Loading summary
Transcript109 lines
- [00:01]
Robert Peston
He is going to fight. Basically put out a statement that said bring it on if you're hard enough. I mean, I don't blame him for that.
- [00:10]
Steph McGovern
It's the first time we've seen some dedication to a decision, isn't it?
- [00:14]
Robert Peston
It's been a terrible look for Britain over the last decade, the lack of stability. One year alone, you know, we had Johnson and then Truss and then sooner we had three prime ministers in a matter of just weeks. What we need is strong leadership. One of the reasons we pay so much to borrow is because the nobody thinks that we have strong government anymore.
- [00:32]
Steph McGovern
And on that point we're delighted to say that this year the Rest Is Money is being powered by Octopus Energy. And that means we get to welcome back the founder of Octopus Energy, Greg Jackson, now CEO of it. Time for a quick fire question. What's the one bit of advice you give a young entrepreneur? Maybe it's stuff that people don't normally talk about.
- [00:53]
Robert Peston
Don't be arrogant, but do be confident. Almost by definition as an entrepreneur, you're doing stuff that other people didn't think is going to work or they've discounted or dismissed. So you have to be confident to believe in your own ideas and your ability to deliver them. But you should still listen to everyone else and learn from them and not be arrogant. I think that is the secret to being able to build something special but successful.
- [01:21]
Steph McGovern
Well, cheers Greg and thank you for powering this episode of the Rest Is Money ready to soundtrack your summer with Red Bull Summer All Day Play? You choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end dj, a road dog or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit Red Bull.com BrightSummer ahead to learn more.
- [01:50]
Robert Peston
See you this summer trading at Schwab is now powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to to help you trade brilliantly. Learn more@schwab.com trading.
- [02:33]
Steph McGovern
Hello and welcome to the Rest Is Money with me, Steph McGovern and with me Robert Pearson. So it's a willy wony kind of week Isn't it?
- [02:40]
Robert Peston
I thought you said something else about a willy there as well. I'm slightly worried about how we were starting, but you're right, I now know what you mean. And I mean, we're talking about Keir Starmer and whether he's going to set out of time, timetable to quit. And he's made it absolutely clear this morning, put out a statement before Cabinet that, no, he is not going to give any indication of when he. When or whether he will ever step down. In fact, he basically put out a statement that said, bring it on if you're hard enough. I mean, I don't blame him for that.
- [03:13]
Steph McGovern
It's the first time we've seen some dedication to a decision, isn't it? He's done so many U turns and this is the first time I feel like where he's actually.
- [03:22]
Robert Peston
He's been consistent that he's never gonna leave. But you're absolutely right, there is consistency there. And, you know, his statement basically said, you know, the rules are the rules. If somebody gets 81 nominations to be, you know, a challenger, there'll be a contest. But, you know, unless and until there is that, you know, that trigger for a contest, he's staying put. And as I was talking to, you know, an incredibly senior member of the government shortly after Cabinet, and he just said, look, it's absolutely clear he is going to fight. And then I talked to another Cabinet minister who just said, look, if he does anything other than that, you know, the government just looks incredibly weak. Yeah, there is no confidence in the Cabinet nonetheless, that there won't be a contest. And actually, all eyes now are on whether where Streeting resigns and puts himself forward as a candidate. And there is certainly going to be quite a lot of pressure on Streeting to do that, because a lot of the MPs yesterday who were calling on the Prime Minister to set out a timetable to stand down were Streeting supporters. Then there were others who are Andy Burnham supporters, who also were calling on the Prime Minister to clear a path for their hero, Andy Burnham. Andy Burnham, as we speak, is about to be spotted arriving at London.
- [04:50]
Steph McGovern
Eustace Something, doesn't it, when you get a news alert on your phone saying, Andy Burnham's arrived in London.
- [04:56]
Robert Peston
Oh, my God, it's such a mad world. I mean, I am sort of, you know, to be clear, and you can probably spot this, I'm sort of midway between hysteria and trauma at the moment, because, I mean, for two reasons. One is because these occasions when we're not sure whether Prime Minister is going to survive are unbelievably intense. I'm on the phone the whole time talking to different ministers and MPs. I'm trying to work out where the balance of power lies, you know, what the mood of people are. It takes over your entire life and you know, one is doing. One is having those conversations, you know, right up to sort of midnight. And then as soon as you wake up in the morning, you're on the phone again trying to work out what the hell has been happening. So it's exhausting. But also the reason I say it's traumatizing is because in the last, well, 10 years we've had, I've had, I mean, I've been stuck in, outside Downing Street. It's always freezing cold in Downing street, by the way, what the weather's like. It's always freezing cold. And actually this time of year it's both cold. And there are these weird plane trees that.
