Latest / The Fourcast / Will Rachel Reeves' spending review turbocharge or tank UK economy?

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Will Rachel Reeves' spending review turbocharge or tank UK economy? · The Fourcast

• 0:00
  The danger is, are we lurching from make or break moment to
• 0:03
  make or break moment with this government?
• 0:05
  Yes, she has to talk to the electorate, but there is another
• 0:07
  audience out there and that other audience is the markets.
• 0:12
  Asylum hotels I would say are the one policy which is the most
• 0:17
  toxic. Labour have now said we're going
• 0:19
  to stop that and I think if they fail to meet it, reform will be
• 0:23
  the big beneficiaries. How deep are Labour's problems
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  with public opinion right now? Hello and welcome to the
• 0:34
  forecast, with immediate reaction to what's been billed
• 0:36
  as the most important policy announcement of this Parliament.
• 0:39
  The government's spending review.
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  The winners? Health, home building and
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  defence. The losers?
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  Well, pretty much everyone else. The Prime Minister told the
• 0:48
  Cabinet that today marks the end of the first phase of the
• 0:51
  government, and he's probably glad to see the back of it, with
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  the economy flatlining and each pole more painful than the last.
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  So will Rachel Reeves focused largesse move the dial?
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  Will it make the lives of working people better, as she
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  promises? Will it keep herself in the job?
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  To discuss all of this, I'm joined by our economics
• 1:10
  correspondent Helia Ebrahimi, who's in our lead studio.
• 1:13
  And from more in common, the pollster Luke Trill.
• 1:17
  Luke, I mean, when Keir Starmer says this was the end of the
• 1:22
  first phase of the government, I guess he's talking about painful
• 1:27
  decisions, tough decisions as the government talks about it to
• 1:30
  try and fix the problems that they inherited.
• 1:33
  So what? What were they trying to do with
• 1:34
  this spending review? Well, they build it as the end
• 1:38
  of the first phase. I think it was a bit of an
• 1:41
  acknowledgement that the messaging around that first
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  phase hadn't worked because we know Rachel Reeves and Keir
• 1:47
  Starmer come in and they start talking about tough choices,
• 1:50
  difficult decisions. You get winter fuel, you get the
• 1:53
  pit cuts. You know, it almost looked like
• 1:56
  they were trying to pick up George Osborne's playbook from
• 1:59
  2010. It's all terrible.
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  It's all terrible, but it's all the other guys fault that it's
• 2:03
  terrible too. Now, clearly that hasn't landed
• 2:06
  with the public. You know, the public are very
• 2:08
  weary, they're exhausted. They think they've had language
• 2:10
  about tough choices for 16 years.
• 2:13
  And one of the things we know is that, you know, when people
• 2:16
  elect the Tories, you ask people what the Tories at the best are
• 2:19
  like. It's creating economic
• 2:21
  stability. When you ask people why they
• 2:23
  vote for labour #1 on the list is protecting the working class,
• 2:27
  followed by looking after public services.
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  And so I just felt that messaging never worked.
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  Obviously economic stability is important, but it wasn't what
• 2:35
  people expected from a Labour government.
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  And I think what you've seen today is an attempt to pivot, to
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  set out a distinctly Labour vision of what they're going to
• 2:45
  do for the next few years and try and give some purpose and
• 2:48
  definition to their government, which you know, from my
• 2:50
  conversations with the public, particularly in focus groups,
• 2:52
  they haven't got to date. Yes, but what what they've also
• 2:55
  talked about is the need for people to feel the change.
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  And if you look at the big spending decisions, which is the
• 3:03
  NHS increasing at 3%, defence edging up to 2.6% but then not
• 3:12
  really getting to 3% yet, is, is that going to actually make
• 3:17
  people feel better? It's absolutely true.
