Latest / Merryn Talks Money / Can the UK Fix Its Troubled Tax System?

Transcript

Can the UK Fix Its Troubled Tax System? · Merryn Talks Money

0:00
Speaker 1: Have iem ready. Okay, here we go. Welcome to Marin
0:05
Speaker 1: Talks Money for podcast in which people who know the
0:07
Speaker 1: markets explain the markets. I'm there in Sunset Web and
0:10
Speaker 1: with us today we have a special guest, Paul Johnson,
0:13
Speaker 1: who is director of the Institute's Physical Studies and has
0:16
Speaker 1: been since twenty eleven. And I will say, for a
0:19
Speaker 1: people who aren't here, which will be most people, we
0:20
Speaker 1: are recording this in front of an audience today, which
0:23
Speaker 1: is very exciting. It's the first for us. Also with
0:26
Speaker 1: me today, of course, is John Stephick, who's going today
0:28
Speaker 1: with us for the entire conversation today asps just being
0:31
Speaker 1: shoved on at the beginning and the end like he
0:33
Speaker 1: easily is. So, John, try and provide value.
0:34
Speaker 2: Okay, do my best to our best.
0:38
Speaker 1: Now, Paul, one of the reasons we've got here on
0:40
Speaker 1: today is that you have written this fantastic book. It's
0:42
Speaker 1: called Follow the Money. How much does Britain cost? And
0:46
Speaker 1: the answer I suspect that everyone here would give if
0:48
Speaker 1: they were allowed to put their hands up and give
0:50
Speaker 1: an answer now, is kind of too much? Right, kind
0:52
Speaker 1: of too much? The tax burden is at all an
0:56
Speaker 1: all time high. Right, We're paying more is a percentage
0:58
Speaker 1: of GDP and will be over the next few years.
1:00
Speaker 1: And we've ever paid before, and we're not entirely sure
1:03
Speaker 1: that we're getting value. Is this absolutely necessary?
1:07
Speaker 3: Well, absolutely right. We're spending more than ever, we are
1:10
Speaker 3: taxing more than ever. And actually this Parliament has seen
1:13
Speaker 3: the biggest increase in tax of any parliament ever outside
1:17
Speaker 3: of Wars anyway, which is a pretty extraordinary statement. The
1:21
Speaker 3: tax burden actually is a fraction of national income, pretty stable,
1:25
Speaker 3: about thirty three to thirty four percent of national income
1:27
Speaker 3: for decades, and it's suddenly bashed up to about thirty
1:32
Speaker 3: seven percent. That's about one hundred billion pounds tax rise. Now,
1:38
Speaker 3: lots of reasons for that. I mean, we kept taxes
1:40
Speaker 3: down by essentially abolishing the defense budget over a decade decades,
1:45
Speaker 3: we've had a decade of austerity in public services, and
1:49
Speaker 3: all of that's stopped. There's no more defense to go.
1:51
Speaker 3: In fact, defense spending is going up. Austerity has almost
1:54
Speaker 3: certainly run its course, and indeed over this parliament spending
1:57
Speaker 3: has risen quite significantly, very big spending on debt interest
2:01
Speaker 3: at the moment, and of course serious demographic change, lots
2:05
Speaker 3: more spending on health, and over the next few years
2:07
Speaker 3: we have lots more spending on pensions, social care and
2:10
Speaker 3: so on. So my guess is that whilst this is
2:13
Speaker 3: the first time in my life that we've had taxes
2:16
Speaker 3: anywhere near this high, I don't think we're ever going
2:19
Speaker 3: to get down, certainly the rest of my life the
2:21
Speaker 3: taxes where they have been for the last seventy years.
2:24
Speaker 1: Yeah, but there's not always a government choice, is it.
2:26
Speaker 1: I mean, we've seen in the past, we've seen taxes
2:29
Speaker 1: as percented GDP. The burden has a percented GDP creep
2:32
Speaker 1: up over thirty five percent, but it always comes down
2:35
Speaker 1: again pretty quickly. There seems to be a level at
2:37
Speaker 1: which the Brits won't pay anymore. And if you look
2:40
Speaker 1: at the rates that other countries pay, you can see
2:42
Speaker 1: that in some Scandinavian countries it tends to be higher
2:45
Speaker 1: and it can stay higher, and perhaps in the US
2:46
Speaker 1: it's lower and it can stay lower. But each country
2:49
Speaker 1: seems to have an amount that they're prepared to pay
2:51
Speaker 1: beyond which they will not go and for us it
2:53
Speaker 1: looks like it's about thirty five percent.
