Can Burnham end Britain’s social care crisis?

0:14This is Political Currency with Ed Balls and George Osborne.

0:26Ed Balls: so we are in the studio in hoxton in the dog days of july parliament is not in session andy burnham is i guess still making hourly new announcements in his first two weeks as prime Minister, but we are off on our travels. This is our last show together until September. Where are you off to?

0:48George Osborne: I'm off to Greece and yeah, we won't be doing a show, will we, unless World War III breaks out, which I have to say is looking a little bit more likely than it was a few days ago. But no, we are going to be providing you, however, with content through the summer. So you can listen to us on the beach and hiking up mountains and by the pool. We've pre-recorded some interviews.

1:10Ed Balls: That's right. In fact, we will be doing EMQs every week as normal. If you're a Kitchen Cabinet member, you'll be getting your weekly briefing. But also we're doing four special interviews in August. First week, I'm speaking to Kemi Badenok, which will be great, I think, because it's such a pivotal moment for her, but also for the Conservative Party. Her poll ratings have shot up, but not so far, the Conservatives. No.

1:39George Osborne: And then I have just finished doing an interview with someone. I wonder if you can guess who this is. This is someone who is in the Cabinet. She was a health minister 27 years ago. She's the only woman who's ever been Foreign Secretary and Home Secretary. Any ideas who that might be? Angela Reina? No. You're married to her. Yes, you know. Yvette Cooper actually just finished a really interesting interview with her about how politics has changed over those decades.

2:04Ed Balls: then I'm speaking to Sue Gray distinguished public servant author of the Partygate report Keir Starmer's Chief of Staff in opposition for a period in government and to reflect with her on public service and the Starmer years and then also to look forward to the new administration it's Sue Gray speaking in public for the first time I think so looking forward to talking to her

2:30George Osborne: well the fourth interviewee It's definitely not his first time speaking in public because I'm going to be talking to Amal Rajan as he leaves the Today programme, as he embarks on an exciting new career and a new enterprise. It's all about the nature of communication. How is politics changing? What has he seen over his time, not just as a Today programme presenter, but also a newspaper editor? So he's always very good value.

2:53Ed Balls: And then we have exciting news about the beginning of September.

2:57George Osborne: yes we are going to be broadcasting the podcast from inside the room with the bayern tapestry as it opens at the beginning of september we have spoken to the people we know at the british museum and we've got the special access it's gonna be great we're gonna do i've seen the room already because i i took the french and british culture ministers around it just a week or two ago tapestry there and we are going to be there one of the first people in the room as it opens the public and a million people start to file past it. Very exciting. It's a tale of regicide, of disloyalty, of the king over the water coming and getting rid of the sitting monarch and how the courts changed.

3:45Ed Balls: But through a traditional communications medium. Yes. The tapestry. Not TikTok. Yeah I mean just Just on a serious note, at a time when those terrible wildfires are ravaging through France, I mean, you know, what a good thing to know that the Bayeux Tapestri is safe here in London. I think, to be fair, they're not actually in Normandy. I'm just saying, who knows what kind of treasures are being lost? I mean, and what might be lost, whether that's in nature or, you know, man-made. And that is the nature of these kind of disasters. But anyway, I think for a second that we're thinking about people in France dealing with these kind of terrible fire events.

4:26Ed Balls: But the Bay of Tapestry is safe. The Bay of Tapestry is where it belongs. Anyway. So what? George has been so diplomatic as chair of the British Museum. I'm drawing you into. You are concentrating so hard on not saying something which you shouldn't say. But we are. I mean, can I touch it when we go to see it?

4:44George Osborne: No, it's already buying glass. Sorry. Sorry.

4:47Ed Balls: Not if I want to. It's just, you know, if you go to a museum.

4:49George Osborne: Yeah. You missed the moment, the brief moment when it was out of a display case. Did you touch it? No. Oh. No. But there was someone with white gloves who was handling it. We've got to get on with the show. So we're going to be talking about the second week of Andy Burnham's Premiership. It's only been two weeks. How's it been going? But what are we starting to see from the way he governs? How is number 10 operating? How has the cabinet settled in? So the kind of mechanics of the Burnham Premiership.

