smaller businesses and
Speaker 1: businesses and the services sector screaming slightly.
Speaker 5: You have chosen to put quite a lot of pain
Speaker 5: on I think medium sized, a lot of the very
Speaker 5: small employers. I think they've made an effort to at
Speaker 5: least partially protect them. But I think you're quite right
Speaker 5: that the combination of the national living wage increase and
Speaker 5: the national insurance rise is a sort of upfront challenge
Speaker 5: and an increase in the cost and cost of labor.
Speaker 5: I wouldn't have cut national insurance last year, and I
Speaker 5: think there was no economists who thought that was affordable,
Speaker 5: especially by taking twenty billion out of the future public
Speaker 5: spending plans.
Speaker 4: That's what happened last November.
Speaker 5: Is you know the way A large part of how
Speaker 5: it's I'm hesitant to say this with Addy King because
Speaker 5: I know he will immediately correct me if I come wrong,
Speaker 5: but a large part of how the national insurance cuts
Speaker 5: we were quote unquote financed was through these very unrealistic
Speaker 5: spending plans. So in a sense, Rachel Ries was just
Speaker 5: reversing cuts which were widely felt to be unaffordable. I
Speaker 5: think it's unfortunate that the reversal has been is as
Speaker 5: bad for or it is affecting labor supply in a
Speaker 5: negative way and hurting employers when youbably would have wanted
Speaker 5: to just add some a few pence to income tax.
Speaker 4: But that's that's not the world we live in.
Speaker 2: Now, this this rise in n M, we should mention it.
Speaker 1: You speak about employers and employee and I in the
Speaker 1: same kind of breath, right, they're sort of the same thing.
Speaker 1: So does the Office of Budgets, So does the Officer
Speaker 1: Budget Responsibility exactly, but RAG does not. So we must assume,
Speaker 1: must't we andy that this does end up coming through
Speaker 1: at lower wages or certainly lower razors to wages.
Speaker 3: Absolutely, and so the OBI said that yesterday they expect
Speaker 3: in the end three quarters of that tax rise will
Speaker 3: ultimately manifest itself in lower real wages, probably over time,
Speaker 3: as next year's four percent pay rise will actually be
Speaker 3: two and a half, and those kind of decisions. They
Speaker 3: do think that a quarter of it will come off profits.
Speaker 3: The way in which the tax rise was structured, with
Speaker 3: actually most of the revenue coming from moving the point
Speaker 3: at which your each employee's wages start to be liable
Speaker 3: for an I back to five thousand pounds, means that
Speaker 3: the tax rise itself is quite concentrated on low paid people.
Speaker 3: It doesn't matter whether you're a large employer of low
Speaker 3: paid people or a small smaller employer of low pay people.
Speaker 3: It's low paid people, whether whether tax rise is largest.
Speaker 3: But also that is the same group where your room
Speaker 3: for maneuver is reduced by the living wage, So you
Speaker 3: can't actually choose how much you pay rise you give.
Speaker 3: So that looks quite risky to me.
Speaker 2: Well, maybe it's just a way of trying to boost productivity.
Speaker 1: Like it very expensive to hire people down at the
Speaker 1: bottom en you've forced people to introduce productivity enhancement measures.
Speaker 3: That has always been one of the arguments for why
Speaker 3: minimum wages could work. That although in someone's model it
Speaker 3: says you can't have a latent productivity gain that a
Speaker 3: business has not already taken advantage of, in the real.
Speaker 5: World, can can definitely and just so just on that though,
Speaker 5: I mean, ever since the minimum wage was introduced by
Speaker 5: Golden Brown, this has been the fear, and it's been
Speaker 5: gradually increased, and there was always a feeling that at
Speaker 5: some point it would start to really hit employment. But
Speaker 5: up until now and that has actually been surprisingly positive
Speaker 5: for both employment and living standards at the bottom end.
Speaker 5: So who knows whether we've reached that critical point I mean,
Speaker 5: it is now getting closer to the average earnings than
Speaker 5: you would have ever thought was possible without having a
Speaker 5: big impact on employment.
Speaker 4: But if a lot of the studies was.
Speaker 5: Looking at one in Manchester and other places, it has
Speaker 5: actually raised productivity in these in these low wage sectors
Speaker 5: in a way that you might want to see, and
Speaker 5: hopefully that will continue.
Speaker 6: Actually, one thing I'm curious about when that point is,
Speaker 6: I mean, presumably it has they had an mpicked when
Speaker 6: for example, read comprehation in or the gaps between So
Speaker 6: if you're a minimum reja or not, then the person
Speaker 6: above view, in the person above view, the gap between
Speaker 6: those wages get smaller, and therefore the reward for if
Speaker 6: you like taking on more responsibility or going for promotion
Speaker 6: also becomes smaller. Is there any kind of evidence of
Speaker 6: that or I mean the other thing is also you know,
Speaker 6: the choice between working as say, a low paid position
Speaker 6: in the NHS and working when the tells it tesco
Speaker 6: one of those jobs I think most people would degree
Speaker 6: is much harder than the other. But if the gap
Speaker 6: between the pay for them is non existent, then that's
Speaker 6: why it's perhaps how they recruit for certain roles and others.
Speaker 4: I mean that speaks to this.