2:55
Speaker 3: Well that was certainly. I used to work in the
2:57
Speaker 3: treasury and that was absolutely the kind of counts of
3:00
Speaker 3: you in the treasury, certainly at the sort of most
3:03
Speaker 3: senior levels, that there was a limit to what was feasible.
3:08
Speaker 3: Now we're testing that limit, and at the moment we're
3:12
Speaker 3: going through if you count it as a single tax
3:14
Speaker 3: riseer the single biggest tax risee ever, which is the
3:17
Speaker 3: holding of the income tax, personal allowance and thresholds at
3:21
Speaker 3: the same level in cash terms for six years, that's
3:24
Speaker 3: the policy. That is a fifty billion pound tax rising
3:28
Speaker 3: one go much of the biggest tax rise in history,
3:30
Speaker 3: if you count that as a single one and I
3:32
Speaker 3: think that will be the test. Is that something which
3:36
Speaker 3: drags hugely more people into higher rate tax. I think
3:41
Speaker 3: something like one in six adults will be paying higher
3:45
Speaker 3: rate tax by the end of that period compared with
3:47
Speaker 3: something like one in twenty not very long ago. So
3:50
Speaker 3: that's a huge change, and I think that is where
3:54
Speaker 3: we'll test your proposition that actually this isn't sustainable. But
4:00
Speaker 3: my guess is that one way or another we will
4:02
Speaker 3: keep at this kind of level of taxation because it's
4:05
Speaker 3: so hard to see what is the government going to slash,
4:09
Speaker 3: Is it going to cut health spending, pension spending, welfare spending,
4:12
Speaker 3: education spending. We've done so much to get defense spending.
4:16
Speaker 3: Now we've had a decade of austerial we've got this
4:18
Speaker 3: demographic change. I think we might not like it, but
4:21
Speaker 3: I rather feel we're going to have a lump it
4:22
Speaker 3: in terms of the tax spurn.
4:24
Speaker 1: Yeah, let's just stick with this fiscal drag for a moment.
4:27
Speaker 1: I mean, in fact, it's an even bigger tax right
4:29
Speaker 1: rise than the government might have thought initially, because inflation
4:32
Speaker 1: is so much much than they expected initially. So that
4:34
Speaker 1: means that even more people are going to be pulled
4:36
Speaker 1: into these higher rates than the government might have expected
4:39
Speaker 1: when they first introduced this policy. Right. And one of
4:41
Speaker 1: the things that John and I talk about a lot
4:44
Speaker 1: is the extent to which the forty percent tax rate
4:46
Speaker 1: affects so many more people than anyone really thinks about.
4:50
Speaker 1: So when when the Treasury look at and they go
4:52
Speaker 1: it's one in four, it's one five, it's one and six,
4:54
Speaker 1: But in fact, over a lifetime, over a career, of course,
4:57
Speaker 1: it's a much larger percentage of the population. And then
4:59
Speaker 1: if you take into account the partners with people who
5:01
Speaker 1: pay forty percent, the children of people who pay forty percent,
5:04
Speaker 1: et cetera. That higher rate affects a really large part
5:08
Speaker 1: of the tax paying population.
5:09
Speaker 3: It really does mean you're right over a lifetime. I
5:12
Speaker 3: people's salaries, incomes tend to peek in their forties, say so,
5:16
Speaker 3: lots of people in their twenties at the moment not
5:18
Speaker 3: paying higher rate who will do. Lots of people in
5:20
Speaker 3: their sixties who aren't who have done so. As a
5:23
Speaker 3: fraction of the population, it does get quite big. And
5:26
Speaker 3: we're not just looking at the forty percent rate. Of course,
5:28
Speaker 3: So there's there's the sixty percent rate for people earning
5:31
Speaker 3: between one hundred, one hundred and twenty five thousand.
5:33
Speaker 1: Then they playing that quickly. Not everyone understand how you
5:35
Speaker 1: get sixty percent.
5:36
Speaker 3: There is a sixty percent rate of income tax on
5:39
Speaker 3: incomes between one hundred, one hundred and twenty five thousand pounds.
