WEBVTT - Live Event: What Did Rachel Reeves Risk With Her First Budget? 0:00:03.160 --> 0:00:21.760 Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the special 0:00:21.880 --> 0:00:24.079 edition of Marrin Talks Money, the podcast in which people 0:00:24.120 --> 0:00:26.520 who know the markets explain the markets. 0:00:26.680 --> 0:00:27.760 I'm Merri in Sunset Web. 0:00:28.200 --> 0:00:31.840 We are recording this episode today in front of an audience. Hello, audience, 0:00:31.880 --> 0:00:35.680 welcome at our Bloomberg headquarters in London. And we're doing 0:00:35.680 --> 0:00:38.400 that because it's a special day. On how you define special, 0:00:38.760 --> 0:00:42.040 it is the day after the long awaited budget, which 0:00:42.040 --> 0:00:45.680 I'm sure you all watched very carefully yesterday. So before 0:00:45.680 --> 0:00:47.960 we get onto introducing the guests, let me just take 0:00:48.000 --> 0:00:52.600 the mood of the room. Who felt better after the 0:00:52.640 --> 0:00:57.360 budget yesterday? Okay, So that's quite a lot of hands, 0:00:57.360 --> 0:00:59.320 a lot of people felt better, who felt worse? 0:01:02.000 --> 0:01:03.400 Okay? And of those of you. 0:01:03.360 --> 0:01:05.520 Who put your hand up and said you felt better, 0:01:05.880 --> 0:01:08.600 did you feel better because it wasn't quite as bad 0:01:08.640 --> 0:01:13.000 as you expected, that's all the hands. And did anybody 0:01:13.040 --> 0:01:14.880 feel better because it was really really great? 0:01:17.000 --> 0:01:19.400 Okay? For those of you who aren't in the room, 0:01:19.480 --> 0:01:21.480 not a single hand won't up. 0:01:21.760 --> 0:01:24.160 So there is obviously quite a lot to unpack here. 0:01:24.160 --> 0:01:26.000 We're going to unpack those announcements. We're going to look 0:01:26.000 --> 0:01:28.160 at the tag sites, look at the extra borrowing, and 0:01:28.400 --> 0:01:31.240 look at the smaller measures and what they actually mean 0:01:31.440 --> 0:01:32.959 for you right onwards. 0:01:32.959 --> 0:01:33.920 I'm very lucky today. 0:01:33.959 --> 0:01:37.000 I don't just have money to stilled author and Bloomberg 0:01:37.000 --> 0:01:39.760 writer John Steppeck. Obviously we have him most times. This 0:01:39.880 --> 0:01:42.440 is fantastic, but today we are extra lucky. We also 0:01:42.520 --> 0:01:45.360 have Stephanie Flanders, head of Economics and Government at Bloomberg 0:01:45.480 --> 0:01:49.120 News and head of Bloomberg Economics. And as an extra 0:01:49.240 --> 0:01:52.080 treat we have Andy King, who spent ten years at 0:01:52.120 --> 0:01:55.040 the UK's Office for Budget Responsibility, most notably as a 0:01:55.040 --> 0:01:58.920 member of the obr's Executive Budget Responsibility Committee, and who 0:01:58.960 --> 0:02:03.320 is currently especially partner at Flint Global. So welcome all 0:02:03.320 --> 0:02:07.680 of you, thank you, and he could possibly start with you. 0:02:07.760 --> 0:02:09.679 As we saw from the show of hands here we've 0:02:09.680 --> 0:02:13.000 got an audience that wasn't madly impressed. And when you 0:02:13.040 --> 0:02:15.720 look at the bear numbers, what you see is a 0:02:15.840 --> 0:02:19.040 massive tax rise, very significantly larger than anyone would have 0:02:19.120 --> 0:02:22.280 expected if they'd listened to any labor politician speaking before 0:02:22.320 --> 0:02:24.640 the election, much more than you might have expected if 0:02:24.680 --> 0:02:29.400 you'd believe the manifesto, A very sharp rise in spending 0:02:29.400 --> 0:02:34.160 both investment and current a tax to GDP ratio that's 0:02:34.240 --> 0:02:37.240 going to be one of the highest ever, a state 0:02:37.360 --> 0:02:40.440 spending ratio that is possibly one of the highest we've 0:02:40.440 --> 0:02:40.920 ever seen. 0:02:41.520 --> 0:02:42.160 And when you. 0:02:42.240 --> 0:02:45.760 Look out over the rest of the decade, really quite 0:02:45.880 --> 0:02:48.840 shockingly low growth numbers. We get to two percent next 0:02:48.919 --> 0:02:51.360 year on the forecast, but beyond that we're well below 0:02:51.400 --> 0:02:53.000 two percent into the end of the decade, and we 0:02:53.080 --> 0:02:56.120 average out the decade at one point five eight percent. 