- [06:11]
Steph McGovern
It's a wind trap, isn't it? It's a wind trap.
- [06:13]
Robert Peston
But also there are these plane trees that I can't remember what it is. It's a sort of pollen, right, which gets in your throat, gets in your eyes, you cough the whole time. It's horrific.
- [06:23]
Steph McGovern
Who are you, love? Who are you?
- [06:25]
Robert Peston
Okay, all right. I can tell that, you know, like most of the country, you don't have a lot of sympathy for me. But the point is, it's been a terrible look for Britain over the last decade. The lack of stability, the numbers of, you know, leaders we've had in 2022, one year alone, you know, we had Johnson and then Truss and then soon we had three Prime Ministers in the matter of just weeks as it. But what is it, something like seven prime ministers since 2015? Something like that. You know, it's such a bad look for Britain, for the rest of the world. It doesn't look as though our government is stable or consistent. One of the reasons we pay so much to borrow is because nobody thinks that we have strong government anymore.
- [07:09]
Steph McGovern
And on that point, you know, obviously, as we always talk about, the bond markets have reacted to this. So now our UK's long term borrowing costs have hit the highest level since 1990, 98. And this is all because 1998, to
- [07:24]
Robert Peston
borrow for 30 years, the government is paying an interest rate. I mean, that is actually, you know, does your head in when you think about.
- [07:30]
Steph McGovern
And the pound's fallen as well. If you look at what's happening against the pound, against the dollar, that's gone down so this is really negative. It is not in any way good for our economy at a time when we are in so much turmoil with the geopolitical situation. We've got a cost of living crisis. You know, people are paying more tax mess. Public services are creaking, living standards are not getting any better. Inequality's growing. Young people feel like they've got less opportunity than previous generations. The social contract has been broken and we are in a mess.
- [08:04]
Robert Peston
What do you mean by the social contract?
- [08:06]
Steph McGovern
Right, the, the social contract I see it is, you know, you work hard and as you, you know, you go on in your life, things get better for you. No, it doesn't have to be massively, but just all people want to see is things slightly improve or have someone who is giving them a plan, a, a principled one, which will make things better in the future. People can cope with tough times if they think things are going to get better. And the way things are at the moment, people don't feel like that. And that is why they're going for the populist vote of, you know, reform and the Greens is because they're like, oh, I've had it with all these people who've had a go and failed us. We need to give someone else a chance.
- [08:46]
Robert Peston
I completely agree with you. You are absolutely right in that sense. Social contract has broken. And it is actually part of my, the argument I sort of had with the prime minister yesterday. So, you know, he goes to Waterloo, the sort of community center in Waterloo, and does his great reset speech.
- [09:03]
Steph McGovern
The irony of it being Waterloo, it feels like, you know, like a battlefield, isn't it?
- [09:08]
Robert Peston
Yeah, yeah, yeah. Well, I made a terrible joke yesterday on the news where I said he's, you know, he doesn't want to be Napoleon, he's trying to be Wellington. And so far it's not clear whether it's working. But anyway, yeah, he said in this speech, which was supposed to, for, I don't know, it's probably the 49th time, redefine his premiership relaunch. But this time, you know, he wants us to believe it's real. He said the time for incremental changes, little step by step changes is past. The challenges are just too great. And before I get on to, you know, why he said that, what my argument was, I should point out that, you know, one of the things that is. I couldn't decide whether to laugh or cry about this, but they put out a press release about this speech and the headline was, the time for incremental changes is over. And then the next sentence says, in the coming months, he will set out the steps to achieve it. Do they not understand English? If the time for incremental change is over, you don't have steps, you just do it. Right, okay. Anyway, let's put that to one side, right? So, and take him at his word that he really wants to be bold. And you know, he says, and actually I did a podcast with him for ITV actually only a few weeks ago when I was out in the Gulf, where he made this argument, which is in and of itself a perfectly reasonable argument, right, where he says, look, after the financial crisis, the reforms weren't radical enough. It was an attempt to sort of get back to normal. You know, after Brexit they tried to do the same, after Covid tried to do the same. It's all been in his views, incrementalism, not bold enough. You know, and he says, now we will be bold and rise to the challenge and reset. And he says the reason this has dawned on him is because of Trump's war in, in Iran, right?