5:17Ed Balls: That's right. And then second, we're going to move on to week one was about small retail announcements. I think you called them last week a bit small beer. In week two, big, long term, massive challenges. I think they've said they're running towards the big issues, but not necessarily providing answers at this stage. But we're going to talk about the week two, the Burnham policy rollout.

5:43George Osborne: And then finally, we're going to turn to the cost of living, which obviously is a big theme of the Burnham premiership. But as all British prime ministers soon discover, they're not actually in control of the cost of living. The people who are in control of the cost of living for the world are the Federal Reserve Board in the United States. They have met this week. They've put interest rates on hold, but the interest rates in the market are going up. We're going to have a look at this critical moment in the global fight against inflation and take a look at how Kevin Walsh is performing as chair of that Federal Reserve Board.

6:20Ed Balls: And it is at noon in the UK as we record this podcast. I think the Bank of England must be announcing just about now whether they've raised interest rates or cut interest rates. I think they're going to keep them on hold, but we will reveal that as we go along. Let us start, though, week two of the Burnham government. And we're going to come to policy in a moment. So this is about how they are governing. And we said last week that the communication style of Andy Burnham versus Keir Starmer, kind of very, very different. Andy Burnham clearly an kind of instinctive, popular communicator. I rather unfairly said it was like the news quiz versus the shipping forecast.

7:03Ed Balls: but you know i think it's pretty accurate but the second thing which strikes me and i think it's much much clearer now that there is also a sea change in the style of governing we are seeing the return of cabinet government in the final weeks of um the kirstama period i kind of remarked how shocking i found it that on the day when kirstama was making his big announcement about social media and the social media ban for children under the age of 16, a special sort of press conference. He not only did that alone without standing next to him, the tech secretary, Liz Kendall, who'd done all the work, he didn't even make reference to her and the work she'd done.

7:47Ed Balls: I mean, it was like cabinet government wasn't there. This was the Starmer presidency. And I think that was a pattern across the two years. Very often there wasn't even a forward from the relevant minister in the document or white paper, even though they'd done all the work and produced all of the policy ideas. You think that's changed? I think it's very clearly changed.

8:12George Osborne: Even in these first two weeks?

8:14Ed Balls: Even in these first two weeks, Andy Burnham is appearing with the relevant secretary of state. He's asking them to speak. he is wanting to involve them publicly in the the conversation and from what i see this has come from a number of different sources the same thing is happening on the inside as well so this is not it's not just appearances it's not just appearances this is not keir starmer style saying provide me with the solution this is andy burnham in the room with civil servants political people in number 10 always James Pinnell, but also the relevant Secretary of State with Andy Burnham wanting to know what's the problem, how should we think about this, throwing out ideas, debating strategy, a much, much more collectivist approach to decision making.

9:06Ed Balls: And, you know, I think that for me, this is kind of obvious, because that was how it always was in the Blair Brown years when I was a cabinet minister. And of course, that was when Andy Burnham was a cabinet minister, too and he is returning to the way I think traditionally government has worked in the UK I can't talk about 2010 through to 2024 but I do think the certainly the two years of the Starmer approach to non-Cabinet government are the aberration rather than this being an aberrant period I think Andy Burnham is taking things back to no sometimes people said well you know was it sofa government because it was happening in the Prime Minister's study under Tony Blair or Gordon Brown rather than around the formal cabinet table.

9:54Ed Balls: But I think in the Prime Minister's office where the change is happening but also on display in terms of the way in which cabinet ministers are being asked to take responsibility and leadership for their policy portfolios.

10:05George Osborne: You're right that the style is different. I think you always have to be careful when there's a new Prime Minister, and we've had a lot recently, that they come in and they do things differently from the person who sort of by definition has failed because they're out and everyone goes oh you know unlike Theresa May Boris Johnson's number 10 does this or unlike uh you know Boris Johnson's number 10 Liz Truss is doing this or unlike Liz Truss you know Brishy Sunak's doing this so do you always have to just be a little bit careful there's always a new kind of excitement around the prime minister but I think it is true that what Andy Benham is doing at the moment is what I would regard as the sort of basics of the job.

