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Kwasi Kwarteng Says Sunak Should Feel Free to Cut Taxes · Merryn Talks Money

• 0:00
  Speaker 1: John, pensions. Normally it's property, but today pensions. You know
• 0:05
  Speaker 1: how the weekend papers are normally jammed full of misery,
• 0:10
  Speaker 1: right you reading this story and you think, God, this
• 0:12
  Speaker 1: is awful. This week our competitor friend Claire Barrett wrote
• 0:18
  Speaker 1: a piece about a man called Martin, and I cannot
• 0:21
  Speaker 1: get Martin out of my head.
• 0:22
  Speaker 2: I can't.
• 0:23
  Speaker 1: You know, Martin is coming up to retirement. It's not funny,
• 0:27
  Speaker 1: by the way, John, this is.
• 0:29
  Speaker 2: A funny story.
• 0:30
  Speaker 3: You freeze it the way you freeze it.
• 0:32
  Speaker 1: That funny story. Martin. One day he looks at his
• 0:35
  Speaker 1: pension pot. He sees he's got two underground in it.
• 0:38
  Speaker 1: Looks it again, Yep, looked it again. A year or
• 0:41
  Speaker 1: so later, one hundred and thirty four thousand, maybe hundred
• 0:44
  Speaker 1: and thirty five, can't remember exactly one. Yeah, this guy
• 0:49
  Speaker 1: is running out of retirement. One third of his pension
• 0:53
  Speaker 1: money is gone.
• 0:56
  Speaker 3: Yeah, that's kind of nicety. Was he was he invested
• 0:58
  Speaker 3: in some dougy take stock or something like or a cryptocurrency.
• 1:04
  Speaker 1: Or something like that. Had he maybe gone ott on
• 1:07
  Speaker 1: bide let properties No one wanted rend no, no, no.
• 1:11
  Speaker 1: What Martin had done is left his money with one
• 1:14
  Speaker 1: of the UK's big pension fund managers, yep, and they
• 1:18
  Speaker 1: had moved it because he was coming out to retirement,
• 1:21
  Speaker 1: and they were running a strategy called lifestyling, whereby you're
• 1:24
  Speaker 1: defaulted into what they call a lifestyle fund, and in
• 1:28
  Speaker 1: your younger years you're in mainly equities because that's high rest.
• 1:33
  Speaker 1: And then as you get older, and my pension fund
• 1:35
  Speaker 1: does this, by the way, and you'll probably does too
• 1:38
  Speaker 1: as you get older, they lifestyle you into something low risk,
• 1:42
  Speaker 1: really really really really low risk, but nothing can possibly
• 1:46
  Speaker 1: go wrong. And he was being lifestyled into, from from
• 1:51
  Speaker 1: what I can see, a bond fund that held mainly guilts,
• 1:56
  Speaker 1: and he was in it at exactly the wrong time.
• 1:58
  Speaker 1: This is particularly relevant because the guests we have coming up,
• 2:01
  Speaker 1: by the way, when the guild market went slightly ballistic
• 2:06
  Speaker 1: and that fund lost fifty percent.
• 2:10
  Speaker 3: I mean, that is that's awful, and it's also obviously
• 2:15
  Speaker 3: it's extra awful because you think I'm invested in government points,
• 2:17
  Speaker 3: therefore those are safe, and all of these are the
• 2:20
  Speaker 3: things that are always described as safe, and I'm assuring
• 2:22
  Speaker 3: those must have been pretty long term points to have
• 2:25
  Speaker 3: lost that amount of money.
• 2:26
  Speaker 1: I'm assuming so anyway. Either way, he was in something safe,
• 2:31
  Speaker 1: he lost a pot of money, and he does not
• 2:34
  Speaker 1: obviously have time if he's running up to retirement to
• 2:36
  Speaker 1: sit around and as you say, there long dated bond.
• 2:38
  Speaker 1: He's not going to sit around and wait for thirty
• 2:40
  Speaker 1: years to get get that money back. It's gone.
• 2:42
  Speaker 3: Should we explain to people why this gets done and
• 2:48
  Speaker 3: why in the days now that you don't have to
• 2:50
  Speaker 3: buy any newity. It's a complete anacronism and it's somewhat
• 2:53
  Speaker 3: deranged that the financial system has not got round to
• 2:58
  Speaker 3: changing it does things.
• 3:00
  Speaker 1: God, I did, John, Might you do that?
• 3:03
  Speaker 4: All right?
• 3:03
  Speaker 3: So in the old days went you used had to
• 3:04
  Speaker 3: buy an annuity. And what was interesting when you look
• 3:07
  Speaker 3: at the comments under Clear's piece, a lot of people
• 3:10
  Speaker 3: say this without actually realizing they're talking rubbish. But it's
• 3:15
  Speaker 3: like we they define benefit pension schemes and how they
• 3:17
  Speaker 3: were using LDI is this idea that because the interest
• 3:23
  Speaker 3: rate goes up, so the price of the bond goes down,
• 3:26
  Speaker 3: but the annuity that you can buy with your diminished
• 3:28
  Speaker 3: port of capital is actually basically the same or roughly
• 3:32
  Speaker 3: the same, because at one percent, two hundred grand will
• 3:35
  Speaker 3: buy you a very small annuity, whereas if interest rate
• 3:39
  Speaker 3: iscored five percent, then one hundred and thirty grand will
• 3:41
  Speaker 3: buy something like the same annuity or maybe even a
• 3:44
  Speaker 3: slightly better one. The problem, low is that the pensions
• 3:49
  Speaker 3: don't work like that anymore. You don't have to buy
• 3:52
  Speaker 3: annuity whenever you retire or the minute that you retire
• 3:56
  Speaker 3: at age sixty five or what it used to be.
• 4:00
  Speaker 3: And so now most days or more, people just draw
• 4:03
  Speaker 3: down their pensions and so being shifted one hundred percent
• 4:07
  Speaker 3: and they bonds at any given moment in time no
• 4:09
  Speaker 3: longer makes the same sort of sense that they used
• 4:13
  Speaker 3: to whenever you essentially had to crystallize whatever it was
• 4:16
  Speaker 3: in your pot and use that to buy an income
• 4:18
  Speaker 3: at a given point in time.
• 4:20
  Speaker 1: Yep, very well explained, to gorgeously explain what d Yeah.
• 4:27
  Speaker 3: But yeah, but the things that changed stages ago.
• 4:30
  Speaker 1: And that they're still putting people into the default lifestyle
• 4:33
  Speaker 1: and funds. And the key is default, I think in
• 4:37
  Speaker 1: that because people get put into this default, they could
• 4:40
  Speaker 1: get something else, they could choose something else, but there's
• 4:42
  Speaker 1: a default. They're not obliged to engage at the beginning
• 4:45
  Speaker 1: of the process, right, so they don't understand the process,
• 4:49
  Speaker 1: so they don't know that this could be a really
• 4:51
  Speaker 1: bad idea.
• 4:52
  Speaker 3: Yeah, and also, but I suppose that thinks people don't
• 4:56
  Speaker 3: check their funds. Probably often they're not pretty because I mean,
• 5:01
  Speaker 3: my heart goes it to Martin, and I don't think
• 5:05
  Speaker 3: he's unusual. But clearly at some point between two hundred
• 5:08
  Speaker 3: and one thirty that we are points at which defined
• 5:12
  Speaker 3: was you know, you'd have looked at that point and
• 5:14
  Speaker 3: going William and it was going on here. I don't
• 5:17
  Speaker 3: think that harpenedn't say the month. So it's that thing
• 5:20
  Speaker 3: of being a weird.
• 5:21
  Speaker 1: Yeah. Then, yeah, So I was thinking about exactly what
• 5:26
  Speaker 1: should be done about this, what should people do? And
• 5:28
  Speaker 1: obviously the first thing is to get onto the website
• 5:31
  Speaker 1: of your your pension provider. And obviously most of these
• 5:34
  Speaker 1: websites are absolutely useless and it might tell you nothing
• 5:36
  Speaker 1: at all, but it might give you a clue. I mean,
• 5:38
  Speaker 1: I did this again with this very small pension that
• 5:40
  Speaker 1: I have with a viva. I think you might have
• 5:42
  Speaker 1: one of those two Johns.
• 5:44
  Speaker 2: Work checking.
• 5:46
  Speaker 1: The default. There is one of these, and it will
• 5:50
  Speaker 1: start ten years before retirement. It will start lifestyling me right,
• 5:55
  Speaker 1: and I couldn't. I couldn't find anywhere where it told
• 5:57
  Speaker 1: me when I expected retirement dated. But I found somewhere
• 6:00
  Speaker 1: where you can change your expected retirement date. And I
• 6:03
  Speaker 1: was thinking about what should the lazy person do right now?
• 6:05
  Speaker 1: Obviously the proactive person should go in and look at
• 6:08
  Speaker 1: what they've got, think about it carefully, and possibly shift
• 6:10
  Speaker 1: to another fund. If they're being life out, then they
• 6:12
  Speaker 1: don't want to be lifestyle. Some people may want to
• 6:13
  Speaker 1: be lifestyle. That's fine. You don't want to be lifestyleed,
• 6:16
  Speaker 1: you can shift into a fun maybe designed for a
• 6:17
  Speaker 1: younger person, something like that. But if you're really lazy,
• 6:21
  Speaker 1: you can do what I've just done and go onto
• 6:24
  Speaker 1: the pench and fund a website and change your retirement
• 6:26
  Speaker 1: date to seventy five. Yeah. Now they're not going to
• 6:30
  Speaker 1: start lifestyling me until I'm sixty five, and I have
• 6:33
  Speaker 1: delayed that admin for years now.
• 6:37
  Speaker 3: It's a really clever piece of arbitrage.
• 6:39
  Speaker 1: I'll hey that, thank you very much. Personal finance tip
• 6:42
  Speaker 1: of the week. There you go. Welcome to Meren Talks Money,
• 6:49
  Speaker 1: the podcast in which people who know the markets explain
• 6:51
  Speaker 1: the markets. I'm mereor in some set web. This week
• 6:53
  Speaker 1: we bring you a conversation with former Chancelor, the ex
• 6:55
  Speaker 1: Checko quasi Queteng. Now he's obviously with Chancelliver for a
• 6:58
  Speaker 1: short period of time, he had many positions in government
• 7:00
  Speaker 1: before that. But also relevant to our conversation is the
• 7:02
  Speaker 1: fact that he has a PhD in economic history and
• 7:05
  Speaker 1: has written a variety of very interesting books, including War
• 7:08
  Speaker 1: and Gold, which I'm working my way through at the
• 7:09
  Speaker 1: moment and strongly recommend, and also one that has been
• 7:12
  Speaker 1: discussed quite a lot over the last few years that
• 7:14
  Speaker 1: he co wrote with a variety of other MPs Britannia
• 7:17
  Speaker 1: Unchanged Global Lessons for growth and prosperity. And if you
• 7:20
  Speaker 1: haven't read that one again, I would suggest it. We're
• 7:26
  Speaker 1: going to have to start with your time as chance
• 7:28
  Speaker 1: It's incredibly interesting.
