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- [00:01]
Robert Peston
You are reported regularly as being in some sense as an advisor to Andy Burnham.
- [00:08]
Jim O'Neill
Andy needs to figure out what is it exactly his key priorities and then communicate that to everybody and then actually stick with them. One of the many mistakes that Keir Starmer presided over was effectively trying to play around with small amounts of savings in welfare. That I think the triple O needs to be dealt with. And I suspect that once the right person is bold enough to do it, it's going to be pretty hard for any major political opposition to disagree.
- [00:34]
Steph McGovern
Burnham's talked about a ten year plan. We've been talking about prime ministers only lasting two out of a four year term and, you know, some even only last weeks. Do you think the markets will buy into that? Will people? Will the electorate? Is 10 years going to be the right time frame?
- [00:50]
Jim O'Neill
There are two opposing issues that somebody like Andy's got to face here.
- [00:56]
Steph McGovern
This episode is brought to you by Octopus Energy. Greg Jackson, the CEO, is with us now. Greg, I want you to look into your crystal ball and tell me what's your vision in terms of, let's say, 10 years for how the average UK house will be powered.
- [01:13]
Greg Jackson
As we build out more and more renewables on the grid, the underlying electricity system's much more volatile and that means that people who've got their own solar panels and their own batteries can help balance the grid. And, and cars are going to be doing that as well. So you're going to end up with a system that looks a lot more like the Internet, where everything is automatically improving. Just like in the Internet improves your bandwidth here, it'll be improving your energy cost and prices are going to come down. And by the way, it brings prices down even for those people who don't have the solar panels and the batteries or the electric cars because it makes the whole system more efficient for everybody.
- [01:50]
Steph McGovern
Let's hope that's right then, Greg. Thank you. Now on with today's episode.
- [01:55]
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- [02:21]
Jim O'Neill
Did you know with the Sam's Club app, you're technically in the club no
- [02:23]
Sam's Club Announcer
matter where you are?
- [02:24]
Jim O'Neill
Like, this is a club. This is also a club. And this is sh.
- [02:31]
Sam's Club Announcer
A club.
- [02:33]
Vanguard Announcer
My bad.
- [02:34]
Jim O'Neill
Come join us. Sam's Club.
- [02:46]
Steph McGovern
Hello and welcome to the Best Is Money. With me, Steph McGovern and with me,
- [02:50]
Robert Peston
Robert Peston in Ankara. In Turkey, I'm at the NATO summit of world leaders. It is Keir Starmer's last proper outing at an international conference as Britain's Prime Minister. And all the tension here is between Trump and the European leaders, including Keir Starmer. But we're not going to focus on that today, are we, Stefan?
- [03:20]
Steph McGovern
No, because over in the uk, obviously, Andy Burnham is pretty much looks set to become Prime Minister very soon and we want to look further in this episode into what might shape his economic thinking. One of the people we know he's talking to is former Goldman Sachs top dog and ex Treasury Minister, Jim o'. Neill. So we've got him back in to find out what advice he's been giving the future Prime Minister. He is our interview with Jim o'. Neill.
- [03:46]
Robert Peston
Jim, it's terrific to see you. You may. Not that I'm quite a long way from the UK and a UK that seems to be gripped again by Farage madness, but we don't really want to talk to you about Farage. What we want to talk to you about is Andy Burnham, who, barring, you know, summer event that I simply cannot conceive of, will be Prime Minister in a matter of days. You are reported regularly as being, in some senses, an advisor to Andy Burnham. Can you characterise your relationship with him?
- [04:29]
Jim O'Neill
I mean, I've known Andy ever since the Greater Manchester Mayoral Authority was created, which, of course, indirectly, because of George Osborne, came out of the review on Cities Growth that I was leading. So Andy was the first person to become a mayor and I've known him ever since then and I've talked to him frequently about issues to do with evolution in Manchester as it specifically relates to the press, media speculation, the past, what, three weeks plus there is no specific role being offered. The early speculation was actually factually incorrect. As far as I know, he hasn't got any formal appointed economic advisers, but I talk to him a lot and I talk to him a lot about the right things to do.