10:44Yes.

10:44George Osborne: Which are, you know, what are the basics of communication? I mean, normally prime ministers, you know, should be good at communicating. Some better than others. He's sort of organized Downing Street. Again, prime ministers who haven't ultimately been politically successful are usually quite good at organizing a team in Downing Street. He's organized the team in Downing Street. And there's now a kind of grid of policy announcements and kind of substance coming out. So all of those things. And I think you're right. The kind of The question is, is that kind of radically different from just how normally you would expect a government to function?

11:20No.

11:21George Osborne: I think the kind of still unanswered question about Burnham is what's the actual political strategy here? And I don't mean that kind of like there isn't one. I just think we don't yet really know. he's done what you absolutely need to and we talked about in this show for the last few weeks which is you've got to kind of launch the premiership effectively those first couple of weeks have to go well because people take a look at you if you compare these first few weeks to the first few weeks of Keir Starmer which were a catastrophe you know even though he just won an election suddenly there were rows about suits and glasses and then you know a kind of premature a treasury announcement that no one had thought through.

12:02George Osborne: But what is he actually trying to do? Is he trying to do, as I was saying, kind of he's sort of, is there a bit of kind of left-wing populism, giving the parliamentary party something to shout about and campaign on, squeezing the left, squeezing the Greens, bit of a recorrection, if that's the right word, or manoeuvre on Gaza, you know, to squeeze the left. Is that what it's about? Or is there a kind of, what's the overall sort of political shape of the government at the moment? Where do you think it's heading? Is it a kind of radical centre or is it moving left?

12:36Ed Balls: Well, look, we're going to come to talk about policy in the second section. In a way, you get more clues from how he's going about the policy conversations around defence or welfare reform. But in terms of style and the organisation of government, I mean, he is absolutely the centre. So every day there is an Andy Burnham announcement.

12:58George Osborne: But he's not actually staying in the centre. He's travelling a lot, isn't he? He's in Barrow and Furness today, and he was in Portsmouth earlier this week. He's been all around the country this week.

13:08Ed Balls: That is true. And clearly what he wants to do is go into the summer with a lot of momentum and a lot of connection and having people saying, I've noticed what he's talking about, what he said struck a chord with me. this is a guy with a plan he's not only doing things which i think might help but also talking about the big things i'm worrying about he wants to be the outsider coming in and shaking things up but also the guy who is can deliver and talk about the difficult issues um but look a senior person um at the center who i spoke to a few days ago said that they'd had so much contact just over the first 10 days with James Pinnell with Lou Haig.

13:49Like far more in 10 days.

13:51George Osborne: This is like an official rather than a politician.

13:53Ed Balls: Far more than they'd had with Keir Starmer or Darren Jones in particular over the previous period. I just sort of think what's going on here is James Pinnell, who was a cabinet minister, and Andy Burda, who was a cabinet minister, are coming back. And as you say, they're getting on with governing, but getting on with governing in a way where lots of civil servants, and this is a tribute to James Pinnell, also to Antonio Omega, civil servants former cabinet ministers are saying yeah this is how we remember this is the way to do things absolutely rip and team and that is that is a you know we talked last week about the fact that um the reshuffle was seen as divisive and i think it was but they are also uh trying to create a sense of kind of collective endeavor and also doing the media differently maybe we should move on to media because there's a um interesting um piece in the times by um Aubrey Allegretti, about a letter which has gone round from Lou Haig and Antonio Romeo to cabinet ministers, reminding them or telling them that only people who are special advisors with media responsibilities should be talking to the press and that should be monitored and there'll be consequences if that is not adhered to.

15:03George Osborne: I mean, you always followed that rule when you were a special advisor, didn't you?

15:07Ed Balls: Always. Absolutely. I had media responsibilities. No, you did not. I absolutely did. I was responsible for everything. And so I... He said he gave that impression at the time. And number 10, look, they need to do this. After the chaos of recent months, they need to get a grip and they need to try and get control back. I think it's going to be quite hard. Number 10, I'm also saying from the centre, these are the people who speak for Andy Burnham. They're trying to deal with the problem of the allies and the MPs. Look, it's not an easy thing to pull off, but it's right that they tried. I've just got to say this to you.