Speaker 5: There's much broader question about whether or not, for example,
Speaker 5: in social care, whether there's enough money going into that
Speaker 5: system to have people be paid in a way that
Speaker 5: reflects the hardness of the job. So I think that's
Speaker 5: sort of the basic together. But you're absolutely right that
Speaker 5: there is a It does cause compression, but it isn't
Speaker 5: the case that everyone just gets pushed, and that means
Speaker 5: that you're not paying more to everybody in order to
Speaker 5: preserve those differentials, which depending on how look at it,
Speaker 5: maybe it maybe it certainly is a good thing for
Speaker 5: people at the bottom. Yeah, and employment is a good
Speaker 5: thing for employment because you're not having to pay more
Speaker 5: for everybody.
Speaker 4: You're just paying more for those people.
Speaker 1: Johnny, you wrote the money just sailed last week or
Speaker 1: as earlier this week. There are several criteria for whether
Speaker 1: this will be a good budget or a bad budget.
Speaker 2: How did it go?
Speaker 6: I mean, but it didn't crash the gout's market, So
Speaker 6: that was the FoST wine. I did feel at the
Speaker 6: time that was a pretty low hart Oughty clear because
Speaker 6: you know, generally I just don't crash the gout's market.
Speaker 6: That doesn't happen that often in terms of making the
Speaker 6: tax system less complicated.
Speaker 4: I don't know. It's hard to gather a tech for that.
Speaker 6: Wine you've sort of introduced, I knew levels of inheritance tax,
Speaker 6: for example, without really reforming it, particularly.
Speaker 2: In fact that we should have a little little pull
Speaker 2: on that.
Speaker 1: Did anyone in the audience move their pension from dB
Speaker 1: to DC in order for their children to be able
Speaker 1: to inherit it? No, I mean think we do have
Speaker 1: quite a few listeners who did do that as a
Speaker 1: disappoint die for them yesterday.
Speaker 6: I did, Well, that's a good point. I mean, that's
Speaker 6: one thing on the inheritance tax thing. I mean, I
Speaker 6: don't know, but I remember when that first happened and
Speaker 6: it became clear that you could use a defined contribution
Speaker 6: pension to stash away your assets from inheritance tax. I
Speaker 6: realized this may not may or may not be a
Speaker 6: popular thing to say about. I remember when we first
Speaker 6: realized that and we were writing about it, we were like,
Speaker 6: this cannot last. This is a really gray area is
Speaker 6: definitely going to be reversed. So the fact that it
Speaker 6: then hung around for so long that it actually became
Speaker 6: a tax planning tool.
Speaker 4: It was always something.
Speaker 6: I think it was on the cards, and I feel
Speaker 6: that it's difficult to object to put it that way.
Speaker 6: As far as the other things inherent tax inheritance tax
Speaker 6: goal did I mean name market rallied because they only
Speaker 6: get hit with twenty percent in hurdance tax instead of
Speaker 6: forty percent, So you know, I mean, I'm sure AIM
Speaker 6: investors are we relieved about that. The farm stuff, now,
Speaker 6: I don't I know nothing about farming, to be very clear,
Speaker 6: I think that people are quite shocked about the million
Speaker 6: pound limit that does come when topowin allowance law. So
Speaker 6: it is a two million pound limit around a million
Speaker 6: pound limit from what I'm like to believe from looking
Speaker 6: at Twitter, most farms are still bigger than that, but.
Speaker 1: Farms that are sustainable or profitable will be much more
Speaker 1: valuable than that. If a hobby farmer is going to
Speaker 1: be more valuable than that, So that was quite an
Speaker 1: interesting move. And I also felt that a bit like
Speaker 1: with AM is one of those things once you've broken
Speaker 1: the taboo of adding inheritance tax, so those it could
Speaker 1: go on. So I know everyone who invests the name
Speaker 1: is very relieved, but I wouldn't be at all surprised
Speaker 1: if there's another bite at that one.
Speaker 6: Yeah, and I mean to be fair again, it was
Speaker 6: always dafted aim was being propped up by being a
Speaker 6: funnel for inheritance tax avoidance because you know, the the companies,
Speaker 6: the companies should be good enough not to just be
Speaker 6: getting money because it's a way to minimize your your losses.
Speaker 6: But at the same time, if you're not then going
Speaker 6: to replace that. We already have an issue with raising
Speaker 6: funds for small companies in this country or released it's
Speaker 6: not actually, it's more the funnel between small companies and
Speaker 6: big companies. And obviously the budget didn't do and in
Speaker 6: particular for capital markets. It wasn't against them, but it
Speaker 6: wasn't for them either, which was something that had been
Speaker 6: talked up a lot before the election. As far as
Speaker 6: our stuff goes. Capital gainst tax going up from twenty
Speaker 6: eighteen percent to twenty to.
Speaker 4: Twenty four percent.
Speaker 6: Again, that was more a relief from what it could
Speaker 6: have been. Doesn't before men and doesn't make anything more straightforward.
Speaker 6: So yeah, so in terms of complexity, I would have
Speaker 6: said that, you know, it wasn't. No Chancellor has passed
Speaker 6: that for years and years. You know, they don't ever
Speaker 6: make it less complicated. And I do think that I
Speaker 6: do think that's a problem. It is like I politically speaking,
Speaker 6: if Rachel Reeves could not get fuel duty through now
Speaker 6: at the start of a five year term, way I
Speaker 6: mean a shallow but wide landslide victory. You know, it's
Speaker 6: never going to happen. And this is why, for example,
Speaker 6: like the OBR, there should be something in the rules
Speaker 6: that says it's not biased on making a judgment. If
Speaker 6: a politician is clearly not going to have this in
Speaker 6: the next budget, for us to take it out and
Speaker 6: put the pressure on them. You know, I'm actually in
Speaker 6: a way that would be a good way to take
Speaker 6: the fiscal watchdog side of things, because politics is the
Speaker 6: thing that gets in the way of improving the structure
Speaker 6: of our tax system. And if we want to get
Speaker 6: more productive, then we're going to have to simplify it.