- [05:16]
Steph McGovern
And so, you know, you've told us in the past about that. The hard choices, whoever is the next Prime Minister, probably Burnham, are going to have to make. So, you know, is that. Can you just tell us a bit about that in terms of what you think they are, then?
- [05:31]
Jim O'Neill
So, particularly because of the very, very strange nature of how it looks like Andy is going to emerge as the next Prime Minister. Which is quite remarkable, of course, and hence why quite a few people ask whether it's democratic and all the rest of it. I think there are two opposing issues that somebody like Andy's got to got to face here. First of all, I think there has to be recognition of what I frequently have increasingly called the sacred cows that nobody in the Westminster Whitehall game seems to want to deal with. Because otherwise what's the point of having had a new leader to replace somebody that was constrained by not wanting to change the games, but at the same time because of this sort of very strange role of manifestos, which to somebody like me, not that interested in politics, seem like marketing tools, but they do seem to bound elected governments. And maybe that's right without them, you know, calling another general election to seek approval for what is, you know, supposedly a different mandate. And those two things I think as Andy's building up for government are sort of clashing because you can see that and every time he's pushed on certain issues himself. But I do believe because you've got lurking in the background every second of every day the financial markets that are not charging the UK a premium on its interest rate, borrowing for nothing, expecting at some point somebody's going to be bold enough to take on some of these so called sacred cows and put us on a more sustainable path of debt. But in my view, one that should be thought of as a sort of reward potential in the same modern version of when Tony Blair and Gordon Brown appeared, made the bank of England independent and gilt yields dropped dramatically just that week and stayed down. And I think that should be the reward for somebody that's going to be bold enough to deal with some of
- [07:48]
Robert Peston
this stuff and just to therefore identify the sacred cows. And also in order of importance there is the triple lock, which leads to, some believe, unaffordable increases in state pension year after year and significantly increasing the share of public spending that that pension takes. There is the thorny issue of, of welfare reform and whether the current system is the right system, frankly to support people who are unable to work because of various disabilities, but is also forecast again to take a hell of a lot more money out of the public spending purse over the next few years. I assume those are two of your sacred cows. What would the others be?
- [08:50]
Jim O'Neill
I mean, I have four that I think have taught you guys about before and those two are probably the most obvious. And you know, let me again emphasize, because I have talked to Andy and his team, I, I have no idea quite what precise things will happen, but I. I'm on public record in, in the past three weeks and certainly before it, that I think the triple lot needs to be dealt with. And I suspect once the right person is bold enough to do it, then it's going to be pretty hard for any major political opposition to disagree. And you're very right to point to the growth of debt servicing and cost as time goes on, if it's left unchanged, because it is pretty spectacular as we go towards 2050, as actually the latest OBR for mid year forecast upgrade has just shown. But there is this issue about the manifesto and all the rest of it, and when Andy was pressed on it, of course a week or so ago, he said, sticking by the manifesto, but let's see what happens on that. But I think that's definitely right at the forefront and it's also very unfair from an intergenerational perspective, with all these young people that can't afford to buy or rent in some parts of the country having to be expected to pay more and more tax for a lot of people who own a lot of their own homes and still get a very nice protected pension increase all the time. Second thing, which relates very much into the devolution argument, and I think there's a subtlety to it that Andy's already talked about and that's welfare reform. I do think one of the many mistakes that Keir Starmer presided over was effectively trying to play around with small amounts of savings in welfare purely to meet what one might regard objectively as an arbitrary fiscal rule or the fiscal space. Whereas if you're really going to do it, you've got to have a systematic reform of everything that connects to the various welfare payments that are going on. And at the core of the idea of number 10 for the north, as well as giving a lot more devolved responsibilities to areas of the country that are capable of handling it. What I think you will get is a much more connected approach across all the departments that are relevant to different forms of welfare reform. Part of what Andy is being influenced about is Manchester has something called the prevention demonstrator going on, which involves a completely connected approach. And it's pretty clear to me that if you do that correctly, you could end up saving considerable sums of wasted money that are going on welfare payments and much more importantly, probably have an increased chance of actually improving some outcomes about so many people in these troubled situations getting jobs if they're young, getting better support if they've got genuine mental health challenges and so on.