• 3:19
  Look, you know, figures in a book will not shift the dial in
• 3:23
  the polls. People have to feel it
• 3:25
  day-to-day. The one thing I would say is
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  that when you talk to people about the NHS already, their
• 3:29
  stories are not great but a little bit less bad than they
• 3:33
  were a year ago. So I think people are seeing
• 3:35
  that. But I thought what was
• 3:37
  interesting was as well as the kind of big, you know, NHS
• 3:40
  defence stuff, there were sections in her speech which
• 3:43
  were clearly aimed at more immediate game.
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  And in particular that focus on place, that sense that people's
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  high streets are to rundown, that vandalism is a real
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  problem. That's the sort of thing which
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  makes people feel government don't care about me, they don't
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  care about my life. And if they can make some
• 4:00
  differences there, I think it'll at least show that they're
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  committed. You know, actually that bit of
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  her speech and the bit on local transport projects was almost
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  Johnsonian in it, in its rhetoric.
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  And it's moved from Osborne to Johnson in the tone of the
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  speech. And I think that's where they'll
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  be hoping they see the gains. Helia, what what have you picked
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  out so far as the big trends, the big moves?
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  I mean, as you said at the beginning, Krish, the big winner
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  is defence. I mean it gets this huge capital
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  injection, 7.3% and that kind of wipes everything else off the
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  board. And you were talking about
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  health, overall health on day-to-day is getting 2.8%.
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  Now that is very big compared to other departments.
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  But actually when you look at what that is compared to the
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  long run average, the long run average of health settlements is
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  about 3.6%. It's not necessarily that
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  generous. And when you come and look at
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  the capital budgets, Chris, actually health gets a zero real
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  terms increase during the spending review.
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  So all of the capital, all of that kind of, so it's not
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  hospitals infrastructure exactly, it's economic
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  infrastructure. What they have decided.
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  You've got two stories here. You know, is this a choice about
• 5:17
  social infrastructure or is this a choice about economic
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  infrastructure? And what this government is
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  saying today, I think, is that what we're doing is about
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  defence and economics. And So what does that mean for
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  the unprotected departments? I mean what you know, for years
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  literally we have been putting to the top people that lay, but
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  well you're going to protect a couple of departments but but
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  you're going to face real terms cuts in unprotected departments
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  and that is what we now know. Yeah.
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  I mean, I, I think that that's the overall picture.
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  Like for example, if you look at transport though, it has a
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  different picture day-to-day. Actually, transport is getting a
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  bit of a rough ride to make space for, as you were saying,
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  health. But when you look at what
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  they're doing on capital, on investment, remember the
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  government borrowed all this money in order to invest.
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  You've got a huge, you know, 3.1 increase in capital.
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  And again, energy, energy is one of the winners here.
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  Not only is it getting a day-to-day increase, it's
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  getting a capital increase. And if you extend the period,
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  there's a bit of kind of jiggery pokery going on with the
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  Chancellor's figures today and that they keep talking about not
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  just the spending review period, but also the entire period from
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  when they were in government. If you look at those two years,
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  remember that the government actually front loaded a lot of
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  their spending energy has actually had a 16% bumper, mega
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  huge increase in capital and a lot of that spending has
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  actually already happened. So what what?
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  What does that mean? Well, one that it is one of the
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  one of the big winners 2 that a lot of the government spending
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  has already been done in the first two years it was front
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  loaded. But that means that it's from a
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  higher base, you know, so it creates a higher starting point
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  for the spending review. But also in addition to that,
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  they have increased the spending for for energy.
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  So I'd say Ed Miliband must be pretty happy here.
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  We, we still haven't looked at all of the details of within the
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  department, what it means and what it means for different
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  parts of, you know, whether it's solar panels.
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  But overall, they will be one of the winners, I mean.