15:40Ed Balls: There's a fabulous tweet that I just saw while I was waiting to come in. Aubrey Allegretti, cabinet minister, is being urged to prevent leaks and hostile briefings. Kitty Donaldson, the commentator on the I, tweets, Remember George Osborne telling the same to number 10 Spad School and one of them calling to tell me what he'd said within minutes. So I think maintaining this discipline is not easy. But what you've got to do is get away from the random allies, people just speaking all over the place, which has been characteristic of number 10, let alone wider white wall over the last year.

16:19George Osborne: Yeah. And you need two things for that to work. You need a bit of fear, like this guy's in charge and we don't want to step out of line. And we don't want the person I'm employing to step out of line or else I'm also going to get in the neck. And you also need to have a sense of what's the plan. If people are confident there's a plan, there's no point faking up a load of people because they're all going to tell you the same thing. That's all true. Now, I think that, you know, I always have sort of have in my mind when there's a new leader. It's true in opposition as well as in government, but it's particularly true of new prime ministers.

16:47George Osborne: You've got to kind of clear the coning tower. That's the kind of rocket law. You know, some rockets just blow up on the rocket pad and they never make it anywhere near the moon or wherever. the first thing you've got to do is that rocket has got to clear the device that's holding it and launching a premiership is much harder than it looks and quite a few of the recent prime ministers have actually not managed to do that so effectively so i think full marks for that and we'll come on to the policy i mean there are two big topics that are completely missing from the conversation at the moment the first is growing the economy there's certainly been cost of living announcements, pub rates, rebate, and cutting VAT on electricity.

17:31George Osborne: But there's no big kind of message about growing the economy. Now, we are going to get regional devolution coming in the next 24 hours. But I would say that's only part of the picture of how you make Britain an attractive place to invest.

17:44Ed Balls: And then last Friday, they think they had the National Economic Council meet in number 10 north with the growth plan with the mayors. But so far, there's no flesh on those bones at all yet.

17:54George Osborne: So where's the kind of growth plan which is going to pay for everything? And then the second thing is, you know, an interesting omission is immigration. You know, this is actually a week in which there's been another kind of record crossing of small boats across the Channel. And Andy Burnham is definitely, I would say, you know, slightly old fashioned terms, but sort of tacking right. He sort of appears to have sort of stuck with the immigration proposals of Shabana Mahmood. He obviously has kept her in post as Home Secretary. You know, he's made some defence announcements. He's literally at the nuclear submarine base today.

18:30George Osborne: And in the sort of Labour sense, he's quite right wing on defence and immigration. But he has not done, he's not actually said anything particularly new about immigration, which I think is an interesting. And most people of you are saying, what are Britain's two big political problems at the moment for the incumbent parties? Immigration. And then above all, kind of how do we get the economy growing? So I think that those are interesting emissions. And maybe, you know, they're going to be addressed in the next few days. What about the there's a lot of talk about the communication, isn't there? And the use of social media in a much more comfortable, relaxed way.

19:06It's not that Keir Starmer didn't do social media or TikTok videos and whatever.

19:11George Osborne: But obviously, Andy Burnham is really doubling down on that and is much more natural at it. You know, it's interesting. People who I was seeing earlier this week who don't follow British politics particularly closely had spotted and were asking me about what on earth pork scratchings and scampi was. And I realised that they had seen this TikTok video of Andy Burnham and the new Chancellor John Healy in a pub. But maybe we'll just play it for those who didn't see it.

19:41Ed Balls: It's real pork scratchings. This looks good. Old school, but we are quite old school, aren't we, me and you? When did you last buy a pack of pork scratchings in a pub? Two weeks ago.

19:54Ed Balls: Number one for me. I'll go two then, just to spice it up. Now, talking about old school, I mean, come on. You scared people.

20:03George Osborne: Come on. It's interesting that Andy Burnham's happy to call himself old school, isn't it? He's not presenting himself as the young Tony Blair or the young Barack Obama or the young Bill Clinton who would never have described themselves as old school. There's a bit of him that's the bloke in the pub who's ordered the port scratchings, isn't it?