5:41
Speaker 3: Now that is described as with drawing the personal ounce.
5:44
Speaker 3: It is actually just a sixty percent marginal rate. And
5:47
Speaker 3: then of course there's a forty five percent marginal rate
5:49
Speaker 3: on incomes above that. We're now in a world actually
5:51
Speaker 3: where there are as many people paying sixty or forty
5:54
Speaker 3: five percent as thirty years ago there were people paying
5:57
Speaker 3: forty percent. So the new higher rate actually is that
6:01
Speaker 3: sort of sixty and forty five level, and the forty
6:04
Speaker 3: is becoming close to a second basic rate.
6:07
Speaker 1: And in fact, of course, for a lot of people,
6:08
Speaker 1: that's way higher because once you've added on lestal insurance
6:10
Speaker 1: and you've added on student debt, which we think of
6:12
Speaker 1: as attacks. I know other people don't, but we think
6:14
Speaker 1: of it as attacks. Once you've added that on, some
6:16
Speaker 1: of the marginal rates of attacks, people are paying it insane.
6:19
Speaker 3: Well, you've got not only that, but you've got even
6:21
Speaker 3: more insane things. So if you're married and you tip
6:25
Speaker 3: over to the forty percent rate, you lose your married
6:27
Speaker 3: couples allowed. So you've got a tax rate of hundreds
6:29
Speaker 3: of percent. And if you're actually, if you've got kids,
6:34
Speaker 3: and you move over that hundred thousand point, you lose
6:37
Speaker 3: all your childcare support to Actually, you can be earning
6:41
Speaker 3: ninety nine thousand and you need a thirty five thousand
6:44
Speaker 3: pounds increase in your pay to make it worthwhile. Anything
6:47
Speaker 3: less than that and you're worse off than you were
6:49
Speaker 3: on ninety nine thousand. Now, you know that's a small
6:52
Speaker 3: fractional population, but that is an absurd situation.
6:55
Speaker 2: I mean, you're obvious creating you por on that as
7:00
Speaker 2: why it this not defects it because it's clearly mad.
7:06
Speaker 2: It's I mean, I realize that when you start feeling
7:08
Speaker 2: these threads, other things start to unravel. But is there
7:12
Speaker 2: not a better system that we could I mean, the
7:15
Speaker 2: system did.
7:15
Speaker 3: Not used to be this complicated that there's so much
7:18
Speaker 3: you could do to make the system better. I mean,
7:20
Speaker 3: I think in terms of what we're talking about, I
7:22
Speaker 3: think the reason it's not change is because governments frankly
7:27
Speaker 3: get away with it. I mean, it is quite a
7:28
Speaker 3: big revenue raiser, having a forty p rate at fifty
7:33
Speaker 3: Very few people I think understand this point at one
7:35
Speaker 3: hundred thousand pounds change. And even if they did, I
7:39
Speaker 3: think electorally, we saw we saw how incredibly unpopular the
7:47
Speaker 3: proposition a year ago was to get rid of the
7:49
Speaker 3: forty five p rate. Now, in terms of that mini
7:52
Speaker 3: budget that was by far the smallest of the tax cards,
7:55
Speaker 3: would have cost very little compared with everything else within
8:00
Speaker 3: the Conservative Party, it appeared to be incredibly unpopular. So
8:03
Speaker 3: I think actually kind of getting marginal rates down for
8:06
Speaker 3: higher earners doesn't appear to as far as one can tell,
8:09
Speaker 3: have a great deal of popular demand behind it, I suppose.
8:12
Speaker 2: And then the other thing that comes from you know
8:15
Speaker 2: which tomb overall is that, Okay, so lea'ssume we're going
8:18
Speaker 2: to need higher taxes for a long period of time.
8:22
Speaker 2: What's the politics of that, because one of the big
8:24
Speaker 2: problems is that I think, and I don't know if
8:26
Speaker 2: this is a fair representation of the audience or not,
8:29
Speaker 2: but I would say that people probably feel as if
8:31
Speaker 2: they are getting charged a lot of tax, but at
8:34
Speaker 2: the same time, the public services aren't getting better. A
8:37
Speaker 2: lot of them are getting worse, and there's no prospect
8:40
Speaker 2: of them getting better because all of the money is
8:42
Speaker 2: either going towards people getting old or towards it's just
8:45
Speaker 2: it's kind of paying for more of the same, and amazingly.