- [12:05]
Steph McGovern
Yeah, there's loads to Dig into there, Jim. But so just to kind of summarize what you've. You've just said there, so what you think if you I guess were Prime Minister is overhaul welfare, get rid of the triple lock and don't worry too much about sticking to the manifesto?
- [12:20]
Jim O'Neill
Well, I think I might be far too removed from the nitty gritty of politics and the Constitution and that would be my natural instinct. But I'm a crossbencher and I don't have to worry about those things. I do think the more I listen to it, there is probably a bit of an issue about what a party puts and stamps in its manifesto, then goes ripping it up when their leader hasn't been facing the British public. So subject to how one deals with that. Yeah, I would if it were me, but luckily for the country it's not me in practice.
- [13:02]
Robert Peston
If, as I think you think would be the right way to go, you default some of the sort of welfare decisions to let's say some of the powerful mayors, what would that mean in practice? Is that to do with a sort of mixed approach of getting involved more in skills and retraining and is it a combined sort of employment creation as well as sort of welfare rules devolution?
- [13:30]
Jim O'Neill
I think it's across the board. I mean I would imagine and I'm a strong believer of this and I have been for years because of my experience with Greater Manchester and other main. But I think the whole of everything to do with adult skills should be devolved as well. Meaning as some people in the Department of Education and occasionally biz or buys or whatever the hell we're calling it at any point in time. That's the business department. They have no capability of understanding what are the right skills needs in a reading versus a Rotherham and so you got to take it away from them and give it to on the assumption that you've got accountable and responsible people locally that are looking in a holistic way that suits their area. I would go as far as also adding Robert, something very close to another part of your heart, probably early years education and aspects of education in big urban areas should also be devolved. I think. Anybody you care to listen to? I think I heard Steve Rotherham interview the Mayor of Liverpool about this recently, about just how woeful the Department of Education is about this kind of thing of thinking on a simplistic one for all approach all over the country. And I know with my shine hat on where I'm one of the co founders of a educational charity that looks at young disadvantaged People, it's just ridiculous. And it, you know, despite some improvements in certain aspects of schooling outcomes in the really tough parts of the country, you can't solve them unless you're taking a place based approach, in my view. And so I think there's a chance that some of that would follow as well.
- [15:20]
Steph McGovern
And I think, you know, that that's very true of what Robert and I think on this, particularly around education, I think what, what's been interesting in the kind of build up to Burnham has been this emphasis on Manchester though and this idea, you know, and I've heard you talk about Greater Manchester going three times faster than the rate of London in the last 15 years. And, and there's this sense, and you'll know this sense of oh, we might move part of number 10 to Manchester to the north, which to me is the Midlands and to Scottish people is
- [15:47]
Jim O'Neill
definitely this is a build up to the Northeast stuff I feel coming here.
- [15:51]
Steph McGovern
Good. So, but, but my what. And I think, you know, you've just touched on it there in terms of skills. What people are worried about is this idea you can just copy Manchester and that's just going to be replicated. But, but that, that you're saying that's not what is going to happen so we're not all going to become Manchester's.