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  Look, it's almost impossible for a government to be
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  transformative in a spending review because they're working
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  to the the numbers they've created in the budget, you know,
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  but but if you look at where they've prioritized, you know,
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  does this produce any transformation in public
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  opinion, do you think? Well, interesting is, so we
• 8:00
  asked in advance of the spending review firstly, do you expect
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  the decisions will be good for the country, bad for the country
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  or make no difference? And just 15% said they expected
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  the decisions made would be good for the country.
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  So yeah, Lisa. Institutionally passive.
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  We are, we are at the moment. You know I joke.
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  My standard public opinion presentation is why is Britain
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  so miserable at the moment? But you know, it meant she had
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  low expectations to play part. Of our culture, I think it's
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  part of our culture, I think. It's particularly really gloomy
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  at the moment, so low expectations.
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  But we then asked which departments do you think could
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  find efficiencies and which couldn't?
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  And it's interesting, the ones where the public were more
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  likely to say they needed more money were health, defence,
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  education. The ones where the public were
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  more likely to say they could absorb reductions were the
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  Foreign Office, Department of Culture.
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  I mean, not huge budgets, but they are the areas where it's
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  been cut. So I think lots of this is in
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  line with public opinion, but the question.
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  Will it actually? Make people feel better.
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  Exactly. Exactly.
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  So what do I expect we'll see in public opinion?
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  Probably is a bit of a bump. You generally see that after
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  this type of event. But I'm not sure you're going to
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  see a massive transformation in the government's fortunes until
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  people start to feel it. And the big thing is, you know
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  you. We talk about NHS, we talk about
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  immigration, we talk about crime.
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  The number one issue remains the cost of living and living
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  standards. Until that improves, it's hard
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  to see any other metric going up and how.
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  Bad. And actually, and actually Luke,
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  I think the difficulty here isn't it that a lot of the
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  government's plans which are about based on kind of we're
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  going to put all of this money into building roads, building
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  rail, you know, creating this infrastructure.
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  It's not necessarily going to deliver in, in the kind of time
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  frames that your focus groups are going to respond to.
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  It might be way beyond the next few years.
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  Yeah. And and the other thing you've
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  got to remember is there will be a little bit of haven't we heard
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  this all before on that type of stuff?
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  You know, remember, Boris Johnson comes in 2019, talks
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  about levelling up. This government looks for the
• 10:08
  first period like they're moving away from it.
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  They seem to have, I think, rightly recognized that was a
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  bad idea. But it's can you convince the
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  public that jam tomorrow is really worth it?
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  And I think that's a hard ask, given where public trust is.
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  Just on that, Hell yeah. I mean, if you look at what the
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  government's saying on housing, again, they bombarded with
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  numbers, £39 billion sounds like a huge amount of money to go
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  into house building, but it's over 10 years, so we're down to
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  3.9 billion a year and actually. Listen, Chris, that is bigger
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  that I, I have to say, you know that is much bigger.
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  The current grant is too well. That that's what I'm trying to
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  ask you about. So, so, so, so when you compare
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  that to where we were under Rishi Sunak, how much of a
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  difference is that going to make?
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  I think it's going to be pretty significant.
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  When I've talked to kind of social housing providers, they
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  are very happy about this was one of the big asks, you know,
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  social housing really have been on their names.
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  They've faced real terms cuts over the last 15 years.
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  So this package which will be the affordable homes program is
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  considerably, it's about 50% more than the last spending
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  review. So I think it will deliver a
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  significant uplift. And and that's the issue is that
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  one of the key drivers for this government is we want to build
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  homes, we want to build homes. And when you've been talking to
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  social homes providers, they say, well, hang on, we can't do
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  that unless the funding package is there.
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  We can't do that because first we have to make sure that all of
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  our existing property is up to date because there's a whole
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  stream of regulation coming down the track.
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  And 2nd, if we have extra cash, fine, we'll build the homes.
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  But unless that cash is there, we can't do it.
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  And it I think it's not just the money, Chris, when I've talked
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  to people, it's the fact that it's over 10 years.
