Where do your taxes actually go?

24:29It's tax to shape behavior, which is the beard tax and things like that. Everyone shaves. Actually, the use for tax is to shape behavior and push people ways. Because like you say, if you tax over here, they'll move over there. So if you want to go to net zero, you have to tax gas usage and maybe incentivize electric on the other side. So the behavior moves that way. The one takeaway that I took from the book, though, is we talk about beer tax and all of that. None of them really matter. There's three taxes that move the needle. Can you just explain to us what those taxes are? Yeah. So we raise about a trillion pounds, just under a trillion pounds a year.

25:03That's a big number in tax. And about two-thirds of that nearly is just from three taxes, income tax, national insurance contributions, and VAT. The next big as well is corporation tax. So between those, that's more two-thirds of the... Excellent. We're very grateful. He said you are welcome. You are welcome. But you would think corporation tax would be a bit higher. It's quite higher. No, no, no. Leave it alone. So we get whatever it is, 250 billion or something from income tax and getting on for 200 billion from national insurance and VAT. Corporation tax is actually going up quite a lot. And by international standards, it's really quite high.

25:49That surprises people in terms of what we get in the UK. But it's still only, what, less than about a fifth of what we get from income tax, a bit more than a fifth. So it's those three big ones, national insurance, which you pay on your earnings, income tax you pay on your income, VAT you pay when you buy stuff. Those are the three big ones. Income tax at the moment, people may not realize this, income tax at the moment is going up by the most it has ever gone up. Fiscal drag. Fiscal drag. So what that means is the point at which you start to pay income tax is being held at the same level in cash terms for six years when inflation is really high.

26:26So that drags more and more of your income into tax. The point at which you start to pay higher rate tax, just over£50 ,000, is also being held for six years. And that's doubling the number of people who are going to be higher rate taxpayers. and the point at which you start to pay 60 % tax, which you do between 100 and 125 ,000 pounds, and 45 % tax over 125 ,000. All of those are being held. And that's probably a£50 billion tax rise. Now, that's one of the biggest tax rises in history. But you don't kind of notice it because it's just holding things the same in cash terms. Yeah, it's this point of being a higher rate taxpayer used to mean something.

27:03Now you can actually be in poverty as a higher rate taxpayer. You could not be able to afford to live and still be in the higher rates. Well, I think, yeah. Again, this is one of the funny things about tax. I mean, if you are a single person with no children and small housing costs, obviously,£50 ,000 a year and you're really well off. If you're a single earner with a mortgage and two or three children,£50 ,000 really isn't very much. And of course, the tax system doesn't take account of those differences. So you'll pay the same amount of tax either way. It punishes people in certain circumstances.

27:38Your book highlighted, I would like you to explain it, but if you, say, have three children and you're going from 50 to 60K in income, you're paying, is it like 68 % or something? like that. You're paying really high. So the reason is that your child benefit, which you get if your income is below£50 ,000, is taxed away between£50 ,000 and£60 ,000. So if you've got two or three children, that's a reasonable amount of money, which you gradually lose as your income goes up between£50 ,000 and£60 ,000. And that can take your marginal tax rate. So the amount you lose for every pound that you earn is well above 60.

28:13And if you've got enough children, 70%. So you're saying to us that an aging population is an issue, but we're disincentivizing people to have children in a common income bracket. I mean, you're probably going to just say, yeah, but shouldn't we be incentivizing people to have children then instead and not impacting that? Because they'll make financial decisions. People will say of our generation, I'm not going to have kids because it's too expensive. And that's a reflection of that, isn't it? Well, I think it is. I mean, I think the bigger issues there are around housing costs and so on. I mean, and if you look, I mean, 25 years ago, the large majority of middle income people in their 30s who had children were owner occupiers.

28:51Now, a big fraction of them are private renting. And private renting, as everyone will know, is really expensive and has all sorts of other downsides. And it's definitely one of the things that makes it, you know, when you make that calculus, how am I going to have a kid? How many kids am I going to have? The housing cost is really important. The childcare costs are really important. And possibly the child benefit, but that's actually quite small probably relative to your housing costs and your childcare costs. But all of those things matter. And the number of kids that we're having is dropping really quite fast.