- [16:08]
Jim O'Neill
I think that would be a very naive and potentially dangerous thing to attempt to do. And in that regard I think what is interesting that one of Andy's very, very few early appointments is to appoint Caroline Simpson, who has been the chief exit of Greater Manchester, to be the person that's probably going to be running this number 10 in, in the north. And so of course that on the one hand that adds to this impression. Well, it's just going to be to try and create a load of Greater Manchesters. But I don't think at all, knowing Caroline in the way that I do, that that is going to be the case. I think what it is is about the concept of how Greater Manchester has gone around it and that's what I think can be transferred or the way of thinking to elsewhere and again, as I think we've touched on before and now I think is really important. One of the things that is, I think from my experience quite unique about the Greater Manchester part of the Manchesterism is that for many, many years you've had every particularly important constituent player, whether it's the university, whether it's business aspects of civil society and the council and the mayor's office, they're all singing from the same Hymn sheets. And so it comes across as a very joined up, committed path. What I've found in so many other parts of the north and elsewhere in other urban areas that I've dealt with and I'm afraid to say it's been true stuff quite often in the Northeast it is dramatically fragmented with very strong local infighting that makes it effectively impossible for a skeptical treasury to even seriously start to give them some of the kind of money and responsibilities the Greater Manchester's had because you can't have confidence anything really good is going to come from it. And one of the things that Caroline's office probably supported out of the Cabinet office in Whitehall and here in this regard, the economics campus of Darlington, where a lot of treasury and buyers people are these days, they are going to be now probably thinking of giving much more systematic support as to how other areas can have the staffing which was at the core of the Manchester story, which actually predates Andy's arrival. And I don't think Andy is daft enough or whatever the phrase is to think that it all suddenly started the day he became mayor because it's not actually true. A lot of it was, you know, in Howard Bernstein's family should be very proud about all of this because a lot of it started with Howard and but importantly behind the scenes with Howard he had something called the New Economy Group were people who were qualified for looking at big picture strategic things with some kind of economic lens. And that I think you can have as a transferable thing. But of course, and obviously you're from there. The nature of the challenges in the Northeast and I often think of Northumberland as opposed to a less urban place than a Newcastle or indeed a Teesside that has particularly complex challenges, especially as it relates to early years education. And so you can't just say, well, we've done it that way in greater Mansion, you've got to do it the same way. That is, that is for the Northeast to determine itself.
- [19:52]
Robert Peston
I am somebody who hates loose ends and I am aware that I think we've only talked about two of the sacred cows that need reforming. Just run us through quickly what the other two.
- [20:03]
Jim O'Neill
The third one would be proper housing and land tax reform. Again, I think we've touched on this in the past. Robert, you shove a load of economists in the room and on virtually every topic you'd get them to disagree on anything. But of the few experts that look at this issue, there is widespread agreement that we have a utterly nonsensical approach to effectively the taxation of housing by approaching it from taxing what's on the land as opposed to the land. And then we end up with crazy things like stamp duty, which are effectively a disincentive to activity. And one of the problems about breaking the triple locket that I now realize more and more is Even though over 70 odd percent, I believe, of pensioners own their own housing outright, the stamp duty issues of selling and buying something else are so large that it acts as a disincentive for them to consider downsizing or whatever. And there are many examples like that. And of course the sort of lunatic way that the council tax system has developed in that the owners of higher priced houses effectively pay way less proportionately council tax than people at the other end of the scale and somebody bold enough is going to finally deal with that. And most importantly, in terms of China, change the cyclical momentum of the economy and the mood of business. My own increasingly strong hunch is that the construction industry would then start to think, actually there's something really real different going on here and it would probably act as a major cyclical stimulus as well, in my own view.
- [21:56]
Robert Peston
Could you replace Castle tax stamp duty with a land tax based kind of system? I mean, how long would it take? Because one of the reasons it's never happened is because the treasury and HMRC always wring their hands and say it's all too complicated, you know, the whole valuation process would take forever and all the rest. Do you think these are lame excuses, basically?
- [22:17]
Jim O'Neill
I don't know is my honest answer. I'm not, I'm not a technical expert on, on these issues, in fact, far from it. But there are plenty around, I do suspect to really work it, you know, to implement it probably takes the time. But again you, you would know, you know, people like John Mulbulla and Kate Barker and people like this have been thinking about this stuff for a long, long time. So I think you could actually have the right solutions pretty quickly. The most important thing I would personally believe, being somebody that spent 40 odd years, 30 of them active in financial markets, if you send the signals that these things are going to change, that in itself starts to influence the private sector in terms of what they're prepared to do and invest in things.
- [23:04]
Steph McGovern
Yeah. On that point of time then Burnham's talked about a 10 year plan. Do you think that is the right time frame? Is that how long it's going to take to kind of lift up living standards? Because, you know, 10 years we've been talking about prime ministers only lasting two out of a four year term and you know, some even only last weeks based on what's going on. So is that, do you think the markets will buy into that? Will people will the electorate? Is 10 years going to be the right time for him?
