Transcription
When I was health secretary, I was, you know, the most unpopular man in the country.
Chancellor Jeremy H. Evaluate yourself as chancellor. I probably give myself an 8 out of 10. There was just so much chaos at Westminster.
And the truth is that I am really worried about what is happening to London. Where are we going wrong with taxes? The average family are paying for grand in tax, not for schools or the NHS, but for debt interest. Even Trump can't buck the market. What do people not understand about running the country? How hard it really is. What happens in government is do you think the political system needs a reform? It does. There's too much wokery. Quarter of adults are not in work. We need to change.
What do you think is the biggest single threat to the UK right now? The biggest of all is. Jeremy, is the UK economy failing right now? We're doing badly, but I think you can overstate it. And I think if you look at the the trend lines rather than the headlines, people have always been really bearish about the UK. I mean, we we're brilliant at washing our dirty linen in public.
Uh we have newspapers like the Financial Times and The Economists that are read in every corner of the world.
And so people know about all our problems.
Um and they know less about our strengths. And at the moment we've got two really big strengths that people don't talk about. Our tech sector which is the third biggest in the world after the US and China. And also we have a big defense sector which is obviously sadly very important now with what's happening in Ukraine. So um I actually think we have got great prospects. Obviously, I don't agree with a lot of the decisions the government's taken um which are, you know, take us in the wrong direction, but you know, I've got kids and I'm an optimist for the future of the UK.
Right. So, what are those things you don't agree with that the UK are currently doing, our government?
Well, I think there's two things where I believe that the government is either wrong or failed to understand the challenge. Um, one of them won't be a surprise, Rob, and it's tax. And I just.
Oh, we were getting on so well.
I just feel that you look around the world and the countries which have high energy dynamic economies have lower tax levels. North America, Asia, places like China.
Well, Argentina recently.
Yes, indeed. Um but uh places which have high taxes which is mainly Europe including the UK.
Uh there is less dynamism and that is because if you raise taxes up too high uh you make you stop work being worthwhile.
And you uh crush what economists call the animal spirits.
That you need in a modern economy. And so I believe I mean I put up taxes.
Um I had to do it after the pandemic but for me it was always something that was temporary. Uh we had to stabilize the market show that we were good for the money as a country but I always thought as we were able to we need to get back on the path to lower tax. So that's one and the other one is uh a really boring topic but you know as a as a property guy you will totally get this and that is debt. Um, you know, in the property world, you think about mortgages and you know, you watch your mortgage like a hawk and you really care about what's happening to interest rates. Well, it's the same for the country and we've got debt now at 100% of GDP. Our debt interest, this is something very uh not really well known, but it's an extraordinary fact that our debt interest is about 105 billion pounds a year. But for the average household that is about four grand a year in tax. So the average family are paying about four grand in tax. Not for schools or the NHS or the police but for debt interest.
Wow. And and not repaying the debt just the interest. Interest only debt.
It's the interest on the debt. It's not repaying the debt at all. And um by the way that is the average uh household the average household income in this country or the average median 37 grand. Yeah. So many people were paying a lot more than that.
And um the problem is that that money is dead money because money that's paying for debt interest isn't being invested in mobile new buildings or uh new businesses.
Um it's not being spent on consumption. you know, people, you know, more doctors putting more money into the economy by spending their salary. A third of it's going abroad actually to international investors. So, it's it's.
Really big drag on the economy. And I think that we've got to get out of our we've got a tax doom loop and a debt doom loop. And in a way, it's a you know, don't want to be apocalyptic, but it's a double doom loop.
Um and countries that are successful get out of that and we can absolutely do that but I don't see any recognition from the government of that. M so I want to come back to the taxation park cuz I think there's a lot to talk about but um debt so Ray Dalio seems to be going on this parade on many shows.
He there was a headline his quote something worse than a recession is coming in my book the only thing worse than a recession is a depression and I know the US is different from the UK but I guess it's linked but yeah he believes that these big nations like the US are in too much debt they're in a debt deficit.
Uh and you know, people are looking at the UK and the US and not seeing them as investable. Therefore, the money they need to get rid of their debt deficit won't come in. Are you seeing this in the UK? Is this why bonds are really low?
And.
Um, the reason bonds are low in the UK is is slightly different. is a bit more UK specific which is that the markets.
Can't see an economic growth plan that is really going to bring down debt in the medium term. But.
Ray Dal is a very smart guy and I read his book, How Countries Go Broke Over the Summer. It's well worth a read.
Yeah. And I think the the sobering thing about that book is that even the US is not immune to the laws of gravity when it comes to debt. And you know, up till now, the US, which by the way, we're on 100% of GDP. The US is 123% of GDP. So they've got.
You know, isn't their debt like 10 times more than us? Something like 30 trillion or something.
It's huge because they have a much bigger GDP than ours. Yeah.
But um it has traditionally been the case that because the dollar has been the world's premium currency, what we call the reserve currency, so everyone wants to hold dollars, that um the US hasn't had to follow the rules that everyone else has had to follow, and they've been able to borrow.
Quite freely. But after Trump did his liberation day tariffs.
The markets went funny. He did because I I'd put £300,000 into the stock market like the day before. So I felt that. Yeah. Dear me. Gosh. Yes.
I just hold it. So it's fine. But.
But that he said, you know, his phrase was the market's got a bit icky.
But the truth is that, you know, even Trump can't buck the markets and even America now has to recognize the risks. Now, is is Ray Dalio right that we're we're going to head for a mega correction, the once in 80year correction? Well, you know, I'm not an analyst or an expert, but what I do know.
But you were the chancellor of.
I was the chanc that's true, but I wouldn't I wouldn't feel qualified to predict whether the world was heading for one of those big corrections. But what I think was interesting was that he said underneath that every seven to eight years you have a more minor correction and that is something that's in Rachel Reeves's power to avoid if she takes action now she can avoid.
What can she do then?
She could say to the um markets that over the course of the parliament uh we will never increase public spending by more than the growth in the economy for example and that would persuade markets that we were going to be responsible with our spending. She could reform welfare which would relieve a lot of pressure on the finances and that would mean that taxes wouldn't have to go up so much. She could make a big push on public sector productivity and say look we want to pay public sector work as well but anything above inflation has to be paid for with productivity increases which is the rule in the private sector. So, you know, there are lots and lots of things that she could do which I think would help get all those numbers that are beginning to flash red uh start to look a bit more healthy.