29:25I mean, it's about one point. So the way that we measure this is how many children per woman in their lifetime. And you need 2.1 to just keep the population stable if you ignore immigration. We're only having 1.6 at the moment, which probably is the lowest ever. And the only reason that the population is reasonably stable at working age is because we've got quite a large number of immigrants. Yeah. I mean, you've just had a kid. I'm not having any more. Congratulations. You've got one. When I grew up, though, I thought I'm going to have four. But I come from a big family, so I thought when I grew up, I'm like, oh, I want to have twin boys.

30:04Twin boys? You can't specify that. I did, I did. I'm not one. I grew up for it. I've got twin boys. You see, there you go. Shoot to kill. Shoot to kill. Put it out there. But yeah, I always thought I had like two twins and then like a couple of others. So at least three or four kids. I've had one and I'm like, no. Done. Done. Because it just changes your life. But it's more expensive now to have a kid than it was before. Not even talking about school fees, just like maintenance and food and like nursery and everything. It just costs. Try having a, yeah, 10 years old is an expensive age. Yeah, my son.

30:36Like, you know, they don't get cheaper. I'd say that when they're a baby. Well, I've got two at university at the moment. They're a little bit expensive. Yeah, yeah. So, yeah, keep having kids, people. Even university used to be free. Like, yeah, when we were growing up, university was free, right? The loan doesn't cover the - Yeah, it was free. The loan doesn't cover the costs is the problem. So, you know, you have to supplement your child or they have to work, don't they? Because the grant and the loan isn't enough to even pay the accommodation. Before you could just go and have fun and party and not worry about it.

31:04Now it's like, I need some money, parents. I need a loan. I just paid off my student loan, thankfully. But yeah, it's just a lot of work. Not the one that you've defaulted on.

31:15It was like, yeah, but now they don't charge interest on it. I was like, okay. Yeah, because they start charging interest after you stop making the payment. When you default. It was my second degrees. So I took a private loan. Yeah, I'm old enough not to have had to pay anything. Yeah. It's that lack of investment in the future. It's that short term mindset that we're not investing in kids' educations. We charge loads for university, straddling people with debt. It all seems backwards, doesn't it, the thinking? Well, I think the big, you know, one of the things, again, I say in the book is that the biggest thing that worries me about COVID is what's happened to kids' education.

31:52I mean, a lot of kids lost a lot of education and we know that there's particularly poorer kids are not going back to school full-time in the way that they used to. So I think all of the rest of it will pass. I mean, the sort of the health issues and the economic issues and so on. But the effects on that generation of young people, and particularly those from particular backgrounds who aren't going back to school properly. And the government's invested very, very, very little in sort of dealing with that. That, I think, might be the biggest cost that we see in 10, 20 years' time. Yeah. So just the intelligence cost or the education cost.

32:30Loss of education. We know that having a good – the most important thing for any individual and for the country is that we've got a good education system. People get the skills and the education and the literacy and the numeracy and all those things. And if you lose that – I mean, we know this just from research. You can actually see it in the data that if you don't get that education, then you'll end up worse off and the country will end up worse off. Last time we recorded, Temein, you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted.

33:01They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes and yeah, they were charging me thousands. They saved me some money, but yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp. It's a tech platform that makes self-assessment simple. Whether you're self-employed like me, a freelancer or a director like Damo, big dog. Instead of sending endless emails, bills and spreadsheets to your accountant, you just connect your bank, answer a few questions that are only relevant to you, and your tax return can be ready in as little as 15 minutes.

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35:20That's Vanta.com forward slash making money. There's a link in the description though, so you can just click that. We know that the three biggest taxes, income tax, VAT, we know that everyone's paying more at the minute. Can we just tackle the thing that I know everyone's screaming at home is why don't we just tax the wealthy more? Yeah. So it's always great, isn't it? Don't tax me, don't tax you, don't tax me, tax that man behind the tree. Someone else, always tax someone else. Tax tea, that's it. Yeah, tax tea. That's it. No, I'm finding you. Yeah, because I'm finding you. You're behind the tree, aren't you?