20:21Ed Balls: That's right. But I mean, he can call himself old school at the moment because he's absolutely the new kid on the block. And at the moment, he's just been given loads of latitude. Can you imagine Keir Starmer if two weeks ago? I mean, I don't think Keir Starmer would have the style to pull that off. But even if he had two weeks ago, people have been saying, for God's sake, what are you doing? Talking about pork scratchings, run the country, sort out this, sort out that. And at the moment, Andy Burnham has the skill, but also the latitude as the new arrival to do that. And I'm not sure it'll be so easy come the autumn.

20:55Ed Balls: And it'll be a test for him whether he's still doing the down the barrel social media clips when he's under pressure and when there's difficult issues and when it's become hard. They may have to be flexible about how they go about this, but it's definitely different and it's definitely working. We also had an interview last weekend, again, a bit criticised by some. He's done an interview with Laura Koonsberg, who has her show on Sunday morning. We're thinking, oh, so he's doing the Laura Koonsberg interview Sunday morning. It doesn't actually come out until Monday night. And instead, there's a drip, drip set of clips between Laura and Andy Burnham about Trump, about the election, about social care, which come out over two or three days.

21:39Ed Balls: Now, I don't know whether that was because the Andy Burnham team said, this is what we want, or whether this was what the Laura Koonsberg team says, this is how we'd like to do it. It kind of works for both of them, because they end up with three days worth of coverage rather than one day. But you had people like Andrew Neil, our old sparring partner, Roger Mosey, the editor of the Today programme, saying that this is the wrong way to do things. The right way to hold a prime minister to account is have him sit down and do a full interview first. And then the clips should come out of that rather than this media management.

22:13Ed Balls: I kind of thought...

22:15George Osborne: Isn't that a bit old school?

22:16Ed Balls: I thought, yeah, in the end, you're trying to get attention, aren't you? And you're trying to hold people.

22:22George Osborne: And it's also the BBC responding to an age where you can't just do sort of one big interview on a Sunday morning and assume that's it or even just clip it up. You know, you too have to react to a world where people are consuming short form videos and they want to be on to the new and latest thing. That's right. Who's doing the comms? I mean, do we know who is?

22:41Ed Balls: Well, there's a woman called Sarah Brown who's in charge, who's come over from Sadiq Khan's team. and she is head of comms. And there's quite a lot of the old comms team from the Starmer period who have stayed on for now. But I think, honestly, Andy Burnham's ding his comms and James Pinnell is heavily involved in it. And I think they have a very clear view about how to do this.

23:03George Osborne: Did you see him running with Mo Farah? That was another clip.

23:06Ed Balls: But it's all very smart. And then people say, oh, no, but it's all very well, but he's not done a proper press conference with journalists. And then on Wednesday with a social care announcement, he did a full round of question and answers where he did the very unusual thing in modern politics, which is he actually answered the questions. Every time he got a question, at least he sought to answer the question.

23:30George Osborne: And he killed off the assisted dying bill in the process of answering one of those questions. Absolutely.

23:35Ed Balls: With great skill. He didn't actually kill it off. He just said, we've got to do this first. It was a total long grass strategy. Yeah.

23:42George Osborne: So I guess the sort of big question is, is it working for the Labour Party? Is there any evidence yet that it's going to change the political fortunes of the Labour Party? I mean, obviously, the Labour Party ditched its election winning leader because it felt, at least, it was staring down the barrel of defeat by reform in a general election in a couple of years' time.