And why isn't she doing any of those?
Well, part of it is because she is a center-left chancellor and uh people on the left have tended to believe that uh you can borrow your way to growth. I mean, we heard it again from Andy Bernham this week, and that's, you know, something where people on the right tend to be more nervous of debt mounting up.
Um, and also she doesn't have a problem with higher taxes. I mean, you know, I think her she's um, you know, she's one of the more sensible ones on the Labour side, I hasten to add, but I think her worldview is is quite 1997. You know, the economy will be fine. I just need to tax a bit more and spend a bit more on public services and that's that's what a Labor government will do. But because of the levels of debt, you have to do a lot more if we're actually going to get the economy growing. So, I mean, the 1990s are 30 years ago and things change. Can can she not see that we're spending too much on welfare? Productivity could come from getting people back to work. is this, you know, I'm an entrepreneur and I started from nothing and I worked hard and I felt down sometimes and I didn't phone the doctor and get signed off for a few months. Not everyone does that, I know, but I think it's been easier to do that. And actually, do you know what made me feel really good? A good day's work. Made me feel really good afterwards, even if it was hard. And we're told we need to build 1.5 million houses. So to me, why don't we, you know, get some of the people off welfare, off the streets, give them apprentice jobs, manual work, brick layers, you know, roofers, build these houses. They'd save a lot of money, they'd improve employment. Am I naive?
Do you know I have exactly the same view, but maybe that's not a surprise because I also set up and ran my own business for 14 years before I went into politics. And um you know you I think hit the nail on the head when you said you know after a good day's work you feel good.
You do. Yeah.
And at the moment we are signing off about a thousand people every single day as being not just too ill to work but too ill to even look for work. And the majority of that is for mental health reasons.
Wow.
Uh anxiety, depression. Well, every doctor I ever met when I was health secretary, they said, you know, if you've got mental illness, you need social contact. You need to be with people. You need those work colleagues, the the water cooler moments, the, you know, the postwork drinks, the uh the the friendships that build up in the world of work. But if you park someone on benefit, you're taking them away from all that social contact, all that sense of selfworth. And you know what's going to happen is the mental illness will get worse. And not only that, but if by saying you've got anxiety or depression, you get entitlement to universal credit health component or personal independence payment. You then create a worry that if that person gets better and they tell the authorities they got better, they could lose their benefit. So you create the risk that you're actually locking people into a life on benefit. And it's really I mean we were getting the numbers on benefit down until the pandemic. It's something that has uh come up and bite us after the pandemic. But you know from Rachel Reese's point of view just let's put ourselves in her shoes for a moment.
Um, if she got the benefit bill down to where it was in 2019, just before the pandemic, that saves nearly 50 billion quid a year and she wouldn't have to put up a single tax.
And isn't that not what they're saying the black hole is now? So, isn't that just a quick.
She would be able to avoid all those tax rises which are so damaging to the economy? But actually, of course, great for business because you're creating the workers that businesses can hire and also most importantly of all great for the individuals involved.
I mean, you know, I know these are all kind of numbers, but you know, we the NHS has a worldleading talking therapies program for people with anxiety or depression. And I happen to know it cost about a billion quid a year to run. You could save with some of that 4950 billion you're saving from the benefits reform. You could double the amount of people that we put into anxiety or depression talking therapies and we're doing them a massive favor. You know what we're saying is if you're not well, we're going to make you better and it's so much more healthy for the individuals and for society.
So why are labor not doing anything about this?
Well, they tried in the summer, but they did it in a very hamfisted way. Um, and they said, "This is all about getting 5 billion of savings." And um, obviously for Labor MPs, that was very challenging. What they should have done is said, "Here is a thoughtout program, not a rush program, but a thoughtout program that is going to make life better for people who've lost their jobs or people who are unwell. And, you know, we're going to do this big expansion in mental health. We're going to have a big expansion of uh physiootherapy for people who've hurt their back. And you know, if you want to know how to do this, you don't have to look very far. Look at somewhere like Denmark. I mean, they are so good at getting people into work and keeping people in work.
Um and um you know if we had this if we had the same number of disabled people in work as they have in Denmark, there'd be 600,000 more disabled people working in the UK.
Wow.
So you know there's so much we can learn from how other countries do these things.
Yeah. I was having a lunch with Quasi as I told you recently and he said when you look at the numbers of the people actually working i.e. in the working age and able to work i.e. over 18 etc. Onethird of those aren't working. Is that is that about right? Does that sound about right? So about 11ish million out of about 33ish million able to work. Sounds crazy.
It's it's um it's the 11 million is right. It's actually 41 million for the whole of the UK. That might be the England number.
Right? Okay.
But it's basically a quarter. A quarter of adults are not in work. And Rob, here's the thing which makes.
I'll hire some of them. They could come and apply to here's the thing that is so ridiculous. At the same time, we're trying to deal with an aging population, growing numbers of older people.
More people retired. So actually we need more of the adult age population to be in work in order to make sure we can afford the services that our parents and grandparents are needing.
I I'll ask again and you've sort of answered it but maybe in a more direct way. Why aren't Labor doing this?
Well, I think they now are beginning to understand that they need to do this. The trouble is they've wasted a year and they've lost a lot of momentum. And in politics, uh, your golden period is when you're brand new in the job and people are giving you the benefit of the doubt.
They don't hate you yet.
They don't hate you yet. Yeah. I'm afraid it happens to all of us. I mean, when I was health secretary, I was, you know, the most unpopular man in the country. So, it happens to everyone.
Um, and they've they've lost a lot of political capital in in uh the last year. But you know they are also looking to regain credibility. And I would say that for you know business people like yourself Rob um you don't care the party label you just want a government that's got solutions to the big problems we face. If they came up with a plan for welfare reform, a plan to uh sort out the productivity in the public sector which is often so woeful. If they came up with a plan to deal with our debt, I think you'd say, "I don't mind if it's Labor. This is sounds like a good plan, and we got to get behind it." So, I think it's actually the key to how they get out of the hole that they're in as well. So, as I said, I want to come back to taxes, but something I've become acutely more aware of in the last 5 years as I think the world's gotten more political. I used to stay out of politics and just crack on with running my business and staying in my lane, but it feels like, you know, since lockdown, it's important for us all to be knowledgeable. and I've interviewed so many great politicians and one thing I've understood is I don't know any anywhere near as much as I think and I can sit here and go why don't we get everyone back to work but you know you were the chancellor so what do people not understand about being the chancellor about running the country how hard it really is because it must be much harder than everyone thinks.