35:56With all my crypto behind the tree deciding, don't tax me, please. Well, we can do a bit more of that, but I think there's some things that's really worth keeping in mind. Because if you look at income tax, 1 % of people pay 30 % of income tax already. So we're getting a lot of tax from people on high incomes. That's partly because their incomes are pretty high, but we get a lot. And we get more, actually, than most European countries from the people at the top. Again, partly because people at the top are quite well off. 1 % we're talking about incomes over$160 ,000 or something before tax. That's the top 1%.

36:30The top 0.1%, they've got incomes over about$650 ,000. There's about 50 ,000 people in that group. they're paying just 0.1 % are paying about 6 % or 7 % of all income tax. You mean taxable income, so like a wage basically or a salary? Or income from self-employment or whatever. Okay, yeah. So that's a huge number. I mean, not very many people earn that amount of money, but they pay an awful lot of tax. Although one of the things that is frustrating in a sense is that they're much more likely to get their money from sources which are less highly taxed. So they're more likely to be self-employed or they're more likely to be company owner managers or what have you.

37:10And they pay less tax than wage slaves like me who just pay income tax and national insurance. Second thing about that group is that about a third of them were born abroad. So I never used to think this was a real issue. But we now – so they could leave. And that would be expensive for us. So that's the first thing. They came here, they could go. They could go. So if we do, yeah, I mean, there's lots of things we could do to chase them away, like leaving the European Union or what have you. In terms of wealth, so that's income. So that's people on high incomes. We get a lot from them, and we probably get a bit more, but not enough to move the dial.

37:49In terms of wealth, I think that's where we could look. So wealth has become much more important relative to income over the last 20 or 30 years. House prices have gone up. Asset values have gone up. an older generation is sitting on quite a lot of wealth. And wealth is much more unequally distributed than income. And we don't have a sort of specific wealth tax. But more importantly, we don't, the wealth taxes we do have work really badly. So inheritance tax, for example, doesn't raise very much money, partly because if you're really rich, it's really easy to avoid it. A trust. A trust or just, you know, just buy shares in the AIM market, in the sort of small company market.

38:28Or farmland. any of those things. And so I've got a little quote in there from this great tax lawyer called Dan Needle. He says, you go to your advisor, how do I reduce my inheritance tax? And you expect a kind of 30 page thing. And you just come back saying, sell the assets you've got, buy some shares on the AIM market, live two years, that's it. No inheritance tax. And so the result is that the average level of inheritance tax on a£2 million inheritance is double what it is on a 10 million bound inheritance. And if you've got billions, you pay almost none. So you can do a lot to fix that. Council tax, you highlighted as a wealth tax.

39:09And this was the first time I'd thought about it, but can you just explain that please? So council tax is a tax based on the value of your property that you live in, but the value as it was in 1991, so more than 30 years ago. And the amount that you pay is a higher fraction of that value, the lower the value of your house. So if you've got a really cheap house, mostly in the north of England, you pay three times as much as a fraction of the value of your property as if you're in a quite expensive house in London, say. And because there's a cap on the amount you pay, if you're in a£10 million mansion, you pay the same as someone who's in a sort of standard, well, in London at least, standard million pound house.

39:56That didn't used to be the case. Under the old rate system, There was no cap on it. And you had sort of the amount directly related to the value of the property. So I think this is the only tax we've got, which I think is deliberately regressive in the sense that the wealthier you are, the less you pay as a fraction of your wealth. And it could be a genuine, easily enforceable wealth tax. Because one thing about wealth, like to argue the other side, someone like Elon Musk hasn't got billions in the bank. It's tied up in stock value. So, you know, if you're saying, oh, I want 10 % of your wealth, what does he do?

40:30Does he dump 10 % of Tesla stock on the open market? Well, I mean, he lost more than 10 % buying Twitter, didn't he? Yeah, yeah. X. Yeah, yeah, yeah, yeah. Yeah, he does a good job of burning his own cash. I mean, I say that, the guy's worth a lot of money, so he does a good job of burning it. But with council tax, it's like, oh, you're living in a 15 million pound house. You've got to pay, you know, 100 ,000 pound a year to live in it. That seems quite fair. It's crazy that I pay more council tax than some people who live in Mayfair, you know, living up north where I live. Yeah, it's completely crackers.