Speaker 6: And simplifying it doesn't mean making the tax take lower.
Speaker 6: It actually would probably make the tax take higher. But
Speaker 6: there are so many things that have been done over
Speaker 6: the years because they don't show up on working people's
Speaker 6: pace lips, you know, even though actually it poly means
Speaker 6: a load of working people will get fired or not
Speaker 6: get hired as a result of this. So I think
Speaker 6: that we don't think enough about the structure of our
Speaker 6: systems in terms of, you know, the bare numbers as
Speaker 6: long as the spreadsheet adds up and we can put
Speaker 6: up with it. You know, there's a reason that we've
Speaker 6: not had growth since two thousand and eight, and that
Speaker 6: clearly comes down to something qualitative rather than quantitative. It
Speaker 6: doesn't mean it's easy to effects, but you know, it's
Speaker 6: not like I mean, because we blame demographics all the time,
Speaker 6: but we didn't all age overnight. In two thousand and eight.
Speaker 6: There was a global financial crisis and that did something.
Speaker 6: So either the productivity before then was artificial, which I
Speaker 6: think is partially true, but also since then we've done
Speaker 6: something to the economy that's made it much much harder
Speaker 6: to be productive. And whether that's too much financial regulation,
Speaker 6: be carefully going down that route, or if it's something else.
Speaker 6: But that's the sort of questions we need to have,
Speaker 6: and they are divorced from.
Speaker 2: Quite a lot of those kind of thing in the budget.
Speaker 1: I mean, if you look at it, and if you
Speaker 1: look at several of the of the tax changes that effectively,
Speaker 1: when you look at the numbers will raise no money
Speaker 1: at all, so vat on private schools, the changes to
Speaker 1: non doms regulations, the abolition of that, and the private
Speaker 1: equity rising private equity taxations, so thirty two percent on
Speaker 1: carried interest. These will raise almost nothing. But if anything,
Speaker 1: that had to be done because they're so clearly laid
Speaker 1: out in the manifesto.
Speaker 3: So fair, Yes, absolutely. I mean the choice to try
Speaker 3: and tax those with the broadest shoulders always means that
Speaker 3: you're that you're looking at choices for people who are
Speaker 3: well advised, are savvy, can have lots of options, and
Speaker 3: so I mean one thing is to take it as
Speaker 3: a good thing that those tax measures are not in
Speaker 3: the budget book raising massive amounts of money. It means
Speaker 3: that they've taken a realistic assessment of what people will
Speaker 3: do in the face of higher time tax rates.
Speaker 1: Yes, so there has been more of a focus on
Speaker 1: behavior than you might have expected, and the run up
Speaker 1: for them.
Speaker 3: Not more than I would have expected, because I spent
Speaker 3: ten years trying to put those kind of assumptions into numbers.
Speaker 3: But there was a lot of focus on the types
Speaker 3: of taxes where behavioral responses are big, and it's good
Speaker 3: to see that you know they thought about them. Whether
Speaker 3: they're right or wrong, you know, unknowable because there's some
Speaker 3: of these taxes where you're talking about hundreds, maybe thousands
Speaker 3: of people, not millions as the tax base. And you know,
Speaker 3: I remember asking the AHMRC officials that you know, you
Speaker 3: can't tell me, but could you just like google the
Speaker 3: fifty biggest and find out if their kids are you know,
Speaker 3: school age, are they likely to move? I think this
Speaker 3: is more important than finding the right elasticity from a
Speaker 3: study of Swiss cantons.
Speaker 1: Yeah, I suppose one thing that people say is that
Speaker 1: there'll be a relief out there because the rise in
Speaker 1: the taxon carried interest are only thirty two percent, wh
Speaker 1: was expected to go much higher. Proof that you can
Speaker 1: still lobby this government, and if you've got plenty of
Speaker 1: manay to lobby, you can still make sure that it
Speaker 1: works for you.
Speaker 3: And to be honest, it looks like they're kind of
Speaker 3: following the evidence that those are the models I remember of,
Speaker 3: you know, the revenue maximizing rates in hmrc's giant spreadsheets.
Speaker 3: So that's a good thing too.
Speaker 1: Definitely, what do you expect another round of tack phrases
Speaker 1: from this government?
Speaker 5: And I think the big risk is that we've all
Speaker 5: said this is this is an amazing huge budget, and
Speaker 5: there was also this kind of expect insane expectations around
Speaker 5: it that it was going to kind of set the
Speaker 5: political weather for the whole of the Parliament and resolve
Speaker 5: all of the sort of disquiet on both on the
Speaker 5: labor side and in sort of in the broader public,
Speaker 5: and solve all our economic problems. I mean, it just
Speaker 5: was never going to be able to wear that carry
Speaker 5: that weight. You've raised forty billion, more than almost any
Speaker 5: other chancellor as a share of GDP in the modern times.
Speaker 5: You've stopped the rot in the public services, but you've
Speaker 5: chosen to inject. She has chosen to inject front load
Speaker 5: most of that additional a lot of that additional spending
Speaker 5: in the first year and a half, including for the
Speaker 5: NHS and then for the as Andy pointed out, the
Speaker 5: for the unprotected departments. You're looking at a slightly less
Speaker 5: less of a squeeze. I think half the squeeze in
Speaker 5: real terms every year that was the previous plans, but
Speaker 5: still much tighter than we've recently achieved. So I think
Speaker 5: that the risk is this money. You know, there's a
Speaker 5: there's an you know, one and a half percent of
Speaker 5: GDP extra going into the NHS over the next couple
Speaker 5: of years, give or take. Hopefully we will notice that,
Speaker 5: and hopefully it won't just get swallowed up because of
Speaker 5: the speed she is, speed of which it's going in.