0:02:56.160 --> 0:03:00.200 And that's not GDP ahead, it's just GDP. So look 0:03:00.200 --> 0:03:03.280 at those bad numbers, it's hard to feel good about 0:03:03.320 --> 0:03:07.560 it on a big sweep. Is there anything that you 0:03:07.560 --> 0:03:11.160 can see there that makes you feel a little better? Well, 0:03:12.360 --> 0:03:13.959 this is a tone I'm planning to use the whole 0:03:13.960 --> 0:03:15.400 way through it. 0:03:15.760 --> 0:03:18.919 A very leading introduction, Thanks very much, you know, I mean, 0:03:19.160 --> 0:03:21.600 I thought that the show of hands really told the 0:03:21.680 --> 0:03:22.280 story there. 0:03:22.880 --> 0:03:23.760 What was it? 0:03:23.800 --> 0:03:29.040 Sixty percent unhappy? Forty percent could have been worse. And 0:03:29.080 --> 0:03:33.440 that's probably a decent outcome for this budget because the 0:03:34.840 --> 0:03:40.480 Chancellor's inheritance was a tax burden set to rise to 0:03:40.520 --> 0:03:45.720 the highest in decades, was a larger state than before 0:03:45.720 --> 0:03:51.560 the pandemic, but was a state that was the plans 0:03:51.600 --> 0:03:56.400 were to cut that back quite substantially, without any detail. 0:03:56.040 --> 0:03:57.160 On how that would be done. 0:03:57.520 --> 0:04:00.120 Now, my former colleagues at the GOBR, who are not 0:04:00.160 --> 0:04:03.280 allowed to make normative statements, did their very best to 0:04:03.280 --> 0:04:08.480 say that that was implausible, perhaps even impossible, And so 0:04:08.560 --> 0:04:14.120 what we saw yesterday was a replacement of essentially unrealistic 0:04:14.200 --> 0:04:19.359 numbers with at least possibly deliverable realistic numbers. And the 0:04:19.440 --> 0:04:23.279 difference was huge. As you say, seventy billion pounds going 0:04:23.279 --> 0:04:26.479 into public spending, most of that two thirds of that 0:04:26.520 --> 0:04:31.320 into public services, a third into public investment, a huge 0:04:31.360 --> 0:04:36.000 tax rise adding to what was already a huge tax 0:04:36.080 --> 0:04:38.960 rise baked in that had been announced in the budget 0:04:39.040 --> 0:04:44.240 since the pandemic, and strangely, it leaves the size of 0:04:44.279 --> 0:04:47.760 the state in five years time roughly where it is today. 0:04:48.440 --> 0:04:52.799 It's a decision not to reduce the size as opposed 0:04:52.800 --> 0:04:55.880 to increase it. Of course, it is much larger than 0:04:55.920 --> 0:05:00.160 it was pre pandemic. That's down to things like aging, 0:05:00.360 --> 0:05:04.400 down to things like their health troubles in the country, 0:05:04.839 --> 0:05:07.680 and the very important point at the end, it's because 0:05:07.720 --> 0:05:11.080 growth is weak and has been weak now for fifteen years, 0:05:11.160 --> 0:05:14.200 and is essentially expected to remain weak for another five 0:05:14.920 --> 0:05:17.000 and there are those who would say that the OPRS 0:05:17.000 --> 0:05:20.240 have been optimistic, not pessimistic about growth. But it is 0:05:20.320 --> 0:05:25.480 a very still a very challenging outlook. And I think 0:05:25.520 --> 0:05:27.760 that was my takeaway. You needed to do all of 0:05:27.760 --> 0:05:33.320 those things to get the public finances and public services 0:05:33.680 --> 0:05:36.960 on a path that can be delivered, but is still 0:05:37.080 --> 0:05:38.400 quite difficulty. 0:05:38.560 --> 0:05:40.400 And it is incredibly fragile the whole thing. 