• 7:30
  Speaker 2: Now.
• 7:30
  Speaker 1: I don't want to go to go on about what
• 7:33
  Speaker 1: went wrong, particularly although we might a little. I think
• 7:35
  Speaker 1: we can assume that what happened here was that you
• 7:38
  Speaker 1: had great policies. But a lot of people would say
• 7:41
  Speaker 1: great policies, but a lot of the things that we're
• 7:42
  Speaker 1: done were far too fast and without particularly reference to
• 7:45
  Speaker 1: how the markets would react. Is that fair?
• 7:47
  Speaker 4: Yeah? I think it was.
• 7:48
  Speaker 5: I think the speed was what was at fault really,
• 7:52
  Speaker 5: I think it was far too fast, far too much.
• 7:55
  Speaker 5: I mean, I think I took off this on the
• 7:57
  Speaker 5: sixth of September, the budget, the so called mini budget.
• 8:00
  Speaker 5: The statement was on the twenty third, and of course
• 8:02
  Speaker 5: we'd had the passing of Her Late Majesty Queen Elizabeth
• 8:06
  Speaker 5: Second in between, so it was a very febrile atmosphere
• 8:10
  Speaker 5: and I think it was we took it too fast,
• 8:13
  Speaker 5: And even at the time I was residence, was that
• 8:16
  Speaker 5: we discussed spending plans. In fact, I think Simon Clark,
• 8:19
  Speaker 5: who then became the Leveling up Minister and has been
• 8:21
  Speaker 5: in the papers recently calling for Richie Sunak's removal, which
• 8:25
  Speaker 5: I don't agree with, but Simon publicly said that we
• 8:28
  Speaker 5: were all through the leadship campaign, we were looking at
• 8:30
  Speaker 5: spendings restraint and savings and I think, looking back and
• 8:35
  Speaker 5: even at the time, I thought it would be a
• 8:36
  Speaker 5: better idea to present the tax cuts with some spending restraint.
• 8:42
  Speaker 1: Because there were a lot of tax cuts and that
• 8:44
  Speaker 1: was not upfront taking away for five pea.
• 8:48
  Speaker 5: Expansion forty five billion on the scorecard, and of course
• 8:53
  Speaker 5: that was on top of the energy intervention, which was
• 8:56
  Speaker 5: scored at about sixty and I think understandably market were concerned,
• 9:01
  Speaker 5: got concerned.
• 9:02
  Speaker 4: Looking back, and we discussed it at the time.
• 9:05
  Speaker 5: I think the expansion should have been less than forty
• 9:07
  Speaker 5: five billion if we'd stuck to what Liz Trust had
• 9:10
  Speaker 5: campaigned on, namely the not increasing corporation tax from nineteen
• 9:15
  Speaker 5: percent and also getting rid of the NI that was
• 9:18
  Speaker 5: scored at thirty five billion. And along with the thirty
• 9:21
  Speaker 5: five billion, we should we should have presented some savings.
• 9:25
  Speaker 5: Now these aren't cuts. The slow the reductions of the
• 9:29
  Speaker 5: rate of growth. For mathematicians out there, the first order,
• 9:32
  Speaker 5: it goes down, so that means that spending isn't going
• 9:35
  Speaker 5: up as fast as you had anticipated. It's still going up,
• 9:39
  Speaker 5: but instead of let's say two or three percent a year,
• 9:43
  Speaker 5: we were trying to restrain that growth to something like
• 9:47
  Speaker 5: one percent a year.
• 9:48
  Speaker 1: The idea mean you get GDP growing faster than spending.
• 9:50
  Speaker 5: That's right, that's right because the I mean it's a
• 9:52
  Speaker 5: very simple equation. But if your public spending is going
• 9:55
  Speaker 5: faster than your GDP or certainly your tax take, that
• 10:00
  Speaker 5: just means the state gets larger and large as a
• 10:01
  Speaker 5: proportion of GDP.
• 10:03
  Speaker 4: And I think that has an adverse effect on growth.
• 10:07
  Speaker 1: Interesting, I think let's just pick up why that has
• 10:09
  Speaker 1: a terrible effect on growth. I mean know that I
• 10:12
  Speaker 1: feel that we know that instinctively, right, it sort of bigger,
• 10:14
  Speaker 1: the state gets the worst, the private sector performs. But
• 10:17
  Speaker 1: what way is that?
• 10:17
  Speaker 2: How does that?
• 10:18
  Speaker 5: So? I think that the problem that you've had over
• 10:20
  Speaker 5: essentially the twentieth century is that you've had states that
• 10:24
  Speaker 5: have grown bigger in terms of spending. But a lot
• 10:26
  Speaker 5: of that wasn't deliberate. I mean, if you think of
• 10:29
  Speaker 5: the events of the trentieth century, you had two world wars,
• 10:32
  Speaker 5: and they massively increased spending. Arguably, COVID was another situation,
• 10:36
  Speaker 5: almost like an emergency war type situation where the state
• 10:40
  Speaker 5: was expected to spend huge amounts of money in very
• 10:43
  Speaker 5: short order, short time. And that essentially because it ratches
• 10:47
  Speaker 5: up debt, it ratches up taxes because you have to pay.
• 10:51
  Speaker 4: For the spending.
• 10:52
  Speaker 5: It does crowd out private sector investments, and that is
• 10:56
  Speaker 5: a limit in itself, as a limit imposes a cap
• 10:59
  Speaker 5: on growth.
• 11:00
  Speaker 1: Yeah, so the bond market. One thing that you discovered
• 11:02
  Speaker 1: that many many people in governments around the world will
• 11:04
  Speaker 1: discovered over the years is that bond market is slightly nuts,
• 11:06
  Speaker 1: incredibly powerful and slightly irrational in it. You know, it
• 11:10
  Speaker 1: accepted all that massive boost and spending during COVID with
• 11:13
  Speaker 1: that literally that blinking an eye, but then looked at
• 11:16
  Speaker 1: your policies and went slightly.
• 11:17
  Speaker 5: So it breaked out and I said, you know, I said,
• 11:20
  Speaker 5: in the future, we'd already said that we were going
• 11:21
  Speaker 5: to have a statement on spending. But because when I said,
• 11:25
  Speaker 5: you know, in the future we want to reduce taxes,
• 11:27
  Speaker 5: then people went nuts as well. The markets went nuts.
• 11:30
  Speaker 5: But I think my main lesson is that you have
• 11:33
  Speaker 5: to do things. You have to prepare the pitch, you
• 11:36
  Speaker 5: have to do things more deliberately. I think there was
• 11:38
  Speaker 5: a real urgency to get things done. I remember the
• 11:41
  Speaker 5: Prime Minister said, oh, I've only got two years, and
• 11:42
  Speaker 5: I thought, well, if we care on like this, you'll
• 11:44
  Speaker 5: have two months. I said that to her after the
• 11:46
  Speaker 5: mini budget. And I think that, you know, it's always
• 11:49
  Speaker 5: a case of slow and steady wins the race, I
• 11:52
  Speaker 5: think in terms of government policy, because you're trying to
• 11:54
  Speaker 5: move when you're in government, especially with very large economies,
• 11:58
  Speaker 5: so I trying to move a supertanker. You know it
• 12:00
  Speaker 5: takes time to turn corners. It takes time to get
• 12:04
  Speaker 5: that sort of acceleration and momentum that you need. And
• 12:08
  Speaker 5: I think to try and expect things to do things
• 12:10
  Speaker 5: very quickly, I think it does add to the risk certainly,
• 12:13
  Speaker 5: although it does.
• 12:14
  Speaker 1: Slightly feel if you think that we've been moving in
• 12:16
  Speaker 1: the wrong direction on growth for decades, for a long term,
• 12:19
  Speaker 1: and that you have a relatively or could be a
• 12:20
  Speaker 1: relatively short period to turn things around, maybe you do
• 12:23
  Speaker 1: need to move fast. And if you look back at
• 12:25
  Speaker 1: decades worth of people going on and on about how
• 12:27
  Speaker 1: we must have growth, but not setting an environment that
• 12:31
  Speaker 1: will give you growth, and politicians relentlessly talk about how
• 12:33
  Speaker 1: we're going to we're going to create growth. But of
• 12:35
  Speaker 1: course you can't create growth, all right. I don't think
• 12:37
  Speaker 1: you can create growth. All you can do is create
• 12:39
  Speaker 1: the conditions.
• 12:40
  Speaker 4: That's exactly right.
• 12:41
  Speaker 1: It can happen, right. So you can set up an acceptable,
• 12:44
  Speaker 1: uncomplicated and reasonly low taxes, that's right. You can have
• 12:47
  Speaker 1: a very good education system, which of course we have
• 12:49
  Speaker 1: done done well at in much of the UK. You
• 12:51
  Speaker 1: can set up a legal system that everyone trusts. You
• 12:54
  Speaker 1: can have an infrastructure that works, the system that works
• 12:57
  Speaker 1: all these things, that's all you can do, as I
• 13:00
  Speaker 1: see man, then you just get out of the way.
• 13:02
  Speaker 1: But we've had successive government to have been unable to
• 13:05
  Speaker 1: produce that environment and absolutely unable to get out of
• 13:08
  Speaker 1: the way.
• 13:09
  Speaker 5: So the problem that I think we have in Britain,
• 13:11
  Speaker 5: and it's all across the West, it's not just a
• 13:13
  Speaker 5: British problem, is that governments have a very short term focus.
• 13:18
  Speaker 5: And also with the chops and changes, you keep switching,
• 13:21
  Speaker 5: one keep switching. So you know, if you look at
• 13:23
  Speaker 5: something very simple like capital allowances, the amount that we
• 13:26
  Speaker 5: were giving people in terms of capital allowances businesses kept
• 13:30
  Speaker 5: changing every year, so it's very difficult to plan in
• 13:32
  Speaker 5: those circumstances. I think you're right to say that time
• 13:35
  Speaker 5: is short. But you know, I was thinking we had
• 13:37
  Speaker 5: the autumn statement and we would have had a budget
• 13:39
  Speaker 5: in spring, and that would have been six months in
• 13:42
  Speaker 5: which we could have set the parameters that you're talking about. Obviously,
• 13:45
  Speaker 5: for longer term growth you need to have much more stability.
• 13:48
  Speaker 5: And one of the places I looked at, and I'm
• 13:51
  Speaker 5: still very interested in, is Ireland, and if you look
• 13:53
  Speaker 5: at their corporation tax policy, that's been the I think
• 13:56
  Speaker 5: they've said that in about ninety nine, so nearly a
• 13:58
  Speaker 5: quarter of a century they've had ex act of the
• 14:00
  Speaker 5: same corporation tax rate regardless of who was in power.
• 14:04
  Speaker 5: That's a really good model of how you can set
• 14:06
  Speaker 5: conditions regardless of who gets in for growth. The example,
• 14:13
  Speaker 5: the British example of that, I think is when Nigel
• 14:15
  Speaker 5: Lawson set the top rate of tax in nineteen eighty
• 14:17
  Speaker 5: six I think it was eighty seven at forty percent.