- [23:34]
Jim O'Neill
I think there has to be a, a shift in mentality about that assumption that all 66 million of us hold because linking it a little bit to education again and I know we touched on it in the past, the idea that we spend three times the share of GDP on health, a lot of it wasted compared to education, it's not normal. When Maggie Thatcher was leaving, it was the same. If you really want to affect long term economic growth, just that in itself has got to be changed because it's just ludicrous. But back on this other thing, what I want to really highlight is two different aspects of it. So for things to do with changing the mentality and outcomes and success of infrastructure spending and you could include housing as part of that. This idea of having NISTA taken out of the treasury as some kind of standalone body, that's like an infrastructure version of the obr, I am a very, very passionate advocate for that. And rather troublingly for those that are sick to death of hearing me talk about it, John Armitt, who was effectively the first person that ran the Infrastructure Commission, has just coincidentally published in the Times something almost identical to what I've been proposing. Even though John and I haven't directly discussed anything like this for years. And John is a guy that presided over the early days of the Infrastructure Commission and he knows that there are people that can estimate the macroeconomic consequences of Project X and Project Y in a pretty powerful way that can most importantly help the OBR with its own long term trend growth forecasts, but much more importantly make British people see through the kind of madness of our democratic complexities and elections that various projects can make a difference to the country. One of the things that my suddenly thousand best new friends every day are messaging me about, amusingly, is Heathrow. You know, and I'm, you know, Heathrow would be a perfect thing to put through it, you know, have you ever seen a proper independent estimate of whether a third Runway would be really good for the UK or not? I haven't. Have you ever seen anything like that for HS2? No.
- [26:04]
Robert Peston
Nista needs to be a powerful, independent, trusted authority that assesses whether one investment rather than another will have a bigger impact on growth, prosperity, tax revenues, everything. That sort of matters when it comes to reviving the uk.
- [26:24]
Steph McGovern
And just for anyone who doesn't know what NISTA stands for. It's the National Infrastructure and Service Transformation Authority. Nice and catchy there. But it's basically the government agency that combines like strategy and delivery for big capital projects. And it was launched to kind of bridge that gap between planning and implementation. So it merged the functions of the National Infrastructure Commission and the Infrastructure and Projects Authority into this umbrella, essentially, which is called nista.
- [26:50]
Jim O'Neill
Yes, and so that's it really important. That's. So that does relate to this ten year thing. But importantly, linking it to the other part of answering your question, Steph, again, once financial markets and serious investors see something like that, then who are people who have to make decisions today? They're like, well, hang on a minute, this is a bit different. And the UK is actually now trying to put in a proper framework, and I say it in that order because what is so interesting about the timing of all this very peculiar developments is that the UK economy, yes, is still generally struggling and it doesn't appear to be doing anything to really improve people's feelings about it. But the numbers have actually been a bit better. And most importantly, whether that's actually of material relevance or not, in the underlying background, we currently have, by our cyclical standards, a surprisingly high savings rate. And if something can be done to change the mindset of consumers and business and think, hang on a second, we don't have to worry as much about the next few years like we have been doing effectively on and off since the financial crisis, then I think the human instincts and the sort of natural juices would mean so long as you don't have an incoming government saying, actually, yeah, repeating what Kier did. Oh, well, it's actually way worse than we thought. Sorry, we're going to tax the hell out of. Your life's going to be miserable. So that is definitely not the nature of our probable incoming leader. And I think all of that could actually quite quickly start to influence activity.
- [28:38]
Steph McGovern
So if the next. If the next leader then borrows more for big projects, which is what you want them to do, you think the markets are going to react okay to that?
- [28:47]
Jim O'Neill
If it's credible. I mean, if it's just. Trust me, I know, I know what infrastructure projects work because I'm an absolute, trustworthy, brilliant human being. Of course they won't. Why should they?
- [29:00]
Robert Peston
Jim? We haven't quite solved all Britain's economic woes, but that's. We will do that today after the break.
- [29:12]
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- [29:20]
Steph McGovern
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Steph McGovern
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- [31:06]
Robert Peston
Fairness to you, you've been on the podcast, I think actually multiple times since the general election, talking about the importance of having an independent, objective analysis of different investment projects to just build the kind of confidence among those who lend to the UK that money isn't being wasted. Why? In the end, given that you always thought that this Body Nista was going to do it, why do you think it's never happened?