0:05:40.480 --> 0:05:42.839 So it is incredibly vulnerable to shifts in inflation, and 0:05:42.880 --> 0:05:45.039 we may see how inflation as a result of this budget, 0:05:45.240 --> 0:05:49.600 incredibly vulnerable to shift in interest rates and positive the 0:05:49.839 --> 0:05:52.599 positive part of this budget is very far out the 0:05:52.680 --> 0:05:54.760 idea that as a result of this kind of spending 0:05:54.800 --> 0:05:56.880 over the next five years, we'll see an uptick in 0:05:56.960 --> 0:05:59.080 GDP over the much longer term. 0:05:59.200 --> 0:06:01.920 And it is fragile, start right, it. 0:06:02.040 --> 0:06:06.440 Is it isn't you know? There are parts of this 0:06:06.720 --> 0:06:11.359 budget that unfortunately looked like those from pre elections. So 0:06:11.520 --> 0:06:14.920 fuel duty has once again been frozen only for one 0:06:15.000 --> 0:06:20.479 year for the fourteenth time, and you know, the fiscal 0:06:20.480 --> 0:06:23.640 targets have been changed. One is actually tighter and one 0:06:23.680 --> 0:06:27.640 is looser than those that were inherited. But there's only 0:06:27.920 --> 0:06:31.800 a tiny fraction of headroom against them. So any of 0:06:31.839 --> 0:06:35.160 those things you mentioned, or any decisions that are taken 0:06:35.760 --> 0:06:40.800 defense spending, say, they all will require either trade offs 0:06:41.200 --> 0:06:45.440 or will make you know, will make life difficult because 0:06:46.120 --> 0:06:47.440 because the outlook is challenging. 0:06:47.839 --> 0:06:50.560 I mean, there is no getting away from the fact 0:06:50.600 --> 0:06:53.080 that we've seen extraordinary changes in the role of the 0:06:53.120 --> 0:06:54.760 state and in the amount of debt we have in 0:06:54.800 --> 0:06:56.680 the UK over the last couple of decades. So if 0:06:56.680 --> 0:06:59.760 you go back to before the financial crisis, are debt 0:07:00.120 --> 0:07:01.800 DP race you collect correct me if I'm wrong, Here's 0:07:01.800 --> 0:07:04.080 definitely because you're the expect here was around thirty. It 0:07:04.120 --> 0:07:06.280 was about thirty I think thirty percent or so eighty 0:07:06.480 --> 0:07:09.159 eighty before COVID. Now we're up at one hundred and 0:07:09.160 --> 0:07:11.200 there's no I think any of us can see sort 0:07:11.200 --> 0:07:14.080 of credible reason to expect it full significantly from there. 0:07:14.240 --> 0:07:16.880 Back in the nineteen nineties, the state state spending was 0:07:16.880 --> 0:07:19.120 what around twenty eight to thirty percent of GDP, and 0:07:19.240 --> 0:07:21.360 now we're up into the high forties. You know, we've 0:07:21.360 --> 0:07:24.960 made some fairly extraordinary shifts. And when you look at 0:07:24.960 --> 0:07:27.600 a budget like this, can you see any way that 0:07:27.640 --> 0:07:31.000 we rowe back from those rather extraordinary. 0:07:30.640 --> 0:07:32.920 Now, if you make a substantial different change in the 0:07:32.920 --> 0:07:36.240 way you think about public services and the quality and 0:07:36.320 --> 0:07:41.640 the degree of generosity or adequacy of the welfare system, 0:07:41.920 --> 0:07:44.000 then you could take us back to those levels. 0:07:44.000 --> 0:07:44.440 I think it's a. 0:07:44.440 --> 0:07:48.760 Little bit odd to focus on this budget in isolation 0:07:49.040 --> 0:07:52.720 and focus on that debt number in isolation. You know, 0:07:52.760 --> 0:07:56.320 the budget caps. As Andy has said, the budget came 0:07:56.720 --> 0:07:59.080 at the beginning of a parliament when I imagine nobody 0:07:59.120 --> 0:08:01.480 was expecting it to be a give away a budget 0:08:01.480 --> 0:08:04.760 it never is, and when it had been very widely 0:08:04.800 --> 0:08:09.000 flagged that there was a complete disconnect between sort of 0:08:09.040 --> 0:08:12.920 the realistic spending plans and the level of taxes that 0:08:12.960 --> 0:08:14.960 people had committed to on either side. And I think 0:08:15.000 --> 0:08:17.960 actually the polls suggests that no one everyone did, in 0:08:18.000 --> 0:08:22.480 fact expect the Labor government to raise taxes more than 0:08:22.560 --> 0:08:24.680 was indicated in the