• 14:20
  Speaker 5: Now that lasted twenty years and that was a very
• 14:23
  Speaker 5: good again, quite permanent, so it seemed at the time
• 14:27
  Speaker 5: tax policy that everyone understood, and that sent a very
• 14:30
  Speaker 5: good signal. I think when things start going wrong is
• 14:33
  Speaker 5: when you keep chopping and changing, you know, increasing rates here,
• 14:36
  Speaker 5: reducing them there on a kind of continual site.
• 14:40
  Speaker 1: So when you make it very complicated, doesn't it more complicated?
• 14:42
  Speaker 1: You make taxes and more stressed people are about that?
• 14:44
  Speaker 4: I take it, And one.
• 14:45
  Speaker 1: Of my big bug burs is is inheritance tax. I'm
• 14:48
  Speaker 1: not alone in that, obviously, but if you think about
• 14:50
  Speaker 1: the amount of stress that inheritance tax causes older people
• 14:54
  Speaker 1: because they believed that it is possible to avoid it,
• 14:57
  Speaker 1: that's right. So they think about it.
• 14:58
  Speaker 4: And are lots of report Yeah, there are lots of loopholes.
• 15:01
  Speaker 1: Those loopholes mainly exist for the very rich.
• 15:03
  Speaker 4: Yeah, that's right. So if you're buying away.
• 15:06
  Speaker 1: Whatever, But if you're a middling sort of person with
• 15:09
  Speaker 1: one house and an income that you need to live on,
• 15:12
  Speaker 1: you feel stressed by the idea that you could avoided, yes,
• 15:15
  Speaker 1: and that you kind of haven't.
• 15:16
  Speaker 4: So you're right.
• 15:17
  Speaker 5: So I think the simplicity of taxation it's something which
• 15:20
  Speaker 5: we've got badly wrong in the UK. And then we
• 15:22
  Speaker 5: had an Office of Tax Simplification, but.
• 15:23
  Speaker 1: It doesn't really work.
• 15:24
  Speaker 4: It was hopeless.
• 15:25
  Speaker 5: Yeah, and it was there for You've been there for
• 15:27
  Speaker 5: years and it didn't really do anything. And I think
• 15:30
  Speaker 5: there's there's a lot of political will that's involved that
• 15:32
  Speaker 5: is needed. But that's something again that if I obviously
• 15:35
  Speaker 5: had longer, I was something that I was that was
• 15:37
  Speaker 5: something I was going to look at and I.
• 15:38
  Speaker 4: Was very interested in.
• 15:39
  Speaker 1: Yeah, okay, well let's talk about that what you would
• 15:41
  Speaker 1: have done if you'd had longer. So spending was coming next?
• 15:44
  Speaker 1: Where would spending has been, as you say, not cut
• 15:46
  Speaker 1: but cut from real terms?
• 15:47
  Speaker 5: Where would we have it's all I'm saying is that
• 15:50
  Speaker 5: the increase, you know, needed to be reduced. The rate
• 15:53
  Speaker 5: of change, even though it was going up, that needed
• 15:56
  Speaker 5: to be slowed down.
• 15:57
  Speaker 1: It would probably have been a real terms cut. I
• 15:59
  Speaker 1: think if you could have pushed growth to say two two.
• 16:01
  Speaker 2: And a half percent, well, it depends on what.
• 16:04
  Speaker 1: Depends on by one percent.
• 16:06
  Speaker 4: It depends what the inflation is, you know, it depends
• 16:09
  Speaker 4: what the inflation.
• 16:10
  Speaker 1: But nonetheless, what is it that government does that government
• 16:14
  Speaker 1: could not do?
• 16:15
  Speaker 5: So I think what I mean it sounds like an
• 16:18
  Speaker 5: old cliche, but what you have to do is try
• 16:21
  Speaker 5: and I think cut across in the round. I think
• 16:25
  Speaker 5: what we've done in the past is we've rung ring
• 16:27
  Speaker 5: fenced things, and the things we ring fence can sort
• 16:30
  Speaker 5: of get favored status and there less likely to find
• 16:33
  Speaker 5: efficiencies because they know that they're going to get the
• 16:35
  Speaker 5: money regardless. And then the other departments have been have
• 16:38
  Speaker 5: been cut very severely as a consequence of other you know,
• 16:42
  Speaker 5: the first departments being ring fenced. I think what you
• 16:45
  Speaker 5: have to do is look at an overall and this
• 16:47
  Speaker 5: is what essentially what Jeremy Hunt has done. I mean,
• 16:49
  Speaker 5: post twenty the election, what the Tories are committed to
• 16:53
  Speaker 5: is a one percent increase in public spending in the round,
• 16:57
  Speaker 5: and I think that's probably a better approach than having
• 17:01
  Speaker 5: sort of favored children, if you like, or favored departments
• 17:04
  Speaker 5: being ring fenced, and then others having to bear the
• 17:07
  Speaker 5: bruns of public expenditure cuts or restraint.
• 17:11
  Speaker 1: I'm still going to push you on this slide, just
• 17:13
  Speaker 1: because you know there is there is often talk about,
• 17:16
  Speaker 1: and particularly on this podcast, I think about how the
• 17:18
  Speaker 1: government does too much, how it extends now into every
• 17:21
  Speaker 1: part of every life, Every everything that you do is
• 17:23
  Speaker 1: somehow influenced by the government. Are there areas where state
• 17:27
  Speaker 1: spending can actually go, where the government can be made smaller?
• 17:31
  Speaker 1: You know, you're a small state person, and you're also
• 17:34
  Speaker 1: a balanced budget person in the end. You know, by
• 17:37
  Speaker 1: the way listeners, you must read war and goal. That's right,
• 17:40
  Speaker 1: which is excellent, and a lot of that is about
• 17:42
  Speaker 1: how you know budgets.
• 17:43
  Speaker 4: Must have balance budget person, Only you can't run.
• 17:46
  Speaker 1: A constant deficit. You run deficits in wars and then
• 17:48
  Speaker 1: you thought them out afterwards. You know, the last time
• 17:50
  Speaker 1: that debt in the UK was this high one hundred
• 17:52
  Speaker 1: percent of GDP two point five trillion. What are we
• 17:55
  Speaker 1: on thirty eight grand a person. You know, the last
• 17:57
  Speaker 1: time debt was anywhere near this highest patternial of GDP,
• 18:00
  Speaker 1: it was on the way down, not on the way
• 18:04
  Speaker 1: So if we want to get back to anything like that,
• 18:06
  Speaker 1: we have to say the role that government plays is
• 18:09
  Speaker 1: too big. It has bigured smaller.
• 18:11
  Speaker 5: So you will know that if you ask a politician
• 18:13
  Speaker 5: where are we going to cover the spending and.
• 18:14
  Speaker 1: They say, it's a huge.
• 18:18
  Speaker 5: You know, political sort of football political fight that you
• 18:21
  Speaker 5: set up, and that I think was why Liz Trust
• 18:23
  Speaker 5: was reluctant to go down that route even though but
• 18:25
  Speaker 5: I think things, you know, just tentatively, I think that
• 18:30
  Speaker 5: areas where the public spending has gone up through the roof,
• 18:34
  Speaker 5: for example, the NHS, there's got to be a more
• 18:36
  Speaker 5: efficient way of delivering top line services than simply you know,
• 18:43
  Speaker 5: funding without any accountability, things like the NHS. And they're
• 18:50
  Speaker 5: specifically I mean, you know, salaries of workers and I'm
• 18:54
  Speaker 5: not talking about nurses, I'm talking about very high end people, managers.
• 19:00
  Speaker 4: There are lots and lots of managers.
• 19:01
  Speaker 5: If you look at local government again, there's lots and
• 19:04
  Speaker 5: lots of bureaucracy and it's very unclear how that bureaucracy
• 19:08
  Speaker 5: is actually delivering on the front line. So there's a
• 19:11
  Speaker 5: whole sort of administrative and services budget around different departments
• 19:16
  Speaker 5: that in the last few years has gone through the roof.
• 19:20
  Speaker 5: And that's why I'm really impressed with the Prime Minister
• 19:23
  Speaker 5: in the attitude he took to the strikes and public spending,
• 19:27
  Speaker 5: because that we have to show restraint in terms of
• 19:32
  Speaker 5: salaries and I'm not talking about people on you know,
• 19:35
  Speaker 5: earning lower income people at the heart of the top,
• 19:38
  Speaker 5: and that's seen massive, huge increases which if restrained, I
• 19:42
  Speaker 5: think can have savings and will lead.
• 19:44
  Speaker 4: To again, as I say, slowing down of the increase.
• 19:48
  Speaker 1: Yeah, it's a bit. The NHS, it's a bit. It's
• 19:51
  Speaker 1: a bit like the post Office. Isn't quite what I mean,
• 19:52
  Speaker 1: but in terms of the way that we have these
• 19:54
  Speaker 1: huge organizations that are technically owned by the stage and
• 19:57
  Speaker 1: technically owned by the taxpayer, but there is no way
• 20:01
  Speaker 1: of them being accountable to directors in the same way
• 20:05
  Speaker 1: as a company. So you know, we used to worry
• 20:06
  Speaker 1: in the old days about managerial capitalism about to see
• 20:09
  Speaker 1: you over a big company having full control over that
• 20:11
  Speaker 1: company because the actual owners of the company were so
• 20:15
  Speaker 1: diverse and widespread that it was impossible for them to
• 20:17
  Speaker 1: have any controller and do any any interest in how
• 20:19
  Speaker 1: a company would work. So we used to worry endlessly
• 20:22
  Speaker 1: about one man being in charge of one big company.
• 20:24
  Speaker 1: Now we don't worry about that anymore. We worry about
• 20:26
  Speaker 1: money manager capitalism. We worry about the big sheld is
• 20:28
  Speaker 1: having too much power. But things like the scandal of
• 20:31
  Speaker 1: the post Office and the difficulties of the NHS kind
• 20:33
  Speaker 1: of bring my mind back to this idea of how
• 20:37
  Speaker 1: dangerous it can be to have a large organization that
• 20:41
  Speaker 1: has managers who are not really accountable to any particular
• 20:46
  Speaker 1: So that.
• 20:46
  Speaker 4: Was that was the issue.
• 20:48
  Speaker 5: This is one of the big issues of the British state.
• 20:50
  Speaker 5: I mean I was before I was Chancellor. You will
• 20:52
  Speaker 5: know I was Sector State for Business Enterprise. I was
• 20:56
  Speaker 5: called Business Energy Industrial Strategy BASE. No one actual knew
• 20:58
  Speaker 5: what BA stood for, but it was business energy into
• 21:00
  Speaker 5: an industrial strategy and it's been split up into three
• 21:03
  Speaker 5: departments now a Secure of State for Bays, I was
• 21:06
  Speaker 5: responsible for forty three I remember counting them, and I
• 21:10
  Speaker 5: knew them all at the time. Forty three organizations, including
• 21:14
  Speaker 5: the post Office, and I was essentially ultimately going to
• 21:19
  Speaker 5: hire people to run those organizations. But there were forty
• 21:22
  Speaker 5: three of them, you know, from the Met Office to
• 21:25
  Speaker 5: the Post Office to you know, British Nuclear.