- [11:11]
Steph McGovern
It's just dawned on him. I mean, we've been seeing it for
- [11:14]
Robert Peston
years, we've been saying so that. But that was my argument with him, right? I just said, look, you know, Trump's war in Iran is a shock, right? It's a, you know, energy prices, it's absolutely throwing the whole of the Middle east into turmoil. It's, you know, it's damaging, you know, economies across, across the world. Of course, it's not a trivial event. But I literally said to him, look, when you were elected In July of 2024, we'd had 15 years of living standards stagnating. Brexit, many people would say had not worked. We'd had the worst energy shock, well, certainly for half a century with Putin's invasion of Ukraine and, and we knew that defence spending was utterly inadequate because of, you know, Putin's imperialism and the threat that he was posing to, to Europe, you know, in the run up to the general election. And when you were elected, you had all the information you needed that so called incrementalism was inappropriate. You had to have, you know, massive ambition to essentially give people both physical security and economic security. And as you and I have talked many times, that was all about having a compelling growth plan, right? And you didn't do any of it.
- [12:39]
Steph McGovern
No.
- [12:40]
Robert Peston
You know, and you actually, many of the things you did undermine growth, much of what you did was incoherent because even though in any individual policy might make sense, it just didn't make. No. When you put them all together, what. What did he add up to in terms of the direction of. Of it was too confusing. Why has it only now dawned on you, and by the way, what in your speech are you saying that can make us believe that you have now got an ambitious plan to which the answer is not very much. It's an ambition. But there's no detail that would give us confidence that he does. He can rise to this moment.
- [13:19]
Steph McGovern
I think that's a really good point about this. It comes back to the incremental point, actually. These individual decisions on tax and spending policy have, you know, when you look at them on their own, you could. They, they could make sense. But as you pointed out, on the whole, what that has meant is these kind of tough spending decisions, we've been told have had to be made always seem to hit ordinary people and businesses, the exact people, you know, the businesses are the ones who are going to grow the economy, who, if they have enough money will, you know, hopefully invest more in. In areas, employ more people and everything else. And as a collective, they've been hammered. And so that is also why there's such a. A feeling of like being let down by a party. They feel. People feel sore, let down that they are not being supported through any of the crisis. It's. Things have got harder for them. Rather than feeling like it's a government who wants people to do well, to better their lives and to make money, it feels like that's not what they want them to do. If you make money, we're going to hammer you on taxes and that's the big issue that they face in all. And plus the other thing I would say is you don't they. It feels like at the moment there's definitely an identity crisis. No one knows what Labour stand for. They don't know themselves. It feels like they end up, you know, debating whether they go right to try and beat reform or left to beat the greens. And they do it on a tactical basis, not on principled ones. And people can see through it. They look like pale imitations whenever they come out and say something, whether it's about immigration. When Starmer came out after Reform had talked about immigration being problem in the economy, then Starmer came out and said, yeah, immigration is a problem and, and it just looks like they have no principles and just they. And then so many U turns as well. Who are they? Who. Who are they and what are they? What do they stand for? I don't know.