Gosh that is a great question I'm not sure I've properly been asked it before um Let Let me give you a good answer to that. So try and understand what it's like to be a government minister. So I had no background in economics, no background in the financial services. I never worked in the city and I become chancellor and the markets are collapsing around my ears and I've got to take massively important decisions to stabilize the pound, the stock market, the bond markets and um by the way it was exactly the same when I became health secretary. I knew nothing about the NHS and I had to deal with.
They're not a recruitment issue.
Well um this is what happens in politics. So the prime ministers appoint the you know the people they think are the best people around them into the cabinet but they're not experts in their fields. And what happens I think is that you let's let's take health secretary. You arrive and you're feeling inside you're panicking a bit because you really don't know very much about what's what. But morning, noon, and night you're answering questions about your brief. It's Parliament. It's the media. It's uh conferences, it's in your constituency, and after answering questions nonstop for about a month, you begin to think, I know this stuff.
Right.
And you begin to think you really know it all. And it's only when you leave the job, as I've done many times, and then you say, I'm going to write a book about it, and I'm going to write the book that I wish someone had given me on the day I got this job. Now, that's what I'm writing now. Actually, I'm writing a book about economic growth in the UK. It come out next year, and it's the book I wish I'd been given the day I became chancellor.
I think you're going to need to write it quicker for us. We need it now.
Thanks, Rob. But the thing is, it's only when you write a book, you realize you actually didn't know the half.
And so, of course, we have structures in place. We have civil servants who are usually very smart and hardworking who who help you get through some of these difficult storms. Um but the reality is you are an amateur doing these very very difficult jobs.
Wouldn't we want a chancellor who's got really good economics background?
Um sometimes it's a good thing not to be an expert in that field because you have common sense and you can challenge the status quo. Um, but the way I think about it is slightly more connected to your roots and my roots. I as an entrepreneur, as someone who set up a business, you know, when you when you bought your first property, you didn't know how the property business worked.
You had to learn. You didn't know how you got loans from a bank. You didn't know how you did employment contracts. Uh what you had to do was to surround yourself with good people and trust them and where you didn't have expertise find it out and then learn on the job and that's what you have to do as a government minister it's a fatal mistake to arrive in a ministry like the Treasury thinking you know it all you have to think okay I don't know it all and when it comes to financial markets this person does. I trust them. I'm going to listen to them. When it comes to tax, I don't know how the tax system works, but this person does. And the really smart ministers don't just talk to their own civil servants. They talk to people outside. And all those meetings they have and all those times they're asked questions. They're when you're learning on the job. So, I've often suggested this on my podcast. I'm going to suggest it to you. Why don't Labor go and call up Sir Jim Ratcliffe? Oh, I understand you're throwing your billions of investment away from the UK. Come to Down the Street. Let's have a chat. You know, maybe you can advise and help. Um why don't they call up um James Dyson, Richard Branson, we have got talent and charismatic talent as well. Um billionaires, you know, cuz being a billionaire is like running it's an economy. Why are we not like learning from all these great people we've got in the UK? Maybe even doing something having like an entrepreneurial advisory board. And I I think also like you could call up Ray Dallio. I'm sure he would contribute cuz you know these people are later in life. They're probably in giving back mode. They're probably you know the probably the billionaires on the rise is they probably want a few policies and they're probably still in power mode. But you know these 70-year-old plus billionaires maybe with a bit of time to give back. Why can't we use all this intellect?
We should. And in fact, um, you know, when I was chancellor, James Dyson came in and saw me several times. I had the, you know, I had the heads of the big banks. I had the heads of our major businesses. They all came and see me. They came and saw me the whole time. And I hope Rachel Ree is doing the same.
Do you think she is?
Um I think she started that way but you know I think there's been quite a rupture with business because of the employers national insurance rise which which which businesses felt was a betrayal.
But I would say the question is not just inviting them in for coffee.
That's the easy.
Yeah. It's creating a board isn't it?
It is actually well it's actually about learning from those people how to get things done. Now your your podcast is called disruptors and I think uh we in the political system need to be honest that we need a bit more disruptor spirit inside government and what happens in government is that your appetite for risk becomes way too cautious compared to what it's like in business. And there are various reasons for that, but one of them is that if you're a cabinet minister, um your job depends on the prime minister. They can fire you at any time in a reshuffle. And what number 10 wants is a quiet life. They want no trouble in your patch.
Right.
And so.
Which they're not succeeding in at the moment.
They're not succeeding at the moment, but you know, so if you do something bold and controversial that creates a stir, it could be bad for your career. And the result is that most cabinet ministers mindset is to try and calm things down the whole time. And that is um something that if we want things to change, uh we need to change. And you know, just look at the issue, forget the rights and wrongs of the issue, but just look at the issue that's on the tip tip of everyone's tongues at the moment, which is the small boats crossings.
You know, Trump got the irregular crossings across the Mexican border down by more than 90% in 8 months. Karma, who said it was totally important for him as well, in uh a longer period of time, they've actually gone up by a third. And the truth is that Trump has come in with a business mentality and he is saying I'm going to make stuff happen. And we have forgotten that in politics and I say that as you know as as a businessman who went into politics. I understand the rules are different. Uh businesses are dictatorships.
Um politics is a democracy and you have accountability and you have to spend time explaining what you're doing and parliamentary procedures and the media. So it's a different world and so I thought for many years look just accept politics and business are different but having come out of government I think that we have made a mistake we have not understood properly that ordinary people are beginning to despair that the politicians they elect are not able to solve the big problems we face and what they want is more uh disruptor spirit.
U people are actually going to judge themselves not on the process, not on whether they did a good media interview, but whether they actually get results. And that is a cultural change that we need to have.
Right now, your personal data is being sold and exploited and probably without you knowing. Every day, countless companies are invading your personal privacy by buying and selling your data for their profits. But the good news is there's a way to opt out of this. And this is why I'm excited to partner with Incogn. Because what Incogn do is they work, hustle, and force on your behalf in the background to remove all of your personal data from all of these intrusive databases, marketing lists, and companies. So to stop the spam and protect your privacy, go right now to incogn.com/disruptors to get an exclusive 60% discount off an incogn plan. That's incogn.com/disruptors or click the link in the description. Evaluate yourself as chancellor. Were you a good chancellor? Give yourself a score out of 10. And what might you do better next time?