8:48
Speaker 1: It's going towards paying higher interest rates on government the
8:51
Speaker 1: government debt.
8:52
Speaker 2: So I guess the picture of painting is you're going
8:54
Speaker 2: to be paying more and you're not going to be
8:57
Speaker 2: getting better public services.
8:58
Speaker 3: You make it worst. One is a horrible I mean,
9:00
Speaker 3: it really is horrible. I mean we are in this
9:03
Speaker 3: position where if you look at the last budget red book,
9:07
Speaker 3: you've got tax at a record level. As we've discussed,
9:11
Speaker 3: you've got debt at a very high level, over ninety
9:15
Speaker 3: percent of national income and stout stuck there, not going down.
9:19
Speaker 3: And yet the budget read book has penciled in what
9:22
Speaker 3: are effectively be cut in public service spending through for
9:26
Speaker 3: many public services through the next parloment.
9:30
Speaker 1: Is extraordinary the function of a raging It's a.
9:33
Speaker 3: Function of very high spending on debt, interest, poor growth,
9:38
Speaker 3: and lots of spending on things like health particularly and pensions.
9:43
Speaker 3: So people aren't going to get pretty fed up, I think,
9:46
Speaker 3: and see tax rec taxes at record levels and this
9:50
Speaker 3: very very tight spending situation.
9:53
Speaker 1: Let's talk about is there a way to make the
9:55
Speaker 1: tax system more efficient? Among things that journalists do, and
9:58
Speaker 1: I'm guilty of this, constantly talk about how the UK
10:02
Speaker 1: tax code is now as long as the complete works
10:04
Speaker 1: of Shakespeare or the longest novel ever written, or whatever
10:06
Speaker 1: it is. We can always come up with these comparisons,
10:08
Speaker 1: and it gets longer and longer and longer and more
10:10
Speaker 1: and more complicated. Is there a way to simplify it,
10:15
Speaker 1: make it fairer? Are there any taxes that you think
10:17
Speaker 1: should go or any new taxes that should come in.
10:20
Speaker 3: I mean, I mean so many ways that you could
10:22
Speaker 3: make it better than it is. I mean, we have
10:25
Speaker 3: this absurd situation where we've got National insurance contributions which
10:29
Speaker 3: are just a tax there's no relation to anything that
10:33
Speaker 3: people are entitled to, which you pay on earned income.
10:36
Speaker 3: So if you're a wage slave like me, you pay
10:38
Speaker 3: lots of that. If you're a partner at a professional
10:41
Speaker 3: services company, you don't. If you're self employed, you pay
10:45
Speaker 3: a lot less. And if your income is coming from
10:47
Speaker 3: rents on a property happened to earn or shares what
10:49
Speaker 3: you don't pay anything. You don't pay any national insurance
10:53
Speaker 3: on pension payment in payment, actually don't pay on pension
10:56
Speaker 3: contributions either. So number one, just admit that this is
11:01
Speaker 3: just a tax on income and you get rid of
11:04
Speaker 3: a lot of the complexity.
11:06
Speaker 1: Repension are in the land absolutely furious because they will
11:09
Speaker 1: say I paid my own I already but let.
11:11
Speaker 3: Which probably they haven't. But let's haven't. But let's look
11:15
Speaker 3: at this difference between you know, if I get my
11:17
Speaker 3: income as a self employed person, I pay a lot
11:19
Speaker 3: less nationally insurance if I do it as an employee,
11:22
Speaker 3: and if I incorporate I pay less. Still, so that
11:25
Speaker 3: creates an enormous amount of complexity because you treat almost
11:28
Speaker 3: identical things completely differently. And that's true throughout the tax system.
11:32
Speaker 3: That's also true in terms of how we treat you know, vat.
11:37
Speaker 3: I mean in the book, there's lots of laughs in
11:39
Speaker 3: the book actually there, you know, we we have we
11:47
Speaker 3: have this situation where you you have to define exactly
11:52
Speaker 3: how much chocolate gingerbread man has on it to determine
11:55
Speaker 3: whether it's got v AT on it or not. If
11:57
Speaker 3: you want a pet to get a rabbit, there's no
11:59
Speaker 3: va on rabbits because they're edible.