41:01And there are actually still places where the council tax in cash terms today is less than the rates were, which is what preceded council tax, 35 years ago. And so if you're in a really expensive place in central London, you're paying, I don't know,£2 ,000 or£3 ,000 a year. Actually, the US, which is hardly the hotbed of socialism, Most areas in the US have property taxes, which are much, much bigger than that on really expensive properties. You use an example, is it Hartlepool, where the person pays like 1 % or 2 % of the value of their home every year? Yeah, and in Westminster, it's 0.1%. So it impacts 10 times heavier on Hartlepool than it does on Westminster.

41:42That's madness, isn't it? That's wild. Are there any other taxes like that where you think this could be an easy fix? Well, capital gains tax. Again, it doesn't raise huge amounts, but it raises a significant amount. It's a tax as you'd want. If you buy something and it becomes more valuable and then you sell it, then you pay some tax on that gain. Actually, historically, that was one of the reasons 20 years ago when Gordon Brown unaccountably really cut capital gains tax. People in private equity were able to pay 10 % tax, whereas other people were paying 40 % tax. and they were able to claim, I mean, this was in the press at the time, I pay a lower rate of tax than my cleaner.

42:24And this is kind of, you know, multi-millionaires. That's not quite as bad as that anymore. But there's only a 10 % capital gains tax on business disposal, up to a million pounds. That benefits a small number of very wealthy people. And if you hold on to something until you die, there's no capital gains tax at all. And that does mean that a lot of people who would, you know, probably benefit from selling their second home or their shares or what have you. Just hold on to them to avoid the tax. And then when it's passed on, there's no tax. That's both unfair and actually economically inefficient as well.

42:58You had a good analysis of corporation tax. You said companies like Amazon or Apple, they might have their R &D in America and then they build everything in China, but then they sell the iPhone in London. but because you can't really say it's a tax on the profit they make right so you can't really say where the profits actualize but you said that instead of taxing so a lot of companies will choose oh we'll pay the tax in Ireland or somewhere where it's cheaper do you think it would just make more sense if everyone just said okay you're gonna if you sell in England you have to pay tax in England if you sell would that work or do you think all the corporations would be like no we want to keep paying naturally we want to keep paying our tax in Ireland or Singapore wherever it's cheaper where we make the product.

43:42I think in the long run, a move in that direction would, you know, is probably the way to go. I mean, the problem is exactly as you describe it, corporation tax is supposed to be a tax on profits. When you're looking at Apple or Amazon, where is the profit made? And, you know, the corporation tax system is an international system and it was sort of still based on rules made in the 1920s, so 100 years ago, when that wasn't so hard. I mean, you know, you didn't have internet companies and these incredibly complex supply chains. So it's exactly right. That's why lawyers and accountants and international bodies, there are hundreds of thousands of people making a lot of money out of determining where profits are made.

44:23And there's no correct answer to where the profit is made. As you say, is it just because of the R &D? Is it where it's sold? Is it where it's made? So you could sweep all of that away and say, look, actually, we're just going to tax you according to where the sales are, because we can see where the sales are. Of course, that needs some international agreement. And of course, some countries would win and some countries would lose. And that's why that's quite hard to achieve. It hasn't been reformed since 1920. It hasn't been updated. I mean, there's been lots of effort into sort of fixing holes and updating it and making it more and more and more complex.

45:00But the basis of it is still the same. Yeah, because America's incentivized to keep the system as it is because they benefit these massive corporations, a lot of them are American, aren't they? The biggest ones are. And so there are some reforms going ahead. And the Americans essentially are saying, if everyone in the world will at least ensure there's a 15 % minimum corporation tax rate, then we will allow you to tax a little bit more of some of these American companies' profits in your own country. So that's the sort of quid pro quo. They want to make sure, you know, that they get rid of the sort of more egregious sort of tax havens.

45:41And if you do that, then some countries can charge a little bit more tax. But this is, you know, they've been negotiating this for 10 years and it's still not in place. So this leads me on to another question I'd like to ask you. You're talking about, you know, agreements internationally, which kind of makes me think about policing of the tax system as well. Well, in the sense of another YouTuber friend of mine has just had the tax man all over him. And there was a month long discussion about a coffee maker. But then the government have recently said about furlough and all the fraud that exists around there.

