Adam Fleming (2:13)

to realize Next, our livestream of our rota meeting. Now, Chris, you know what? You can welcome me back with a classic correction and slash clarification.

Chris Mason (2:22)

Will have a clarification that is the biggest euphemism in journalism.

Adam Fleming (2:26)

No, this is a clarification. So on yesterday's newscast, which is I was listening to on the way into work on Tuesday morning. You mentioned the phrase Westminster wags. Yes, I know what that means. But some younger members of the newscast team said. What does he mean when he says Westminster wag?

Chris Mason (2:43)

Perhaps implying that I was talking about like, like football as well.

Adam Fleming (2:46)

Wives and girlfriends.

Chris Mason (2:47)

Yeah, right, I see. Yes, I suppose. I suppose I was indulging in a bit of sort of journalese, a bit of the kind of thing that you might see written in a kind of gossip column in one of the political magazines or perhaps in a. In a newspaper at the weekend or whatever to mean somebody who's cracking a middle ranking, if that joke, as opposed to talking about people's partners or wives and girlfriends or anything like that. So, yeah, fair. That is a fair critique from the. From the more youthful end of the newscast team, isn't there?

Adam Fleming (3:24)

Is it an old cove? Is that a word to describe what? Somebody, somebody.

Chris Mason (3:31)

An old cove, I think. Is that a compliment? I'm not sure.

Adam Fleming (3:34)

I think I've made it up. But what could it be?

Chris Mason (3:37)

Oh, old cove.

Adam Fleming (3:40)

So, yeah, I've just looked it up in the dictionary. Old fashioned slang, British and Australian. A fellow, a chap. I thought I just maybe invented a word.

Chris Mason (3:48)

I also see here that it refers to a 2023 drama podcast series created by Blah, blah, blah, blah, blah.

Adam Fleming (3:56)

Right, let's make an episode of Newscast about what's been happening in the world today.

Chris Mason (4:00)

Newscast, Newscast from the BBC.

Faisal Islam (4:02)

Fat Boy Slim and me in the

Chris Mason (4:03)

classroom doing our violin lessons.

Faisal Islam (4:05)

I was the tattletale in the classroom. Can I have an apology, please?

Chris Mason (4:08)

I trust almost nobody that daddy has to sometimes use strong language.

Faisal Islam (4:12)

I am in mosque.

Newscast Outro Host (4:14)

I feel dulu with no salulu.

Chris Mason (4:15)

Take me down to Downing Street.

Adam Fleming (4:17)

Let's go have a tour.

Chris Mason (4:19)

Blimey.

Adam Fleming (4:20)

Hello, it's Adam in the newscast studio

Chris Mason (4:22)

and it is Chris surrounded by wags at Westminster.

Adam Fleming (4:26)

You old cove. Right, shortly we'll be joined by Faisal Islam because he's talking about the Chancellor's Maze lecture. I think I remember once, Chris, you talking about that saying, was it maize, like corn? Yes, but is maize named after a person?

Chris Mason (4:39)

It is m a I s not m a ize. Or indeed the sort of thing that a country house you might run around trying to find the middle of.

Adam Fleming (4:49)

Right, I really need to get back into work mode this first few minutes. Put yourself in the holiday mode. Right, Focus, focus, focus. Well, actually something important to focus on. The war in Ukraine, which was kind of back on British soil today because Volodymyr Zelenskyy, the Ukrainian President was back addressing Parliament.

Chris Mason (5:08)