Um I am really proud of what I achieved. Um, and you know, if you looked at the the one big thing that every family in the country needed me to do, which was to get inflation down from 11% to 2%, avoid a huge recession, get the economy growing again, what people call a soft landing after we had the, you know, the COVID and Ukraine shock. I did that. So, in terms of that one big thing, I'd probably give myself an eight out of 10. But there's also really big things that I didn't do, and I wish I'd had longer to do.
Um, I didn't do the big welfare reform that we've just been talking about. We got timed out by the election, but I would love to have done that more. I didn't properly devolve power around the country to elected mayors, which is the only way we're going to unlock economic growth in the regions outside London by actually giving uh our great cities and regions power over their own destiny and uh uh and the ch the ability to solve their own problems and and that just wasn't possible in the time that we had.
Um I started with a big uh public sector productivity program with the NHS um in my last budget that was announced and the government's taken that they've grabbed it and they're building on it but I didn't roll it out for the whole of the rest of the public sector and uh we had big strikes across the public sector. So that was you know that was not finished. So I I'm pleased with some of the things I did. By the way, um the other thing on the on the credit side that I'm very proud of is increasing defense spending to 2 and a half% of GDP. I my dad in the Royal Navy to me it was totally clear that we need to step up our defenses given what Putin is up to. So that was a positive. Does that give you a is that a balanced uh balanced picture?
I expected you to be balanced. So um the political system itself so Liz Truss has been doing the rounds and um I believe that she said that um doesn't really matter who's running the country because you know the the civil servants are a blockage and it's very difficult to kind of get anything done or get anything passed. Do you think the political system needs a reform?
It does, but I don't agree with Liz's analysis that it's all the fault of the blob or the system. In my experience, if you are clear about what you want as a government minister, the civil servants work their butts off to deliver it.
Right.
But you have to be very clear about what you want and um and you have to take smart decisions. You know, if you do uh bad decisions, they will go wrong. But I don't think it's right to blame the people working for you for the problems we had. I think the leaders themselves need to pull their socks up and um you know and I think you can make very big changes if you want to. I mean George Osborne when he was chancellor um you know in 2010 straight after the global financial crisis for every uh4 the state was spending we were borrowing one. So like literally a quarter of the cost of running the NHS was just being borrowed every year. That's how broke we were as a country.
Uh and he got that 10% deficit down to 2%. took really hard decisions. I took really hard decisions after the uh debt and the energy shock um and you know I squeezed inflation out of the system. So we are capable of doing big things. But I'll tell you where I think the British state falls down. It's taking long-term decisions when there isn't a crisis. Normally when there's a crisis, you know, one way or another, we do the right thing. But when there isn't a crisis, when there's a kind of a slow burn, which is like the problem with debt or with the small boats crossings, these things have been going up gradually year in year out. That's when we're not as good as we need to be at gripping problems quickly and sorting them out.
So, you mentioned inflation and you got it right down. Feels like um it's more now a strategy to let it go up. And I I think most people who are entrepreneurial have got some understanding of money understand that high inflation can be good if you're in a lot of debt because it can pay your debt down. And I imagine it's never going to be publicly announced that yeah, we're going to keep inflation nice and high so we can pay off our debt off the the back door. But it seems like that's what's happening now.
I really hope it isn't. I don't think it is actually. I mean, I'll tell you why. For our national debt, a lot of it is now index linked, which means it's linked to inflation.
Right.
So, inflation goes up, the debt goes up with it. So, um that old way of paying off your debt doesn't have the same impact that it used to. But it's also really bad for um two other reasons. First of all, because interest rates go up because they have to go up when inflation goes up because the Bank of England then wants to bring inflation down.
Then that means it's much more expensive for businesses who want to borrow money to expand. So it's a big.
Families are paying more for their mortgages. They have less money to spend. That's a big dampener on the economy. But most importantly for Rachel Reeves, when interest rates go up, she has to pay more for our national debt. Yes. So that debt interest, which by the way now costs nearly double our defense budget, is just debt interest.
Um it's about half the cost of running the NHS. I mean, it's over a 100red billion quid a year. That's the four grand a year that we were talking about earlier. Now that if you have high inflation, that bill goes up.
Yeah.
And it makes her job even more of a nightmare, which is why you cannot afford to take risks with inflation. And unfortunately, the.
Increase.
It's creeping up, isn't it?
It is because the increase to employers national insurance, you know, sure enough, lots of employers said, "Well, I can't absorb all of this. I'm going to have to put up some prices."
Yeah. And what unemployment's gone up quite a lot since then as well. Surprise, surprise.
Yeah. And what I fear has happened is that something else is happening at the same time, which is that we are on the cusp of a massive AI jobs revolution, which is means that companies are culling the number of jobs they offer because they're saying, could a computer do this job more quickly or more cheaply than a human being? And that's why you go into Tesco Express and it screens everywhere. You go into McDonald's, it screens everywhere. You try and talk to your bank, your credit card company, you've got to do it on.
Yeah.
Message. You're messaging a bot.
But also accountants and consultants, they're all massively reducing the number of graduate employees. I fear that the employers national insurance hike triggered a lot of employers saying, "Okay, well, if employing people's coming becoming more expensive, I'm going to go headlong into this AI revolution."
Well, you you're forced into it. You have no choice. We had 108 staff when lockdown happened and um you know we had to let a lot of them go and then the furow came in and we brought a lot of them back and of course as we all know inflation got really quite high and yeah you were we were like we didn't want to just let people go but we just thought if people leave we'll try and replace them with AI rather than rehiring and you know we've got down to like maybe 90 staff.
And you know when when you have less staff you're also more agile.
Um, but I was I've always been very proud that we're a local employer and we employ 100 people and we pay all these taxes.
Um, but then there's so many unemployed people and there's so many people on welfare that could be in work and.
Surely um we're going to need all this manual labor, aren't we?
Well, we don't know is the answer. Um, and.
I mean, if we need to build all these houses, we need plumbers, you know, we need all of it.