46:14We're just going to wipe that. How do you view the policing of the tax system? And do you see that as fair? So that's a really complicated area. I mean, it's extraordinary, isn't it? That thing about the furlough. So through COVID, the government spent vast amounts of money, I mean, hundreds of billions of pounds, I mean, in a way that's never happened before. And actually, the British government spent more than most other governments. And Rishi Sunak, when he was Chancellor, he'd be very proud of that. Obviously, we needed to spend a lot, but it's pretty clear in some ways we spent too much. So Furley went on for longer than it should have done.

46:51For example, we wasted a lot of money on PPE, personal protective equipment, for example. But the fraud mostly appears to occur where loans were made to businesses, things called bounce-back loans. They were made through the banks. But the government told the banks, look, essentially, lend to whoever you want and we'll pay you back. And quite a lot of people got rich off the back of that, quite a lot of that, billions and billions. Government admits was fraud and appears to have effectively given up on trying to get it back. And actually, they were warned at the time about some of these loans that they were giving.

47:29But that's by the by. I mean, if you've got a tax system, you need to police it. And again, one of the things I quote in there was one of the many mad things that Quasic Quarting did when he was chancellor was to essentially say, we're going to stop policing whether it's self-employment income or whether it's earned income. That's the IR35. IR35, exactly. And the Treasury said, well, that'll cost you$2 billion a year. That was the Treasury's estimate. But if you've got a tax, I mean, the answer really is to tax everyone the same and you wouldn't need all these rules. But if you've got these rules, then you need to police it.

48:09Yeah. So we were speaking off camera before and I told you that I worked in accountancy and I actually worked for contractor-based accountancy. So I oversaw the transition of IR35. I saw it get undone. I saw it transition again and then I seen them threaten to undo it. And just to give people context on what that was, it's a perfect example as well of you saying before that people get hurt and they don't like it. But people, we would have cleaners who are contractors or doctors working in the NHS, working through a limited company and not paying high levels of tax, maybe 10%. But then a full-time member of staff next to them doing the exact same job was paying 30%, 40%, whatever.

48:48So the IR35 rules tried to close that loophole where people who were just employees were contractors working through limited companies. It was really unfair because what was the incentive to be full-time employed when you could just - Yeah, yeah. And this is why people like Gary Lineker have spent years in the courts fighting with HMRC about whether they were an employee of the BBC or whether they were doing it through their own company. And I think he's recently won that case. But, I mean, for people like that, there's lots of money at stake. And it's just a kind of small legal technicality depends on that, whether you're paying millions more tax or not.

49:25You can see immediately that that's a cracker's tax system. Yeah. So I still think it's a hard message to swallow in terms of we're all going to pay more tax or we all need to pay more tax. Do you have a positive way of reassuring people that that's a good thing or that it's going to be okay? Well, look, we all want to pay less tax, don't we? I mean, I'd much rather pay less tax than more tax. I suppose one answer is you go to places like Denmark where they've got much higher taxes than us, and on average they're pretty happy about that because that does seem to pay for social equity and good public services and so on.

50:06I think the problem here is exactly as you were saying earlier on, is that these high tax levels seem to pay for pretty rubbish public services at the moment. And whilst that continues, then I think people are going to continue to be a bit unhappy. Also, when it just looks unfair. I mean, we've talked about how super rich people tend to avoid inheritance tax. You can use capital gains tax to avoid income tax. You can, you know, partners in law firms pay less tax than employees. So part of the answer is, if you're going to have more tax, it's even more important to tidy up the tax system so that it's fair and it works efficiently and it's not too complex and all of those sorts of things.

50:48I mean, all those things matter anyway, but the more that you rely on tax, the more that it's going to matter for economic growth as well as people feeling that it's fair. Speaking of growth, how does growth in the UK impact this taxation point? And is growth an answer? Well, we certainly need growth. So one of the reasons that we're in the position we are at the moment is that incomes and growth have been so poor over the last 15 years. One of the extraordinary things, if you look at earnings growth, the last 15 years have probably been the worst 15 years since Napoleon. I mean, going back to when we, you know, income taxes first.

51:28So literally the worst 15 years for 200 years in terms of earnings and income growth, which is just extraordinary. And of course, if they're not growing, then tax revenues aren't coming in. And the less money we have as a country, the less money we've got to spend on health and education and so on and so on. So more growth matters in all sorts of ways. It's also one of the reasons why we've got this sort of intergenerational inequity that sort of older people who owned their houses 15 years ago have done so much better than younger people because very low interest rates, which reflects the very poor growth, and earnings haven't gone up.