• 21:30
  Speaker 1: Yeah, it's just too much.
• 21:31
  Speaker 5: Yeah, you know the competition authorities. The CIA was the
• 21:35
  Speaker 5: Department of Transport, but I had forty three of these
• 21:38
  Speaker 5: and it was very difficult to see, you know, the
• 21:40
  Speaker 5: grocery is adjudicator, and it was very difficult to see
• 21:45
  Speaker 5: how transparent these organizations were because you've got a department,
• 21:50
  Speaker 5: you've got a one secret of State, and you've got
• 21:52
  Speaker 5: forty three of these organizations.
• 21:54
  Speaker 4: That was just one department.
• 21:55
  Speaker 5: You know, the Transport secretary would have maybe twenty or
• 21:58
  Speaker 5: twenty five such organizations. And all of these organizations have
• 22:01
  Speaker 5: a corporate structure. They all have people, experienced people running them,
• 22:07
  Speaker 5: but it's very difficult to see the oversid and most
• 22:09
  Speaker 5: people wouldn't know who they are, even though they wield
• 22:12
  Speaker 5: in their own domain huge amounts of authority. They get
• 22:16
  Speaker 5: big salaries.
• 22:17
  Speaker 2: Yeah, well, we always.
• 22:17
  Speaker 1: Wanted during the pandemic, one person you very rarely heard
• 22:21
  Speaker 1: on the radio was the person actually in charge of
• 22:23
  Speaker 1: the NHS.
• 22:24
  Speaker 5: That's right, that's right exactly, and that was. I mean,
• 22:27
  Speaker 5: I was never in the Health department, but that's a
• 22:28
  Speaker 5: huge I mean, if you could imagine, you know, sexual
• 22:32
  Speaker 5: state for bays and about forty three arm's length bodies
• 22:35
  Speaker 5: they were called, You've got the health secretary with this
• 22:39
  Speaker 5: huge berm off called the NHS, which is I think
• 22:41
  Speaker 5: the biggest employer in the world practically after the Indian Yeah,
• 22:46
  Speaker 5: and it's very difficult to see or know a what
• 22:49
  Speaker 5: leavers to pull and who the actual people who are
• 22:52
  Speaker 5: the decision makers in that organization are. And that's a
• 22:55
  Speaker 5: huge problem. And that's something which I think most ordinary
• 22:59
  Speaker 5: voters are not aware of, even though these organizations have huge.
• 23:03
  Speaker 1: Bearing and are rejectively independent.
• 23:06
  Speaker 4: Yeah, there are, and that's and how you manage that.
• 23:11
  Speaker 5: I think is very difficult because these organizations have grown
• 23:15
  Speaker 5: immeasurably in the last twenty thirty years and they're more
• 23:19
  Speaker 5: and more powerful, but they're less and less accountable.
• 23:21
  Speaker 4: And that's a big problem.
• 23:22
  Speaker 1: Okay, Now, lots of problems here which way we can't
• 23:26
  Speaker 1: solve I'm afraid today. But there is one person who
• 23:29
  Speaker 1: can solve problems, has the power to solve problems right now,
• 23:31
  Speaker 1: as Richie Suna. Right now, he has a limited amount
• 23:34
  Speaker 1: of time left. I'm not going to ask you to
• 23:35
  Speaker 1: agree with me on this, but he's quite clearly not
• 23:37
  Speaker 1: going to win another election. So he's got this period
• 23:40
  Speaker 1: of time in which he really has nothing to lose politically. Sure,
• 23:44
  Speaker 1: And if you were Richie and you were sitting there
• 23:47
  Speaker 1: today thinking, look, I've got this certain amount of time,
• 23:49
  Speaker 1: and I have the ability to do something that may
• 23:53
  Speaker 1: be incredibly unpopular, maybe very difficult, but could be the
• 23:56
  Speaker 1: right thing to do for the nation going forward. And
• 23:59
  Speaker 1: whether it make me popular and popular is by the
• 24:01
  Speaker 1: buy at this point. So I can do it. What
• 24:03
  Speaker 1: might it be? Do you think?
• 24:05
  Speaker 4: So? I think you're right.
• 24:05
  Speaker 5: I think in a way he's quite liberated because nobody's
• 24:08
  Speaker 5: expecting him to win and all he needs to do
• 24:12
  Speaker 5: is really just do what he believes in.
• 24:14
  Speaker 1: Yeah, so what would be the gift to the nation?
• 24:16
  Speaker 5: I think I think the tax burden is something which
• 24:18
  Speaker 5: he has to look at. I'd be amazed if after
• 24:21
  Speaker 5: the budget this year we don't see some tax carts,
• 24:24
  Speaker 5: because essentially, if they don't cut taxes, I think you're
• 24:29
  Speaker 5: essentially running on the same program as the Labor Party.
• 24:31
  Speaker 1: But it'll be nitpicky won't it.
• 24:33
  Speaker 2: I mean, I don't know.
• 24:34
  Speaker 4: I mean it could be quite radical.
• 24:36
  Speaker 1: Reform of the whole thing. He can bin done that.
• 24:38
  Speaker 5: I mean he's had a year exactly, He's had a
• 24:41
  Speaker 5: whole year to plan that, and who knows, maybe they've
• 24:44
  Speaker 5: been working behind the scenes to reform our tax code.
• 24:48
  Speaker 4: I doubt it.
• 24:49
  Speaker 5: I think it will be, as you say, a bit
• 24:52
  Speaker 5: sort of nitpicky and piecemeal.
• 24:54
  Speaker 4: But we don't know that.
• 24:55
  Speaker 1: What about what about net zero? Could he give the
• 24:58
  Speaker 1: nation a gift by making that less well, something like that.
• 25:02
  Speaker 5: I think reversing the legislation is going to be very difficult.
• 25:05
  Speaker 5: He has indicated a pivot away from net zero in
• 25:09
  Speaker 5: the sense that you know, the twenty thirty deadline on
• 25:15
  Speaker 5: internal combustion engines, that's been shifted out, I think to
• 25:18
  Speaker 5: twenty thirty five. He's very much toned down the rhetoric
• 25:22
  Speaker 5: on net zero. I think all in gas licenses are
• 25:27
  Speaker 5: coming back, which I think is good because to ban
• 25:29
  Speaker 5: them is insane because you're just going to simply rely
• 25:32
  Speaker 5: on foreign all in gas.
• 25:34
  Speaker 1: But we still use ail and gas we are going
• 25:36
  Speaker 1: to do for decades ago, possibly forever.
• 25:37
  Speaker 5: So not to say that you're not going to produce
• 25:40
  Speaker 5: it in your country, but you're going to import it
• 25:41
  Speaker 5: from wherever else not increases the cost and reduces the security.
• 25:47
  Speaker 5: So I don't understand why anyone would want to do that.
• 25:51
  Speaker 5: And it's good that he's faced down in a way
• 25:54
  Speaker 5: that the more extreme green lob beyond that.
• 25:56
  Speaker 4: So he's done some things.
• 25:58
  Speaker 1: But I don't think the legislation is reversible because it
• 26:01
  Speaker 1: has an impact on everything, doesn't We were talking earlier infrastructure,
• 26:04
  Speaker 1: and I think.
• 26:05
  Speaker 5: That would be so if you look at the net
• 26:08
  Speaker 5: zero legislation, and I was responsible for some of it, certainly,
• 26:12
  Speaker 5: it's you know, following it in bays. It's actually attracted
• 26:16
  Speaker 5: a lot of capital. So if you think look at
• 26:18
  Speaker 5: the offshore wind auctions, you look at the renewables developments.
• 26:22
  Speaker 5: I mean, obviously we had this check last year. When
• 26:25
  Speaker 5: they didn't, I mean, that was a disaster, frankly, and
• 26:27
  Speaker 5: I think it was ministers and officials drop the ball
• 26:29
  Speaker 5: on that. But generally we've been very successful in driving
• 26:33
  Speaker 5: investment inward, investment into new technologies, and I think to
• 26:37
  Speaker 5: reverse the legislation would be a very bad signal for
• 26:40
  Speaker 5: those investors, and so I don't see that happening. As
• 26:43
  Speaker 5: well as a whole political headache with people for whom
• 26:45
  Speaker 5: it's very important.
• 26:46
  Speaker 1: But within the frame we meant about it. For a
• 26:49
  Speaker 1: couple of years ago, there was no disagreement at zero
• 26:52
  Speaker 1: is a good thing or not, and now there's definitely.
• 26:54
  Speaker 5: So there's there's some, there's some, there's some water, you know,
• 26:56
  Speaker 5: clear blue water, whatever you want to call it, between
• 26:59
  Speaker 5: the two penalties on this issue, which hadn't been the case.
• 27:02
  Speaker 5: I mean from I think the original Climate Change Act
• 27:05
  Speaker 5: was two thousand and eight, and really from two thousand
• 27:08
  Speaker 5: and eight until pretty much last year, there was quite
• 27:11
  Speaker 5: a degree of consensus between conservative and labor on the
• 27:15
  Speaker 5: net zero agenda. From my point of view, I think
• 27:18
  Speaker 5: that was probably a good thing because, as I've said,
• 27:21
  Speaker 5: we had legislation, we managed to set up CfDS and
• 27:24
  Speaker 5: other structures that really crowded in private sector investment, and
• 27:28
  Speaker 5: we saw huge amounts of investment, particularly in offshore wind,
• 27:32
  Speaker 5: where we were the leading nation in the world. I
• 27:33
  Speaker 5: think China overtook us about eighteen months ago, but we
• 27:36
  Speaker 5: were the leading nation until that point in terms of
• 27:39
  Speaker 5: the rollout installation of offshal wind infrastructure. So now I
• 27:47
  Speaker 5: think for political reasons, probably Richie Sunak has decided that
• 27:51
  Speaker 5: we shouldn't go too fast in that direction, and I
• 27:54
  Speaker 5: think he's probably right. I think people have a feeling,
• 27:57
  Speaker 5: particularly when energy prices were very high last year at
• 28:00
  Speaker 5: the end of the year before that, that we shouldn't
• 28:03
  Speaker 5: be sacrificing today's consumer for a hypothetical target, you know,
• 28:08
  Speaker 5: in thirty years time.
• 28:09
  Speaker 1: And we also can't go much further without a massive
• 28:12
  Speaker 1: overhaul of the grid, which is insanely expensive.
• 28:15
  Speaker 4: That's right.
• 28:15
  Speaker 1: And people are going to feel a little less good
• 28:17
  Speaker 1: about net zero when the pylons go up in their
• 28:19
  Speaker 1: back gardens.