24:04Ed Balls: Look, the early polling is still very early as a bounce for Labour. Early polling is in a forced choice as Prime Minister, Andy Burnham versus Kemmy Baden-Noc, Andy Burnham versus Nigel Farage. At the moment, he's winning it hands down. I mean, like two to one. It's just far too early to make any judgments yet. You'll need to know where we are by the time you get to the budget and afterwards. But I mean, you know, if he didn't get a first bounce, he'd be in difficulty. Deborah Matheson the pollster who we had on our inside the room talking about 2007 with Gordon Brown said in transitions to new leaders the first six months is your best period for popularity Andy Burnham's only not six months he's only two weeks into it but at the moment there is evidence so of course what that means is the natural question arises we talked about last week we speculated you led the speculation that this looks like an early general election strategy Laura Kunzberg put this to Andy Byrd in one of their pre-release clips and this was the exchange well I'm going to rule it out yeah there's no early general election I don't think people want it you know we've well the opinion polls might say there's a there's some people do some people don't but the thing is I just think what I most need to do is get Britain focused on getting the country back where it should be getting it working i mean of course he said that no and

25:30George Osborne: teresa may also ruled out an early election so and and went on to have one um well gordon

25:35Ed Balls: brand famously didn't and um he didn't have one we didn't but that was close um it's interesting

25:42George Osborne: he's definitely he has got a bounce and i don't think you can completely take it for granted that he would have had a bounce he's got a you know i think if you look at it it looks like a sort of roughly 4 % bounce, which is quite similar to the one Gordon Brown had. And it's not to be sniffed at. 4 % is, you know, pretty significant. And it's just a start. And it's definitely, obviously, better than the alternative if it had all kind of got off to a terrible start.

26:09Ed Balls: The problem for Gordon Brown was he sustained it through August and through September. And it's as if it's lasted for two, two and a half months. There's a piece by Tim Shipman in The Spectator today saying, you know, don't rule out an early election, whatever they are saying, and saying that there's a number of people in Downing Street who say that they support going early. Tim Shipman speculates James Purnell, the chief of staff, supports going early if the polls... And as we said last week...

26:38George Osborne: I thought they're not supposed to speak to the media, these... I know what... I thought only the media spads are speaking to them.

26:45Ed Balls: So who's Tim speaking to? Well, I have a feeling that what happened was that the number 10 press secretary said, just to be clear to the media, if it hasn't come from me or my deputy, then it's not authorised. Although, of course, if James Spill speaks to you or Lou Hague speaks to you or I don't know who else. That's above my pay grade. I mean, controlling these things is hard. And I have no idea what James Spill thinks. And I doubt very much he's had any conversations with Tim Shipman about that. But if you're Andy Burnham at the moment, you would definitely be ruling it out. And it may well be that that is what he wants and they can't afford to have any signs internally of, you know, early preparations, because if that leaks, it's a disaster.

27:28Ed Balls: But from a mandate point of view, if the first six months are the best and he gets a poll bounce, will he think about it? Of course he will.

27:38George Osborne: OK, well, let me put the counterfactual. If you were to organize or at least want to have open to you the option of an early election, what would you do? You would start with a blitz of eye-catching policy initiatives, which are populist and your MPs can go and sell. You would, of course, rule out an early election in your first interview so that there's no speculation about it. rather than take a summer holiday, what would you do? You'd start campaigning around the country, right? That's right. Which is what he's going to do.

28:10Ed Balls: And what you might do is float two or three big areas where you want to start debates and maybe have consultations. But I don't think we should reach a conclusion until we've had a discussion with the public. I mean, discussion with the public, on the doorstep, with a manifesto, in a campaign.

28:30George Osborne: And then what would you do if you were, come out of August, you haven't made any decision, but you're keeping your option open you're staring at your budget you're going oh my god just like rachel reeves did and kia starmer how on earth am i going to make this all that up because suddenly the obr has given me this forecast so what you're saying interest rates are going up you know in terms of you know people's real lived experiences of mortgage rates and the like and and look at my political opponents nigel farage in a mess over donations zach polanski having to apologise and no longer nuke it on the block.

29:06Ed Balls: The Conservative Party still languishing in the polls, despite Kemi Bain not doing better. The Lib Dems not quite cutting through. Picking up rubbish in the River Thames on canoes, I saw them doing the other day. As I said on every forced choice, they want me as Prime Minister, George. They want me as Prime Minister, says Andy Burnham. I don't think there is any...

29:24George Osborne: And he's constrained by the manifesto, by his own admission, right?

29:26Ed Balls: Nothing has happened in the first two weeks, which you wouldn't have done if you were going for an autumn election.