52:04So all of those things matter. So going forward, economic growth is important for us feeling better about the world, but also in order to be able to pay more tax for the better public services. And actually, if you've got the same tax as a fraction of national income buys you more if there's more national income. Yeah. So you point to Scandinavian countries and they earn a lot more per capita on average than, say, we do, don't they, as well? Yeah, so they've got lots more to spend on their public services. Now, I mean, obviously, if you've got more income as a country, you have to pay your doctors and nurses and teachers and policemen and so on more because you can't have them falling further and further behind.

52:47So it's not all a win in terms of things just get easier, but it obviously helps. So how do we grow? A phrase I use in there is there's a dirty little secret in Whitehall, which is that they know how to do it and don't do it. So we know how to get growth in the long run. And that's a political problem because you can't do stuff today, which will make a difference in a year's time to growth in a way that's sustainable. But you can do stuff over the next three years, which will make a big difference in 10 years. So that's the political problem because politicians don't tend to have that sort of time span.

53:26But what are the things we could do that we know would be good for growth? well one is reform the planning system so we can actually build houses where they're needed and build roads where they're needed and so on and governments have continually bottled out of that the last time infrastructure investment so HS2 infrastructure investment as well I'm not so sure about HS2 but we can come back to that southerners southerners you get on that train that Avani West Coast train you sat next to the toilet and tell me we don't need more capacity on that line more capacity perhaps and whether HS2 is the best way of doing it Yeah, my kids are at University of Manchester, so I'm on that train quite a lot.

54:02I went there. So you end up standing on a Sunday, you stand there with like no seats. Well, that's the best bit of the train. And then go, you know, regional in, you know, go to like, you know, Barrow and Furness. But that's why, anyway, that's why you need to, you definitely need infrastructure across the north and across the Midlands. So one of the things outside of London, our cities are much worse served by transport than in Europe. So European cities have much better public transport and American cities have much better roads and we're stuck. So that means that Birmingham, Manchester and so on effectively, they're serving a much smaller labour market than they could because people can't get in to work.

54:40So that's one thing that really matters. Planning, infrastructure investment, and we cut spending on investment dramatically in the early 2010s and we're paying the costs of that. Education, we know really matters for growth, particularly, and this is a real sort of bugbear of mine. people between 16 and 21 who aren't doing A-levels and going to university, which is about half, we really cut spending on that. Policy has been totally changing all of the time. And our 15-year-olds actually compare quite well internationally. Our 21-year-olds are disastrous internationally. And that's telling you something really serious about what's going wrong between 16 and 21, particularly for people doing vocational.

55:21So higher education and apprenticeships, is that what you mean? Further education and apprenticeships, yeah. We have very few people doing higher level apprenticeships. So lots of people do degrees and lots of people sort of stop at sort of GCSE or A level. Almost nobody does stuff in between. Actually, one of my sons did a sort of higher level apprenticeship doing really well. And we know that there are big gaps in skills at exactly those levels. So that will be good for growth. We know that. We've talked about reforming the tax system in ways that would be good for growth. We know that's important.

55:56And there's all sorts of things we need to do with trade with Europe. I mean, we know that making trade more expensive with our biggest, nearest and richest trading partner is bad for growth. So the closer we can get to the single market, the customs union, the better. And then there's lots of issues around competition law and regulation and getting all of those right. So we kind of know the broad outline of things that we need to do to get growth going. But each one of those things is either expensive or it's bad for people who've already got houses somewhere. Or it's a bit difficult when it comes to education or it makes some people worse off when it comes to tax.

56:33And so there are always trade-offs. And if there's one theme of my book, it's there are always trade-offs. There are not very many things you can do which makes everyone better off. But my view is we've made the wrong trade-offs for a long period of time, which is partly why we're in the position we're in. Do you think Brexit made this a lot worse or not in the grand scheme of things? It certainly had an effect. So we're probably 3 % or 4 % worse off than if we hadn't or will be than if we hadn't gone through Brexit. Now, that is a decision you can make. I mean, we're a rich country despite everything we've just been saying.