We absolutely will. Um and in the past when you've had technology revolutions and big changes like the invention of electricity and um you know the the IT revolution there have been new jobs.
That have emerged that we didn't know we needed.
Yes.
Um you know like podcasters.
Um.
Wish it would pay better. But the uh the AI revolution, we're all hoping that's going to be the case, but it may not be quite like that because it's happening so fast. And all those other revolutions happened over decades, even centuries. But the AI revolution is going to be, you know, it's hitting us like a train now.
And uh so it's going to, I think, lead to a lot of social disruption.
Yeah, it's very disruptive. Let's talk about reform. I I I still want to get to the favorite subject which is tax. So we will um have reform got a chance and um what do you think about if reform got in?
Uh they've got a chance. They are formidable. Nigel Farage is a brilliant communicator and in a five party system which is what we've got now because it's not just Labor and the Conservatives. There's the Lib Dems, the Greens, um reform, uh possibly Jeremy Corbyn's new party could be a six party system. You only need 30% of the vote in the first pass the post system to win and reform are on there now.
So, uh it's absolutely uh perfectly reasonable question to ask. Um I would say uh two things though as a caution. Um, the first is I think we've got no idea what reform would actually be like in government. I mean, if you take the last.
I bet they haven't.
No, I think.
I've been to their offices. It's a little startup. Yeah.
I mean, they um, you know, have been promising to reopen the coal mines in South Wales, reationalize the water industry, bring back the two child benefit cap. I mean, and and cut taxes. So, they are like spending like there's no tomorrow. if you thought you know quasi made a mistake with a mini budget this is off the charts different.
Um so um I don't think that they have any economic credibility at the moment now that can change but as things stand at the moment uh it would be incredibly dangerous for the economy if they started implementing those policies but the main thing I would say Rob is you know let's not jump the gun here this next election is probably going to be in 2029. Kama doesn't have to have an election uh until 5 years after he entered Downing Street. And um sometimes they do it after four years, but people who are on the back foot as he most definitely is tend to wait. So the most likely time for an election is four years from now. And just look how much politics has changed in the last year. So, in one year, everything's been turned upside down. Labor, you know, trailing badly. Another four years, I just think we've got to not jump the gun. I I think Conservatives will be back. And I'll tell you why.
Why?
Because um in the end, come four years time, people are going to be desperate for a party offering credible solutions. They don't want people peddling, you know, magic money trees and saying, "It's so easy. We just got to do A, B, and C." They will want credible solutions that tackle the big problems we face. Now, that's what in our country, in our system, that's what opposition parties should do, and I think we will do that. But we've got a lot of work to do, don't get me wrong, but I think uh we will get back in the race.
Do you feel that Conservatives lost their identity? Um it felt like you know usual fairly conservative policies kind of forgot. Obviously government grew and grew and grew and that's not normally a big bloated government isn't normally a conservative thing. Taxes kept going up. It's not normally a conservative thing. Do you think they lost their identity? Did did they become a little bit left?
Um we didn't but we probably did lose our identity. And why is that? because we had these big economic crises. You know, everyone thought it was the right thing to support companies with the furlow scheme, um the bounceback loans, um you know, give the NHS the money it needed for the vaccine program, but it cost 350 billion quid.
And you know, in the end.
That needs to be paid back.
That had to be paid back. And so I think it we were right to be pragmatic and not ideological and say we're not going to spend this money. Um but yes it probably did blur our identity. And I think the other thing that happened were the Brexit wars which you know basically you had this it doesn't matter who you voted whether you voted leave or remain. You had this big division in the country between the people who wanted to stay and the people who wanted to leave. And then in the end we voted to leave but the establishment didn't want to leave. They wanted to stay. And so it was a massive challenge to our democracy to show the 52% who voted leave that we were going to do what we said we'd do and honor what they wanted to do. And in that process there was just so much chaos at Westminster, not just in the conservative side but you know in all parties.
Um and um and I think that was in the end that was the reason why we had this you know David Cameron to Theresa May to Boris Johnson to Liz Trust to Richie Sunnak quite a lot of that were the kind of aftershocks of that Brexit disruption.
Do you think people would forgive that though and forget about that?
I think over time, but I think you know we were in for 14 years and people were exhausted by the drama. Uh they were crossed that their taxes had to go up after the pandemic and for the energy shocks and um and I think there was a bigger problem which is that going back to the financial crisis in 20078 across the whole of the western world uh economies have started growing again but the benefits haven't been spread out and you've got large communities that just feel that things have stagnated and.
So, you know, that was something that we didn't sort out. We talked about leveling up um but we we weren't around for long enough to deliver it and that's something that whoever is in power needs to think hard about.
So, let's say reform get in and Nigel Farage is prime minister and in that process he calls you up and he wants you to be the chancellor. Will you come out of retirement? Would you do that?
I can tell you that it's never going to happen for a very simple reason that Nigel Farage once said that he had one of the biggest boosts in reform membership ever the day I became chancellor. So, so, so it's not going to happen. But.
But let's let's say I'll say this though. I'll say this. I'm going to write a book on, you know, what I've learned after being chancellor, how to fix the British economy. And I hope everyone reads that because this is not a party political book. I'm not trying to say I got everything right. In fact, I'm very honest about what I got wrong. But in there were all the things that I wish I'd known the day I took over the reigns. And uh so um you know, if he wants to read that, it's all in there.
But you don't think you're ever getting the call?
By the way, uh I don't think I'll get the call. in a highly unlikely situation uh that I would I think my wife would say, "Hang on, you were you were on the front line for nearly 14 years."
And you always promised that you'd give the next bit of your life to the family. So, uh, I'm I'm in a different stage of my life.
So, where are we going wrong with taxes? It feels like the only thing they know how to do is increase taxes. So what are what are the main taxes that you think could or should come down?
Well, I would focus on the ones that unlock economic growth and reward work. Uh that was why I cut 4 p of employees national insurance. I'd like to abolish that tax. You know, in the age of AI, we should be doing everything we can to encourage people off welfare into work and encourage employers to employ people. And national insurance is a crazy tax.
Yeah.
Um there are other taxes that don't work at all well like um stamp duty which has a big drag effect drag effect on the housing market. Um the way the thresholds work for income tax are um are ridiculous. you know, there's a there's a big threshold uh when you uh move into the higher rate of tax because you lose your um child benefit.