29:31George Osborne: So I've got one question for you. If you were the leader of an opposition party and it's the end of July, just before everyone goes off on holidays, would you press the button on? Can we start at least beginning the preparations for what would happen if there's an early election? Oh, I think if I was Kemi Badenock or Nigel Farage, I would absolutely be preparing for an early election now.

29:55Ed Balls: And I wouldn't care. The work was known and in public. I can't afford to be caught short. We did an interview with Ed Davey on Good Wing Britain a week or so ago after Andy had taken over with me and Susanna Reid and we said, do you want an early election? And he said, that's not the priority. And we said, Ed, I'm really sorry. You are the leader level Democrats. You always have to want a general election. You have to.

30:19George Osborne: That's what the Tories are saying as well. No case for an early election. I mean, that is not where I would be. We are going to turn to some of the issues that are going to make that question even sharper in the autumn, which is the big policy announcements. And then after that, we're going to turn to what's going on in the financial markets that shapes the background to all of this conversation. And we'll be back after this.

30:52Ed Balls: So welcome back. Last week, we had three policy announcements, a media action, or at least in the next few months. Cutting VAT on electricity, support for pubs with lower business rates. There was another one. What was the other one? I can't even remember.

31:08George Osborne: Oh my gosh, I've forgotten already as well.

31:10Ed Balls: Business rates on pubs. Bus fares. Bus fares. Bus fares. There you go. We're on top of it. We know what we're talking about. You said these were small beer. Yeah. But in week two, he's had a different strategy.

31:23George Osborne: Gone for a big beer. Yes, he's made two big announcements on the training of young unemployed people or underemployed people. And second, a big announcement about social care alongside Yvette. And we know he's got a big announcement tomorrow on devolution to the regions and a kind of new way of doing the assignment of revenues. Here's a little medley of what Andy Burnham has been saying this week.

31:50Ed Balls: It's long overdue that Britain makes this change. In England particularly, we build an education system that has a path at 14 for all young people. And we strengthen that offer on technical education. Whatever you've got, home pension savings can be whittled right down to that floor. And that's why I talked before about hundreds of thousands of pounds being on the table. On the roulette table when people go into a later life and who knows what can happen to any of us. I think social care in England is as unfair as American health care. The vulnerable pay with everything and it can completely leave them with nothing.

32:32George Osborne: So should we just take them in order, kind of take a temperature test on how significant these announcements are? So the first one is on vocational education. And I'm going to argue that this is, although this is a topic that governments have returned to again and again, and there's been no stability in this sort of policy area for years, including the same government can constantly tinker around with vocational education. and and although Andy Burnham's rhetoric is exactly what previous prime ministers would have said we undervalue vocational skills too much emphasis on going to university certainly at least since Tony Blair's time Tony Blair was the last prime minister who said we want to get up the number of people who go into university here there is some substance because he's got something he did in Manchester there's an MBAC there's a there's a particular qualification that he designed with local employers and local technical colleges and further education colleges which essentially meant that for teenagers in Manchester, they could start to take on vocational subjects that were partly designed with local employers and there were work placement schemes.

33:39George Osborne: Now, it was very small scale because it just was happening in the Greater Manchester. But at least he's got something he can quite quickly move to roll out and deliver. He doesn't have to have a great national conversation about it. He's got a pretty clear idea about what he wants to do, right?

33:53Ed Balls: That's right. And let's be honest, it makes sense for him to do this now he's prime minister much more as mayor of Greater Manchester. It doesn't make sense to have different qualifications in every city across England. It's complicated enough having different qualifications in England and in Scotland. You don't want to have whole different assessment learning systems city by city because people move and often they cross boundaries. but this is smart. I have a lot of sympathy with what they're trying to do although I think they have to be careful with the language. Michael Gove has launched a full broadside on Lucy Powell saying that this is you know the dumbing down of education and this is because of a particular tweet she put out where she said we must recognise that an over focus on academic outcomes has left too many young people behind.

34:49Ed Balls: And also we've had Andy Burnham saying that the 50 % of university was a mistake.

34:53George Osborne: And actually, this was the target, I think it was a coalition government target. And you've been a Tony Blair aspiration.