Yeah, and I had the privilege of getting to go into the room and you know, it is the, this, the risk of sounding pious, I'm just going to do it anyway because it's kind of the essence of being a reporter, you know, the essence of being a news reporter is getting to witness things and getting to be in the room when things happen. Now, quite often reporters find themselves the other side of the door to a room where the stuff is happening because we're not in there, you know, for this. We were a handful of journalists alongside mps and members of the House of Lords. One of the most extraordinary things I've witnessed journalistically in the last four or five years was when President Zelensky addressed Westminster hall in Parliament around about three years ago, pretty much one year in to the war after the full scale invasion in February 2022. And that was an extraordinary thing to witness because he is a master communicator. And at the time then, Adam, he was trying to make an argument about the dangers of war fatigue. And you know, here we are three years on, the war, very much still live and real. And then the backdrop of course being that all the headlines are dominated by another war in the Middle East. And, and again, I thought you had this master communicator on show making an argument, two fold argument one, that the conflict in the Middle east and the conflict in Ukraine are effectively one and the same thing. So he described Russia and Iran as brothers in hatred. And then the other argument he was making was that by necessity Ukraine has become a pioneer in modern warfare, particularly drones. And that that legacy of learning, if you like, is what Ukraine's allies in supporting his country will inherit both now and after any conflict in terms of how modern warfare now looks. And what he didn't do today, but it was implicit, was sort of bang the drum for more support. He didn't need to say that explicitly because it was implicit, I think in the thrust of the argument he was making. It was a fascinating, fascinating argument.

Adam Fleming (7:11)

Well, yeah, just he's rhetorically made that switch from supplicants to I can help you out.

Chris Mason (7:17)

Yes, exactly that. And so shifting it round from exactly that sense of you need to help us because we are a friend in trouble, obviously, clearly from his perspective that argument remains live. But flipping it round, as you say, to a sense of not just our front line is your front line, which has been part of his argument all the way through, but the nature of the conflict that Ukraine is Currently both a victim of and a prosecutor of, is the nature of conflict in the years and the decades ahead. And he talked at the beginning of the speech about how there are Ukrainians now in the Middle east sharing their expertise in the war with Iran, but then also the prospect of Europe on the front line of conflicts to come.

Adam Fleming (8:07)

And we're recording this episode of newscast at 5 to 7 in the evening on Tuesday 17th March. And just before we started recording Chris, Donald Trump was live in the Oval Office with the Irish Taoiseach, Michal Martin, to mark St. Patrick's Day. And another pop at Keir Starmer, although they're getting quite repetitive now and quite similar.

Chris Mason (8:28)

They are. So I was just catching up with this as I walked back over the road from Parliament, having been in the room with President Zelensky. And interestingly, another strand of President Trump's critique was a critique of NATO. And that critique was happening whilst the Prime Minister, President Zelensky and the Secretary General of NATO, Mark Rutter, were all in the same room. The that I was also in Committee Room 14 in Parliament. But, yeah, as far as President Trump is concerned, he is. I said this in a piece I wrote for the BBC app this morning and it remains true pretty much every time the President, President Trump, that is, is in front of a camera at the moment, he has a paup at Keir Starmer. Now, the critique is becoming familiar and the language is becoming familiar and some of the arguments are becoming familiar. His critique around the UK's outlook on energy or immigration, for instance, his critique of Keir Starmer as a leader. I mean, I think what's interesting is the stickiness of it. Does this stickiness of it mean that it is less likely that it blows over? Or given, for instance, the sort of volcanic nature of that meeting that we all recall between President Trump and President Zelensky just over a year ago, and given how they have since had much more kind of conventional diplomatic meetings, at least the bits we see in front of the camera, maybe it still can blow over. But it's so interesting that Mihail Martin, the Taoiseach, was attempting to smooth things over, attempting to talk Keir Starmer up or defend him, and it didn't seem to work.

Guest or Contributor (10:08)

Keir Starmer has done a lot to reset the Irish British relationship. I just want to put that on the record. But I do believe that he's a very earnest, sound person with. You have a capacity to get on with. You've got on with him before and you've got on with other European leaders as well. And I think you have that capacity again, and I think everyone exists. I mean, you cannot have a rogue state with a nuclear weapon.

Adam Fleming (10:32)

And somebody who's not necessarily coming to the Prime Minister's aid, but is becoming a little bit more anti Trump is Chemi Betanov.

Chris Mason (10:40)

Yeah. I think this is perhaps the most striking domestic contribution, if you like, politically today, as we record. I'm now trying to pull up because I was doing something else at the point where Kemi Badenok said what she said. I am now for the second newscast in a row, because on the edition we recorded on Monday, I was also flicking through my inbox trying to find something whilst talking.

Adam Fleming (11:06)

Yeah.