12:03
Speaker 1: Don't tell your children.
12:06
Speaker 3: So these are the sorts of absurdity. So a lot
12:08
Speaker 3: of these things happen when you treat similar things differently,
12:11
Speaker 3: and when you treat similar things differently, you have to
12:13
Speaker 3: have a wall of legislation to kind of tell you
12:17
Speaker 3: exactly where that boundary comes. Just one last thing on
12:22
Speaker 3: making the tax system better might absolute number one priorty
12:26
Speaker 3: be getting rid of stamp duty. It's just and I'm
12:29
Speaker 3: particularly talking about on housing here, it's just so damaging.
12:33
Speaker 3: It massively reduces the amount of times people move. It's unfair,
12:36
Speaker 3: it's inefficient, it's inequitable. It stuffs up the labor market,
12:40
Speaker 3: it stuffs up the housing market. But what a chancellor's done.
12:43
Speaker 3: You're up to your increase it. And that really is
12:45
Speaker 3: if you can think of one. If I had to
12:47
Speaker 3: choose number one tax which is super damaging, that'll be it.
12:51
Speaker 1: But what's mad about damn duty in particular and on
12:55
Speaker 1: shares as well, is that they keep putting it up
12:58
Speaker 1: on houses, et cetera. But also talking about introducing a
13:01
Speaker 1: wealth tax, which makes you want to tear your hair
13:03
Speaker 1: up because we have so many wealth taxes in the UK.
13:06
Speaker 1: There's stamp duty, there's I h T, there's non index
13:09
Speaker 1: capital gains. These are all wealth tax The.
13:12
Speaker 3: Point the point about wealth taxes. I mean people talk
13:13
Speaker 3: about introducing wealth taxes as you say, We've got inheritance tax,
13:16
Speaker 3: council tax, stamp duty, capital gains tax and so on.
13:20
Speaker 3: The problem is they're all rubbish. I mean, they all
13:22
Speaker 3: you know, we we we need to get them right.
13:27
Speaker 3: Then maybe we can think about we get the ones
13:30
Speaker 3: we got vaguely right, rather than disaster as of them, we.
13:33
Speaker 1: Could get rid of all of them and introduce a
13:35
Speaker 1: much simpler wealth tax. I mean I don't prove wealth
13:39
Speaker 1: taxes at all.
13:40
Speaker 3: Possibly we we we we need a we need a
13:44
Speaker 3: capital gains tax. But I mean not at least because
13:46
Speaker 3: if you don't have one.
13:47
Speaker 1: Tax, if it's if it's tax on inflation.
13:49
Speaker 3: In well indeed, then it should be it should be
13:52
Speaker 3: on only real gas and possibly even only some fraction
13:54
Speaker 3: of real gains.
13:56
Speaker 2: Yeah, But I mean the problem then is I mean
13:59
Speaker 2: all of this obviously somebody would prefer lower taxes in
14:02
Speaker 2: a smaller state overall. But but if your point is
14:05
Speaker 2: that we need to raise this thirty seven percent GDP,
14:08
Speaker 2: then if you assume that that is the case, then
14:11
Speaker 2: it's kind of got to come from somewhere. So the wretch,
14:15
Speaker 2: John the rich if well, yeah, i'd always it's always
14:18
Speaker 2: going to come from the wretch. But if we've got
14:23
Speaker 2: this kind of system whereby we're going to have to
14:25
Speaker 2: be paying for you know, the NHS, we have to
14:28
Speaker 2: be paying for people getting older all the time, then
14:31
Speaker 2: anytime we talk a getting rid of the taxes, we
14:33
Speaker 2: have to talk about, well, what are you going to
14:34
Speaker 2: replace that with? At least certainly that's where you know
14:37
Speaker 2: the politicians message is, so you know, what what do
14:41
Speaker 2: you do? If you decide that we shouldn't index link capital,
14:44
Speaker 2: that we should index link capital gains for example, and
14:47
Speaker 2: where does the extra money.