manifesto, and that would also be 0:08:24.720 --> 0:08:27.200 the case for the Conservatives if they'd wen't. 0:08:27.240 --> 0:08:28.280 I think so. 0:08:28.360 --> 0:08:30.640 I think it has to be placed in the context 0:08:30.720 --> 0:08:34.760 of where we are, what the plans were like before, 0:08:35.280 --> 0:08:38.120 and I think the very tough challenges I mean Andy's right, 0:08:38.160 --> 0:08:41.880 I mean, for me, this just told us how much 0:08:41.920 --> 0:08:45.360 you have to do just to begin to narrow the 0:08:45.360 --> 0:08:47.760 gap between what we want as a nation in terms 0:08:47.760 --> 0:08:51.320 of our welfare services and our public services, and how 0:08:51.440 --> 0:08:52.880 much we're willing to pay for it. And it's a 0:08:52.960 --> 0:08:55.120 very common thing that people talk about the gap. But 0:08:55.160 --> 0:08:57.760 you know that is why we're going up. It is 0:08:57.840 --> 0:09:02.040 an all time high, even slightly higher tax ratio than 0:09:02.040 --> 0:09:05.320 it would have been under the previous government's plans. 0:09:06.960 --> 0:09:07.640 Or you could put it. 0:09:07.720 --> 0:09:10.280 You could say we're moving towards the European average because 0:09:10.360 --> 0:09:14.040 we actually want European style public services, and that's a choice. 0:09:14.040 --> 0:09:15.640 But I think it sort of shows you you can 0:09:15.679 --> 0:09:18.560 do all of this. You can spend another seventy billion, 0:09:18.880 --> 0:09:22.080 of which forty billion came from higher taxes, and still 0:09:22.280 --> 0:09:24.600 only be sort of as Andy said, sort of paying 0:09:24.640 --> 0:09:26.439 for what you need right now. 0:09:26.320 --> 0:09:27.640 At the most basic level. 0:09:27.960 --> 0:09:29.760 The other thing you look at in isolation is the 0:09:29.840 --> 0:09:32.200 rise in debt, and I think, to look at what's 0:09:32.200 --> 0:09:34.400 happened to our growth and what's happened to our debt 0:09:35.040 --> 0:09:38.520 as a country without looking at the global context, and 0:09:38.559 --> 0:09:41.360 what's happened to the debt of every single advanced economy. 0:09:41.360 --> 0:09:44.840 I mean Germany, I think truly is the exception in 0:09:44.960 --> 0:09:47.160 not having seen a more than doubling of its I 0:09:47.200 --> 0:09:49.520 think it's even Germany has seen a doubling of its debt, 0:09:49.520 --> 0:09:53.000 but it's still relatively let low. Every other country has 0:09:53.080 --> 0:09:56.280 seen a move either beyond one hundred percent of GDP 0:09:56.440 --> 0:09:58.240 or closed one hundred percent of GDP. As we know, 0:09:58.280 --> 0:10:02.760 the US debt trajectories even more unsustainable, but with a 0:10:02.960 --> 0:10:07.360 stronger growth underpinning it. So this is not to say 0:10:07.400 --> 0:10:08.960 that you know, everyone else a terrible so we get 0:10:09.000 --> 0:10:10.880 to be terrible too. But I think that we're clearly 0:10:10.960 --> 0:10:15.600 our country has responded to similar challenges and has sort 0:10:15.600 --> 0:10:17.760 of had to run up debt in response to that. 0:10:19.000 --> 0:10:21.600 Whether we can can I think that your right to 0:10:21.679 --> 0:10:25.200 highlight the weak growth picture, but it is it is 0:10:25.440 --> 0:10:28.000 over the piece, no weaker than it was looking before 0:10:28.040 --> 0:10:30.680 and has been since the Global financial crisis. It is 0:10:30.840 --> 0:10:34.120 fundamental to the narrowness of the choices we face that 0:10:34.160 --> 0:10:37.319 we not be able to get that productivity growth rate, 0:10:37.440 --> 0:10:40.840 long term productivity growth rate back anywhere close to where 0:10:40.880 --> 0:10:43.280 it was before the Global financial crisis. But I mean 0:10:43.520 --> 0:10:46.840 that too, is a shared challenge, and I think at 0:10:46.960 --> 0:10:52.280 least we have a very clear effort to invest over 0:10:52.320 --> 0:10:55.040 the next five to ten years in