Chris Mason (11:06)

I am Keir Starmer's biggest critic. She says. There's a lot of stuff I believe he has done that is wrong, but the words coming from the White House are completely wrong. I actually think it's quite childish. There is a lot that can be said behind closed doors. The Western alliance having an argument with itself, I think sends the wrong signal to our opponents in Iran and Russia. The words coming from the White House were childish. And that's fascinating because she is, and this is what you can do as an opposition leader. That's much harder when you're a Prime minister. She is able to be more critical, isn't she, than in public than the Prime Minister feels, at least up to now, that he is able to be. And I think probably she recognizes that. While she has made a different argument around the Iran war and the role the UK should have played, the Conservatives arguing that the access to the airstrip should have been granted from the outset, not a couple of days in, but articulating a view I suspect she thinks is fairly close to the sort of median position amongst the British electorate. When they see these exchanges, almost irrespective of their political views of President Trump and Keir Starmer.

Adam Fleming (12:17)

And then we got. In terms of the substance of what's happening in the Middle east now, Donald Trump seems to have stepped back from his demand that. That NATO allies in China supply ships and resources to keep the Strait of Hormuz open.

Chris Mason (12:32)

Yes. I think broadly, as a result of the fact that so few. Yeah, we're expressing any enthusiasm for the. For the idea. So I think what's intriguing now, what are we two and a bit weeks into the war is, you know, we're beyond the point, aren't we? Where. For everyone, by the way, but obviously, particularly for America and Israel, where we're beyond the point where the initial kind of rhetorical flourishes and grand statements survive contact with reality anymore, because clearly the conflict rolls on. There's still all of those questions about what the. The end game is, what the precise desires of America and Israel and by the way, they might not be the same, are, and then the extent to which. And Kemi Badenot was speaking to an element of this, what we classically associate with the phrase the Western alliance hangs together or doesn't, and clearly it isn't in many senses, European countries, to a greater or lesser extent, very or rather sceptical, and as are others, too. And then you sit that alongside how this is going down in America, and then a more narrow definition of that within the Make America Great Again Maga movement of the Republican Party, many of whom were very skeptical about the idea of foreign military adventures. So where this goes from now, in terms of how Donald Trump makes an argument both domestically and internationally, when he is not seeing those who might normally rally to America's support, doing that is going to be really interesting. And, you know, what bearing does that have on how long the war goes on?

Adam Fleming (14:21)

And a little sidebar story. So a couple of days ago in the Spectator magazine, their political editor, Tim Shipman, had a quite detailed leak from the National Security Council of the UK about which ministers were on which side of the argument about allowing the US to use British military bases to launch the attacks on Iran. And that's now the subject of a leak inquiry. Because the National Security Council is the one thing that should never leak.

Chris Mason (14:48)

Yes. I thought Tim Shipman is a master journalist and it was a fascinating read. The thing I took away from it, when I read it, the content was fascinating, but the thing I took away from it was, blimey, people are talking within, you know, or who are involved in that particular forum. Leak inquiries at Westminster do not have a wildly positive track record from the perspective of those conducting the inquiries in terms of getting to a leaker, apart from

Adam Fleming (15:23)

trivia fans.

Chris Mason (15:23)

Oh, yeah.

Adam Fleming (15:25)

A leak from the National Security Council under Theresa May, which was traced to Gavin Williamson, who then got fired.

Chris Mason (15:30)

Yes, that is true.

Adam Fleming (15:31)

One of the few leak inquiries that went anywhere.

Chris Mason (15:33)

Yes. So the precedent does relate.

Adam Fleming (15:35)

He denied it at the time.

Chris Mason (15:36)

Yeah. That particular forum. Interesting. But the vast majority don't because most people tend to cover their tracks and make sure there isn't a. There isn't some sort of trail, paper trail or digital trail, as it's more likely to be now, given how digital lives are. Does it make it harder or easier to cover your tracks? Interesting. I think to be to definitively prove it, I think unless people have been very slapdash, would, I suspect, be quite difficult.

Adam Fleming (16:08)

I mean, in these leak inquiries, though, people do have to hand over their phones. And the Cabinet Secretary, Antonio Romeo, said in a letter that she was responding to from a Tory frontbencher who raised this, that she's taking it very seriously and will use all the tools at her disposal. And so presumably if she decides that asking Cabinet ministers to hand in their phones is one of the tools at her disposal, she'll do that.