Speaker 5: It won't just get swallowed up in ways that don't
Speaker 5: build lasting improvement, you know. I hope there is a
Speaker 5: sort of step change in the way that it works.
Speaker 5: I hope they're willing to hire us some more managers
Speaker 5: to actually handle this money, which is always politically difficult,
Speaker 5: but that's what they desperately need, actually, is more people
Speaker 5: to actually to.
Speaker 4: Manage in the NHS.
Speaker 5: And get those kind of output and productivity numbers better
Speaker 5: so that we continue to notice it, because otherwise you
Speaker 5: may be sort of in a sense, squandering this big
Speaker 5: tax rise that you were able to do at the
Speaker 5: beginning of parliament with not and having to go back
Speaker 5: in a couple of years. And I think they will
Speaker 5: inevitably have to come back. I think the question is
Speaker 5: that when they come back, will people say, Okay, we
Speaker 5: can see this is working, and we're willing to kind
Speaker 5: of spend a bit more money on it. Or are
Speaker 5: they going to say, well, hang on a minute, you know,
Speaker 5: why should we throw more money into a black hole?
Speaker 5: I mean maybe we will then be talking about a
Speaker 5: different kind of black hole.
Speaker 1: Yeah, I mean, here is the big risk for this government, right,
Speaker 1: so they've done this. It's a big blade. Lots of
Speaker 1: new spending and say, lots of new money going into
Speaker 1: the NHS. Even though they said there wasn't going to happen,
Speaker 1: it has happened. So the general public is going to
Speaker 1: really need to see a result there and reasonably quickly.
Speaker 1: And at the same time, one of the results of
Speaker 1: the budget has been that we now expect great to
Speaker 1: force slightly more slowly than we might have before, and
Speaker 1: that will help people's mortgage payments, etc. So it may
Speaker 1: there's a lot of risk in here for the government politically. Yeah,
Speaker 1: I mean, obviously we should get too excited about the numbers.
Speaker 1: I think it's true that we stopped expecting another a second,
Speaker 1: I mean a December rate cut yesterday by the time
Speaker 1: that Rachel Ruth had stopped talking.
Speaker 5: We still expect in November one. I think the difference
Speaker 5: that the OBR is suggesting it's maybe interest rates or
Speaker 5: bank rate over the course of the next few years
Speaker 5: will be zero point two percentage points higher something like that.
Speaker 5: I think ordinary people may not notice a lot of
Speaker 5: this tax increase, but it certainly is quite a squeeze
Speaker 5: on business and potentially is not still not doing enough.
Speaker 1: You said earlier, Andy that that the possibly the best
Speaker 1: thing you can say for this budget is that public
Speaker 1: sources are now going to get worse.
Speaker 2: Is that really the best we can say?
Speaker 3: I hope it's not the best we can say.
Speaker 2: I think.
Speaker 3: I just I read all the front pages of seventy
Speaker 3: billion of extra spending. I looked at the line that
Speaker 3: shows the state roughly the same size over the next
Speaker 3: five years, and I just thought to myself, like, it
Speaker 3: tells you more about what could not be delivered before
Speaker 3: than it does about the generosity of what's been announced.
Speaker 3: And if you look at public services today, you know,
Speaker 3: you can name any public service and there is something
Speaker 3: equivalent to a backlog associated with it. Overcoming that I
Speaker 3: think is part of the reason why the spending is
Speaker 3: front loaded. But overcoming that in two years for some
Speaker 3: of these things is going to be quite difficult. So possibly, yes,
Speaker 3: you know, not things look quite broken in quite a
Speaker 3: lot of places right now, like them. Not being broken
Speaker 3: is probably, you know, is a good outcome, but it's
Speaker 3: probably not that kind of feel good. Everything's brilliant because
Speaker 3: the public spending numbers are so generous.
Speaker 1: Okay, I'm not really hearing massive positivity, John, Was there
Speaker 1: anything in here that you think will make things better
Speaker 1: for ordinary investors?
Speaker 2: Rare?
Speaker 1: I mean, the good news is that isis weren't fiddled
Speaker 1: with and we're set on our set on our allowance
Speaker 1: there for five years VCTs we get to hang onto
Speaker 1: aim twenty forty percent. But for me, the big problem
Speaker 1: was no active signal of confidence in the stock market.
Speaker 1: You know, we wrote a lot you and I and
Speaker 1: a lot of other people in the run up to
Speaker 1: this budget about wouldn't it be great if we could
Speaker 1: see some reduction in stamp duty down perhaps to historical norms,
Speaker 1: or perhaps even an abolition of stamp duty, which was
Speaker 1: some kind of a signal. We were very keen on
Speaker 1: the brit I say, which we obviously knew wasn't going
Speaker 1: to come up, but we were waiting for for some
Speaker 1: kind of a signal from the government that there was
Speaker 1: going to be intense support for UK stock market. It's
Speaker 1: even although we slightly disapprove of it, mandatory mandatory investments
Speaker 1: in UK markets from DC pensions.
Speaker 6: I think they could have thrown a bone because stamp
Speaker 6: duty and shares is a good example because it raises
Speaker 6: three point five billion a year and if you would
Speaker 6: you could either even just reduce the rate, or you
Speaker 6: could say extend the relief up to foot say two
Speaker 6: fifty companies, and then you say if it made a difference,
Speaker 6: and if it made a difference, then take it further.