- [15:16]
Robert Peston
If you look at what he actually announced yesterday. You know, he says Brexit has failed and I want Britain to be, in his words, at the heart of Europe. Okay, now there are many people listening to this podcast who will agree with all of that. But what is his coherent plan to be at the heart of Europe? When asked yesterday, does that mean we would re enter the Customs Union or the European Single Market, he basically said, no, no, there are new ways of somehow getting commercially close to Europe. Well, maybe there are. I mean, I do think that we now have quite a lot of leverage with Europe because the threat of Putin means closer defense cooperation. We have, you know, relatively speaking, compared to most of Europe, a powerful defense capability, which combined with the rest of Europe's, you know, you know, will make Europe more formidable versus Putin. And, you know, closer cooperation in defense ought, you know, ought to be a route also to get closer commercial cooperation, because they do, you know, to an extent, Europe leads us more than they used to because of our defence capability. But even so, there is no actually compelling roadmap to really get the costs of trading with a single market down in a very significant way that would boost growth. And absent something that looks like a practical plan, those investors that currently are very skeptical about the UK are not going to become any less skeptical. I mean, there are lots and lots of Labour supporters who would dearly love him to move towards a position where the next election would be fought on a single big issue, which is that we should rejoin the European Union. But he seems to be a million miles from making what would be a very courageous leap. Now, as I say, there are lots of people, both within Parliament, within the government, and indeed the wider sort of group of Labour supporters who take the view that it, were he to do that, that would reunite the centre and the left of politics and it would give the Labour Party a fighting chance to beat reform. And actually, at the moment, there aren't many issues that the Labour Party can coalesce around that look as though they would give farage and reform a bit of a run for their money at the next election. But again, as I say, there's absolutely no sense that he's got the courage to move labor in that direction. And then when it comes to industrial economic policy, I mean, the one thing that he announced, okay, was taking British Steel into public ownership, right? Now, I'm not saying that taking British Steel into public ownership is necessarily a bad thing in and of itself. I mean, you know, I, I, I'm broadly take the view that this idea that he put forward that it's incredibly important for an economy like ours to have a steel manufacturing capacity, that this is some issue of enormous economic security. I personally think that's slightly overstated in the sense that there is definitely surplus steel making capacity in the world. The idea that we're ever going to be a position where we can't import steel, I personally think is mad. But okay, I'm not prepared to die in that particular ditch. But what I do think is, you know, nationalizing steel sounds like the Labour Party of 1967 when they last nationalized it. It doesn't sound like a very modern economic strategy or industrial strategy that is going to benefit the people that you're talking about, people on low. You know, if you happen to work in steel or related industry, you probably think, thank goodness, but we're talking. Those are thousands of people. You know, it is not the millions and millions of people who want their living. You know, if you nationalize steel, it will have zero impact on the vast majority of people who are struggling to, you know, pay their bills at the moment. And in that sense, as a symbol of what labor is, it's ridiculous.
- [19:44]
Steph McGovern
It's out of date, isn't it? That's what it feels like. Cause I get it. Like as you say, if you look at an individual, you know, steel making facility, obviously it's really important to the community. I grew up in Middlesbrough, I know this. I have grown up in an area where steel has been absolutely vital to the local economy and you know, watch the hardship of people who've lost jobs in it. But life goes on and it's about reskilling those people. Like we're seeing happening in the oil sector. You know, the lads I know because it is many lads who've left that sector retrained and gone into renewables. And okay, it hasn't been a perfect system of transition, but there are things happening there which are working and it's really important to be forward looking in terms of growth and not be clinging on to, to the past. But anyway, let's go to a quick break and then afterwards should we talk about then the leadership contenders and what they might do for the economy? You know, where does West Angela Rainer, Andy Burnham stand on all of this? This episode is sponsored by Starling, the bank that helps you organize your money, build great habits and stay in control of your spending. Now I talk a lot about financial literacy and its importance in our economy. You know, giving people knowledge but also confidence with money too. And Starling reckons anyone can be good with money. And you can start simply by checking your balance daily. It gets EAs every day and it takes the mystery out of it. And then the real value comes from digging into the details with tools like Starling Spending Intelligence. So this is an AI powered search bar within Starling Current Accounts where you can ask a question about your spending habits and get an instant answer in app. It helps deepen your knowledge and make more informed money decisions. It's a little like having a financial co pilot in your pocket mapping out exactly where your money goes. Search Starling bank to find out more. Good with money starts here.
- [21:43]
Robert Peston
When you need to build up your
- [21:44]
Steph McGovern
team to handle the growing chaos at work.
- [21:47]
Robert Peston
Use Indeed Sponsored Jobs. It gives your job post the boost
- [21:50]
Steph McGovern
it needs to be seen and helps
- [21:52]
Robert Peston
reach people with the right skills, certifications and more. Spend less time searching and more time
- [21:57]
Steph McGovern
actually interviewing candidates who check all your boxes. Listeners of this show will get a
- [22:01]
Robert Peston
$75 sponsored job credit@ Indeed.com podcast. That's Indeed.com podcast. Terms and conditions apply. Need a hiring hero?
- [22:10]
Steph McGovern
This is a job for Indeed Sponsored Jobs.
- [22:12]
Robert Peston
You can't reason with the sun. Trust us, we've tried. This summer, it's time to put that angry ball of fire on mute. Columbia's Omnishade technology is engineered to protect you from the sun's harsh rays that can burn and damage your skin. The sun is relentless, but so is our gear. Level up your sun@columbia.com to spend more time outside and less time slathering on aloe lotion. You're welcome, Columbia. Engineered for whatever. So welcome back to the Rest Is Money with me, Robert Peston, and me, Steph McGovern. Now, what is important, I think, is that the candidates for the leadership would, I think, take the economy in a different direction from Starmer. Now, it's early days. None of them have put out any kind of compelling manifesto, but we have got a sense of where they would go that is different from the status quo. Yeah, and I thought I would just start with a document actually that by chance was put out today by a group of MPs called the Laboratory Growth Group.