• 28:20
  Speaker 5: That's all right. So it has to be coordinated. And
• 28:22
  Speaker 5: the other thing that I think is most important, if
• 28:25
  Speaker 5: you look at the global picture in terms of global warming,
• 28:29
  Speaker 5: global climate change, other countries have to be aligned. Doesn't
• 28:33
  Speaker 5: make sense for us to reach net zero and for
• 28:36
  Speaker 5: every other country to be miles behind. That's not going
• 28:39
  Speaker 5: to help the climate. We're one percent, I think of
• 28:41
  Speaker 5: the global economy and a lot smaller proportion of the
• 28:44
  Speaker 5: global population, so it doesn't make sense for us to
• 28:49
  Speaker 5: simply try and force through net zero without regard to
• 28:55
  Speaker 5: other countries. So it has to be a global coalition
• 28:57
  Speaker 5: and that's where. But again it's a delicate situation because
• 29:01
  Speaker 5: in order to coordinate or help coordinate a global response,
• 29:06
  Speaker 5: we need to show that we're leaders. And I think
• 29:08
  Speaker 5: we're doing that. And I think, you know, if you
• 29:09
  Speaker 5: look at the amount of carbon that we've reduced to
• 29:12
  Speaker 5: carbon emissions that we've reduced since nineteen ninety, which is
• 29:14
  Speaker 5: the base year, we've actually done a reasonable job. I
• 29:17
  Speaker 5: think it's something that fifty percent. We're pretty we're emitting
• 29:20
  Speaker 5: fifty percent less carbon.
• 29:21
  Speaker 2: And people will say, well, we've done a long way
• 29:23
  Speaker 2: down the road already.
• 29:24
  Speaker 1: Yeah, we have, and going anything'd be difficult for us.
• 29:28
  Speaker 5: So you know, if you look at where we were
• 29:30
  Speaker 5: the basic year is nineteen ninety, we just thirty four
• 29:32
  Speaker 5: years ago, we've actually made quite a lot of progress.
• 29:35
  Speaker 5: And we don't need to wear the hair shirt and
• 29:36
  Speaker 5: beat ourselves up, particularly if other countries aren't following.
• 29:42
  Speaker 2: Okay, So.
• 29:44
  Speaker 1: What is if you were Rishi and you had these
• 29:47
  Speaker 1: few months in hand, what would be your part?
• 29:49
  Speaker 4: I think tax is a big I think tax is
• 29:51
  Speaker 4: a big I think.
• 29:52
  Speaker 1: Taxes if you could abolish a tax completely, because we
• 29:56
  Speaker 1: have a lot of taxes that create a lot of friction. Yeah,
• 30:00
  Speaker 1: in our business world, in our world etc. What would
• 30:03
  Speaker 1: go that.
• 30:04
  Speaker 5: I don't think they've got enough time for this. But
• 30:06
  Speaker 5: the tax that really irritated me as not only as
• 30:09
  Speaker 5: a finance minister but also as a constituency MP was
• 30:13
  Speaker 5: business rates.
• 30:14
  Speaker 4: I mean, business rates have been.
• 30:16
  Speaker 5: Around for about five hundred years and you know they
• 30:19
  Speaker 5: completely discriminate against physical shops, physical units as against the
• 30:25
  Speaker 5: Internet at shopping and there are big revenue raiser for
• 30:31
  Speaker 5: the Treasury and I think that some form of reformer
• 30:33
  Speaker 5: business rates is something that will happen. I'm not sure
• 30:36
  Speaker 5: whether Rishi is working on that. I don't know what
• 30:39
  Speaker 5: his thoughts on it are, but that seems to be unfair.
• 30:42
  Speaker 5: And of course the other tax which is particularly galling
• 30:47
  Speaker 5: for families is inheritance tax. And the annoying thing about
• 30:50
  Speaker 5: that is that it hits people, particularly in the Southeast,
• 30:53
  Speaker 5: who may have a principal home that's worth I don't know, three.
• 30:57
  Speaker 4: Quarters of a million pounds.
• 30:58
  Speaker 5: They are affected by business sorry, inheritance tax, not business rates.
• 31:03
  Speaker 5: Inheritance tax. And obviously people who are a lot wealthier
• 31:06
  Speaker 5: can they escape that. There are lots of loopholes. You
• 31:09
  Speaker 5: can buy farms, you can buy forests. There lots of
• 31:14
  Speaker 5: ways of.
• 31:14
  Speaker 1: Avoiding stocks, et cetera. I mean, you could solve that
• 31:18
  Speaker 1: by getting rid of inheritance tax but turning it into
• 31:20
  Speaker 1: a gift tax so that it's paid by the person
• 31:22
  Speaker 1: who receives the money. Yeah, you could do rather easier.
• 31:26
  Speaker 5: There lots And actually the problem that we have with
• 31:29
  Speaker 5: our tax system is that it's almost like a Christmas
• 31:31
  Speaker 5: tree that's accrued lots and lots of different things over
• 31:34
  Speaker 5: the years, and we haven't.
• 31:35
  Speaker 2: Taken it from here.
• 31:36
  Speaker 1: You wouldn't, You wouldn't.
• 31:37
  Speaker 5: You wouldn't start from here here at all. And you know,
• 31:40
  Speaker 5: and and and and people are very reluctant because the Treasury,
• 31:43
  Speaker 5: you know, they're very interested in revenue raising. If you
• 31:46
  Speaker 5: if you try and change taxes, that could have an
• 31:49
  Speaker 5: adverse effect on your revenue. And so there's a real
• 31:52
  Speaker 5: reluctance and in built reluctance to see any reform on that.
• 31:55
  Speaker 1: Yeah, And there's always a lobby group to push.
• 31:57
  Speaker 2: Back on everything, always, always, always.
• 32:00
  Speaker 1: Now speaking of Bank of England, now, there was discussion
• 32:05
  Speaker 1: when you were a chancellor and Lisbi was Prime Minister
• 32:08
  Speaker 1: possibly about talking about the independence of the Bank of
• 32:10
  Speaker 1: England given their appalling performance during the pandemic and the
• 32:14
  Speaker 1: inflation incident. Now they would you say the Bank of
• 32:18
  Speaker 1: England was responsible to a degree for the inflation that
• 32:21
  Speaker 1: we yeah, And.
• 32:23
  Speaker 5: Actually, to be honest with you, they did two things.
• 32:26
  Speaker 5: Not only did the governor say that, you know, we
• 32:28
  Speaker 5: were a bit behind the curve on this, They've got
• 32:30
  Speaker 5: Banank to do an independent sort of investigation.
• 32:33
  Speaker 1: Of just how well the model as to what went wrong.
• 32:35
  Speaker 5: So if you'ren't going to bring in an American Nobel
• 32:38
  Speaker 5: Prize winning economist, if everything you felt that you've done
• 32:41
  Speaker 5: everything right. So they've they've kind of admitted more or
• 32:45
  Speaker 5: less that they were a bit slow in terms of
• 32:48
  Speaker 5: the interest rate increases. I think independence of the central
• 32:53
  Speaker 5: Bank is absolutely non negotiable.
• 32:56
  Speaker 4: Now you know the rights and wrongs of it. We
• 32:58
  Speaker 4: could have discussed.
• 32:59
  Speaker 5: I member old enough to remember when it happened in
• 33:01
  Speaker 5: ninety seven, but I think to reverse that would send
• 33:05
  Speaker 5: again a bad.
• 33:05
  Speaker 1: Sign again, a terrible signal exactly.
• 33:07
  Speaker 4: So I think it's something that we have to live with.
• 33:10
  Speaker 1: But it does give them, It gives upout. And we
• 33:12
  Speaker 1: talked earlier about these huge organizations inside government and the
• 33:14
  Speaker 1: power that they have in the Bank of Land extraordinary power,
• 33:18
  Speaker 1: and with particularly with the age of quantitive easing, they
• 33:21
  Speaker 1: attectively have given themselves a type of fiscal power because
• 33:24
  Speaker 1: by affecting, by affecting wealth, which you do very low
• 33:26
  Speaker 1: interest rates, you effectively you know, the environment, and that's
• 33:30
  Speaker 1: very uncomfortable in lots of ways.
• 33:32
  Speaker 5: And they're a hugely powerful organization. And again, like a
• 33:34
  Speaker 5: lot of the quangos and the arms length bodies I
• 33:37
  Speaker 5: was talking to talking about again, there's no accountability. Andrew Bailey,
• 33:44
  Speaker 5: who I think has had a hard time, but he's
• 33:46
  Speaker 5: you know, I always got on very well with him personally,
• 33:48
  Speaker 5: and I think he's, you know, a thoughtful man, but
• 33:51
  Speaker 5: you know he's he's somebody you can't change.
• 33:53
  Speaker 4: You can't change him. You certainly don't vote for him.
• 33:57
  Speaker 5: And yet they wield a huge amount of power, and
• 33:59
  Speaker 5: that's a feature of modern you know, advanced capitalism.
• 34:03
  Speaker 1: I suppose one we just have to live with.
• 34:06
  Speaker 4: I think.
• 34:06
  Speaker 5: So, I mean unless you I mean, you could go
• 34:09
  Speaker 5: a full populist route and essentially you know, have have
• 34:14
  Speaker 5: sort of elections for people. But again people wouldn't want
• 34:19
  Speaker 5: that and it would create too much instability. So I
• 34:22
  Speaker 5: think the balance is to try and make sure that
• 34:24
  Speaker 5: these people are accountable to Parliament and to the executive
• 34:28
  Speaker 5: and that's something we could do more of. So, I mean,
• 34:31
  Speaker 5: Andrew Bailey is now the Government of Bank of England,
• 34:33
  Speaker 5: but let's say he has a successor. I think that
• 34:35
  Speaker 5: successor should be ratified by some sort of parliamentary committee.
• 34:39
  Speaker 5: And I think they should be able and they should
• 34:41
  Speaker 5: have certain parameters, certain targets if you like that, they
• 34:48
  Speaker 5: should be held accountable to and I.
• 34:50
  Speaker 1: Think beyond just well, if not just that.
• 34:54
  Speaker 5: The two percent is one thing, but they're not even
• 34:55
  Speaker 5: really held accountable for that because they write a letter
• 34:59
  Speaker 5: which is you know, I mean, that's all. But actually
• 35:01
  Speaker 5: it'd be quite good to have an annual session in
• 35:04
  Speaker 5: Parliament of a committee where they grill the governor on
• 35:07
  Speaker 5: why these targets they met. They're sort of approximating to that,
• 35:11
  Speaker 5: but it's not formalized. And I think the only way
• 35:14
  Speaker 5: that you can actually square this circle is actually having
• 35:17
  Speaker 5: lots of open scrutiny of these people who, you know,
• 35:20
  Speaker 5: let's face it, haven't been voted for that. They're totally
• 35:22
  Speaker 5: unaccountable from a democratic point of view, but they have
• 35:25
  Speaker 5: to be able to answer for themselves in a public arena, and.
• 35:30
  Speaker 1: They need to answer for the long term effect of
• 35:32
  Speaker 1: very low interest rates and what of that.
• 35:33
  Speaker 4: That's right, and then it was suddenly done.
• 35:35
  Speaker 5: I mean I remember even when I was Business secretary,
• 35:38
  Speaker 5: I think the interest rate, the bank rate we used
• 35:40
  Speaker 5: to call it was zero point one percent, and today
• 35:43
  Speaker 5: it's five point two five percent, And that's only what
• 35:46
  Speaker 5: two and a half years, So it's gone up fifty
• 35:48
  Speaker 5: times in two years.