Speaker 6: You could have tested that, and I get that, you know,
Speaker 6: it's it was a small thing, but the end of
Speaker 6: the day's again one of the slight problems I think
Speaker 6: the way we do things here anyway is that the
Speaker 6: Chancellor stands up in literally names schools and hospitals that
Speaker 6: they are going to individually rebuilding a kin like Is
Speaker 6: that no a local councilor's job. So that kind of thing,
Speaker 6: you know, So they could have done something in that front.
Speaker 6: And I think the other problem is there's an element
Speaker 6: of you know, they clearly decided to just go down
Speaker 6: the non dom route they were already planning, which's absolutely fine.
Speaker 6: Was nothing. Maybe it'll pan it, maybe it won't. May
Speaker 6: we we'll just find out if they're all up and
Speaker 6: leave or if they don't. But it's more that point
Speaker 6: of signaling a continuation of the support. Basically, it's like
Speaker 6: I think a lot of people in the city maybe
Speaker 6: voted for Labor thinking it was New Labor two point zero.
Speaker 6: Obviously times have changed, you know, the nineteen nineties was
Speaker 6: a different world.
Speaker 4: So it's not just that.
Speaker 6: But I think that with this budget they've sort of
Speaker 6: confirmed it. Guys, this isn't Tony Blair again, it's not
Speaker 6: Jeremy Cobbyn either, but it's something closer to just kind
Speaker 6: of big state, you know, not really kind of hugging
Speaker 6: the rich sort of mode. And I think that that
Speaker 6: is an ideal given that we're wanting to get more
Speaker 6: investment in the UK.
Speaker 1: Yeah, and then a lot of our listeners will be
Speaker 1: by to let investors by to little vests.
Speaker 2: Quite a lot of our listeners are by to little
Speaker 2: vesters and.
Speaker 6: The hands only when like that.
Speaker 2: They didn't they didn't got quite advised, they didn't.
Speaker 4: Lost them before they.
Speaker 2: And they will be mildly disappointed with this rise in
Speaker 2: stamp duty. And I did.
Speaker 1: I got some response on on social media to talking
Speaker 1: about this last night, saying why is why is this
Speaker 1: a problem? You know, buy to that investors already owned
Speaker 1: their houses wide vay care of stamp duty goes up.
Speaker 1: But because as we've written about over and over and over,
Speaker 1: stamp duty is in the end paid by the seller,
Speaker 1: not the buyer, so they'll theater and reduced prices when
Speaker 1: they sell.
Speaker 2: So that's going to be disappointing.
Speaker 4: That's good to disappoint.
Speaker 6: I'm being bick to be honest. If you're still a
Speaker 6: landlord at this point, then you must really know your business,
Speaker 6: because I mean since George Osborne, the writing has been
Speaker 6: on the wall for I mean, I'm amazed that. I'm
Speaker 6: amazed that survived as long because all of the tax
Speaker 6: advantage has been taken away. It's no, it's no extremely
Speaker 6: taxed and efficient and lots of we used to be
Speaker 6: a lined lord. And I mean I'm not necessarily I
Speaker 6: don't have a big issue with that in some ways
Speaker 6: because too much capital in the UK is locked up
Speaker 6: in hosies. But you know, yeah, if you are style alnedlord,
Speaker 6: then you know, I can absolutely because it must be
Speaker 6: very good at your job and to be making money
Speaker 6: at it.
Speaker 2: Thank you. Go. Congratulations from John to the landlords and
Speaker 2: the audience. Well done. Right.
Speaker 1: We're going to move on to questions we'd have quite well,
Speaker 1: we have twenty minutes or so, so if you do
Speaker 1: have them, now's your chance to start with over here.
Speaker 2: Thank you. We are just to remind you we are.
Speaker 1: Recording, so your question will be recorded, and so will
Speaker 1: the answers, and so you will need the mic and
Speaker 1: you'll need to speak directly into it.
Speaker 2: Thank you.
Speaker 7: Following the budget yesterday, both sort of following the commentators
Speaker 7: on Sky News BBC, there was strong opinion raised that
Speaker 7: potentially the Labor government don't actually have a mandate to
Speaker 7: do what they've done, considering the discussion on tax rises
Speaker 7: was considerably less than what they've actually gone ahead and done. Yes,
Speaker 7: Rachel Reeves is blamed this twenty two billion black hole,
Speaker 7: but I'm wondering whether what the three you feel on
Speaker 7: that issue.
Speaker 1: I mean, I think I'm going to hand that to definitely,
Speaker 1: because she did just slightly answer it earlier in the
Speaker 1: conversation by saying that the polls do show that most
Speaker 1: people thought that taxes would go up more than had
Speaker 1: been suggested in the manifesto. Regardless off he won, But
Speaker 1: I would rather agree with you that they were incredibly clear,
Speaker 1: incredibly clear pre the election that this wasn't going to happen,
Speaker 1: and whatever excuse you used, it did happen, and it
Speaker 1: happened on steroids.
Speaker 2: But definitely I'm going to disagree.