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  In the previous spending review, the commitment was for five
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  years only. And I think what they like,
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  because they also borrow in the bond market is to have the
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  certainty over 10 years. So that that I think will shift
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  the needle. Will it deliver the economic
• 12:18
  growth that this government want?
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  I don't know, but it certainly will be very helpful for the
• 12:24
  housing sector. I mean, the, the, the big thing
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  the government's got to try and calculate with this league is,
• 12:28
  is the gap between taking sensible decisions for public
• 12:32
  services and what you do in order to change public opinion
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  about your government. So how, how deep are Labour's
• 12:41
  problems with public opinion right now?
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  I mean, you know, you expect governments to always, you know,
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  run into problems, you know, pretty much as soon as they're
• 12:48
  elected. But how entrenched is it, how
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  firm is it? And therefore, how easy is it
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  going to shift with incremental improvements in some public
• 12:57
  services? Well, actually, I just take
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  issue with one. But you said that you'd expect
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  it to happen almost as soon as they're elected.
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  Actually, governments normally get a bit of a honeymoon.
• 13:06
  And what's been surprising about this government is that they
• 13:09
  just didn't have a honeymoon. Their poll ratings started to
• 13:12
  slump almost from day one, crystallized by some of those
• 13:17
  decisions around the winter fuel allowance, around the pip cuts.
• 13:20
  There, now, you know, in our latest poll, 4 points behind
• 13:24
  Reform UK. So they're in, they're in a
• 13:26
  difficult position. And of course they weren't
• 13:28
  elected with a huge share of the vote.
• 13:30
  They only got about 1/3 of the vote in the election.
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  But I think where the mistake has particularly been is one of
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  the questions we ask is the government is going to have to
• 13:42
  make tough decisions. Are they doing enough to shield
• 13:45
  the vulnerable from the impact of those decisions?
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  And only around 30% of the country think the government is
• 13:52
  either managing to shield vulnerable or even trying.
• 13:55
  A big chunk think they're deliberately targeting the
• 13:57
  vulnerable. And so only think that is what
• 14:00
  they're going to have to shift if they're going to get out of
• 14:02
  this hole. And the problem is despite this
• 14:04
  spending review, despite the money for the NHS, you're still
• 14:07
  going to have that big debate about the pip cuts which is
• 14:11
  coming up. You know, we still haven't had
• 14:13
  any clarity on things like the two child cap or the child
• 14:15
  poverty strategy, only think that's where their real change
• 14:18
  is. Unless they can show progress
• 14:20
  there, I think it's going to be hard to get out of the hole.
• 14:22
  The flip side is when you ask about how deep the problems are,
• 14:27
  we are in an era of extremely volatile electorates.
• 14:31
  You know, let's look at this period four years ago.
• 14:34
  Boris Johnson riding high looks invincible.
• 14:38
  Vaccine bounds very different picture a few years later so
• 14:43
  things can turn around. We have unlike in the US where
• 14:46
  Trump could walk down the street and shoot someone, as he says,
• 14:48
  and still get 40% of the vote, we have a responsive electorate.
• 14:52
  So if Labour can start showing progress, things will move.
• 14:56
  But. But it's whether the electorate
• 14:57
  will respond to this idea of stability.
• 14:59
  Yeah, this government has pinned so much on the idea of
• 15:02
  delivering stability and as Hellya says, long term planning
• 15:05
  economically. And it's whether the electorate
• 15:07
  will actually look at that and go, Oh yes, I notice what
• 15:10
  they're doing or whether they will just demand jam now.
• 15:13
  Yeah, and and I think it is a bit the latter.
• 15:16
  Look, stability is a necessary condition because people were so
• 15:19
  exhausted with what happened under the Tories, freaked out by
• 15:22
  the mini budget. But it's not a sufficient one.
• 15:24
  People actually want the feel good.