- [23:27]
Steph McGovern
Right. Who are they?
- [23:27]
Robert Peston
And so they are broadly people who I think would generally think of themselves as being in the sort of center towards the right of the Labour Party. And, you know, most of them would, I think, end up being we're streeting supporters.
- [23:42]
Steph McGovern
Okay.
- [23:42]
Robert Peston
If he ever, you know, does have the courage or foolhardiness, depending on your point of view, to gather the nominations and challenge Kier Starmer. And they, as I said, they put out a document today which is actually quite an interesting program. It's called An Honest Day.
- [24:05]
Steph McGovern
What a weird name for a growth strategy. An honest deer.
- [24:10]
Robert Peston
Yeah, I'm afraid it does invite satire, but anyway, yeah, we'll absolutely hammer that on.
- [24:17]
Steph McGovern
Have I got news for you.
- [24:19]
Robert Peston
Okay, I'm looking forward to that. Anyway, the bit of it that I find interesting and important is what they're broadly talking about is shifting the burden of taxation from people, from earnings.
- [24:36]
Steph McGovern
Yeah. From income.
- [24:37]
Robert Peston
From income to assets.
- [24:39]
Steph McGovern
Okay.
- [24:40]
Robert Peston
Because at the heart of their analysis, and I think there is a lot to this, that broadly what's been rewarded in the economy over the last 15 odd years is not labor, not essentially the fruits of what we all do to earn a living either as self employed people or employees, but assets of various sorts and in particular property and what they are. So I'll give you one example of a policy that I think is definite worth considering. They are saying that you should shift the burden of, well, you should reduce rates on businesses and then look at who owns the underlying property and make sure that they pay more on. We've talked about property taxes before and so you.
- [25:40]
Steph McGovern
So for example, in my case with one of our retail units, rather than us being hit by it, or it would be reduced a bit for us, but it would let our landlord.
- [25:48]
Robert Peston
Yeah, your landlord would. And so I think that is definitely an idea whose time has come. One of the things we've talked about is, you know, it is ridiculous that we don't have a proper property tax definitely in this country. You know, one of the advantages of, I mean, first of all, we have seen the most massive inflation over the last 15, 20 years in the value of, of property. And I think you could argue that the owners of those assets haven't paid their fair share. But secondly, the great thing about land is you cannot move it, you know, you know, to a taxi. Unless Trump finds a way to buy the entire United Kingdom. Right. Britain will remain sovereign. And you know, if you own land here, you're just gonna have to pay whatever the tax is here.
- [26:39]
Steph McGovern
Has anyone done any kind of modeling on that about what it would mean? Because obvious, see, would that, you know, with all of these things with tax changes, we always talk about how that changes behaviors and maybe that's a good thing. Like you might get people who downsize from properties who, you know, don't need these big properties and that might free things up in the market and things like that.
- [26:57]
Robert Peston
So it's, I, I think it's less that.
- [27:01]
Steph McGovern
Yeah.
- [27:02]
Robert Peston
Although that's got to be part of, of what you'd hope would be the benefit. The other point is when it comes to where investment money goes. Yes. If the tax burden is less on operations. Yeah, right. And more on assets than if you are a provider of credit or investment, you will actually direct that money and actually arguably at lower cost to those businesses who. That are actually creating employment. And, and you will, you know, you will, you'll, you'll reward, you know, proper operational businesses that employ people. And that would be a good thing.
- [27:46]
Steph McGovern
And this sounds good then, like on our brief analysis of it, this makes sense to me. And as you say, it kind of rewards and taxes the right and wrong things. So therefore this is good.
- [28:00]
Robert Peston
I think it's an intellectual framework. It's a really good place to start.
- [28:02]
Steph McGovern
Yeah.
- [28:03]
Robert Peston
Right. And you know, so for example, one of, one of, one of the shorter term practical things that they talk about, which again, we've talked about before and has been around for ages, is also equalizing capital gains and income taxes. So that again, you know, you don't have this distortion where if you've got some spare money, you are more likely to put it, you know, into something that can yield a capital gain, you know, rather than, as I say, rewarding work. Yeah, because one of the big trends over the last 50 years, and it's absolutely, you know, so it's such a powerful trend, is that the share of the economy that rewards capital as opposed to labor has gone up massively. Right. And you know, that's why to go back to the point that you were making, people feel the social contract has broken down. That's another way of saying, right, that the economy is not working for most people. It is working. It's working for owners, not workers.