Chris Mason (16:30)

Yep, yep, that's true. I I whether that definitively proves anything, let's see. But yeah, as you say, there's a precedent there, so you never know.

Adam Fleming (16:40)

Right. Chris, thank you very much and thank you for your warm, warm welcome back. And thank you for the reminder that the Maze lecture is spelled M A I S, not M A I Z E or M A Z E. Happy

Chris Mason (16:52)

to be here for spelling inquiries. B Y E T A.

Adam Fleming (16:59)

Right. The reason we're talking about the Mays Lecture is it's a big part of the financial calendar where a senior figure talks about fiscal or monetary or economic policy. And today it was Rachel Reeves, the Chancellor, doing that in the City of London. And earlier on today, on Tuesday, I spoke to faisalislab because he was there at the speech, having gone on a visit with the Chancellor beforehand. And not massively exciting like title the Mays Lecture. But it turns out what Rachel Reeves had to say to the great and the good in the city was very intriguing. As Faisal explained,

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Adam Fleming (19:14)

Before we talk about the Mays lecture, which is an important part of the financial calendar every year, even if lots of newscasters might not tune in for it. Why is there a picture of you on the BBC news website? You're basically wearing dark glasses.

Faisal Islam (19:25)

Oh, dear. Yeah, well, I thought they looked quite cool. They were yellow. Yellow glasses. Laser safety glasses. Because I went to go and see. We've talked about this before, quantum computers, but the Brit style quantum computers at the Oxfordshire National Quantum Computing Center. And I had focused when we'd spoken before about this, about Google's effort here, which is a massive fridge. There are.

Guest or Contributor (19:48)

Yeah.

Adam Fleming (19:48)

The coldest place on Earth.

Faisal Islam (19:49)

Yes.

Adam Fleming (19:50)

Because that's what you need.

Faisal Islam (19:51)

Known universe. Right. In fact, the Chancellor got excited about being in the coldest place in Europe. So. However, there are different methods to make quantum work. And the thing that I was looking at there was something called trapped atoms where you use lasers to trap single atoms. And then, and forgive me for this explanation, I don't know the missing links here, you somehow get the qubits that form the quantum computer.

Adam Fleming (20:14)

And the reason you were looking at British flavored quantum is because one of the three things that Rachel Reeves was talking about in her lecture today was embracing artificial intelligence and the next generation of computing, which is quantum. But before we talk about her numbered list, and she did a lot of numbered lists in this speech. What is the Mays lecture? Why is it such a big deal for people in your world?

Faisal Islam (20:33)

It. It has. Forgive me, I don't. You might know better because you're looking at the list about how long it goes back, but I think we're talking 20, 30 years. Because I think we go back 1978. Oh, sorry. Okay. Longer than that. So almost as much as my entire life. So you go back to Lawson famous lectures about, if you like medium and long term economic strategy. Shifts have been made at this lecture, which is associated with City University, now the Bayes Business School and you know, so, so, so big decisions that last for years have been signaled at these sorts of lectures with a long list of former chancellors, shadow chancellors and the like. And so, you know, we're very used to kind of looking at the ups and downs of the individual GDP number or the unemployment number or how they're going to respond at an individual budget. But you know, what is the strategy? So under Thatcherism, small estate monetarism, which is when you focus on the money supply, independent central banks, all the things that have we've taken for granted in terms of macroeconomics which when it's working you shouldn't notice it. It's like the ball boys and girls at Wimbledon, but it's not working, we all notice it. These are the sorts of big intellectual shifts. So there's a sort of intellectual framework for medium to long term economic plans.

Adam Fleming (21:45)

And Rachel Reeves is the first person to give this lecture twice.

Faisal Islam (21:49)

Yes. And I think I let you all into a little secret which is she's rather proud of that fact, which I think goes. And the reason why I tell you that it's not just to be indiscreet, it just goes a little bit way to explaining a slightly sort of inscrutable person which is, you know, genuinely very excited about the nerdish quality of being able to deliver a speech like this about, you know, using media.