• 15:26
  And the interesting thing, again, we asked people about,
• 15:29
  you know, how affordable do you think a night out is going to
• 15:32
  the cinema, taking the kids out? They said in that poll that
• 15:37
  basically all of those nice things in life were
• 15:40
  unaffordable. And I think until that changes,
• 15:42
  that sense that you're not just working to live, living to work,
• 15:46
  that you're as a woman in Runcorn told me the day after
• 15:49
  the by election, you know, I'm not living, I'm just surviving
• 15:53
  that that's what's going to change if you're really going to
• 15:55
  move the dial, because that's what's also driving the well,
• 15:59
  look, you know, I might not trust reform, but I may as well
• 16:02
  roll the dice because it can't be any worse than what we've got
• 16:05
  at the moment. Helia.
• 16:06
  There was a very prominent, very uneconomic line in in the
• 16:10
  spending review where Rachel Reeves talked about an end to
• 16:13
  asylum seekers being in hotels. Is that the kind of line you
• 16:17
  would expect in a statement like this?
• 16:21
  I, I mean, the, it, it's also in, in the detailed financial
• 16:26
  breakdown, you know, they, they are, they're obviously one of
• 16:30
  the things they've been pre briefing is that they're going
• 16:34
  to invest in borders. And I think it's for the reasons
• 16:37
  Luke's been talking about in terms of trying to talk to a
• 16:42
  part of the electorate that is being run over by Reform.
• 16:47
  But there's some detail about that.
• 16:49
  I think it's what's not clear from these documents is how
• 16:52
  they're going to deliver on that.
• 16:55
  You know, they're talking about having a £1 billion saving from
• 17:00
  not having, we know that having, you know, putting up asylum
• 17:04
  seekers in hotels is very expensive.
• 17:08
  They claim they're going to save a billion pounds.
• 17:10
  What's not in the? So that that's assumed in the
• 17:12
  Home Office settlement is that the Home Office is gonna save a
• 17:15
  billion pounds in all, I mean, so and if it doesn't, then
• 17:20
  what's gonna happen to that money?
• 17:22
  Or, or how does it get there? That's, that's what is not in
• 17:25
  the document because it's very, very difficult to get that path.
• 17:30
  You know, and actually local governments are really
• 17:32
  struggling to try and deal with that.
• 17:35
  There's lots of social care providers that talk to us that
• 17:38
  are actually can't afford to provide, give their social care
• 17:42
  provision. So they're handing the keys back
• 17:45
  to the local authority. Those properties are being used
• 17:48
  for asylum seekers. It's, it's a endemic problem for
• 17:52
  local authorities. And you know, I, I'm, I'm yet to
• 17:56
  see the details of how that's going to work.
• 17:59
  But as you said, it is a very political statement.
• 18:02
  Just on the asylum hotels, you know the interesting is they
• 18:05
  have given themselves a measurable target on that right
• 18:09
  now and the truth is that asylum hotels I would say are the one
• 18:13
  policy which is the most toxic to social cohesion.
• 18:17
  Every focus group I do in an area which has a hotel, people
• 18:21
  will say it's often the local heritage hotel.
• 18:23
  People will say I go there once or twice a year for a wedding.
• 18:27
  I can't anymore. It obviously increases economic
• 18:29
  resentment because people say well people are getting full
• 18:32
  room and board in a nice hotel whilst I'm losing my winter fuel
• 18:35
  allowance or my benefits. It is a really key issue and
• 18:38
  Labour have now said we're going to stop that.
• 18:41
  And I think if they if they meet that, I think that helps.
• 18:44
  And I think if they fail to meet it, the public backlash would be
• 18:47
  significant there and reform will be the big beneficiaries
• 18:51
  and and. As as Heavier says, I mean they
• 18:53
  haven't said how they're going to meet it and where they're
• 18:55
  going to be putting up asylum seekers instead.
• 18:57
  Now if they're putting them up in social care, then where are
• 19:01
  the old people going? And if they're putting them in
• 19:04
  in an affordable housing, where are the people who need
• 19:07
  affordable housing going? Well, completely.