an effort to 0:10:55.080 --> 0:10:56.720 try and move the dial on that. And I would 0:10:56.760 --> 0:10:59.720 say I think the officer budget Responsibility is optimistic in 0:10:59.720 --> 0:11:02.800 some way areas because it's been proved wrong on its 0:11:02.800 --> 0:11:05.480 productivity forecast for a very long time. Where it was 0:11:05.559 --> 0:11:09.880 quite negative I think was on the impact of public 0:11:09.920 --> 0:11:13.960 investment on private investment and on the broader capacity of 0:11:13.920 --> 0:11:17.240 the economy. As they say themselves, there's perfectly possible that 0:11:17.240 --> 0:11:20.600 that public investment will crowd in private investment. They're assuming 0:11:20.600 --> 0:11:22.360 it won't, and they're assuming, in fact it's a one 0:11:22.360 --> 0:11:25.239 for one for trade off. We could in the US 0:11:25.360 --> 0:11:28.000 it was learned that you could make room. 0:11:27.880 --> 0:11:30.679 Through those kind of investments. We'll see, we'll see. 0:11:31.000 --> 0:11:33.920 So if it had to be done, best done quickly, 0:11:34.480 --> 0:11:37.480 and was employer national insurance the right way to do it, 0:11:37.679 --> 0:11:39.120 do you think? I mean that puts quite a burden 0:11:39.160 --> 0:11:41.800 on businesses. And if you add up employer national insurance 0:11:41.840 --> 0:11:43.320 rises and you add that to the rise in the 0:11:43.320 --> 0:11:45.800 minimum wage, you've got a lot of smaller businesses and 0:11:45.800 --> 0:11:48.800 businesses and the services sector screaming slightly. 0:11:48.880 --> 0:11:50.640 You have chosen to put quite a lot of pain 0:11:51.000 --> 0:11:53.520 on I think medium sized, a lot of the very 0:11:53.520 --> 0:11:55.520 small employers. I think they've made an effort to at 0:11:55.600 --> 0:11:59.080 least partially protect them. But I think you're quite right 0:11:59.080 --> 0:12:03.880 that the combination of the national living wage increase and 0:12:04.600 --> 0:12:09.559 the national insurance rise is a sort of upfront challenge 0:12:09.920 --> 0:12:12.640 and an increase in the cost and cost of labor. 0:12:13.960 --> 0:12:17.160 I wouldn't have cut national insurance last year, and I 0:12:17.200 --> 0:12:19.520 think there was no economists who thought that was affordable, 0:12:19.800 --> 0:12:22.360 especially by taking twenty billion out of the future public 0:12:22.360 --> 0:12:22.920 spending plans. 0:12:22.920 --> 0:12:24.840 That's what happened last November. 0:12:24.840 --> 0:12:27.480 Is you know the way A large part of how 0:12:27.640 --> 0:12:29.800 it's I'm hesitant to say this with Addy King because 0:12:29.800 --> 0:12:31.680 I know he will immediately correct me if I come wrong, 0:12:31.679 --> 0:12:35.560 but a large part of how the national insurance cuts 0:12:35.640 --> 0:12:39.679 we were quote unquote financed was through these very unrealistic 0:12:39.679 --> 0:12:44.640 spending plans. So in a sense, Rachel Ries was just 0:12:44.720 --> 0:12:48.640 reversing cuts which were widely felt to be unaffordable. I 0:12:48.679 --> 0:12:53.320 think it's unfortunate that the reversal has been is as 0:12:53.400 --> 0:12:57.840 bad for or it is affecting labor supply in a 0:12:57.880 --> 0:13:00.720 negative way and hurting employers when youbably would have wanted 0:13:00.760 --> 0:13:04.360 to just add some a few pence to income tax. 0:13:04.400 --> 0:13:06.000 But that's that's not the world we live in. 0:13:06.400 --> 0:13:08.880 Now, this this rise in n M, we should mention it. 0:13:09.120 --> 0:13:11.760 You speak about employers and employee and I in the 0:13:11.800 --> 0:13:13.880 same kind of breath, right, they're sort of the same thing. 0:13:14.000 --> 0:13:15.720 So does the Office of Budgets, So does the Officer 0:13:15.720 --> 0:13:19.199 Budget Responsibility exactly, but RAG does not. So we must assume, 0:13:19.280 --> 0:13:21.480 must't we andy that this does end up coming through 0:13:21.880 --> 0:13:24.800 at lower wages or certainly lower razors to wages. 