Adam Fleming (22:09)

Yeah. Because no one shouts at her or asks her hard questions during it.

Faisal Islam (22:12)

Well, there were some hard questions I would, I, I, I would argue but in terms of the impact. So yeah, you're right is it's not the short term. What's in the headlines right now, in fact, that's kind of the opposite what gets covered. But it's like, you know, how do you grow our cities? What's our relationship? We'll go on to this with Europe. What's going wrong in our relationship between the universities where we do amazing research and building the biggest businesses in the world. So it's things that affect us big time that sometimes we don't have the oxygen to discuss. We discuss it quite a lot I seem to find.

Adam Fleming (22:44)

We basically do a weekly mates lecture. You do it 52 times a year. No, but having said all that though, there was a bit of I'm kind of breaking daily news in it today and that she acknowledged that the, the conflict between the U S Israel and Iran and the Straits of Hormuz being blockaded is going to lead to inflation increasing.

Faisal Islam (23:02)

She did, she did, but she Again made this, this comment that we've heard from the Prime Minister, but I heard first from, from the Chancellor, which is really the only way out of this is de escalation. And you may think quite reasonably that's just words. What does that even mean? I just wonder if some of the news we're hearing today about, you know, from the Germans, for example, saying, you know, we won't engage with, you know, a maritime help on the Straits of Hormuz until the Americans and Israelis have sorted out essentially, I think, stopped what they're doing. You've heard about the idea that, you know, Starmer has a plan that would help with unblocking the Straits of Hormuz, but presumably only as the result of the war having stopped.

Adam Fleming (23:44)

Yeah.

Faisal Islam (23:44)

And so they're keeping channels open with the Iranians so you can start to see. And then if you take everything back and you sort of unwind the logic of this, which is how long is this inflationary bump going to last? And the answer is as long as the war. But if you assume that Donald Trump does not want this to go on in terms of the gasoline prices, it's horrible to look at everything. But, you know, maybe there's a certain truth to it to the midterms in November because this would be disastrous supposedly for him, then this ends in August. And the methodology is that President, you know, before that is that President Trump withdraws and tells Israelis to do so, and then it's over to the Europeans to persuade the Iranians not to blockade the Straits of Hormuz. Now. So that's very tentative, but that's the logic strain that I think that she was pointing to. Yeah.

Adam Fleming (24:29)

And so then she dived into the substance of this big lecture. And as you said, there were sort of three chapters to it. One of the chapters was about artificial intelligence. What's she, what's she planning there?

Faisal Islam (24:39)

So a big injection of public cash over a decade, two and a half billion pounds, primarily on Quantum that we talked, talked about a minute ago, essentially to make sure, I mean, she wants to write what she sees as a pattern of great British invention. And you go back years on this, which since the 60s, 70s, we have failed to commercialize, we failed to create the world's biggest companies. We've, we've had a very financialized economy where we're obsessed with the city, we're obsessed with house prices and stuff like that, but not like real substantive world changing technology. Well, more than unicorn won't cut it. You're talking like a Microsoft or a Google or something like that, where there's a company called ARM holdings which makes chips, which does very well, which is probably was our best bet in terms of that. But we. That was sold partly abroad. So. Yeah, so that's about. And she feels that if you put the money into Quantum now, even before the technology is solid, let alone we

Adam Fleming (25:35)

know the government will buy a billion pounds worth of quantum compute, quantum computing, when it's invented, essentially in a few

Faisal Islam (25:43)

years time, when you might argue it's not entirely certain that she'll be Chancellor, I think that's probably fair to say

Adam Fleming (25:49)

that's the government providing a market, isn't it? And always becoming like an investor.

Faisal Islam (25:53)

Yeah. And I, I know you're gonna like this, which is like that on social media. I noticed this thing and I was a bit suspicious of it because you get massive do mongering, despondency about Britain on social media. But then suddenly I noticed the exact opposite and it was so like, I was like, what's going on here? This thing called London maxing.

Adam Fleming (26:09)

Yeah.

Faisal Islam (26:09)

Or Brit maxing. Have you seen that? With two X's?

Guest or Contributor (26:12)

Yeah.