• 35:50
  Speaker 1: It was for too long before, which exactly, and that
• 35:53
  Speaker 1: has consequences and all sorts of things, exactly's allocation of capital.
• 35:57
  Speaker 1: Business is doing the wrong things for too long. As
• 36:00
  Speaker 1: one of our guest part of the other day, low
• 36:01
  Speaker 1: interest rates get into all the cracks. Once they go up,
• 36:03
  Speaker 1: you never know.
• 36:04
  Speaker 5: And also what we think, because we live through this,
• 36:07
  Speaker 5: you've got to it's totally impressed. And you mentioned my
• 36:09
  Speaker 5: book the bank rate sort of you know, two hundred
• 36:13
  Speaker 5: years ago was five percent for eighty years, so there
• 36:17
  Speaker 5: were people had whole lifetimes and whole careers where they
• 36:20
  Speaker 5: had one interest rate. And actually even the five percent rate,
• 36:25
  Speaker 5: it was only really in the last of forty years
• 36:29
  Speaker 5: that we've seen huge durations and ups and downs of it.
• 36:33
  Speaker 1: Now, listen, do you think that we will be saved
• 36:36
  Speaker 1: from all these terrible things we've been talking about by
• 36:39
  Speaker 1: a great productivity boom brought on by AI. And when
• 36:42
  Speaker 1: I've been speaking to people recently talk about we talk
• 36:45
  Speaker 1: about the different things that could happen. We could have
• 36:47
  Speaker 1: a Roaring twenties driven by huge productivity gains. We could
• 36:51
  Speaker 1: have another nineteen seventies driven by, you know, relentlessly fluctuating
• 36:55
  Speaker 1: inflation because we haven't quite got it right. Or we
• 36:57
  Speaker 1: could be moving into a sort of late nineteen in
• 37:00
  Speaker 1: the markets, where we see it as sort of slightly pointless
• 37:02
  Speaker 1: melt up.
• 37:03
  Speaker 5: So I think the problem in terms of the roaring
• 37:07
  Speaker 5: twenties and huge economic growth, there's too much geopolitical uncertainty.
• 37:10
  Speaker 5: I mean, if you look at our fight against inflation,
• 37:13
  Speaker 5: everything looked as if it was going in the right direction,
• 37:15
  Speaker 5: and then of course we had this amass incident in October,
• 37:19
  Speaker 5: the seventh of October, and that's really changed quite a bit.
• 37:22
  Speaker 5: I mean, I was talking just a few days ago
• 37:24
  Speaker 5: to people who are shippers in my constituency. They do logistics,
• 37:28
  Speaker 5: they ship things all around the world, and they're talking
• 37:30
  Speaker 5: about the Red Sea in a way that we haven't
• 37:32
  Speaker 5: been talking about the Red Sea for quite a while,
• 37:35
  Speaker 5: and the hoofies and the attacks and all of that
• 37:38
  Speaker 5: could have huge implications effects on costs of shipping, and
• 37:43
  Speaker 5: of course the cost of shipping will have a knock
• 37:45
  Speaker 5: on effect on inflation, costs of.
• 37:47
  Speaker 1: Imports and all this could eventually affect the cost of
• 37:49
  Speaker 1: oil as well.
• 37:50
  Speaker 2: Exactly right, that coming through it.
• 37:52
  Speaker 5: So, I think the geopolitical climate it's such that it's
• 37:57
  Speaker 5: difficult to see a really booming the next two or
• 38:00
  Speaker 5: three years.
• 38:01
  Speaker 1: And also suggests that we might see a sharprising defense
• 38:04
  Speaker 1: spending exactly right, so inflation, because war is always inflationary.
• 38:09
  Speaker 5: So the geopolitical uncertainty I think argues against a sort
• 38:15
  Speaker 5: of benign roaring twenties.
• 38:18
  Speaker 1: Prediction, and also suggests that interest rates won't be coming
• 38:21
  Speaker 1: down quite as fast as everyone believing.
• 38:23
  Speaker 4: All of those knocking effects.
• 38:25
  Speaker 5: Me, I'm afraid that the economic outlook perhaps isn't as
• 38:30
  Speaker 5: bright as it seemed a few months ago.
• 38:33
  Speaker 1: There was I trying to get you onto something optimistic.
• 38:35
  Speaker 5: Let's well, I look, So I think in terms of
• 38:39
  Speaker 5: to argue against that, I think AI is exciting. I
• 38:43
  Speaker 5: think quite a lot of some of the sort of
• 38:45
  Speaker 5: green energy stuff. There might be something to that. I
• 38:50
  Speaker 5: think we should be investing a lot in small modular reactors, definitely,
• 38:56
  Speaker 5: And I think I think there are there are elements
• 39:00
  Speaker 5: when I look at the economy which can provide growth.
• 39:04
  Speaker 1: But we are going to invest in modular reactors.
• 39:07
  Speaker 5: I mean, I was very keen to when I was
• 39:08
  Speaker 5: in government. I'm not in government anymore, but I think
• 39:10
  Speaker 5: that's what we're going to do. And I think if
• 39:11
  Speaker 5: labor come in that they will need a growth plan
• 39:15
  Speaker 5: and I think the growth plant will hang on a
• 39:17
  Speaker 5: lot of green investment.
• 39:20
  Speaker 1: Can I ask you about UK stock markets? I mean,
• 39:23
  Speaker 1: one of the things, again we talk about relentlessly on
• 39:25
  Speaker 1: this podcast, is how incredibly irritating it is that UK
• 39:28
  Speaker 1: equities and particularly small and mid cap equities are so
• 39:31
  Speaker 1: cheap and down at the lower end, liquidity is so low,
• 39:34
  Speaker 1: and foreign investor will not come into our markets, and
• 39:36
  Speaker 1: our own pension funds can't get out of our markets
• 39:39
  Speaker 1: fast enough.
• 39:40
  Speaker 4: It's too lumpy and everything. I mean a lot of
• 39:42
  Speaker 4: that's to do with regulation.
• 39:43
  Speaker 1: A lot of it is to do with regulation. So
• 39:44
  Speaker 1: that could be another thing where we made.
• 39:46
  Speaker 5: See and that's what we're trying, I mean, Jeremy sort
• 39:49
  Speaker 5: of the Edinburgh reforms, but they didn't really sort of
• 39:51
  Speaker 5: catch up quite enough.
• 39:52
  Speaker 1: They didn't provide the catalysts. So could it be something
• 39:55
  Speaker 1: like maybe the UK stock market is just dead.
• 39:58
  Speaker 2: I don't believe it is.
• 39:59
  Speaker 1: I mean, I think there's a lot going on here,
• 40:00
  Speaker 1: but something like, for example, removing stamp duty on the
• 40:04
  Speaker 1: trading of UK equities, because our stamp duty is incredibly
• 40:07
  Speaker 1: high relative but almost everybody else is most developed countries.
• 40:10
  Speaker 1: I think you've got a liberal even to have a
• 40:11
  Speaker 1: transaction tax. I think it's only Ireland that is higher
• 40:14
  Speaker 1: than us, that's right, So that seems like a big barrier.
• 40:18
  Speaker 5: And I think so there are a couple of things
• 40:19
  Speaker 5: here I think, I mean, I hate to say this,
• 40:21
  Speaker 5: but I think a lot of it is to do
• 40:23
  Speaker 5: with well, what's coming next. So for the last year
• 40:26
  Speaker 5: pretty much Labor have been clear favorites to win the
• 40:30
  Speaker 5: general election, and I think a lot of people are
• 40:32
  Speaker 5: worried about the effects of a Labor government which is
• 40:36
  Speaker 5: going to raise even more taxes.
• 40:37
  Speaker 1: Although to be fair, this discount has been there since
• 40:39
  Speaker 1: the discount sixteen.
• 40:40
  Speaker 5: The discount has been there before, but it's it's made
• 40:43
  Speaker 5: of different elements. So I still think that that's still
• 40:45
  Speaker 5: a bit of an overhang. But I think immediately answer
• 40:49
  Speaker 5: twenty sixteen. Until relatively recently the regulation, I mean, you know,
• 40:53
  Speaker 5: we kept saying, oh, we're going to get rid of
• 40:55
  Speaker 5: solvency too, we're going to liberalize.
• 40:57
  Speaker 2: We just didn't do it those things, and.
• 40:59
  Speaker 5: We should have done those things things much sooner than
• 41:03
  Speaker 5: we have done, or that we've tried to. And again
• 41:05
  Speaker 5: you're dealing with vested interests, you're dealing with you know,
• 41:07
  Speaker 5: regulators who have a lot of power, particularly post.
• 41:10
  Speaker 1: To two thousand, I find it very very hard to
• 41:12
  Speaker 1: cut any regulation because then of course they were feel
• 41:14
  Speaker 1: culpable where anything to go wrong.
• 41:16
  Speaker 4: That's right.
• 41:17
  Speaker 5: So that so two thousand and eight, really, you know,
• 41:19
  Speaker 5: we're living with the after effects of that. We empowered regulators.
• 41:24
  Speaker 5: I think regulation in certainly the context of the London
• 41:27
  Speaker 5: Stock Exchange is really stifling.
• 41:30
  Speaker 1: Yes, well, companies always say they don't want to list
• 41:32
  Speaker 1: because it's it's just too much. And anyone who's tried
• 41:35
  Speaker 1: to read an annual report from any company, well know,
• 41:38
  Speaker 1: and lots of people.
• 41:38
  Speaker 5: On the private you know, private equity specialist, but private
• 41:41
  Speaker 5: companies essentially are now avoiding, as you say, a public
• 41:46
  Speaker 5: public listing.
• 41:47
  Speaker 4: Used to be the aim.
• 41:48
  Speaker 1: Yeah, so you know we're going to do an IPO,
• 41:50
  Speaker 1: and now we're seeing deecuitization. We're seeing company after the
• 41:53
  Speaker 1: company after company taken off our markets. They're training at
• 41:56
  Speaker 1: such a such a discount now that anyone can come
• 41:59
  Speaker 1: in and buy a UK company at a forty percent
• 42:01
  Speaker 1: discount and meander off.
• 42:03
  Speaker 4: That's right.
• 42:03
  Speaker 5: So that's a bit of a But the point of
• 42:05
  Speaker 5: the political points I fear I made about labor was
• 42:08
  Speaker 5: that I think a lot of it is to do
• 42:10
  Speaker 5: with when I was comparing listings in the in the
• 42:13
  Speaker 5: US compared to the UK, people would well, you know,
• 42:17
  Speaker 5: we can earn more money.
• 42:18
  Speaker 4: We can.
• 42:19
  Speaker 5: It's a more pro capitalist society. People don't have the
• 42:23
  Speaker 5: envy and actually we can be more successful if we
• 42:26
  Speaker 5: listen in New York as opposed to London.
• 42:28
  Speaker 4: Yeah.
• 42:29
  Speaker 1: What about the idea of a brit Isa that comes
• 42:31
  Speaker 1: up again and again and again. What you know, we
• 42:33
  Speaker 1: have this wonderful life structure. People can put their money in.