Speaker 5: I'm going to take a risk because this is being recorded,
Speaker 5: so you know it might be making a mistake. I
Speaker 5: would say, I think the way you judge an election
Speaker 5: campaign is not by exactly what the debate is about,
Speaker 5: but about the sort of direction of change that people
Speaker 5: are indicating. And if you go back to twenty ten,
Speaker 5: and as someone who was the economics editor at BBC
Speaker 5: at that time, I remember quite clearly that the argument
Speaker 5: over austerity was plus all minus twelve billion of austerity
Speaker 5: on Alistair Darling, the last Labor Chancellor, had brittle in
Speaker 5: what was considered by Labour status to be quite an
Speaker 5: austere government, a seteer budget earlier in the year and
Speaker 5: was trying to kind of fix some of the mess
Speaker 5: from the global financial crisis, fiscal mess, and George Osbourne
Speaker 5: was claiming he was going to do twelve billion more
Speaker 5: of squeeze in spending and we had a big debate
Speaker 5: about it. Of course, that turned out to be, for memory,
Speaker 5: a fifth of what he actually announced in the summer budget,
Speaker 5: so you could but the director, we knew that they
Speaker 5: were going to be tougher on spending, and that was
Speaker 5: the sort of the honesty in the message was not
Speaker 5: the number. It was like, we will care more about
Speaker 5: fixing fiscal mess, and we will do it more by
Speaker 5: spending cuts. And I would argue people would disagree that
Speaker 5: this election campaign had that flavor, and I suspect the
Speaker 5: tax increases are about five times what they admitted to
Speaker 5: give or take. But we sort of knew that labor
Speaker 5: was going to be worried more about the quality of
Speaker 5: public services and didn't think tax cuts were priority. And
Speaker 5: that was the So we knew the flavor. We didn't
Speaker 5: know the numbers.
Speaker 1: Yeah, I suppose that ordinary voters might actually listen to
Speaker 1: the numbers, and they might have actually listened when they
Speaker 1: were told that it would be you know, eight billion
Speaker 1: fully costed, etc.
Speaker 4: Reason the extent that it was.
Speaker 5: I think if we make a big thing about how
Speaker 5: they should now be you know, taken to task for
Speaker 5: having you know, misled the public, then we would have
Speaker 5: to go back through many many governments who done it,
Speaker 5: thordered Andy.
Speaker 3: Prior to this election, the public spending numbers, which is
Speaker 3: the source of the problem in my walk of life,
Speaker 3: everyone knew that they were too low by a massive amount.
Speaker 3: Some people thought twenty to thirty, some people thought fifty
Speaker 3: to sixty. Yesterday's number was seventy, of which twenty is
Speaker 3: a decision to do more public investment. So the order
Speaker 3: of magnitude was known. The other thing that everyone in
Speaker 3: my walk of like was kind of lamenting was that
Speaker 3: no party could say that these public spending numbers can't
Speaker 3: be delivered and therefore we'll need to raise more taxes,
Speaker 3: because you open yourself up to the tax bombshell retort.
Speaker 3: And so there was a what did Paul Johnson called
Speaker 3: it a conspiracy of silence? Didn't This was well known
Speaker 3: but not part of the debates.
Speaker 1: Well known, well known by you, definitely me and john
Speaker 1: but maybe not by the electorate.
Speaker 5: Yeah, Paul Johnson was quoted over the course of the campaign.
Speaker 5: I mean, it's true that maybe no one's watching the
Speaker 5: BBC ITV channel for anymore or listening to podcasts, but
Speaker 5: I think in any one of those, any any economic
Speaker 5: discussion on any of those media featured the quote, or
Speaker 5: at least the thought that Andy's just giving.
Speaker 2: Yeah, yeah, okay, So yes and no is the answer
Speaker 2: to that?
Speaker 1: Another one over here, hang on for the microphone please,
Speaker 1: we'll try and get the answer to this one to
Speaker 1: be less yes and no.
Speaker 2: More clear, Thanks very much.
Speaker 8: Just a question about the sort of the politics of
Speaker 8: the budget, where it seems from what the OBR have
Speaker 8: said that in twenty twenty eight, twenty twenty nine, when
Speaker 8: we're likely to have election because of the actions in
Speaker 8: this budget, you're going to have or we're going to
Speaker 8: have slow in growth and rising inflation, which to me
Speaker 8: seems quite a bizarre political choice to sort of fatally
Speaker 8: front load the consumption and potentially face the country when
Speaker 8: things are getting worse.
Speaker 2: That seems fair, definitely.
Speaker 5: I mean, I think when you say bizarre politically, so
Speaker 5: I guess we can't say that this is an overly
Speaker 5: political budget because it's possible, as Andy suggested, that it
Speaker 5: actually was a realistic and sensible strategy to be front
Speaker 5: loading that spending, or at least to be doing more
Speaker 5: of the spending in the first couple of years given
Speaker 5: the backlog. And I just I think only those who
Speaker 5: will be overseeing the way that money gets spent can
Speaker 5: know whether that's really true, but they conceivably have chosen
Speaker 5: to actually do the thing that will make makes most
Speaker 5: sense as opposed to the thing that's politically savvy. But
Speaker 5: I agree with you, there's a very at the moment,
Speaker 5: there is an unusual arc to the way the spending
Speaker 5: and the sort of pain, if you like, is being felt.
Speaker 5: And I guess that's another reason for thinking that this
Speaker 5: will not be the end of it.
Speaker 4: But it never is. By the way, is any more budgets,
Speaker 4: So you have to come up with more.
Speaker 1: They have to come up with more, and it seems
Speaker 1: unlikely that those coming budgets are going to involve falling
Speaker 1: Texas or projections of rising growth.
Speaker 2: You're nodding away. Did you want to have something to that? Oh?
Speaker 6: I just think I wouldn't pay too much attention and
Speaker 6: no offense to They will be hard and you know,
Speaker 6: and all the other think tanks in the bank at
Speaker 6: England because you know, the wrong usually and the and
Speaker 6: the wrong for a good reason, because stuff changes. You know,
Speaker 6: It's like there's stuff asn't static. People react to forecasts.