- [31:36]
Jim O'Neill
I'm a bit baffled. And you know, I actually thought and by the way, as an aside, I want to repeat I know I've said this once before. Despite all the actual issues and the perceptions, Rachel Reeves does deserve congratulations for having created the second fiscal rule in which she attempts to protect and grow public sector investment spending. No other chancellor in my adult lifetime I don't think has done that. And that's at the core and obviously the flavor of what Andy's saying is I think an incoming Andy Burnham leadership would have a stronger instincts on all of that. But why it didn't happen. So I just thought it would be a natural corollary to follow on from creating that second rule that they do it. But for reasons I still don't fully understand, probably because the Infrastructure Projects Authority, which was one of the two things that got merged into nista, was already in Treasury. So some great genius somewhere thought, well, it's just a lot easier if we have it in Treasury. Which I was so disappointed when that happened. And one of the reasons why it's interesting it's so relatively recent that this has happened. I think it would be relatively straightforward to take it out. By the way, I quickly add in all this sort of debate about breaking up the Treasury, I am a strong opponent of that idea. I think it's kind of lunacy. But having Nistinot in it, I think would make a lot of sense.
- [33:07]
Robert Peston
So why is that lunacy? Because somebody like Andy Haldane, for example, who has in my view, very credible and sensible ideas on many things, has been in favor of breaking up the Treasury. Why is he wrong?
- [33:17]
Jim O'Neill
Because I don't. Well, I can only guess that Andy hasn't got any experience of the realities of what goes on inside the Treasury. You know, it boils back. It's a bit of a cousin of this conversation about who should be the Chancellor, which is probably after Heathrow, the second thing I get in my inbox and my thousand best new friends every
- [33:35]
Steph McGovern
day and who are you saying?
- [33:37]
Jim O'Neill
I think it's the wrong question. Andy needs to figure out what exactly as he is trying to do what is it exactly his key priorities, and then communicate that to everybody and then actually stick with them and then choose people around him to deliver them. It shouldn't be made out to be this notion of some great disciple that has got magical credibilities as a Chancellor. It's just sort of, in my view, a sort of slightly insane way of thinking about it.
- [34:08]
Robert Peston
I agree with you that there isn't a sort of off the shelf model. I guess I do have a bit of sympathy with the idea that there is an innate conservativism in the treasury that has often crushed really quite important investments that could have been growth enhancing. And so, you know, I think your idea that says actually what you've got to do is take the assessment of the potential of investments outside of the treasury, which is your proposal, rather than breaking the treasury up but can I check.
- [34:45]
Steph McGovern
Jim, are you saying it doesn't matter what the background is of the Chancellor?
- [34:50]
Jim O'Neill
No, I'm not saying that. Of course it does. What I'm saying is I don't believe. I don't believe, not least, by the way, because Andy is not a Prime Minister yet, so I think it would be rather inappropriate for him to go making public noises about this person's going to be my Chancellor. That, you know, I think just how can you.
- [35:08]
Steph McGovern
No, I get that. But when that person is appointed, won't the markets make some, you know, decision based on who they are? If it said Miller Band, they'll be worried about the focus on energy. Well, you know, there's, there's, there is everyone. That that's fair, isn't it?
- [35:23]
Jim O'Neill
Of course they will. And, you know, obviously, given my background, I have got a staggeringly large number of very experienced investors telling me their pearls of wisdom every minute of every day from inside the country and around the world. But as good as markets collectively are, frequently the views of any one person in it aren't particularly good or reliable. And my own view is that, of course, the individual who the Chancellor is ultimately the second most important person in the country, probably after the Prime Minister. But the importance should be seen in the context of the clarity of the overall policy program and the strength of belief in it, so that everybody in the Cabinet buys into that. And so you don't have what I've also seen from my own experience, endless different departments just doing whatever they fancy and sort of, you know, squirreling it through the back door. Whether it's treasury being reticent about some project they don't quite the look of, or Department of Education refusing to consider any one particular part of the country, say Teesside, which got particularly unique issues with some aspects of education. It's like, oh, we don't care about that because we don't believe it's really worth the help, et cetera, et cetera, et cetera.