0:13:25.640 --> 0:13:30.000 Absolutely, and so the OBI said that yesterday they expect 0:13:30.120 --> 0:13:34.680 in the end three quarters of that tax rise will 0:13:35.160 --> 0:13:39.959 ultimately manifest itself in lower real wages, probably over time, 0:13:40.360 --> 0:13:43.559 as next year's four percent pay rise will actually be 0:13:43.800 --> 0:13:48.559 two and a half, and those kind of decisions. They 0:13:49.000 --> 0:13:51.240 do think that a quarter of it will come off profits. 0:13:51.679 --> 0:13:55.839 The way in which the tax rise was structured, with 0:13:56.240 --> 0:13:59.560 actually most of the revenue coming from moving the point 0:13:59.600 --> 0:14:03.480 at which your each employee's wages start to be liable 0:14:03.600 --> 0:14:08.319 for an I back to five thousand pounds, means that 0:14:08.640 --> 0:14:12.120 the tax rise itself is quite concentrated on low paid people. 0:14:12.440 --> 0:14:14.719 It doesn't matter whether you're a large employer of low 0:14:14.800 --> 0:14:17.720 paid people or a small smaller employer of low pay people. 0:14:17.720 --> 0:14:21.240 It's low paid people, whether whether tax rise is largest. 0:14:21.600 --> 0:14:25.200 But also that is the same group where your room 0:14:25.280 --> 0:14:28.920 for maneuver is reduced by the living wage, So you 0:14:29.000 --> 0:14:33.200 can't actually choose how much you pay rise you give. 0:14:33.600 --> 0:14:35.440 So that looks quite risky to me. 0:14:35.840 --> 0:14:38.320 Well, maybe it's just a way of trying to boost productivity. 0:14:38.920 --> 0:14:41.080 Like it very expensive to hire people down at the 0:14:41.080 --> 0:14:45.760 bottom en you've forced people to introduce productivity enhancement measures. 0:14:45.920 --> 0:14:48.040 That has always been one of the arguments for why 0:14:48.360 --> 0:14:52.760 minimum wages could work. That although in someone's model it 0:14:52.880 --> 0:14:56.120 says you can't have a latent productivity gain that a 0:14:56.200 --> 0:14:59.720 business has not already taken advantage of, in the real. 0:14:59.600 --> 0:15:02.560 World, can can definitely and just so just on that though, 0:15:02.560 --> 0:15:05.360 I mean, ever since the minimum wage was introduced by 0:15:05.720 --> 0:15:08.560 Golden Brown, this has been the fear, and it's been 0:15:08.600 --> 0:15:11.600 gradually increased, and there was always a feeling that at 0:15:11.640 --> 0:15:14.480 some point it would start to really hit employment. But 0:15:14.640 --> 0:15:17.680 up until now and that has actually been surprisingly positive 0:15:17.720 --> 0:15:20.360 for both employment and living standards at the bottom end. 0:15:20.440 --> 0:15:23.120 So who knows whether we've reached that critical point I mean, 0:15:23.200 --> 0:15:25.520 it is now getting closer to the average earnings than 0:15:25.560 --> 0:15:27.560 you would have ever thought was possible without having a 0:15:27.560 --> 0:15:28.600 big impact on employment. 0:15:28.680 --> 0:15:31.120 But if a lot of the studies was. 0:15:33.000 --> 0:15:35.480 Looking at one in Manchester and other places, it has 0:15:35.520 --> 0:15:40.280 actually raised productivity in these in these low wage sectors 0:15:40.520 --> 0:15:41.880 in a way that you might want to see, and 0:15:42.160 --> 0:15:43.160 hopefully that will continue. 