Speaker 6: The entire market, the entire you know, economy as reflex
Speaker 6: of so I think, you know, even if I mean
Speaker 6: at the end of the day, it's not going up
Speaker 6: by that much, and if curth it is only at
Speaker 6: that level by that point, yeah, I think we will
Speaker 6: all be heartily disappointed. But yeah, I just wouldn't attached
Speaker 6: too much, especially ninety five or so, because anything.
Speaker 1: Can happen, and models, as Andy has discussed, models can't
Speaker 1: encompass all the behavior elements and the technological change elements, etc.
Speaker 1: So anything, anything could happen a good or bad, hopefully
Speaker 1: good others when you're in the front.
Speaker 4: Thank you, John.
Speaker 9: I agree with you that the the IHT pension loophole
Speaker 9: was It's hard to argue of that being scrapped, but
Speaker 9: it is just another example of the government making changes
Speaker 9: to the pension system. And as someone who's relative early
Speaker 9: on in his career, I'm expected to invest a lot
Speaker 9: of more money up in this for another thirty years,
Speaker 9: forty years with complete certainty. Is it time I start
Speaker 9: thinking about diverting someone that money going into my pension
Speaker 9: elsewhere into other vehicles or as well, like how can
Speaker 9: the governments regain my trust.
Speaker 2: Like by to that for example, good things.
Speaker 6: I mean, obviously we can't give personal financial advice, one
Speaker 6: thing we've always recommended, and to be very clear, I
Speaker 6: mean this is entirely bipartisan. Government's just and it kind
Speaker 6: of goes back to what I was saying before. It's
Speaker 6: like we've got a structural issue that boys down to politics,
Speaker 6: largely militating against good policy, and that seems to have
Speaker 6: become an even greater problem I think over the last
Speaker 6: ten years or so. So this is both Tories and
Speaker 6: labor and anyone else that will ever get in. So
Speaker 6: your pension is subject to political risk in a way
Speaker 6: that I feel. For example, your eyes at isn't so
Speaker 6: much because an eyes is a really straightforward financial product,
Speaker 6: despite effort's to complicate it. You can take your money
Speaker 6: out of it pretty much instantly most of the time.
Speaker 6: And also they're very popular because people do understand them,
Speaker 6: so that's one reason why governments have tended to avoid
Speaker 6: targeting them. Whereas pensions come in all shapes and sizes,
Speaker 6: it's a lovely port of capital that's just locked up
Speaker 6: there not doing anything. You know, It's like it could
Speaker 6: be getting used to spend on public services, et cetera.
Speaker 6: Et cetera, and so there's always a temptation to go
Speaker 6: after it. So basically, as a loose guide, I would
Speaker 6: sort of say, don't you know, obviously you need pent
Speaker 6: your pension. If you get auto enrollment, for example, in
Speaker 6: your workplace, then that's money that you're passing up on
Speaker 6: if you don't take advantage of it. But at the
Speaker 6: same time you should probably be putting some money into
Speaker 6: your ISSA as well. So basically want to diversify your
Speaker 6: savings vehicles as well as diversifying your portfolio.
Speaker 4: So that make sort of sense.
Speaker 1: And with John all the way on this absolutely right.
Speaker 1: There's so much political risk in your pension, much less
Speaker 1: political risk in your ISSA. You know, whenever we write
Speaker 1: about this way, you know, they'll joke on banks. Why
Speaker 1: did your own banks? That's where the money is. That's
Speaker 1: how governments feel about pensions. We have a question at
Speaker 1: the back here.
Speaker 2: Hi.
Speaker 10: I am aarity chief exec, which I think makes me
Speaker 10: very unusual in this room. But one of the things
Speaker 10: that I'm really interested in asking is charities have been
Speaker 10: propping up the public sector for really quite a long
Speaker 10: time now, and some of the some of charities are
Speaker 10: obviously enormous, but most of them are small, and this
Speaker 10: hit on national insurance is going to be really really
Speaker 10: challenging for charities. Do you have any views or what
Speaker 10: views do you have about what the Chancellor might have
Speaker 10: been able to do for the charity sector which does
Speaker 10: employ more than a million people.
Speaker 2: You know, I got thoughts on that.
Speaker 5: No, Okay, maybe are tricks and I think it speaks
Speaker 5: to that. I think the answer is we don't, but
Speaker 5: I think that they it does speak to even when
Speaker 5: you've you know, you pick a broad tax like this,
Speaker 5: and that's what we would have wanted them to do,
Speaker 5: rather than try and find billions here and there in
Speaker 5: ways that could actually be very costly for certain chucks
Speaker 5: of people you are hitting. You know, people in social
Speaker 5: care homes will be also facing some of the biggest
Speaker 5: squeeze from the increase in the in the national living
Speaker 5: wage and from the national insurance rise. Charities, you know,
Speaker 5: there's there's there's lots of sectors that we wouldn't necessarily
Speaker 5: want to be stressed. Who will find this But I
Speaker 5: guess that that speaks to a sort of structural issue,
Speaker 5: that that those parts of the economy are being lent
Speaker 5: on too much.
Speaker 4: But no, I think it's you know it is. It
Speaker 4: is something that's going to it's going to be different.