- [36:49]
Robert Peston
My own view, for what it's worth, is Ed Miliband will be the Chancellor, and it's partly because he's one of a tiny number of people at the top of government who's worked in the treasury understands how it works. I think you're saying, so long as his appointment is accompanied with what you would regard as a coherent growth plan, there may be a slight wobble in markets, but, you know, there won't be a fundamental fiscal problem for the government, you know, as and when.
- [37:21]
Greg Jackson
As.
- [37:22]
Robert Peston
I think it is an as and When Edmund becomes Chancellor.
- [37:24]
Jim O'Neill
You're not catching me like that, Robert. You're very skilled at these things, but, you know, it has nothing to do. You know, the choice of who the Chancellor is is up to Andy.
- [37:35]
Steph McGovern
Jim, the one thing that does slightly worry me with fiscal devolution and, you know, I am someone who's definitely for it for all the reasons you've explained about the, the needs of different areas and things. But the thing that worries me is accountability and the fact that, you know, we've seen like, the Audit Commission going, the spending watchdogs, the local papers and journalism that, that holds the, the, the councils and the, the regions to account have all but disappeared. So how do we make sure that that money is well spent? It's transparent, it's accountable. Because, you know, we've mentioned Teesside, there has been so much drama about the former steelworks there, you know, closed in 2015. The mayor, Ben Houchin, it's got these two local businessmen who were about to make hundreds of millions of pounds from the sale. You know, there's no proven corruption, but there's definitely a serious lack of oversight there and transparency. And it's been proven from this inquiry that standards were not met when it came to handling public funds. So how do we make sure. Sure when this money is dished out, when this power is dished out, it is done well and transparently.
- [38:41]
Jim O'Neill
I mean, we. You definitely have to have increased accountability alongside a desire for proper responsibility, you know, and this has many bits of it, but the whole thing of having an elected, elected mass as somebody that themselves, you know, is held accountable by the people in the area that they're covering. And so the people can vote on whether that person they think has done the right job and whether, you know, they're accountable.
- [39:15]
Steph McGovern
What you're talking about there is, yes, the people can vote. If they think that, you know, it's been handled badly, they then get rid of them after the event. But do you think there's going to be any framework set in place to make sure that as the regions are given more power, there is more transparency and accountability? Is that going to come centrally?
- [39:31]
Jim O'Neill
You know, my simple, quick answer is it goes back to the Prime Minister himself or herself and his team making sure that all the civil service bodies that implement the tools of elected government are on top of all of this stuff. And I think it also partly relates to making sure the treasury feels empowered. And this another reason why splitting it up strikes me as a bit daft. Because, you know, the spending part of the treasury is not going anywhere. So if you gave out a load of powers that they had that were elsewhere, it might make those people in the treasury even worse. But they are right to be skeptical about money being wasted. And so the Darlington people will probably be more empowered, certainly as it relates to the north and the Midlands, along with their counterparts inside treasury and other key departments, to make sure that they're not rushing to dole out money all over the place until the proper forms of accountability have established again. I think having this entity in, in Manchester almost definitely will help with the way that should be done.
- [40:53]
Robert Peston
I don't know whether you're across the sort of detail of this, but what about the main thing that I find, if I'm honest with you, slightly confusing about what Adi Burnham himself has said and some of those around him who he's close to have said is about the applicability of the bus model in Manchester, the B network, which is obviously a very popular reform that he put in place bringing down the costs of bus travel very significantly for the people of, of Manchester. Andy Burnham, I think, completely understandably says one of the biggest blows to people's living standards in recent years has been the rise in energy costs, housing costs, water costs and all the rest of it. And he and his team talk about how the B network is some kind of model, you know, for what he might do in terms of, you know, everything from housing to, you know, Thames water through to energy. And that seems to me to be not only a very bold claim, but a slightly confusing claim because I just don't think buses are the same as water or power stations or house building.