• 19:10
  And, you know, we already here in focus groups, people saying
• 19:13
  to us, oh, and they're offering landlords, you know, more money
• 19:16
  to house asylum seekers rather than local people.
• 19:19
  You know, this isn't easy. It's not like WARN policy is
• 19:22
  necessarily better. But I just think the hotels have
• 19:24
  become such an iconic sign for many people of a broken
• 19:28
  immigration asylum system. And of course, it's bad for
• 19:31
  asylum seekers themselves. You know, they can't put down
• 19:33
  roots. It's not great to grow, you
• 19:35
  know, raise a family or or anything like that in a hotel,
• 19:38
  but they're going to have to find a solution which washes
• 19:41
  with people and I don't think that's going to be easy.
• 19:43
  And does it shoot reforms Fox? Not on its own, because I think
• 19:49
  it helps and because I think it's one of the most visible
• 19:52
  signs of the problem with channel crossings that people
• 19:56
  want to be addressed. But the truth is the big thing
• 19:59
  which drives concern about channel crossings is people
• 20:01
  seeing those images of people crossing.
• 20:04
  And I think there is a growing acceptance.
• 20:07
  In Labour, in, you know, Labour and amongst government that
• 20:10
  simply the smash the gangs rhetoric isn't going to be
• 20:13
  enough to stop that. They're going to have to start
• 20:15
  exploring other things. But I think until they can make
• 20:18
  visible progress on that, it's going to be hard to deal with
• 20:21
  reform on migration issues. As Luke was talking right at the
• 20:24
  beginning about does the electorate know what this
• 20:26
  government is about? What do they respond to?
• 20:30
  You know, it's not the traditional things that you vote
• 20:33
  Labor for. And I think more and more you're
• 20:36
  seeing certainly Rachel Reeves articulate her vision for the
• 20:43
  economy, and that economy is about protecting workers,
• 20:48
  creating strong kind of industry Titans that are, you know,
• 20:53
  building munitions that are defending our country, You know,
• 20:57
  that are creating jobs and creating skills and that these
• 21:01
  two worlds protect ordinary working class people and create
• 21:06
  in regional areas where previous governments have failed.
• 21:10
  You talked about under the Boris Johnson years, but obviously
• 21:15
  levelling up never materialized. It was a big promise, never
• 21:18
  materialized. So do these kind of nuclear
• 21:22
  projects, do these energy projects, do they actually start
• 21:25
  to deliver for working class? People, I don't think it was a
• 21:28
  mistake that there was such a significant section in the
• 21:32
  speech on Scunthorpe and the steelworks because we know that
• 21:37
  it's one of the most popular things that this government has
• 21:40
  done and it is a thing that people expect of Labour.
• 21:43
  It gives you some definition in the section about defence.
• 21:46
  She wasn't just talking about defensive capability, she was
• 21:50
  talking about the jobs benefit of defence.
• 21:52
  One of the things we know is that if you're going to raise
• 21:56
  more money for defence, cutting the aid budget was the easy bit.
• 22:00
  You've now got to convince people there are other benefits
• 22:03
  such as jobs that will make people be willing to pay more.
• 22:05
  And as I say, in that sense, it sounded much more like a sort of
• 22:09
  Wilsonian sort of white heat of technology style spending
• 22:14
  review, you know, embracing the power of the state to facilitate
• 22:18
  that growth of, of industry. And, and I just wonder, it is
• 22:22
  entirely true that look, you know, only delivery will change
• 22:24
  the dial. But is it easier to sell a
• 22:27
  message when you have a message and a purpose to stand behind in
• 22:31
  the 1st place? And I think probably so if they
• 22:34
  can continue to land it, but. Have you what?