14:48
Speaker 3: Call I mean for example, there you could match the
14:51
Speaker 3: capital gains right to the income tact. Right now, I
14:53
Speaker 3: think there's a strong kind and index. You've got that
14:55
Speaker 3: indexation in there. You know that that you forgive forgive
14:59
Speaker 3: its apple and gains at death is outrageous actually and
15:03
Speaker 3: incredibly edgy damaging to the economy because people hold on
15:06
Speaker 3: to things beyond what they beyond where they should. But
15:09
Speaker 3: if you look, you know Marin said earlier, there are
15:12
Speaker 3: other countries much higher rates levels of tax than we have.
15:16
Speaker 3: If you look at them, they don't get more from
15:18
Speaker 3: the rich. We get more than most from the rich.
15:20
Speaker 3: Partly we've got some pretty rich people, but thirty percent
15:24
Speaker 3: of all income tax comes from one the top one
15:26
Speaker 3: percent of earners. They don't get it from corporates. We've
15:32
Speaker 3: got almost the biggest corporation tax system in the world
15:34
Speaker 3: now in terms of the fraction of national income that
15:36
Speaker 3: it brings in. At least that's the projection given the
15:40
Speaker 3: new rate, they get it from people. I'm sad to
15:43
Speaker 3: say on average and above average earnings and incomes. Now
15:46
Speaker 3: that's where the money comes from in other countries, and
15:49
Speaker 3: I think that's what I think. This is where the
15:51
Speaker 3: political debate is so dishonest, which is that you know,
15:55
Speaker 3: those who say they want more tax, Oh, let's tax
15:57
Speaker 3: the rich, let's tax companies. If you want to make
16:00
Speaker 3: a big difference, it's from ordinary people it comes from.
16:03
Speaker 3: And that's exactly what's happening now about fifty billion pound
16:05
Speaker 3: tax rise I mentioned earlier in terms of the non
16:08
Speaker 3: indexation of allowances and thresholds, that's largely coming from people
16:12
Speaker 3: on average and maybe twice average earnings. It's not largely
16:15
Speaker 3: coming from the rich and from companies.
16:17
Speaker 1: So it's making our system less progressive.
16:19
Speaker 3: It's broadly speaking, if you hold certainly, if you hold
16:23
Speaker 3: the personal allowance down, that is an unprogressive way of
16:26
Speaker 3: raising taxes.
16:28
Speaker 2: So always, if you have to broaden the tax space,
16:31
Speaker 2: then doing it placed the health there's one to it.
16:34
Speaker 3: It's a lot easier than announcing big increases in the race,
16:37
Speaker 3: isn't it.
16:37
Speaker 1: Yeah, inflation, isn't it wonderful?
16:39
Speaker 3: It's certainly helping the government.
16:41
Speaker 1: Okay, I'll tell you what. Let's take a different approach
16:45
Speaker 1: to this. Instead of talking about how much more tax
16:47
Speaker 1: we can get out of people, let's talk about how
16:49
Speaker 1: we can encourage growth in the UK economy. And so
16:52
Speaker 1: much talk about this at the moment. Growth growth, growth.
16:54
Speaker 1: Everyone's into growth. We all love growth, and earth do
16:58
Speaker 1: we get growth in the UK?
17:00
Speaker 3: What's easy? I mean we know how to do it.
17:02
Speaker 3: I mean we really, really, really really do know how
17:04
Speaker 3: to do it, but we decide not to. I mean
17:06
Speaker 3: it's you know, so sorting out the planning system, sorting
17:11
Speaker 3: out the tax system. If we've just described would be
17:13
Speaker 3: good for growth, we know that investment in sensible investment
17:17
Speaker 3: in infrastructure is clearly important, and not cutting spending on
17:22
Speaker 3: further education and vocational education as has happened over the
17:25
Speaker 3: last fifteen years or so, building the roads and airports
17:31
Speaker 3: and so on. That we need, having a consistent strategy
17:34
Speaker 3: towards competition and R and D and all those sorts
17:37
Speaker 3: of things, and free at trade with the European Union,
17:42
Speaker 3: I mean, all of those things we know would be
17:45
Speaker 3: good for growth, and yet in each case we have
17:49
Speaker 3: essentially prioritized other things. We prioritize. We don't build houses
17:54
Speaker 3: because we prioritize people already have houses, and that means
17:59
Speaker 3: that people can't access the high paying jobs in London
18:01
Speaker 3: and the Southeast. We don't build the infrastructure which would
18:05
Speaker 3: link the Manchester and Sheffield and so on to surrounding
18:10
Speaker 3: areas so that people there can get into where the
18:14
Speaker 3: jobs are. We have cut spending on education, and particularly
18:19
Speaker 3: cut spending on education post post sixteen. We cut through
18:24
Speaker 3: the twenty tens. It's not quite so much now spending
18:27
Speaker 3: on infrastructure. Generally, as I say, we know what to
18:32
Speaker 3: do and we don't do it, largely for political reasons,
18:35
Speaker 3: so we don't.