- [42:18]
Jim O'Neill
I think it's the concept of having some public over stronger, responsible oversight to making sure these things link together instead of just allowing the private sector just to go off and do its own thing and to sort of effectively, I know I have to be so careful, effectively sort of drive the regulator to do what permissions them. At the end of the day, you know, some things are in the public interest. And yes, yeah, you might want to have. What you really want to do is change the motives of the private operators to make sure it works better for the public interest. And I think that's the bit that's really there. The idea that you just do exactly what the B network is in every utility, all over the place is as you imply.
- [43:15]
Robert Peston
There was just one other final thing I just thought actually it'd be interesting to hear your sort of take on. You started by talking about how these manifestos do Bind hands of governments. One of the striking things about that manifesto is there's a framework for the kind of devolving of powers that Andy Burnham thinks is necessary, and I think we all think is necessary, actually. It's all in the manifesto. The manifesto actually has an economic analysis which says that one of the fundamental problems with prosperity and growth in this country is the inequalities of income and wealth, you know, between essentially everywhere outside of London and London. And it makes this commitment to close that gap. But of course, the gap hasn't been closed at all. I mean, how disappointed are you? This was a big part of what Keir Starmer was selling to the nation. I mean, how disappointed are you how little progress there's been?
- [44:19]
Jim O'Neill
So, first of all, you know, you can't see the results of that in five minutes. But frankly, no government in the country has been at all serious about it since Cameron and Osborne. That started the whole sort of, as George used to call it, the devolution revolution. But because of the importance of the concept, every government has played at it since. But. But, you know, the way I'd summarize it for you, and hence why I'm happy to talk to Andy and his team, you know, those of us that have been so involved in this for close to 15 years, you know, we should be thinking of this as some almost constitutional shift in economic devolution.
- [45:03]
Steph McGovern
I was talking to Boris Johnson the other day, and it was actually on the day that Keir Starmer resigned, and lots of people were saying, you know, asking him what he thought of it, but one of the things he said, which I think is fair, and I wanted to get your view on this, was that, you know, you can have all these plans for, in his case, leveling up and, you know, set out all these frameworks and then an asteroid, this is how he described. But it comes and hits you in the face, and that might be a pandemic, or it might be, you know, geopolitics, a major war starting, just all these different things which then knock you on off track and then that becomes the excuse from the government. Whether it's right or wrong, it's an excuse. So are you confident that the framework that can be set in place from fiscal devolution, from the other things you suggested, would then not be superseded and knocked out by an asteroid in the face?
- [45:55]
Jim O'Neill
So I partially think that's a pretty ungratifying and very defensive comment from Boris. Of course, every government everywhere is going to get whacked from external shocks and indeed that's why virtually every prime minister ends up spending so much time on external affairs. But that shouldn't stop a leader.
- [46:23]
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- [46:46]
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- [46:54]
Katie K
and welcome to Doing It Anyway, a brand new series from Goal Hanger. I'm Katie K. I've spent years studying the science and art of confidence, writing books about how we can close the confidence gap between men and women, and talking to experts and younger women about how to pass it on. Confidence means taking risks, acknowledging your fears, and, well, doing it anyway. In this series I'll be talking to psychologists, entrepreneurs and business leaders to unpack how you can rethink challenges and grow your own confidence. We'll talk about how to spot the difference between confidence and competence, how to deal with office politics and stolen credit, and yes, handling rejection and ultimately how you can become a better leader, teammate, and yes, a better person. Doing It Anyway with Katie K Every Friday, wherever you get your podcasts.
- [47:47]
Jim O'Neill
Determined to focus on the things that they really believe in from pursuing them.
- [47:52]
Steph McGovern
Can I just check at all of our sacred cows in the field? Have they been caught? Have we covered them all? Can we wrap things up?
- [47:59]
Jim O'Neill
They are the four things. I mean, there's, there's other things that are obviously important, but they are the four really big things that affect the long term. You know, we're having a conversation just after the OBR has done their annual update to the long term debt outlook. And those are the four biggest things that affect why that profile is deteriorating so badly. And if all four of them were dealt with, then the long term debt outlook for the UK would be dramatically changed.
- [48:29]
Steph McGovern
Excellent. Thank you for your time, Jim.
- [48:31]
Robert Peston
Thanks again. All the best.
- [48:32]
Greg Jackson
Bye bye.