• 22:35
  I mean that they're lying, Chris, is that, you know, we can
• 22:38
  do much more. So then just step out of the
• 22:40
  way, which is the Tory position. The state can be involved, be
• 22:44
  involved. I think the problem is, and with
• 22:47
  this is what we've seen from the October budget is that if you
• 22:50
  want to keep business on side, actually raising, you know,
• 22:55
  employer contributions through National Insurance or raising
• 22:59
  the living wage is quite challenging.
• 23:01
  And if you look at what that's done in terms of confidence,
• 23:05
  that's been that's been quite a hit for companies, especially at
• 23:09
  the low end, retail, hospitality, all of these
• 23:13
  sectors have really struggled with this kind of changes that
• 23:16
  the government have brought in. So they're talking a big game
• 23:19
  when it comes to you, you know, utilizing company power,
• 23:23
  corporate power to boost economic growth.
• 23:26
  But when you talk to companies, sometimes there's a bit of a
• 23:29
  mismatch that's happening. Just in the last couple of
• 23:32
  minutes, I mean, what might be confusing to to viewers is, is
• 23:35
  that obviously so much of how this is judged is done through
• 23:39
  the prism of mass media and mass media is banging on about tax
• 23:43
  rises in the budget. Now, is there a direct
• 23:45
  relationship first of all, between what's happened today
• 23:48
  and what needs to happen in the budget?
• 23:49
  Or is that just a separate conversation that is inevitable
• 23:53
  and what's driving it? Well, I mean, it's key to
• 23:57
  remember that in everything that was said, all of these documents
• 24:01
  that we're pouring through today, none of it's been looked
• 24:05
  at by the OBR. This is kind of freewheeling
• 24:09
  exercise of how we're going to spend the money.
• 24:12
  And to Luke's point, earlier you were saying, Luke, you know, the
• 24:15
  big questions about welfare, which is not in this scope,
• 24:19
  haven't been addressed. And all of that is being pushed
• 24:23
  into autumn. And will she be able today?
• 24:27
  Again, she said, you know, my fiscal rules are non negotiable.
• 24:31
  Well, what does that mean? How are we going to raise the
• 24:35
  money to do all of these things? You know, the governments
• 24:37
  articulated lots of different ambitions.
• 24:40
  But the Treasury argument when you talk to civil servants is
• 24:44
  ministers aren't very realistic about what you can buy with the
• 24:48
  money you have. And at the moment the money they
• 24:51
  have is very little. And unless they get growth and
• 24:55
  remember growth, even though in the first quarter we did very
• 24:59
  well, it's not expected that it's going to continue on that
• 25:02
  trajectory. It's going to it's, it's going
• 25:04
  to be challenging. And I think the one thing we
• 25:07
  haven't talked about is what does it mean in terms of the
• 25:11
  bond market? Because overarching everything
• 25:15
  is the one discipline that really, you know, kicks every
• 25:19
  politician up the arse basically is the bond market.
• 25:22
  At the moment we pay about £107 billion in our debt interest
• 25:27
  bill. It's a huge spending line.
• 25:30
  And the bond markets in the world at the moment are very
• 25:33
  nervous, are very, you know, rickety.
• 25:35
  One minute they can just go against you.
• 25:37
  And if there's any kind of move, then it it kind of deletes all
• 25:44
  of the government's ideas about spending on changing welfare
• 25:48
  payments, on spending on energy, on spending on health or
• 25:51
  whatever it is, will get gobbled up by paying bondholders.
• 25:56
  So yes, she has to talk to the electorate, but there is another
• 25:59
  audience out there and that other audience is the markets.
• 26:04
  And so the Tory criticism that we're now going to spend a
• 26:06
  summer of speculation about which taxes are going up is
• 26:11
  right. I, I mean, I think there, there
• 26:15
  there is a sense that how, how do you, how do you pay for
• 26:18
  everything that you're saying you're going to do without
• 26:22
  raising taxes? It's very difficult.