Faisal Islam (26:13)

Right. And this, this is the exact opposite. The idea of like actually everyone slags off the UK or its capital, high crime rates, sort of Elon Musk style memes about the UK, but actually the environment for AI companies built around Google's DeepMind and others and our great universities is very, very positive right now. And this is this movements got a name. London maxing. It was so effusive that I thought this can't be real. Didn't really think about it. People were talking about London maxing in the audience of the maze lecture afterwards and the general positive vibe given off by the Chancellor. And we've talked about this before, Adam, haven't we? Which is, you know, the vibe we get from Westminster is incredibly despondent and doom hungry. And it's not necessarily the case elsewhere, even as the economy is pretty flat in the first month. So in that area. So it's worth thinking.

Adam Fleming (27:03)

So for people who are not fully tuned into the online jargon Zeitgeist, this idea of London maxing is basically people showing off about how great London is. And you did an example the other day, didn't you? You see a West End show.

Faisal Islam (27:14)

Oh, yeah.

Adam Fleming (27:14)

And you said how buzzing everything.

Faisal Islam (27:16)

I was surprised.

Adam Fleming (27:17)

Did you take in?

Faisal Islam (27:17)

You sort of imbibe.

Adam Fleming (27:19)

What show did you go and see?

Faisal Islam (27:22)

You know, you absolutely know. Wicked. Oh, with a five and a seven year old.

Adam Fleming (27:27)

Yeah.

Faisal Islam (27:27)

I just, I couldn't believe how packed everything out was. And this doesn't mean the economy's boom, it doesn't mean everything's per. But like set against the expectation. And so the bottom line is this, what are the proof? You know, we shouldn't take our proof points from social media algorithms ever. Ever.

Adam Fleming (27:40)

So basically, Rachel Reeves was trying to like Quantum Max today.

Faisal Islam (27:44)

Quantum Max AI maxing. It wants to diffuse. And this is the key thing in terms of productivity, which drives growth, which is that AI diffuses across the economy. And so there's all sorts of initiatives being set up to help their institutes and the like.

Adam Fleming (27:58)

Oh yeah, there's going to be an AI Economics institute.

Faisal Islam (28:01)

Yeah.

Adam Fleming (28:02)

Modeled on Rishi Sunak's AI Safety Institute.

Faisal Islam (28:05)

Now that is interesting because I think that's a tacit acknowledgment that, yes, there is benefits to productivity, there's benefits to growth. She wants the UK to be at the forefront of that. There's also in the. In the transition, as they call it, some real issues and we've talked about them before around jobs and around say first. First entry graduate jobs and. And that. So there's a balancing act.

Adam Fleming (28:24)

Right, let's transition into the second pillar of our maze lecture, which was about rebalancing economic growth across the whole of the UK to. At first that sounded like, here we go, levelling up version 556. Which. Which politician or chancellor has not been in favor of doing this for yonks?

Faisal Islam (28:41)

Yeah.

Adam Fleming (28:41)

What's different this time around?

Faisal Islam (28:43)

So I think the first thing which is very interesting is that the reference point leveling up, to be clear, didn't have a huge amount of strategic substance to it. It had a bit of money attached to. Had some recycled European money that used to be European regional funds, didn't it? You know, lots of efforts were made and there was lots of rhetoric about it.

Adam Fleming (29:04)

It never really took off.

Faisal Islam (29:05)

But it wasn't that new either because it was called regeneration before that, you know, in the 2000s.

Guest or Contributor (29:10)

Yeah.

Faisal Islam (29:10)

And we saw big transformations. My hometown Manchester, place like Liverpool, Leeds, other, the Northern Powerhouse, even barn like Barnsley, they were going to make into a Tuscan villa. And actually they sort of did. So. So you have these changes in.

Adam Fleming (29:26)

Sorry, they were going to turn, yeah, into a Tuscan village.

Faisal Islam (29:29)

Yeah, A Tuscan village based on hilltown regeneration in Renaissance Italy. And this became a big, big joke in like politics in 2002 or 2003, I think it was. It was. Will all stop. Very famous. Oh, yeah, yeah, yeah. And he. And I tell you what, I went To Barnes. Yeah. On the way to Elland Road to see my team play. Play against leads. And I popped in and it was really, really beautiful and stunning. And as a guy from Manchester, I was surprised by that. So I guess that's a long way around of saying that. We have had a history of regeneration of cities.