- [29:10]
Steph McGovern
Yeah, yeah, that's a really good point. So this is, so we think this is to frame this around everything that's going on. This is the kind of we're streeting vibe then.
- [29:20]
Robert Peston
Well, it is. Certainly what's striking about it is these are a group of people who, you know, it's in the name, you know, that what they want to do is promote growth. And as it happens, you know, quite a lot of people associated with this group would be streeting supporters. So, you know, my working assumption, even though streeting is not once, since, you know, becoming health secretary, stood up and made the kind of speech which would give you a clear insight into what his economic plans would be. You know, my assumption is that this is the kind of thing that he
- [29:54]
Steph McGovern
would adopt and just on that some of the other things that this labor growth group mention is, you know, they talk about what we've heard a lot of. There's been a lot of rhetoric around, around, you know, getting rid of the bureaucracy on big projects. So they're saying they want to create a powerful department of the Prime Minister. I mean, it does read a bit like satire this as well to drive national priorities. They want to stop making local councils bid for small grant pots and instead give mayors in England real tax and regional spending. Again, we've heard, we've talked about that.
- [30:26]
Robert Peston
Yeah, we definitely wore. Want mayors to have, you know, who know their communities better. More, more ability to work out where investments should go in the, in their communities, what skills are needed, all of that. When we've talked about this. Yeah, you know, endlessly, that kind of serious devolution is, is definitely a good thing.
- [30:46]
Steph McGovern
Yeah. They also just to briefly mention as well a hard line on services saying they, they think that you should let failing debt loaded utility monopolies like Thames Water face the consequences of this.
- [31:00]
Robert Peston
They Thames Water should come into public ownership which actually, to be honest, that unites one of the things actually is quite interesting for what it's worth, whether you're on the left of labor or the right of labor, they all hate Thames Water. They all want Thames Water essentially to be, you know, owned and controlled by the taxpayer.
- [31:16]
Steph McGovern
So. Right. So that's potentially street in. Who do you want to do next? Burnham or.
- [31:21]
Robert Peston
Well, I'm not 100% certain how far apart they are economically. So I think we can sort of talk about them, you know, as having a sort of similar soft left position. And you know, one of the things that they both believe in, you know, more, certainly more than you would argue the Starmer government does is public ownership. And you know, it's a very interesting, you know, interesting question how far they would extend that beyond transport, for example. I mean, Burnham certainly shown when it comes to transport in Manchester that he appears to have improved the, you know, transport in Manchester essentially through, you know, public ownership there. Rainer would sign up to all of, all of that. I think the thing that is interesting to me about Rainer, she put out a statement where she broadly said, starmer's in the last chance saloon. Like all of us, she shares the diagnosis of millions of people on low incomes being able to. Unable to pay the bills. Now again, interestingly, the good growth group, they basically say so much of government policy has to ruthlessly focus on what are the bills these people are paying. I mean, energy being a really important one and just driving as hard and fast as possible to get those bills down. Raina would, I think, take a, a similar sort of view, but she also talks about how she believes you can do this by essentially putting up taxes for those at the top of the income spectrum. You know, whether it's wealth taxes. She sort of implies, without quite being explicit that she wants yet another super tax on the oil companies who are obviously making quite big profits out of Trump's war in Iran. There's a sort of implication that she would put up taxes on the banks. These things are always possible. But, but banks, big profits are cyclical. They go up and they go down. Oil companies, big profits are cyclical. They go up and go down. If you put extra taxes on these institutions, you can raise money in the short term, but it is not a long term solution to a cost of living crisis. The only long term solution to the cost of living crisis is to get the growth rate of the economy up. It is to get the economy generating more taxes in general and then if you want to, distributing those taxes to people on low incomes in different sorts of ways so that everybody's living standards are increased. And you know, ape a I think the most powerful criticism of the Starmer government, and I think this would apply to both at the moment, Rayner and Burnham, would be, yes, you can do things in the short term, possibly by, as I say, putting super taxes on institutions that in the short term seem to be making really big profits, but that nonetheless will do zero to get the growth rate up. In fact, it might actually undermine the rate of growth. And if you actually want to do stuff for working people, you have to have a growth plan and a credible growth plan. And it's not obvious to me, other than a sort of commitment, that both of them seem to believe that the public sector in general, if you just give more money to the public sector, it will somehow invest it better and the growth rate will go up. Well, actually, the history of capitalism doesn't show that the public sector is a better generator of, might be a fairer generator of growth in some ways, but it's definitely not obviously a better generator of growth than the private sector. And this was, I mean, to be clear, the Gordon Brown, Tony Blair consensus when labor were last in power with a proper majority was they absolutely knew back then that if you wanted to get the growth rate up and it succeeded, you had to give the private sector confidence. Yes, yes.