18:36
Speaker 1: Want it enough, We don't really want to grow, or
18:38
Speaker 1: we have a huge part of the population that is happy,
18:42
Speaker 1: settled with what they have and don't want anything to change,
18:45
Speaker 1: and they're the ones who.
18:46
Speaker 3: Vote short the short term cost and disruption against long
18:52
Speaker 3: term Quite hard to grasp positive stuff through growth, so
18:57
Speaker 3: you know, it's always easier to say, well, know, triple
19:00
Speaker 3: lot the pension, or increase spending on wages, or or
19:05
Speaker 3: do more on health or something, all of which are
19:08
Speaker 3: good things, but you know, but also popular, whereas driving
19:13
Speaker 3: a road through someone's back garden or building building houses
19:17
Speaker 3: in the field across across the way, or or or
19:21
Speaker 3: or or increasing taxes to increase spending on education or whatever.
19:25
Speaker 3: Those those are unpopular. So it's the politicians are feeble,
19:30
Speaker 3: but actually the electorates pretty feeble as well. On something.
19:32
Speaker 1: You have to have a massive change the planning system anyway,
19:37
Speaker 1: aren't we If we're going to get anywhere near zero,
19:40
Speaker 1: for example, and we have to completely redo our national grid,
19:42
Speaker 1: we're going to have to have a pylon and pretty
19:44
Speaker 1: much every back garden and that's going to involve a
19:46
Speaker 1: massive change to planning.
19:48
Speaker 3: Well, we're going to have to. I mean, it's it's
19:50
Speaker 3: more expensive to build stuff in Britain than pretty much
19:53
Speaker 3: anywhere else in terms of building roads, in terms of
19:56
Speaker 3: building energy infrastructure, in terms of building but that's okay.
19:58
Speaker 1: Can we just cancel them?
19:59
Speaker 4: Right? That's why one of the reasons, one of the
20:02
Speaker 4: reasons the complete lack of government consistency on policy is
20:08
Speaker 4: also incredibly expensive.
20:10
Speaker 3: We've seen that on on on HS two. Now. I
20:13
Speaker 3: mean personally, I used to work in the Treasury when
20:16
Speaker 3: we did big studies of this stuff. Clearly there was
20:18
Speaker 3: never a strong case for HS two. Clearly actually having
20:22
Speaker 3: a whole series of better links across the North and
20:26
Speaker 3: better roads and so on as set out that is
20:31
Speaker 3: the Treasury view. And you know, you take the man
20:33
Speaker 3: out of the treasure. You can't take the treasury that you.
20:36
Speaker 1: Say there was never a case for never a good
20:38
Speaker 1: case for HS two, and the treasure in knew that.
20:40
Speaker 1: Then explain to those of us who don't understand these things,
20:43
Speaker 1: how on earth it ever got through? Polical we get here?
20:48
Speaker 3: It's a political decision. I mean, I think there's I
20:51
Speaker 3: think it's a really interesting study of how these big
20:53
Speaker 3: infrastructure projects actually do get you do get through. There's
20:58
Speaker 3: obviously there, there's there's there's a two of lobbying. There's
21:01
Speaker 3: a degree of politicians wanting to be associated with big projects.
21:05
Speaker 3: And you know, it's not a stupid bet. It is
21:08
Speaker 3: a bet. I mean, building HSD with a huge bet
21:12
Speaker 3: that actually that would be enough to really make a
21:14
Speaker 3: difference to growth to Manchester and surrounding areas turned out
21:19
Speaker 3: to be a much more expensive bet than was suggested initially.
21:22
Speaker 3: I mean, I mean three times the price I think
21:25
Speaker 3: than was suggested. But I think the pervasive failure here,
21:30
Speaker 3: I mean, first of all, it's for all the issues
21:34
Speaker 3: associated with lots of planning and building lots of things
21:36
Speaker 3: it's turned out very expensive. But our complete lack of consistency.