Speaker 1: And I have a very unpopular answer for you, which
Speaker 1: is that there's an awful lot of room for consolidation
Speaker 1: in the charitable sector. There are many, many, many far
Speaker 1: toy small charities all doing exactly the same thing. They're
Speaker 1: very heavily supported by the tax fayre, via gift gift
Speaker 1: aid and via direct grants from the government. And I
Speaker 1: think it's a it's a space of astonishing inefficiency. And
Speaker 1: if this is one of those things that drives the
Speaker 1: third sector to slightly put itself together, I'm not sure
Speaker 1: that would be a bad thing.
Speaker 2: May not have been the.
Speaker 1: Answer you wanted, but no, it is the answer you wanted. Excellent,
Speaker 1: So you're out for consolidation, right. We have another question
Speaker 1: here third row.
Speaker 9: I think so is the panel arguing for the setting
Speaker 9: up of a DOGE Department of Governmental Efficiency US style.
Speaker 2: More departments? I mean, this is like another one that
Speaker 2: Elon Musk is going to run.
Speaker 1: Yeah, yeah, I mean I'm never sure about setting up
Speaker 1: any any new departments to do anything else. They do.
Speaker 1: Remember that back in the day, there was one of
Speaker 1: the big banks that had a form you had to
Speaker 1: fill in for the applying for the creation of a
Speaker 1: new form. And so whenever I hear about the creation
Speaker 1: of a new department to help other departments do things,
Speaker 1: I worry about it slightly, but it's definitely may happen.
Speaker 5: Actually I'm interested in with it. I mean, in the
Speaker 5: this is a constant theme of public sector productivity, you know.
Speaker 5: Obviously part of the part of the challenge and having
Speaker 5: to put more and more money into public services while
Speaker 5: it remains flat, even just to keep it in the
Speaker 5: same scale. Is that the challenge of getting productivity growth
Speaker 5: in public services, and we particularly found that in the
Speaker 5: NHS over the last few years. So I just I mean,
Speaker 5: I wondered whether are there approaches to increasing public sector
Speaker 5: productivity that seem to you more or less credible when
Speaker 5: you're looking at these plans.
Speaker 3: I think surely the best news for everyone is that
Speaker 3: they are setting up a new institution called the Office
Speaker 3: for Value for Money, which we'll try to do this
Speaker 3: maybe I'll soignd a note of optimism. Some of the
Speaker 3: addition to public investment is not private growth enhancing investment,
Speaker 3: is public sector productivity enhancing investment. So if you look
Speaker 3: at anyone who's been into the NHS knows that the
Speaker 3: computer system is not conducive to the productivity of the
Speaker 3: people who work there, and that can only be addressed
Speaker 3: with public investment, and so putting more investment in is
Speaker 3: a way of helping that. And I think basically that
Speaker 3: kind of you've got to invest the save or you
Speaker 3: spend to raise is where usually I think it looks
Speaker 3: more credible. You know, the other way that public sector
Speaker 3: productivity is typically raised is just by squeezing pays.
Speaker 1: And it does feel that we've got to do something
Speaker 1: about public sector productivity. When anyone talks about the productivity
Speaker 1: Cristis in the UK, they're not really talking about the
Speaker 1: private sector. They're talking about the public sector because that's
Speaker 1: where the drag is. You look at those charts and
Speaker 1: you can see public sector productivity is basically flatline for
Speaker 1: twenty years. And so we must do something. I'm not
Speaker 1: sure that's the answer, but we must do something. Right,
Speaker 1: I think we've got time for one more question, and
Speaker 1: I did say I would take this one here, third.
Speaker 11: Row, thank you, A question really about workers and productivity,
Speaker 11: and given the government got itself into a pickle, defining workers.
Speaker 11: Has this budget actually been good for working people however
Speaker 11: you define them, and specifically this great big black hole
Speaker 11: of economic inactivity that's affecting about ten million people. And
Speaker 11: to the point about productivity, there's a considerable lag in
Speaker 11: the private sector as well.
Speaker 2: And again, has this.
Speaker 11: Has this budget done anything to improve the chances of
Speaker 11: work and working people? Doesn't appear to me that it
Speaker 11: necessarily has done.
Speaker 2: Okay, big question, and we've got about twenty seconds.
Speaker 5: Definitely, working people use public services. I mean, I think
Speaker 5: it just goes back to that fundamental point that probably
Speaker 5: this was not quite the minimum, but not close to
Speaker 5: the minimum what was needed to just sort of to
Speaker 5: prevent public services from getting worse.
Speaker 4: As Andy suggested, John.
Speaker 6: You've made employee working people more expense of so that
Speaker 6: enhances the OIDs of them getting replaced by rulebots. So
Speaker 6: in the one hand, productivity will go up. Is it
Speaker 6: good for working peoplebably not.
Speaker 1: Fifty But everyone will feel better if the NHS starts
Speaker 1: working get your hip operation, you're going to feel better
Speaker 1: working or not?
Speaker 2: And any final thoughts to add there.
Speaker 3: If the government can achieve its aims on reforming the
Speaker 3: planning system, everyone can have more buildings and equipment to use,
Speaker 3: and productivity will.
Speaker 1: Well automatically awesome, excellent. Okay, on that note, at the beginning,
Speaker 1: you're all absolutely miserable. Who feels better as a result
Speaker 1: of what they've heard on the podcast?
Speaker 2: Those of you aren't here.
Speaker 1: About ten percent of people feel better, So I don't
Speaker 1: know what that tells you about the podcast.
Speaker 4: Time.
Speaker 1: Yeah, there we go, we'll get we're getting there. Thank
Speaker 1: you all so much for coming today. We really enjoyed
Speaker 1: having you, and I hope you enjoyed being here. Thank you,
Speaker 1: my wonderful guys.
Speaker 2: SP