Um but then there's another hike, you know, when you get to 100 grand, you uh first of all, the personal allowance goes, so your marginal rate of tax is not 45%.
It's 60%. But also, um, because you lose entitlement to childcare, which could be six grand, we're creating a massive incentive for people to earn £99,999 but not >> £100 grand. And you know what? You want these, those individuals are some of the most economically productive in the country, and you should be encouraging people to want to earn more. So >> lots of things in the structure of tax is wrong. Where do you think Labour might start? Do you think they will actually bring a tax down ever?
>> I'm quite pessimistic. Um, I think Labour people tend to think that life is about social justice and redistribution, and they came into politics to take money from.
>> So, they're Marxists, basically.
>> They're not quite Marxists because, you know, I think, uh, you know, Rachel Reeves believes in capitalism, but she wants to change.
>> Where's she providing evidence in her behaviour that she believes in capitalism?
>> Good question. But she, she wants, she believes in redistribution.
>> And I >> But then that's that already exists.
>> Yeah, it does. And, and the danger is, is, you know, in principle, so do I, but you don't want to do it in a way that is damaging to economic growth.
>> Wow. Okay. So, um, I didn't comment on this when it happened because I don't like to just jump on bandwagons, but I did a LinkedIn post this morning, and it's all kicked off because I commented on Sadiq Khan's pay rise. And at first, I thought, well, I'm an entrepreneur. I like, I don't have anything against the pay rise. But then I thought, wait a minute, if London was a company, London is failing as a company. So the CEO would probably get fired, let alone have a pay rise. Is it right that Sadiq Khan got a pay rise? And, and what's happening to London? Is it failing?
>> Well, I am really worried about what is happening to London.
>> You, you live in London.
>> I live in London in the week and in my constituency at the weekends, and I am really worried. We're having a huge exodus of wealth and of talent. And, um, okay, these are the wealthiest people, but when they leave, they're not spending money in taxes and restaurants where lots of people on much lower salaries earn their living. But most importantly, we have a housing crisis in London, and new houses are not being built. And, uh, you know, it's a classic thing that Sadiq Khan did, he piled on the responsibility to build social housing as part of every development. And the result is that it became unprofitable for developers, and so we're getting no or very, very low numbers of new houses being built. It's an absolute tragedy. So I, I don't think he's doing a good job. I don't go quite as far as Donald Trump in my criticisms of Sadiq, but I have to say that I think the timing of that pay rise is extraordinary, to say the least.
>> So what can we do to turn London around? Well, I think one of the things we need to look at is, um, the way the property taxes work because, um, you know, we have this 15% stamp duty at the for the most expensive properties. Now, most people think, well, that's fine. If you're lucky enough to live in a house worth more than a million quid, you know, good luck to you, and we, we shouldn't worry about you. But what's silly about the structure of tax in London is that people in those very expensive houses are paying some of the lowest council tax rates in the country.
>> Right?
>> So we have this illogicality because the council tax rates are based on 1992 values. So a very logical thing to do would be to modernize the way council tax works in London, but unblock the property market by reforming stamp duty, getting rid of these, um, very high levels of stamp duty, which, which are basically the start of the chain. You know, someone moves into an expensive property, then then someone else will sell up lower down the ladder, and lower down, and lower down. And that's how the property market works. And property in London is not moving, and that's a big thing that we need to sort out.
>> Is this completely naive of me to suggest that we could really simplify our tax code? So, is it true the tax code is 17,000 pages or is it 8,000 pages? Is I've heard it's one of the longest in the world.
>> Yeah.
>> Um, so why can't we, why don't we just have a flat rate of tax?
>> Well, um, I think the answer is that we should simplify. I completely agree. Um, and then you have to ask, what are the circumstances that make it possible to simplify? When you simplify taxes, you have winners and losers.
>> Who are the losers?
>> Well, because, you know, if you, for example >> I know who the losers are, all the people that are employed to keep this tax code up.
>> And >> Not just tax accountants. You will find, you know, if you, if you did what I've just suggested on, uh, property taxes in London, the winners would be people who are moving house because, uh, stamp duty would be lower. But the losers could be council taxpayers in Westminster, who have some of the lowest council tax rates in in the country. So you have winners and losers. And >> the reality is, in a dem, in a democracy, a big change with winners and losers can only happen in the first year or so of a parliament. When, uh, a government can push it through, people kind of know in their hearts it's the right thing, and then you've got time to weather the storm and get to the other side. It's not going to happen in the run-up to a general election. So, um, for tax reform, you know, Nigel Lawson's iconic tax reform, the thing that did so much to transform the country for the better, was when he got rid of the 60% higher rate of tax and brought it down to 40p.
>> That was in 1988. That was the year after a general election, the first year of parliament. And in fact, that reform probably caused a mini recession.
>> Um, but >> he weathered that storm, and it, it stood the test of time.
>> Right. So, what would be the downsides then of a simplified flat tax system, or who would be the losers?
>> I'm presuming your flat tax would be lower than the, uh, the current 45% level. So, maybe it's 30%.
>> Well, let me give you some context. I nearly all my friends are entrepreneurs, and you, when we're talking about another one of our friends who left for Dubai or Portugal or wherever, we're like, well, what's your number? What's your number to not want, um, not have a load of tax specialists and not have a load of accountants and not have a load of different company structures and all that, because we're always having to bob and weave away just to try and keep some of our money. What's your number where you just don't do any of that and you just pay it gratefully? And everyone seems to agree 25% flat. And I, maybe that's naive because maybe that reduces a lot of the tax take, but here's the thing, and I don't think how many trillions of pounds must be stuck in assets and bank accounts that entrepreneurs will not release because they don't want capital gains tax and they don't want income tax. And surely, I mean, a flat, if let's say, I am being ideological here, but bear with me. Let's say the government gave us like 3 months flat tax 25%. Me and all my friends, we're just going to draw all of our money. We'll draw it all out. We'll give you your 25%. I, I have not drawn much of a salary for the last few years because why would I pay 45% income tax on it? I do not sell my assets because why would I pay 28% capital gains tax on it? Why, you know, by paying all this stamp duty. So, I am holding back, holding back millions that could be into the economy. And I'm not a billionaire. Have I got a point, or am I ideological?