• 26:25
  All of the, all of the growth ideas they have, which we've
• 26:30
  talked about earlier are very long term.
• 26:34
  They may make a difference in a few years time.
• 26:37
  They may at the edges make a difference even sooner, but it's
• 26:41
  not going to be transformational.
• 26:43
  So how do you do, how do you keep within the fiscal rules and
• 26:48
  deliver on everything you say you want to deliver without tax
• 26:52
  rises. But remember, she's said that
• 26:54
  last year was the last time that she would come back.
• 26:58
  She she was absolutely explicit, the chancellor about not coming
• 27:02
  back for another big tax rise. So I think it puts her in a, a
• 27:06
  difficult quandary. But perhaps, you know, I don't
• 27:09
  know what Luke thinks, but perhaps they regret not coming
• 27:14
  in after they were elected and saying, you know what the right
• 27:18
  thing is. These, these tax plans from the
• 27:21
  previous government, they, they, they were for the birds.
• 27:24
  We're just going to Chuck them out.
• 27:26
  We're going to reverse this National Insurance cut.
• 27:30
  That's that, that's, that doesn't make sense.
• 27:33
  We're going to cut it. That would have been a lot
• 27:36
  easier in retrospect for them than fuel to fuel payments and
• 27:43
  cutting employers, which got that backlash for the company.
• 27:46
  But I'm in Politics is a difficult landscape to decipher.
• 27:50
  I couldn't agree more with that. They there was the political
• 27:53
  space, particularly those two National Insurance cuts, which
• 27:56
  no one noticed anyway. No one gave the government any
• 27:59
  credit for anywhere. If they done that it they would
• 28:03
  have had the space to be able to do it.
• 28:05
  Instead they box themselves in and not only are they sort of
• 28:09
  grasping around for these small pots of money, what it means is
• 28:13
  they end up targeting particular groups who can then be very
• 28:17
  vocal. And if you ask people who they
• 28:19
  think is getting a bad settlement out of this
• 28:21
  government, I can tell you who's top of the list.
• 28:24
  It's farmers, pensioners and small businesses.
• 28:27
  All of the groups who have been drawn upon to try and plug the
• 28:31
  gap in the fine and they can create much more political noise
• 28:35
  than something more broad based. I know Labour was worried about
• 28:39
  the charge that, you know, Labour raises your taxes, but
• 28:41
  people got it at that state. But how damaging is it going to
• 28:44
  be, you know, when they're trying to get over the line,
• 28:47
  this argument that look, we're doing long term decisions, big
• 28:49
  investments in health and defence when the the the
• 28:53
  shouting and the noise, particularly in the media and in
• 28:56
  the opposition is going to be yeah, but they're going to put
• 28:59
  your taxes up. Oh, yeah.
• 28:59
  I think that's going to be really difficult for them.
• 29:01
  I think they're going to and they're going to now face, as
• 29:03
  you say, the summer of that. We know that people don't think
• 29:07
  that they personally, when you ask them, can afford to pay more
• 29:11
  in taxes. And they're also, and I think
• 29:13
  this is a sign of quite how broken lots of economics is.
• 29:16
  You know, I shouldn't be hearing about bond markets and focus
• 29:19
  groups from ordinary people. And yet they say that, right.
• 29:21
  They're talking about, they're worried about them.
• 29:22
  I think we'll know when things are better when I don't hear
• 29:24
  that anymore, you know, so and I think that's the challenge is
• 29:28
  that. Not going to be talk about Luke.
• 29:30
  Around sadly not, I'm sorry, no. But you know, it's the run up to
• 29:36
  October now becomes more important as well.
• 29:39
  And it does seem the danger is are we lurching from make or
• 29:42
  break moment to make or break moment with this government and
• 29:45
  with the budget and concert drawings is the next one.
• 29:48
  Well, Luke, Trill Hellyer, thank you both very much.
• 29:51
  That's the forecast. We'll see you soon.