57:09And if you, you know, and then there are, you know, it genuinely means we can control our immigration, for example, in a way that we couldn't within the European Union. So, again, there are trade-offs. there are arguably benefits but there are costs and the costs are economic ones because we can see that our trade intensity has fallen a lot and we could see immediately after the referendum that investment fell off so so we know that there are economic costs and you have to weigh those against any political benefits that you might see from it and one of the huge frustrations of referendums both that one and the Scottish one actually is that both sides made out that everything will be best on one, but there are just all, sorry, just to go on about it, there are always trade-offs.

57:51No nuance to the debate. It's like, it's all good over here. Exactly. Do you have much confidence that the political system will, you know, make the changes that we need for growth? Or can they? Because people are not brave, like you said. Well, I think it is possible. We have seen over history changes that have been made. I mean, there have been good changes to the tax system over time. We have had reforms to, you know, taxation of mortgages to capital gains and so on over time. We have had some efforts to change planning. We have had periods. Actually, now is a period when investment spending is quite high.

58:23So there are things that people have done. I think what you need and what – one of the problems is we're doing this in 2023, and certainly between 2016 and 2022, there was just no space. I mean, you talk to cabinet ministers at the time. for four years after the 2016 Brexit vote. No one thought about anything on the Brexit in government. You couldn't do anything. And then we had the chaos of COVID and we've had sort of, you know, Johnson and Corbett and all this kind of stuff. It does feel to me like we're getting, despite all of the, we're speaking on the day that, you know, we're having a reshuffle and Suella Braverman has just been sacked and so on.

59:01So you get all, there's lots of excitement in politics. But despite all of that, it does feel to me like we're returning to a sort of more stable world. It only took five, six years, or however long it's been. And actually, one of the things that is absolutely necessary for economic success and growth is to have stable politics. So when you've got, you know, whatever we had, four chancellors in a few months and three prime ministers, and actually also when you've got prime ministers saying, you know, fuck business and trying to undermine the Bank of England and all of those kinds of things, that might feel it's fun from a political point of view.

59:42That is economically damaging. So actually having stable politics is not enough, but it's absolutely necessary for having economic growth and hopefully will return to a period of more stable politics. So just to summarise everything you've said there, there are big challenges that the country face and I think they're important challenges that everyone acknowledges we need to address, age and population and climate change. in order to do that it's going to cost money and we will need to pay more taxes the main levers for tax are really the three big ones and everything else like inheritance tax and that we can tweak it and move it to make the system fairer but they're not going to they're not going to pull the levers like we need the big three and really your book says that if we're going to fix these issues long term that we probably will all pay more tax over the next 10 years do you think that's fair.

1:00:33Yeah, and we can do better with all the spending that we're doing. We do better with the education spending, especially. But also, we need to get the economy growing. And there are things that we can do to do that. But actually, that's going to take not just politicians to be brave. That's also going to take us to be brave and actually accept that if you're going to make big choices, we made to make in the long run, let me say again, there are trade-offs. And none of this is straightforward. I don't want to speak on behalf of the nation, but I think people could probably get behind the idea of paying a bit more tax as long as the system is fairer and we close off the silly loopholes of which penalize people for having more kids and stuff.

1:01:13And we aggressively go after fraud and we tax businesses more and we make sure that the wealthy, the 0.1 % pay their share, then maybe we could all pitch in and get tea on that as well. Chance of the extract of tea. your book is fantastic you're even better in person honestly I've loved this chat I'd encourage everyone to get a copy of the book or the audio book and if there's one key takeaway from it as well is if you're going to get a pet get a rabbit because you can eat it so there's no VAT on it absolutely bunnies on a bagel mate once Floppy pops his clogs you just spread him on a bagel Bugs Bunny for lunch let's go yeah that's what I took away from it

1:01:58If you missed anything in that episode, don't worry. We do a really good summary of everything that's gone on and what we discussed in our newsletter. You can sign up using the link in the description. And don't forget to subscribe to the podcast and leave us a review. It really makes a difference and lets us know what we're doing right. We're taking a break over Christmas, but we'll put out some special festive treats for you. So keep your eyes peeled for those. We're going to be back on January the 1st to bring in the new year with our full-length episodes. I'm Damo. I'm T. The episode was recorded by Jack Hobbs.

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