• 42:36
  Speaker 1: It grows tax free, free of capital gains free of
• 42:38
  Speaker 1: income tax, and then you can withdraw it at any
• 42:40
  Speaker 1: time and without paying any extra tax. It's a fabulous rapper,
• 42:43
  Speaker 1: very supportive of it. But a lot of people will say,
• 42:45
  Speaker 1: why should we be sponsoring people giving them tax breaks
• 42:49
  Speaker 1: in order to be able to go away and by
• 42:51
  Speaker 1: by shares listed outside of the UK? Why not just
• 42:54
  Speaker 1: make that a UK only tax rapper.
• 42:56
  Speaker 5: So it's very that's a very do I say protectionist, Yeah,
• 43:00
  Speaker 5: way of looking at things might help them. It might do,
• 43:03
  Speaker 5: But I think there are ways you could incentivize investment
• 43:05
  Speaker 5: in the UK without doing that. I mean, that was
• 43:08
  Speaker 5: one of the things that I wanted to do, the
• 43:09
  Speaker 5: corporation tax, for example. And everyone says, oh, well, twenty
• 43:12
  Speaker 5: five people say twenty five percent is the average. We
• 43:15
  Speaker 5: shouldn't be the average. There was to be average, or
• 43:18
  Speaker 5: it's quite you know, we want to be a beacon.
• 43:21
  Speaker 5: And actually it's funny because I met the one time
• 43:23
  Speaker 5: I met the Irish President, he I propos of nothing.
• 43:27
  Speaker 5: He suggested to me that for him, the corporation tax,
• 43:31
  Speaker 5: the low corporation tax. Now, it had been a very
• 43:32
  Speaker 5: successful policy and that was demonstrated, as I said earlier,
• 43:35
  Speaker 5: by the fact that it's been there for twenty five
• 43:37
  Speaker 5: years and neither party, neither of the parties, any of
• 43:40
  Speaker 5: the parties that have gone into government, have really argued
• 43:42
  Speaker 5: against it. And I think that you know, if Ireland
• 43:45
  Speaker 5: could do it, there's a real opportunity. There would have
• 43:48
  Speaker 5: been an opportunity for the UK to be able to
• 43:50
  Speaker 5: attract capital on that basis. And then once you do that,
• 43:54
  Speaker 5: then it has knock on effects. You know, it becomes
• 43:57
  Speaker 5: people come here, they invest here, and then I think
• 44:01
  Speaker 5: you create a culture where the stock market such as
• 44:05
  Speaker 5: it is, can can can can really power ahead, and
• 44:09
  Speaker 5: we haven't done that.
• 44:10
  Speaker 1: Yeah, and you could always you could also introduce things
• 44:12
  Speaker 1: such as you know now corporation tax for the first
• 44:14
  Speaker 1: two years of listing if you're below a certain size
• 44:16
  Speaker 1: level and somehow we've just neglected and.
• 44:20
  Speaker 5: Actually if I you know, just to present a stylized fact.
• 44:22
  Speaker 5: When I was in Treasury and also when I was
• 44:24
  Speaker 5: in business, it seemed to me that you know, growing up,
• 44:26
  Speaker 5: the two biggest among the two biggest a source of
• 44:29
  Speaker 5: productivity in the UK where the energy sector which was
• 44:32
  Speaker 5: all in gas let's face in north Sea, and the
• 44:34
  Speaker 5: financial services and you know, they've really struggled in the
• 44:37
  Speaker 5: last i'd say ten fifteen years, particularly since two thousand
• 44:41
  Speaker 5: and eight for lots of different reasons. I mean, you
• 44:43
  Speaker 5: could argue that the net zero legislation has hampered all
• 44:47
  Speaker 5: in gas in the all and gas.
• 44:48
  Speaker 1: Industry well, or its persuaded people to pull back from
• 44:50
  Speaker 1: investing further in the kind of things that my group productiviat.
• 44:52
  Speaker 5: But it seems to me if you if you just
• 44:55
  Speaker 5: simplest those two sectors which had powered growth in the
• 44:59
  Speaker 5: UK from let's say in the mid seventies right through
• 45:03
  Speaker 5: to ten to two thousand and eight, you know, they've
• 45:06
  Speaker 5: they've had real challenges.
• 45:07
  Speaker 4: And we need to get them back and better. That's
• 45:10
  Speaker 4: my view. That was that was very much my view
• 45:12
  Speaker 4: when I was at the Treasury.
• 45:14
  Speaker 1: Yeah, okay, let me ask you the most important question
• 45:17
  Speaker 1: I ever ask anybody on this podcast, and an answer
• 45:19
  Speaker 1: is compulsory.
• 45:20
  Speaker 2: By the way, Wow, I know compulston.
• 45:23
  Speaker 4: I didn't like compositive. I'm a libertarian me too.
• 45:26
  Speaker 1: This is compulsory business compulsory. Sometimes libertarians have to do
• 45:29
  Speaker 1: things they don't. Okay, if you were to only be
• 45:33
  Speaker 1: able to invest in one thing for a ten year period,
• 45:35
  Speaker 1: that's very good. I'm going to well, I could give
• 45:38
  Speaker 1: you the choice of the whole world, and I'll do
• 45:39
  Speaker 1: that if you'd like. But first I'm only going to
• 45:41
  Speaker 1: give you a choice with three things. Okay, a deposit account,
• 45:45
  Speaker 1: interest paring in the UK, steling, bitcoin, or gold.
• 45:52
  Speaker 4: I'd probably go for gold, Okay, i'd probably.
• 45:54
  Speaker 5: The only problem with gold is that you only get
• 45:56
  Speaker 5: the money when you said it right, Well, but as
• 45:59
  Speaker 5: a store.
• 45:59
  Speaker 2: Of world yeah, you might not even get the money.
• 46:02
  Speaker 5: That's true, that's true. I mean it's much more vold.
• 46:04
  Speaker 5: And also a bit around. Coin has been around twenty
• 46:05
  Speaker 5: years and gold's been around that two thousand years. So
• 46:08
  Speaker 5: I would I would probably, I would probably go for gold.
• 46:12
  Speaker 5: And also the actual if I think about it, because
• 46:14
  Speaker 5: my book is a lot about this, My War and
• 46:16
  Speaker 5: Gold book, it's it's a much better hedge against inflation
• 46:21
  Speaker 5: than bitcoin, or certainly than a deposit account.
• 46:25
  Speaker 4: Yeah.
• 46:25
  Speaker 5: So if you think that there's enough geopolitical instability to
• 46:29
  Speaker 5: keep inflation higher, your propensity I think to go for
• 46:33
  Speaker 5: a savings account is probably lower. Bitcorn I think is
• 46:37
  Speaker 5: just a total crapshoot. You have no idea well what
• 46:41
  Speaker 5: it's going to do. So gold I think is probably
• 46:43
  Speaker 5: the best in an age of geopolitical uncertainty.
• 46:46
  Speaker 1: Gold.
• 46:47
  Speaker 4: I think gold is the best of those three.
• 46:48
  Speaker 1: Yeah, it's taught us over thousands of years instability. Yeah,
• 46:53
  Speaker 1: all right, go about you thought I was going to say,
• 46:55
  Speaker 1: over a ten year period and you could only invest
• 46:57
  Speaker 1: in one thing, what was it? What would it be?
• 46:59
  Speaker 4: Yeah, I was thinking, I was thinking about it wouldn't
• 47:02
  Speaker 4: be gold, That.
• 47:02
  Speaker 1: Wouldn't be that had been the question, would the answer be.
• 47:05
  Speaker 5: It's very tricky that because I think a lot of
• 47:09
  Speaker 5: the sort of very hot you know, sexy industries have
• 47:14
  Speaker 5: got a plethora of businesses and it's very difficult to know.
• 47:17
  Speaker 5: It's remember when we're old enough, I mean you're not,
• 47:19
  Speaker 5: but I think we are. To the dot com boom,
• 47:25
  Speaker 5: and it was clear that, you know, people were going
• 47:27
  Speaker 5: to make a lot of money, but it was very
• 47:29
  Speaker 5: difficult to know which companies. I mean, in the end,
• 47:31
  Speaker 5: you know, we had Facebook, which was a bit after that.
• 47:33
  Speaker 5: We had Google, we had other Amazon for example, but
• 47:36
  Speaker 5: the whole host of different companies and it would have
• 47:39
  Speaker 5: been very difficult. It was difficult for people to know
• 47:41
  Speaker 5: which of those were going to be successful in the
• 47:44
  Speaker 5: long term. So you'd probably have to take a basket
• 47:46
  Speaker 5: a portfolio, Yeah.
• 47:47
  Speaker 1: But you would you take a diversified portfolio. Of equities
• 47:50
  Speaker 1: over gold over the next decade.
• 47:51
  Speaker 4: Yeah, definitely.
• 47:56
  Speaker 1: Thank you so much for joining us today. Thank you, you
• 47:58
  Speaker 1: really appreciate it.
• 47:59
  Speaker 4: Thank you. So.
• 48:06
  Speaker 1: John has lots to pull out of this conversation with Quasi.
• 48:09
  Speaker 1: It was long and fairly wide ranging. I found it
• 48:14
  Speaker 1: interesting the way he believes, and actually I kind of
• 48:17
  Speaker 1: agree with them that a lot of the things that
• 48:19
  Speaker 1: they wanted to do were perfectly valid. It was just
• 48:23
  Speaker 1: done the wrong way round. I deciding to announce all
• 48:26
  Speaker 1: the tax cuts before talking about how they were going
• 48:29
  Speaker 1: to try and slow spending, and doing it all in
• 48:32
  Speaker 1: about twenty five minutes, whereas in fact, if we'd been
• 48:34
  Speaker 1: sort of more drawn out, it might have been fine.
• 48:38
  Speaker 1: I mean, after all, guilt rates are basically right now
• 48:41
  Speaker 1: where they were then, and we're talking about cutting taxes
• 48:46
  Speaker 1: now despite the fact there's no sign of spending coming
• 48:49
  Speaker 1: off or anything like that. So now is really no
• 48:51
  Speaker 1: different to then. It's just feels slower and calmer, right.
• 48:56
  Speaker 3: Yeah, And I mean I think the fact that annoys Tea.
• 49:00
  Speaker 3: It was clear whenever they came in that Liz Trust
• 49:02
  Speaker 3: felt share an artificial deadline or there was some kind
• 49:05
  Speaker 3: of deadline head talk about how she only had two
• 49:08
  Speaker 3: years and then obviously, you know, the poor queen died
• 49:11
  Speaker 3: and that kind of took a chunk out of, you know,
• 49:14
  Speaker 3: the first hundred days that every politician obsesses about. And
• 49:18
  Speaker 3: so I think that sense of panic definitely led to
• 49:20
  Speaker 3: them acting much faster and much more with a much
• 49:24
  Speaker 3: more aggressive sound that and they may be meant to,
• 49:27
  Speaker 3: and of course he Disney bring it up because you know,
• 49:29
  Speaker 3: you might take flack for it, but there was also
• 49:34
  Speaker 3: the small point that the pension system in this country
• 49:37
  Speaker 3: was like heavily leverage towards gilts and so when when
• 49:40
  Speaker 3: prices went down, as I've said lots of times before,
• 49:43
  Speaker 3: the same as prices went down in US treasuries and
• 49:46
  Speaker 3: German bounds, and the difference is that we turned, we
• 49:50
  Speaker 3: got a leverage doom loop because defined benefit pension funds
• 49:53
  Speaker 3: got margin called and had to keep selling gilts and
• 49:56
  Speaker 3: that's why the Bank England had to step in. So
• 49:59
  Speaker 3: again I'll say, I think think that you know, THEO
• 50:03
  Speaker 3: they were very unlucky and they could have got awavey it.