0:15:43.440 --> 0:15:46.720 Actually, one thing I'm curious about when that point is, 0:15:46.760 --> 0:15:49.560 I mean, presumably it has they had an mpicked when 0:15:49.640 --> 0:15:53.600 for example, read comprehation in or the gaps between So 0:15:53.840 --> 0:15:57.280 if you're a minimum reja or not, then the person 0:15:57.360 --> 0:16:00.280 above view, in the person above view, the gap between 0:16:00.360 --> 0:16:04.280 those wages get smaller, and therefore the reward for if 0:16:04.320 --> 0:16:07.560 you like taking on more responsibility or going for promotion 0:16:07.840 --> 0:16:11.600 also becomes smaller. Is there any kind of evidence of 0:16:11.680 --> 0:16:14.520 that or I mean the other thing is also you know, 0:16:14.720 --> 0:16:17.600 the choice between working as say, a low paid position 0:16:17.760 --> 0:16:20.800 in the NHS and working when the tells it tesco 0:16:21.600 --> 0:16:23.480 one of those jobs I think most people would degree 0:16:23.600 --> 0:16:25.520 is much harder than the other. But if the gap 0:16:25.600 --> 0:16:29.880 between the pay for them is non existent, then that's 0:16:29.880 --> 0:16:32.440 why it's perhaps how they recruit for certain roles and others. 0:16:32.720 --> 0:16:34.040 I mean that speaks to this. 0:16:34.240 --> 0:16:36.800 There's much broader question about whether or not, for example, 0:16:36.840 --> 0:16:39.640 in social care, whether there's enough money going into that 0:16:39.720 --> 0:16:42.880 system to have people be paid in a way that 0:16:43.000 --> 0:16:44.960 reflects the hardness of the job. So I think that's 0:16:45.000 --> 0:16:46.800 sort of the basic together. But you're absolutely right that 0:16:46.840 --> 0:16:50.120 there is a It does cause compression, but it isn't 0:16:50.160 --> 0:16:53.320 the case that everyone just gets pushed, and that means 0:16:53.360 --> 0:16:56.120 that you're not paying more to everybody in order to 0:16:56.160 --> 0:16:58.480 preserve those differentials, which depending on how look at it, 0:16:58.600 --> 0:17:00.080 maybe it maybe it certainly is a good thing for 0:17:00.080 --> 0:17:03.080 people at the bottom. Yeah, and employment is a good 0:17:03.080 --> 0:17:04.639 thing for employment because you're not having to pay more 0:17:04.680 --> 0:17:05.159 for everybody. 0:17:05.200 --> 0:17:06.440 You're just paying more for those people. 0:17:07.200 --> 0:17:09.119 Johnny, you wrote the money just sailed last week or 0:17:09.160 --> 0:17:11.560 as earlier this week. There are several criteria for whether 0:17:11.560 --> 0:17:13.600 this will be a good budget or a bad budget. 0:17:14.000 --> 0:17:14.399 How did it go? 0:17:15.440 --> 0:17:17.359 I mean, but it didn't crash the gout's market, So 0:17:17.480 --> 0:17:20.320 that was the FoST wine. I did feel at the 0:17:20.359 --> 0:17:22.560 time that was a pretty low hart Oughty clear because 0:17:22.760 --> 0:17:25.800 you know, generally I just don't crash the gout's market. 0:17:26.119 --> 0:17:30.840 That doesn't happen that often in terms of making the 0:17:30.960 --> 0:17:32.600 tax system less complicated. 0:17:33.680 --> 0:17:36.639 I don't know. It's hard to gather a tech for that. 0:17:36.840 --> 0:17:43.160 Wine you've sort of introduced, I knew levels of inheritance tax, 0:17:43.359 --> 0:17:47.040 for example, without really reforming it, particularly. 0:17:46.560 --> 0:17:48.360 In fact that we should have a little little pull 0:17:48.400 --> 0:17:48.560 on that. 0:17:48.800 --> 0:17:51.480 Did anyone in the audience move their pension from dB 0:17:51.680 --> 0:17:54.280 to DC in order for their children to be able 0:17:54.320 --> 0:17:57.879 to inherit it? No, I mean think we do have 0:17:58.000 --> 0:17:59.440 quite a few listeners who did do that as a 0:17:59.480 --> 0:18:01.040 disappoint die for them yesterday. 0:18:02.359 --> 0:18:04.120 I did, Well, that's a good point. I mean, that's 0:18:04.560 --> 0:18:06.560 one thing on the inheritance tax thing. I mean, I 0:18:06.600 --> 0:18:09.440 don't know, but I remember when that first happened and 0:18:09.560 --> 0:18:12.080 it became clear that you could use a defined contribution 0:18:12.240 --> 0:18:16.960 pension to stash away your assets from inheritance tax. I 0:18:17.080 --> 0:18:18.760 realized this may not may or may not be a 0:18:18.800 --> 0:18:21.000 popular thing to say about. I remember when we first 0:18:21.480 --> 0:18:24.040 realized that and we were writing about it, we were like, 0:18:24.520 --> 0:18:28.600 this cannot last. This is a really gray area is 0:18:28.760 --> 0:18:32.280 definitely going to be reversed. So the fact that it 0:18:32.400 --> 0:18:34.440 then hung around for so long that it actually became 0:18:34.480 --> 0:18:35.560 a tax planning tool. 0:18:36.920 --> 0:18:37.840 It was always something. 