Adam Fleming (30:02)

Yes.

Faisal Islam (30:02)

It's cross party. Michael Hesseltine, people like Lord Adonis, people like Minister. Yeah, the manager. You know, there's been a consensus here of a certain type of politician leveling up was a sort of version of that they didn't have. And then this is quite interesting and I didn't expect this because the Chancellor announced, yes, some more funding. Yes, some more powers for Oxford and. And the like. We've heard some of that before. But a new power for devolution, that powers would go to relevant mayors over the allocation of income tax spending. Not the rates, but your revenue. What's that about? This is about, I would say, incentivizing cities to grow, to increase their population. So they get a tax base. Right, right. And then you keep that, some of that tax base, you keep the proceeds.

Adam Fleming (30:55)

So Tracy Brabin in West Yorkshire will get to keep a certain percentage of how much income tax is generated by the people of West Yorkshire.

Faisal Islam (31:02)

Exactly.

Adam Fleming (31:03)

And she could spend that on her particular projects that she wants to put.

Faisal Islam (31:06)

Spend something like, there's going to be a report come back at the budget in the autumn. I think the classic example would be Manchester, where you get a population in the city center, which was like 500 in 1980 and it's now a hundred thousand and I'm told could get to a quarter of a million and that Greater Manchester would benefit from the income tax generated from tens of thousands of increase in population. Now, this is quite fascinating because when we talk about population growth, like in Westminster politics, more or less, it's like, oh, population's growing too fast. It's an immigration story, it's a small boat story. This is a rather different lens. It's quite. It's quite normal, like in America. That is a famous.

Adam Fleming (31:48)

Well, it's a very. It's a very sort of funky way of doing house building. Target, local house building targets, isn't it?

Faisal Islam (31:54)

You just incentivize growth, like from the top. You incentivize smart local leaders, like, I don't know if you remember the wire, the mayor in the wire. I. I can't do the accent. It's a brilliant. It's a British guy. I've got to grow my tax base. I've Got to increase my population. That is what this is. And it's to create localized incentives for transformation. So I think that's pretty radical. Depends on where it goes. Wasn't expecting.

Adam Fleming (32:15)

I'll believe it when I see it.

Faisal Islam (32:16)

Well, and then someone pointed out very astutely, well, hang on, what if there's a bunch of Green or Reform mayors? Are they going to be so keen to be, you know, demarcating various amounts of the tax revenue for the opposition? In answer, they should be, because that would be the democratic will of the locals.

Adam Fleming (32:32)

And also, we should remember in Scotland under devolution, there are different income tax rates for the Scottish government. So there's an example in the UK of where there's been quite radical, maybe not radical, putting too strongly, but quite dramatic. Fiscal devolution. Yeah. Does already exist.

Faisal Islam (32:48)

Yeah. But I think this is about growing your. This is a big incentive for the big cities to grow their populations with people that pay tax.

Adam Fleming (32:56)

Then the third pillar of this speech was about alignment with the eu. What's Rachel Reeves's pitch here?

Faisal Islam (33:02)

Now, we've heard some of this before and it's like a.

Adam Fleming (33:04)

She's been preparing people for this for a few weeks, hasn't she?

Faisal Islam (33:07)

She has. I. I would say a few months. This is a very slow tanker turning round. We've talked a lot about all tankers the past few weeks. This is a very slow turning round of the tankers. But I think we're getting somewhere directionally in terms of how the economics and politics intertwine here. She's talked about, and the Prime Minister talked about alignment with the single market. This was their great answer to the Customs Union push from the Greens, the Lib Dems from some people in their own party was actually, no, not the Customs Union. Have a look at single market alignment in certain sectors, basically having the same

Adam Fleming (33:39)

rules as the eu.