• 50:07
  Speaker 1: Yeah, they could have got away with it, and that
• 50:09
  Speaker 1: would have been absolutely fascinating because then for the first
• 50:12
  Speaker 1: time in however, long we would have actually had a
• 50:14
  Speaker 1: government that were genuinely pro growth in trying to create
• 50:17
  Speaker 1: real change. And one of the things that I asked
• 50:19
  Speaker 1: him in this conversation was, if you were Richie Sounac today,
• 50:23
  Speaker 1: And of course it's difficult for him because you're still
• 50:25
  Speaker 1: a serving MPs. You can't expect him say anything too dramatic.
• 50:28
  Speaker 1: But you know, I have this idea in my head
• 50:31
  Speaker 1: that Richie could do something amazing if he was that
• 50:35
  Speaker 1: kind of personal, which I kind of suspect he's not.
• 50:37
  Speaker 1: But you know, he's got a very limited amount of
• 50:39
  Speaker 1: time left as Prime Minister. I can't really argue with that,
• 50:41
  Speaker 1: I don't think at this point, although I mean, things
• 50:43
  Speaker 1: turn around on a sixpence these days.
• 50:44
  Speaker 2: So who knows.
• 50:45
  Speaker 1: But you know, he has a short period of time
• 50:47
  Speaker 1: still Prime Minister has quite a lot of support from
• 50:50
  Speaker 1: his party. He shouldn't He could look at himself now
• 50:53
  Speaker 1: and say, okay, I've got this bit of time, I
• 50:56
  Speaker 1: have nothing to lose. I could right now put in
• 51:01
  Speaker 1: place some of the huge reforms that are required in
• 51:05
  Speaker 1: the UK that are long term popular and short term
• 51:08
  Speaker 1: super unpopular and difficult and awkward and full of pressure.
• 51:15
  Speaker 1: Groups all over the place, et cetera, something like I
• 51:16
  Speaker 1: don't know, really having a go at the NHS, really
• 51:20
  Speaker 1: actually working to combine income tax and national insurance and
• 51:23
  Speaker 1: giving us an honest tax system for some genuine simplification,
• 51:28
  Speaker 1: finally doing something about the inconsistencies inside our welfare system.
• 51:32
  Speaker 1: Although I know that good efforts have been made by
• 51:34
  Speaker 1: there's many more efforts still to be made, this kind
• 51:36
  Speaker 1: of thing, that there's chance here. And I was trying
• 51:40
  Speaker 1: to get Quasi to say, well, you know, the big
• 51:42
  Speaker 1: one is, but obviously he couldn't. He couldn't quite go there,
• 51:45
  Speaker 1: couldn't quite go there.
• 51:45
  Speaker 3: And then I get that, No, I mean it's understandable.
• 51:48
  Speaker 3: I mean, I like this analogy about the tax system
• 51:51
  Speaker 3: being like a Christmas street. They say, I just accrude
• 51:54
  Speaker 3: lots and lots of different bits of robbish over the years.
• 51:58
  Speaker 1: Although to be fair, I love a Christmas tree like that,
• 52:00
  Speaker 1: so it didn't really work for me. Who want to
• 52:03
  Speaker 1: take any of that stuff off.
• 52:07
  Speaker 3: Perhaps the more like plaque, I think, the institutional plaque.
• 52:12
  Speaker 1: That's a lot.
• 52:15
  Speaker 3: But I think the other interesting point is that you
• 52:17
  Speaker 3: could see that you know, he is kind of instinctively
• 52:20
  Speaker 3: libertarian because when when we were talking about the stock
• 52:23
  Speaker 3: market and how it affects it, I can have mentioned
• 52:25
  Speaker 3: the British ISA. He kind have made the point, which
• 52:27
  Speaker 3: which I agree with in on an ideological level, that
• 52:32
  Speaker 3: a kind of britt iSER is kind of nationalistic. But
• 52:36
  Speaker 3: equally his idea that all we should cut corporation tax
• 52:39
  Speaker 3: to kind of Irish levels. Again, I like that idea,
• 52:42
  Speaker 3: but I don't think that that would ever pass Muster
• 52:46
  Speaker 3: in the UK because even if she did, it is
• 52:49
  Speaker 3: his you know, I'm about to get kicked out the door.
• 52:52
  Speaker 3: He has a big change. That's the kind of thing
• 52:54
  Speaker 3: that labor would traverse, Whereas at least that thing you
• 52:57
  Speaker 3: said about, you know, merging NI and income tax, that's
• 53:01
  Speaker 3: not something that label would reverse because it's actually a
• 53:04
  Speaker 3: good idea, it's just politically toxic. Yeah. So yeah, that's
• 53:09
  Speaker 3: the kind of thing definitely the you know they should
• 53:11
  Speaker 3: building it doing now because you get nothing to lose
• 53:14
  Speaker 3: the future. Everyone will agree with you. In reality, they
• 53:19
  Speaker 3: just not get the guts to do it.
• 53:21
  Speaker 1: Yeah, exactly like it. And the reason no one can
• 53:24
  Speaker 1: do it, and particularly the Conservative Party can't do it,
• 53:26
  Speaker 1: is because if you start doing that, then you effectively
• 53:29
  Speaker 1: put up income tax for retirees. Yes, and that's the problem.
• 53:36
  Speaker 1: And then you have to and then if you're if
• 53:38
  Speaker 1: you're not going to put up income tax for older
• 53:40
  Speaker 1: people because older people don't pay an I, then you
• 53:43
  Speaker 1: have to say explicitly, explicitly, we are going to charge
• 53:47
  Speaker 1: young people. Younger people are higher rate of income tax
• 53:50
  Speaker 1: and we are older people. That's why you can't do
• 53:51
  Speaker 1: it except for right now when you could.
• 53:55
  Speaker 3: Yeah, good idea, you're marriding for prime minister.
• 54:00
  Speaker 1: Oh yeah, no, I'm not sure I could take the scrutiny.
• 54:02
  Speaker 1: I mean I'd be forever deleating my WhatsApp messages, right,
• 54:05
  Speaker 1: and then how much trouble would I be a poor
• 54:07
  Speaker 1: old Nicholas Sturgeon, right? And you wouldn't want to be her.
• 54:10
  Speaker 1: So now I'm not really up for senior government positions,
• 54:13
  Speaker 1: thanks very much. I've got secrets.
• 54:16
  Speaker 3: Just remember the expense your phones. It's like what I know.
• 54:24
  Speaker 1: I know anyway, not that this is not that kind
• 54:26
  Speaker 1: of podcast, not that kind of podcast. Now, look, before
• 54:29
  Speaker 1: we go, I want to come back to our converlation
• 54:31
  Speaker 1: we had at the beginning about annuities and and how
• 54:35
  Speaker 1: to how to provide for your retirement with your leveraging
• 54:38
  Speaker 1: the capital that you have now. Mark Dampier, who used
• 54:41
  Speaker 1: to be at Hagley's Landsdane, he always used to say
• 54:43
  Speaker 1: that the UK equity market was effectively nature's annuity because
• 54:48
  Speaker 1: you got wonderful dividends. And you know, you might say, well,
• 54:52
  Speaker 1: those dividends are not sustainable because the cash is being
• 54:55
  Speaker 1: used to pay dividends rather than to invest in businesses,
• 54:58
  Speaker 1: et cetera. But you know, nonetheless that's been a news,
• 55:00
  Speaker 1: is right. So the market is nature's annuity, which is
• 55:03
  Speaker 1: a wonderful thing if you have control over your own
• 55:05
  Speaker 1: pension pot and you can invest it like that. So
• 55:07
  Speaker 1: with that in mind, John, I've got a list here
• 55:09
  Speaker 1: of the highest paying investment trust, the best of the
• 55:14
  Speaker 1: nature's annuities there are out there, and I'm looking through
• 55:16
  Speaker 1: them and it is fascinating, you know. And Martin, I'm
• 55:20
  Speaker 1: sorry it's too late for this but for you, but nonetheless,
• 55:23
  Speaker 1: for those of you which is not too late to
• 55:24
  Speaker 1: this list is really worth looking at. You can get
• 55:27
  Speaker 1: to let's see, we've got yields here of Aberdeen Equity
• 55:31
  Speaker 1: Income Trust seven point seven percent. I'm just looking at
• 55:34
  Speaker 1: the UK one. There's loads of non UK non UK ones,
• 55:38
  Speaker 1: CT UK High Income. I don't know that trust nictually
• 55:41
  Speaker 1: six point four, Lindsay Train that's global, but none the
• 55:43
  Speaker 1: last six Lowland Investments Company, which is UK Equity Income
• 55:47
  Speaker 1: five point two. We've spoken to them a few times,
• 55:49
  Speaker 1: haven't we. And if you look down at all the
• 55:51
  Speaker 1: other UK equity funds, UK equity income funds, trusts come
• 55:54
  Speaker 1: a little below jpmore going and Claverhouse Trader Income Growth
• 55:57
  Speaker 1: much and Trust City of London, they're all offering of
• 56:00
  Speaker 1: five percent. Not bad.
• 56:04
  Speaker 3: Yeah, it's not Biden. Also, if we end up getting
• 56:07
  Speaker 3: environment we had interestries do end up going lower or
• 56:10
  Speaker 3: alternatively with unflation still comes back, then you would expect
• 56:13
  Speaker 3: them to be of interest to people because they usually
• 56:17
  Speaker 3: uninvested in kind of values docs. And also, and this
• 56:19
  Speaker 3: is all if this is r ky stuff, then it's
• 56:22
  Speaker 3: cheap anyway, so it feels like a good option.
• 56:28
  Speaker 1: And obviously, in terms of safety et cetera, equities are
• 56:30
  Speaker 1: not comparable with guilt, but nonetheless it's something to look
• 56:33
  Speaker 1: at if you're trying to create an income for yourself
• 56:34
  Speaker 1: in retirement. Definitely, thanks for listening to this week's Marin
• 56:40
  Speaker 1: Doks Money. We'll be back next week. In the meantime,
• 56:42
  Speaker 1: If you like our show, rate review, and subscribe wherever
• 56:45
  Speaker 1: you listen to your podcasts. This episode was hosted by
• 56:48
  Speaker 1: me Maren Sum's Thatt Web. It was produced by Somemasadi.
• 56:51
  Speaker 1: Additional editing by Blake Maple's Special thanks to Quasi Quote