21:40
Speaker 3: I mean again we've seen this in education policy again.
21:43
Speaker 3: The Prime Minister said he wants to change the way
21:45
Speaker 3: we provide a levels to give a broader curriculum. I
21:48
Speaker 3: think it's pretty sensible actually, but no consistency. If you
21:52
Speaker 3: look over the things that happened over the last twenty
21:55
Speaker 3: thirty years, particularly in post sixteen education, particularly vocation changed
21:59
Speaker 3: virtually every year, and you know you can't. You can't
22:03
Speaker 3: run a country like that and expect it to grow.
22:05
Speaker 1: But do other countries, other countries run like that? I mean,
22:08
Speaker 1: is this sort of we're inconsistency a UK thanually. It's
22:10
Speaker 1: a global thing. No governments are consistent.
22:13
Speaker 3: I think ours are less con I mean, particularly given
22:15
Speaker 3: we supposedly have the same party in power thirteen years.
22:17
Speaker 3: I think ours are less consistent than most.
22:19
Speaker 2: Yeah, I think that's straight to it really in terms
22:23
Speaker 2: of what's happened in the last thirteen years. But I
22:26
Speaker 2: mean from that point of view, do you see because
22:29
Speaker 2: obvious there's a lot of frustration. I don't think that
22:32
Speaker 2: it's just you know, I was thinking about these these things.
22:36
Speaker 2: I mean, there's there's clearly a lot of irritation with
22:38
Speaker 2: a parent and ability to get anything done in the UK.
22:42
Speaker 2: Is it end in the political sphere? That kind of
22:44
Speaker 2: gives you I don't know, I glimmer it or hope
22:47
Speaker 2: that we might see it as sort of culture change,
22:51
Speaker 2: or that we might see some political backbone developing or
22:55
Speaker 2: some sensibleness at some point for those of you are
23:00
Speaker 2: really done, we see something to you had thought, but
23:04
Speaker 2: I'm watued.
23:04
Speaker 3: It's often try that, but with limited success. I think
23:12
Speaker 3: we've done it in the past. I mean, you know,
23:15
Speaker 3: whatever you think of the eighties and Thatcher and so on,
23:18
Speaker 3: there were big, you know, structural changes that were driven
23:21
Speaker 3: through in a reasonably consistent way. Whatever you think of
23:24
Speaker 3: the Blair years, there was a big sort of change
23:26
Speaker 3: to the way in which we funded start not enough
23:29
Speaker 3: reform arguably, so we have had long periods of reasonably
23:34
Speaker 3: consistent government in the past. I to some extent, I
23:37
Speaker 3: hope what we've seen over the last seven eight years
23:40
Speaker 3: has been something of an aberration. And again, whatever you
23:42
Speaker 3: think of Brexit, it's clearly the case that politics just
23:45
Speaker 3: got broken essentially between twenty sixteen and twenty twenty one,
23:50
Speaker 3: let's take that or actually, no, let's say twenty twenty two.
23:53
Speaker 3: Given that we had the forty nine day Prime minister
23:55
Speaker 3: in twenty twenty two, politics was very broken over that
23:58
Speaker 3: period on both sides, and I do see you know,
24:02
Speaker 3: actually a move away from that.
24:05
Speaker 1: I'm very we have to go and enter it there. Paul,
24:07
Speaker 1: Thank you so much for joining us today.
24:10
Speaker 3: Thank you, Paul.
24:15
Speaker 1: Thanks for listening to this week's Meren Talks Money. We'll
24:17
Speaker 1: be back next week. Catch our debrief on this week's
24:20
Speaker 1: conversation on the Merin Talks Money after show under the
24:22
Speaker 1: Apple subscription feed in the meantime, If you like our show,
24:25
Speaker 1: rate review, and subscribe wherever you listen to podcasts. This
24:29
Speaker 1: episode was hosted by me Meren Sumset Web that was
24:32
Speaker 1: produced by some Sidi. Additional editing by Blake Maple's. Special
24:35
Speaker 1: thanks of course to Paul Johnson and to John Steppek.
24:38
Speaker 1: Be sure to sign up to John's daily newsletter Money Distilled.
24:41
Speaker 1: The link that that is in the show notes.