Faisal Islam (33:40)

Realizing that we did with the eu, and that means you would get, certainly for regulatory purposes, frictionless trade. There'd still be some customs checks and things like that, but you still get frictionless trade. They're doing this already on food, farm and energy. This is being negotiated right now as part of the existing reset. The question for me was, how ambitious are they in terms of the other sectors? And what she said today was, by default we would align, but there would be some exceptions where there'd be regulatory divergence, where it benefits, and the test would be some sort of cost benefit analysis of, of. Of what business wants, of what would create jobs and the like. But I think she has. She has moved things along. She's created, I think, a situation where, for example, potentially the chemicals industry, advanced manufacturing, aviation and others would make a case that would be heard and they have the powers to do this with their majority for alignment realignment, we should say, with the European Union in order to get those sectors into the single market now, the European Union would have to agree. She made a big kind of plea to the Europeans in the context of this. So be more flexible. So let's not let, you know, let's not the, the cake argument.

Adam Fleming (34:57)

Well, give us some cake because I was good, because I was going to say what does this mean for negotiations with Brussels? Does this mean adding in extra chapters to the already existing negotiations that you just mentioned or is this a much more subtle thing of we independently in the UK will arrange ourselves so that we're like this so the, the, we get the benefits that way.

Faisal Islam (35:19)

Yeah. So I think the existing negotiation goes on, but then creates a sort of scaffolding for including, remember that controversial debate that was had in the Brexit years about European Court of Justice jurisdiction and all this sort of stuff. You create precedents and then I think go out to the sectors, into business and say, do you want this? I don't think they're going to front run businesses, but if businesses want it, it's there.

Adam Fleming (35:47)

Because I just think, not that I hang out in Brussels anymore, but I can imagine people in Brussels saying, oh, it's like Brexit again. Just tell us what you want. Yeah, actually Rachel Reeves hasn't really told Brussels it hasn't given them a list of requests today.

Faisal Islam (36:00)

She was trying to create an atmosphere in, within which better, more constructive conversations. You know, some people will argue the old Barney argument about having cake and all that sort of stuff. Well, I think essentially that yes, they think cake should be on offer when they can in this new world. So what else has changed? We've been talking about Donald Trump, been talking about Iran, we're talking about Greenland. They're also fearful that some of the responses to that Trump world in Europe would be made in the EU rather than made in Europe. There's, there's some moves being made there that she was adamant that they should avoid. But in general terms, a more flexible positive. You know, the Brexit negotiation was separating out and in theory in terms of trade relations, create more barriers. This is a totally different vibe because it's to kind of bring those back down again.

Adam Fleming (36:49)

And this would basically take us to like Theresa May's checkers plan.

Faisal Islam (36:53)

I think that that was all the

Adam Fleming (36:54)

sort of phase line membership of the

Faisal Islam (36:55)

single market or a Swiss style deal. This is the sort of thing that they won't say lots and lots of different agreements, but they are being quite nervous about it and they're tiptoeing around it. I think if you lay the politics on top of this, this is where I think it gets really interesting because we're now. How many years are we out now from potential labor manifesto? What is the politics saying of the Greens? Kind of, you know, chomping at the bit to, to take labor votes, mainly remaining votes, younger people voting age 16 plus. You know, you can start to see a pathway where they are arguing, as she did today, that the economics of alignment is better for trade. That is disputed. There'll be debates about that. But pers. But for their, for the labor politics of this and in terms of any like, leadership contests and the like, could you see a complete mirror image of what we saw with Ukip and, and the conservatives 10 years ago? Could we see that evolve now with the Greens and the Labour Party? I think it's very, very interesting and I guess the question it poses to me, which is just me thinking out the box, is, is this now on a sort of pathway, a glide path towards a Labor manifesto offer of some sort of referendum on joining the single market? If 5 or 6 sectors are already in, it becomes an incremental step. Discuss. I don't know. No one's told me that. I'm just like trying to work, work out how it all sits together. Which is why I think this speech was pretty important. Right. And why I think her going further than I had expected matters.

Adam Fleming (38:26)

But of course, Rachel Reeves cannot defy political or economic gravity.

Faisal Islam (38:30)

Very good, Very good reference to Wicked

Adam Fleming (38:34)

there for anyone who didn't get it. Faisal, thank you.

Faisal Islam (38:37)

Thank you.

Adam Fleming (38:38)

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