0:18:37.840 --> 0:18:41.280 I think it was on the cards, and I feel 0:18:41.359 --> 0:18:44.920 that it's difficult to object to put it that way. 0:18:46.960 --> 0:18:49.359 As far as the other things inherent tax inheritance tax 0:18:49.480 --> 0:18:53.400 goal did I mean name market rallied because they only 0:18:53.400 --> 0:18:55.600 get hit with twenty percent in hurdance tax instead of 0:18:55.680 --> 0:18:58.240 forty percent, So you know, I mean, I'm sure AIM 0:18:58.320 --> 0:19:02.520 investors are we relieved about that. The farm stuff, now, 0:19:02.560 --> 0:19:05.639 I don't I know nothing about farming, to be very clear, 0:19:06.840 --> 0:19:10.399 I think that people are quite shocked about the million 0:19:10.440 --> 0:19:14.119 pound limit that does come when topowin allowance law. So 0:19:14.600 --> 0:19:16.639 it is a two million pound limit around a million 0:19:16.680 --> 0:19:20.040 pound limit from what I'm like to believe from looking 0:19:20.080 --> 0:19:22.919 at Twitter, most farms are still bigger than that, but. 0:19:24.000 --> 0:19:27.640 Farms that are sustainable or profitable will be much more 0:19:27.720 --> 0:19:30.240 valuable than that. If a hobby farmer is going to 0:19:30.280 --> 0:19:32.800 be more valuable than that, So that was quite an 0:19:33.119 --> 0:19:35.960 interesting move. And I also felt that a bit like 0:19:36.000 --> 0:19:37.960 with AM is one of those things once you've broken 0:19:38.000 --> 0:19:40.920 the taboo of adding inheritance tax, so those it could 0:19:41.000 --> 0:19:42.640 go on. So I know everyone who invests the name 0:19:42.720 --> 0:19:44.920 is very relieved, but I wouldn't be at all surprised 0:19:45.000 --> 0:19:47.160 if there's another bite at that one. 0:19:48.240 --> 0:19:51.320 Yeah, and I mean to be fair again, it was 0:19:51.359 --> 0:19:55.680 always dafted aim was being propped up by being a 0:19:55.800 --> 0:20:00.960 funnel for inheritance tax avoidance because you know, the the companies, 0:20:01.200 --> 0:20:03.200 the companies should be good enough not to just be 0:20:03.280 --> 0:20:07.280 getting money because it's a way to minimize your your losses. 0:20:07.720 --> 0:20:10.119 But at the same time, if you're not then going 0:20:10.160 --> 0:20:14.040 to replace that. We already have an issue with raising 0:20:14.080 --> 0:20:17.280 funds for small companies in this country or released it's 0:20:17.320 --> 0:20:19.720 not actually, it's more the funnel between small companies and 0:20:19.840 --> 0:20:23.639 big companies. And obviously the budget didn't do and in 0:20:23.720 --> 0:20:26.159 particular for capital markets. It wasn't against them, but it 0:20:26.320 --> 0:20:29.239 wasn't for them either, which was something that had been 0:20:29.280 --> 0:20:33.399 talked up a lot before the election. As far as 0:20:33.480 --> 0:20:36.120 our stuff goes. Capital gainst tax going up from twenty 0:20:36.200 --> 0:20:37.480 eighteen percent to twenty to. 0:20:37.520 --> 0:20:38.359 Twenty four percent. 0:20:38.760 --> 0:20:41.720 Again, that was more a relief from what it could 0:20:41.800 --> 0:20:46.080 have been. Doesn't before men and doesn't make anything more straightforward. 0:20:46.880 --> 0:20:48.720 So yeah, so in terms of complexity, I would have 0:20:48.800 --> 0:20:54.920 said that, you know, it wasn't. No Chancellor has passed 0:20:55.000 --> 0:20:57.120 that for years and years. You know, they don't ever 0:20:57.240 --> 0:21:00.080 make it less complicated. And I do think that I 0:21:00.119 --> 0:21:03.639 do think that's a problem. It is like I politically speaking, 0:21:04.280 --> 0:21:08.440