- [35:59]
Steph McGovern
And you can't keep hammering the people who, as we've talked about A million times about how, you know, it's a. It's a tiny proportion of people who are paying the biggest income tax, the richest, isn't it? They are, you know, the ones who are paying the most in tax. And if you keep hitting them, they're going to change their behavior, they're going to leave, they're going to do things differently. And also a lot of them are employers and things like that as well. So you can't, you've. It's. So it makes so much common sense to just grow the economy and that will increase tax revenues. It's just the real basics of economics.
- [36:32]
Robert Peston
So there's also. So the issue is whether any of these leaders will have the guts to do what Starmer didn't have the guts to do.
- [36:44]
Steph McGovern
Yeah.
- [36:45]
Robert Peston
Which is actually to do some measures that many working people will feel does not in the short term help them, but they are essentially measures to encourage the private sector to invest a lot more such that you get the productive potential of the economy up. And at that point you can do all sorts once the economy is growing faster, at that point, there are all sorts of things you can do to improve employees rights. There are all sorts of things you can do to get the minimum wage up and the living wage up because the economy is way more productive. But it's about, about not putting the cart before the horse. There was a very, I thought, intelligent analysis of why certain Scandinavian economies like Finland, right. Are both seemingly happier places, but more importantly, they have a greater sense of national identity. And Clive Lewis, who's a great supporter of Andy Burnham, you know, was using which many people do the sort of Finland model for social cohesion and pointing out all sorts of things to do with the fact that they have, you know, a very generous welfare state and, you know, therefore cutting the welfare state in the UK would be a bad thing. Well, all of that is right. But the other absolutely striking fact about all of these Scandinavian economies is they are, are fabulously productive economies. They have a whole range of really competitive industries. And the challenge for, you know, whether you are, you know, Clive Lewis or Andy Burnham or Angela Rayner is, you know, building a diverse product, more productive economy. And, you know, obviously they, they took the talk of, you know, let's invest more in the regions, let's invest more in our second cities. All of that is very, very good because productivity levels there are. But it's all slightly at the level of, in my view, you know, wishful thinking of sort of cakeism, because they're not prepared to Accept that some of the things that you gotta do to help the private sector will not be popular. Of course, many of your core supporters,
- [39:16]
Steph McGovern
and you've got to take that hit and stay committed and not do utent. But the one we at the beginning of this podcast talking about the bond market. So let's end on that because it feels to me like the bond markets wouldn't like Rainer and they wouldn't like Burnham, but Streeton might get through in terms of. In the. If the bond markets dictate this, the bond markets are going to be happier with Streeting's ideas for growth.
- [39:43]
Robert Peston
Probably. And I mean, let's be clear. I hate that. I mean, I sort of, you know, we've talked about this actually on a very recent podcast. I sort of hate that as an idea because whether or whether or not not any of us prefer Streeting to Rayner and Burnham or prefer Burnham and Rayner to Streeting, these decisions should not be decided by faceless hedge funds in different jurisdictions deciding that they're going to punish the UK because it looks as though Raina is going to win, but they're going to reward the uk. They should not be having this kind of influence. I mean, that, you know, what is therefore imperative for Rainer and Burnham is as and when this becomes a really live issue, as and when they are serious candidates, right? They do have to set out very clearly set out how they will not. How they will prevent an unsustainable rise in the indebtedness of, of the uk. And what that basically comes down to is two things. Angela Rayner said, half of it, right? And what, you know, but it's a half that in my view, it almost does her as much harm as good. She says, basically, I'm going to put taxes up to meet the fiscal rules. That's basically what her statement said, Right. The problem with that is, in the end, and this is the virtuous cycle any British government has to get into, whether you're a hedge fund or some other kind of institution lending to the uk, the more confidence you have that the UK can get out of this period of stagnation. If you believe the British economy is going to grow faster, it means the denominator for the measure of debt, GDP will be bigger, right? And at that point you think, wow, the UK is a much safer place to lend money. So growth is genuinely the answer to everything. Growth and productivity the answer to everything. Because they both generate the taxes that you need to pay for your public services and lift people out of poverty. And Growth reassures lenders to the UK and means they will lend to the UK at a lower rate. The fact that that's why, you know, God knows how many times we've said this on this podcast, you and I, any government that wants to succeed, you don't just talk the talk of raising growth, the growth rate and productivity. If you don't make that your number one priority.