>> I agree with you. We need a much simpler tax system. And for entrepreneurs, I, I was a huge fan of, uh, entrepreneurs' relief that we used to have because I thought it was such a great signal that we value the brilliant job that entrepreneurs do in the economy. And so I, I, I love that tax relief when it happened. And I thought it was a real shame that it's been whittled down over time. Um, but if you were to do what you've just suggested and overnight introduce a 25% flat tax, then you and your friends would all be paying less tax. Now, uh, you might repatriate some of your assets. You might invest more in the economy. There could be some knock-on positive effects, but, you know, the immediate impact is you're going to be paying less tax to Rachel Reeves.
>> Or maybe we wouldn't because we might all of a sudden start paying ourselves higher salaries.
>> You might do, but you're still going to be paying less. And, and when you are in Rachel Reeves's shoes, where she's got a huge deficit as it is, >> uh >> she doesn't want to put up those taxes on people on lower incomes. So this is not an argument to say that we don't need tax simplification. It's just to say you've got to be super smart how you get there. Now, Margaret Thatcher was the last prime minister under whom we had really big tax simplification. And in her first parliament, taxes, you know, she, she did some tax simplification, but actually, she had to put taxes up in the 1981 budget. Geoffrey Howe put taxes up. Then she got things organized, and she was able to find a way to bring down taxes such that there were, uh, more winners and very few losers. And should we be going down that path? Absolutely. And what about trying to get these millionaires and billionaires back? Because I think a lot of the exodus from London is that, you know, I was talking to Quincey, like I said, and I, I think common sense, I knew this, but he said, he said 15 years ago, everyone was coming to London, and it was thriving because, you know, China, Russia, UAE, all in. And now it's an exodus the other way. Surely that's really damaging for us. And is it not a politic, is it not just envy politics that we're just pushing them all out?
>> I think it's, um, it's more than that. But is it doing enormous damage? Yes. Uh, what should we do to put it right? Um, I think there's one very simple thing that Rachel Reeves did, which I hope she changes her mind on, and that is to withdraw the decision to charge inheritance tax on people's worldwide assets. Because the thing is, a lot of these wealthy people, uh, they can move anywhere in the world. And if you say that by being in the UK, you're going to pay 40% on your assets, not just in the UK, but anywhere in the world when you die, uh, then they're going to move. Yeah.
>> And I think that was a mistake. Um, but I do understand that when there's a cost of living crisis, when the average median salary is £37 grand, uh, the, the great British public say it's not fair if someone who's much much wealthier is paying a lower rate of tax than I am. So I, I think the system that we had before was complex and not very fair. Everyone I've spoken to, um, and I've got friends too who've moved abroad, they say, look, I don't mind paying a bit more income tax. It's the inheritance tax that's the killer. That's the thing that's really persuaded me that I want to move abroad because that's a type of wealth tax, and those are the assets that I was building up because I wanted to pass on to my family.
>> H something that really bothers me at the moment is business rates because you can start a business and not be doing much money, and you can be paying tens of thousands a year in business rates. Why can't we give a bit of business rates relief, or why can't we stage that? I know you, you have to, what is it, £80, £90 grand, and then you charge that, but why couldn't we stage it? That's 10% in the first year, 15% in the second. Why couldn't we stage up the corporation tax? And a load of people must be listening to this show, but also around the country, thinking, I think I might start a business. I think I want to start a business. I think I need to start a business. Can't we just push them over the edge and get a million people starting a business with a few of these reliefs?
>> Well, you know, you're bang on the money. Um, and I'm someone who set up my own business. There were loads of businesses I set up actually before I went into politics. And, um, the taxes that are the killer are the taxes you have to pay before you've made a penny of profit. So VAT, employers' national insurance, business rates, those are the three killers.
>> Yeah.
>> And the problem with those taxes being high is that it means you're more likely to go bust when you hit a storm because you've got this money being taken away from you by the government right at a moment of maximum vulnerability. So I, I agree. If we're going to help businesses get off the ground, we should look very carefully at those taxes they have to pay before they've made a penny of profit.
>> And is this the fundamental problem with having a left government? Is they're just never going to see the point in that?
>> Well, I sometimes wonder. I mean, I, um, that was why, by the way, as Chancellor, for my entire time as Chancellor, I had a 75% discount on business rates for all retail, hospitality, and leisure businesses. So, every high street shop, every pub, every restaurant, 75% discount in their business rates. Um, now the, the Labour government's come in, and they've taken that away. They've said it's going to go from down to 40% and then down to zero. But, uh, what's happening, you know, in my constituency, I've got three pubs closing.
>> Yeah.
>> It's, it's had a really big impact, those kinds of changes. So look, I want money for great public services like the NHS, the police, schools. That comes from the private sector. It's the private sector growing businesses, paying taxes that funds our public services. And you need to have a tax structure that makes it easy for the private sector to grow.
>> What do you think's the biggest single threat to the UK right now?
>> We've got lots of things you could point to. You know, we've been talking about economic growth and tax, and, you know, migration, and all these things we've touched on, but the biggest of all is that we are losing hope. There is a, um, former First Sea Lord, head of the Royal Navy, called Admiral Sir Jonathan Band, and he had a great saying. He said, "Hope is the first duty of command." And the people at the top need to give us hope. That doesn't mean that we think Rome was built in a day. It doesn't mean that we're expecting all the problems to be solved by the time we wake up tomorrow morning, but we want to know that there's a plan, and that these problems are being tackled, and that we can have some confidence that they'll be tackled quickly. And I think what's happened at the moment is that we've, we've started to lose hope. And, you know, I look at the world, and we have a global struggle now between autocracy and democracy. You know, China and Russia getting very strong. America's very unpredictable with Donald Trump. And we've got this global tussle going on. And I believe in democracy. I like the rule of law. I like the freedoms that we have in this country. And I want my kids to have those freedoms too. But we're not going to persuade the rest of the world that our way is better if we don't believe it ourselves. And I think we've got to find a way of getting back our self-confidence, our mojo, and our hope.
>> And how do we do that?
>> Um, I think by having a bit of perspective, um, by recognizing that we've got loads of problems, but so have other countries as well. I mean, we're the sixth largest economy in the world, and in 2039, I just did a book called "Can We Be Great Again?" And in in 2039, 15 years from now, the economists are saying we'll still be the sixth largest economy in the world. We'll actually have caught up with Japan and Germany a little bit. So, we've got so much going for us in this country. Sure, we've got big problems we need to sort out, but, but don't give up. Um, there's all to play for. So, as a test, once every two weeks, I do a really positive, happy, glass half full post on LinkedIn and X, and they get virtually no views. And it makes me wonder, do we just want to be grumpy? We do like to moan, us Brits, let's be honest. It's a cultural thing. But then it makes me wonder some things a little bit more nefarious, like the algorithms rewarding. I mean, if you go on X, it can be quite toxic there, and it seems like you bash someone and you get loads of views. So how can we be positive when it seems like everything around us is negative?
>> Well, I think it is true that on social media, really aggressive, angry posts do better. Well, they have a name for it, rage baiting. It's an, it's a strategy.
>> Um, all I say is that does that make you happy? I mean, when I was, when I set up and ran my own business with my best friend, who's still my best friend, actually, they were some of the happiest days of my life. I was in control of my diary. I, uh >> You hadn't gone into politics yet.
>> No, I chose the people around me. I had a great team of wonderful people, uh, in our office in Hammersmith, and, um, you know, it was fantastic. And I think that optimism is a very important part of happiness. So all I would say is that, you know, we can rage all we like, but in the end, you're just making yourself miserable, and also it's just not based on reality. I mean, you know, we are a great country, and, um, you know, yes, we've got problems, but we've got a lot going for us.
>> Yeah. And I think that's important to talk about because I do acknowledge that, you know, I'm talking more about the problems than the solutions a lot, although I've tried to offer some here. But actually, um, our law here is pretty good compared to many other countries. Legal system is pretty solid. You own a property in the UK, you own it. There's plenty of countries where if they want it, they'll take it off you. Um, I take you on, Rob. Um, you know, in the pandemic, vaccines and treatments discovered in the UK saved more lives across the world than those from any other country.
>> Wow.
>> Um, you know, we have fantastic universities and research programs, London, Oxford, Cambridge, you know, >> so I think we're also a pretty good force for good in the world. I don't want to slide back into negative, but, but you're going to, but you say all this, and you get me optimistic again, and I agree, and the sun is shining, and then I just think, oh, but Labour are running the country. Give us some, give us some morsel to be positive about about Labour.
>> Well, um, they haven't done a bad job on the international stage, actually. Uh, >> Well, you mean Keir has been good at pandering to Donald?
>> Well, you can put it that way, but actually, that means that's a strategy, though. I mean, >> that is important for the UK. We, we've got the best trade deal with America compared to other countries with our 10% tariff rate. I mean, I think all tariffs are bad, by the way, but, you know, compared to other countries. So, so I think that's the, the least bad bit of what we've seen. Yeah.
>> From Labour, and there have been some successes there. So, I would say, um, that's a bit of good news. I would say that Donald Trump is starting to say the right thing about Ukraine, finally. Um, it's taken a while, but we, we seem to be getting there. Um, and look, I'd say this as well. I'm going to give you my last sort of optimistic comment, you know. Um, we often talk, and I'm sure you've talked with Nigel Farage on your program, about the global migration crisis. Um, where are all these migrants trying to get into? It's not Russia, and it's not China. They're trying to come to Europe and North America. Maybe they understand something about how good our systems are that we've forgotten ourselves.
>> Or could it be they know that it's pretty easy to game the welfare?
>> Um, well, there's definitely a bit of that, but that's that's a UK thing. But you look at it more broadly, and they're looking, look at Europe, look at North America, they want to come to the Western liberal democracies.
>> So what do you think about the state of free speech in the UK? You know, there was this big rally, wasn't there, the the Tommy Robinson free speech rally?
>> Um, yeah. Um, I think, uh, we've got to be careful, and I think there are some things happening that make me uncomfortable when I look at people, you know, comedians being arrested, and, uh, people being, uh, you know, getting visits from the police because of their social media posts. And, um, to me, this is an example of where political correctness has gone mad. Uh, there's too much wokery, and, you know, what we want is the police focusing on real crime. So I, um, I don't think it's a crisis. I don't think that, uh, you know, we have a, a massive problem with free speech in the UK compared to lots of countries. But I do think in those particular areas, it's been going in the, um, the wrong direction.
>> Okay. So final two questions. Um, why did you decide to get into politics? You're an entrepreneur. You, you know what being an entrepreneur is like. You sold your business. You know, you've, you've won at life, and then you go into politics?
>> Well, not for the, uh, popularity, that's for sure. There is something incredibly rewarding about public service. Um, I'll give you an example. When I was Health Secretary, I was one of the most unpopular people in the country. The junior doctors were on strike for a year. Um, and I was detested across the NHS. My thing was, uh, patient safety, reducing the number of avoidable deaths in the NHS, which I thought there were too many. And by the end of my time, we had two fewer baby deaths every day across the NHS. Now, no one knows that.
>> Um, but I, yeah, I will be proud of that till the day I die. And you don't get a chance to do that in business. So it is a privilege.
>> And then finally, what was one maybe mistake or regret?
>> Very good question. I, you know, every job I did, um, I had, uh, uh, mistakes and regrets. You're talking to the person who, in front of the whole world's media, called his Chinese wife Japanese. That was like, that was like the faux pas to end all faux pas. So, so I had plenty of those. Um, but, um, look, I said when I was Chancellor, I wish we'd done more on welfare reform. And, uh, I really do think that when I was Health Secretary, I wish I'd scrapped all the national targets because the NHS is run like a Stalinist bureaucracy, and it makes it impossible for managers to do their job. Um, but, um, overall, I don't have regrets, actually. I'm really proud to have done what I've done. And, you know, I think Bill Clinton said that, you know, don't ask for praise after you've left these jobs. The privilege is doing the jobs themselves.
>> Jeremy, I've really enjoyed this. Thank you very much.
>> My pleasure. Thank you.
>> Thank you.
>> Silver has crashed. It's back to its price in 1974, and I'm going to buy more. And if you'd like to learn how to invest and build multiple streams of recurring income, I recommend you join money.school. Money.school is my global financial education platform to help as many people on this planet get better financial knowledge. For less than four Starbucks coffees a month, there are hundreds of hours of courses, resources, and masterclasses going back a decade to teach how to make, manage, and multiply money and gain financial freedom. So join thousands of other money and freedom seekers on the link money.school school and start today your journey to financial freedom and more money. [Music] [Music] Hey, hey, hey.