- [42:31]
Steph McGovern
Yes.
- [42:32]
Robert Peston
And you don't do the tough things to achieve it, you will always be in the mine.
- [42:36]
Steph McGovern
Exactly right.
- [42:36]
Robert Peston
You will always be in the shit.
- [42:38]
Steph McGovern
The tough things to achieve it is the there. You can't back down when you get a bit of rebellion from your back benches. You've got to carry on. And you know, if that is the plan that you think is going to work, you make moderations along the way. If things happen with geopolitics or whatever else. But on the whole you should stick to a plan, form it, have a end goal and stick to it anyway. We know that. So there we have it. It's growth. That's, that's the key here, a growth
- [43:04]
Robert Peston
with a plan and just, just leadership. What we need is strong leadership with, you know, focused on growth.
- [43:11]
Steph McGovern
And while we're getting through all that, we need a good book to read and Robert, you just happen to have one are coming out.
- [43:16]
Robert Peston
Well it won't be out till July. What I've now got cover and the proofs are in and so it's called the Kill switch. It's the 30 my trilogy of thrillers. It's actually about chaos murder in politics. Actually I have let's talk about it detailed another time but I loved writing. It's the most enjoyable book I've written in terms of just the process of writing it for donkey's years.
- [43:46]
Steph McGovern
Good, right?
- [43:47]
Robert Peston
I hope people enjoy it as and
- [43:48]
Steph McGovern
when it's out and it's worth pre ordering but that's it from us. Bye bye.
- [43:52]
Robert Peston
Goodbye.
- [44:00]
Steph McGovern
Some follow the noise, Bloomberg follows the money. Because behind every headline is a bottom line. Whether it's the funds fueling AI or
- [44:10]
Robert Peston
crypto's trillion dollar swings.
- [44:12]
Steph McGovern
There's a money side to every story. And when you see the money side, you understand what others miss. Get the money side of the story. Subscribe now@bloomberg.com
- [44:26]
Robert Peston
why did we really go to war with Iraq?
- [44:29]
Steph McGovern
And did Saddam Hussein really have weapons of mass destruction?
- [44:33]
Robert Peston
I'm Gordon Carrera, national security journalist.
- [44:36]
Steph McGovern
And I'm David McCloskey, author and former CIA analyst. We are the hosts of the Rest
- [44:41]
Robert Peston
is Classified and in our latest series
- [44:43]
Steph McGovern
we are telling the true story of one of history's biggest intelligence failures. A Radio Rock WMD.
- [44:49]
Robert Peston
In 2003, the US and UK told the world that Saddam Hussein had weapons of mass destruction. But they were wrong.
- [44:58]
Steph McGovern
This wasn't a simple lie. It was something far more complicated, far more interesting and far more dangerous.
- [45:05]
Robert Peston
Spies who believed their sources, politicians who wanted the public to believe in the threat, and a dictator who couldn't prove he'd already already destroyed the weapons. In this series, we go deep inside the CIA and MI6, go into the
- [45:21]
Steph McGovern
rooms where decisions were made, and look
- [45:23]
Robert Peston
at the sources who fabricated the intelligence
- [45:26]
Steph McGovern
that took us to war.
- [45:27]
Robert Peston
The Iraq war reshaped the Middle east and permanently weakened public trust in governments and intelligence agencies. And its consequences are still playing out today. Plus, in a Declassified Club exclusive, we
- [45:40]
Steph McGovern
are joined by three people who were
- [45:41]
Robert Peston
at the heart of the decision to go to war. Former head of MI6, Richard Dearlove, Tony
- [45:46]
Steph McGovern
Blair's former communications director, Alistair Campbell, and
- [45:49]
Robert Peston
former acting head of the CIA, Michael Morell. So get the full story by listening to the rest is classified and subscribing to the Declassified Club. Wherever you get your podcasts,