35:01Ed Balls: Well, it was a Tony Blair aspiration because Gordon Brown announced it. So it's one of those joint pieces of policy. But it was one of those. It was the right thing to do. And I've never ever been in an audience with people, especially business people who complain about the 50 % target. And if you then say to them, so which of you think that your children shouldn't have gone to university? Nobody puts their hand up. It was good to get more people going to university. And I don't think we want schools not to focus on academic outcomes. So I'm not sure that's the best language. I know why Michael is wound up.

35:33Ed Balls: But what we know is parents will say, and I remember this for my time in focus groups, it's great if the school is good academically but if my child is less academic is there something for them and i think the problem in the past and this all goes back to a terrible mistake in my view that tony blair made pressured by the cbi was to reject the tomlinson report which was to say let's have one qualification within which you can go down the more traditional academic route or a more vocational route and it would replace A-levels and it would become a broad baccalaureate style qualification for all and that you wouldn't be choosing at 14 whether you were going for kind of the first class traditional academic route or the second class vocational route.

36:22Ed Balls: And because he stuck with A-levels, but he said we'll still have diplomas, the diplomas from the beginning were always seen as not as good. And I struggled with career services who would say, I know, but going to university is better than being an apprentice. You say, well, actually, it's not necessarily better. It's different. What you want to do flexibly is let people choose to go down a more traditional route or more vocational route without it being sheep and goats, first class, second class. Where Andy Burnham says it should be about the hard hat as well as the mortarboard, that's fine as long as you allow people to move between the two.

36:58Ed Balls: Although these days, quite hard to wear a hard hat and not be good at maths.

37:01George Osborne: um because so isn't that also i was going to make a similar point which is if you take a profession like nurse nursing was a kind of vocational profession when when i was a young people have a vocation for it yeah and you have to but you have to get a degree but now it's a profession it's got a degree level professional qualification and so i i think it's a bit i i didn't really like the choose the hard hat over the multiple because for exactly your point that To be wearing the hard hat these days, you have to be highly competent. And there's quite a lot of sort of academic content to some of these vocations.

37:37George Osborne: And it's interesting, if you look internationally, other European countries, generally the better performing economies are ones with higher degree, higher levels of graduate population. You know, so the Scandinavian economies have more than 50 percent of people going. So I think the risk here is that if you take your foot off the universities and the push to get more people going to universities, and we've discussed on this program, there are all sorts of problems with university financing, which eventually the Burnham government will also have to tackle. But I think this kind of either or is, it makes for good rhetoric, but it's not really where the answer is.

38:15George Osborne: But if the answer is, as you say, to try and create a more integrated system. Exactly. Then that's the answer.

38:22Ed Balls: It's not either or. What he's really saying is if you think to yourself you're more likely to go and work in construction or as a heating engineer or in social care, you shouldn't have to choose to go down what is seen as a second class route at 14. And actually, people should be able to move between different paths. But there shouldn't be, are you going to do A-levels or are you going to go and do a BTEC? What you should do is see it as a whole. That means you have to face up to the fact that A-levels are quite out of date and they're a bit too narrow. It would be quite good if you have some vocational element in all learning, which, of course, is partly what the baccalaureates do and what he's aiming to do in Manchester.

38:59Ed Balls: So he doesn't want it to be either or. And Lucy Pound doesn't want to dumb down academic outcomes in schools. And they sort of fall into that rhetoric. I don't think it's what they mean. I don't think it's actually the policy intent.

39:10George Osborne: It's the easiest way to communicate. It's the way you get a reaction from an audience. It's good policy, I think. Yeah, but before we drink the Kool-Aid, I mean, many governments have tried and failed in this space.

39:21Ed Balls: Because they've never, ever taken on the divide between A-levels and the rest. That's what you've got to do.

39:27George Osborne: And you're saying it's at the A-level level. Because it was taken on at GCSE, wasn't it?

39:31Ed Balls: Which is fine. But I think, no, it's A-levels and the rest. And I always wanted, in the end, to get to rolling A-levels into a board qualification. But by the time I took over, it was too late. The pass had been sold. And Andy Burnham's got a new chance. Actually, Rishi Sunak raised this as an aspiration of his a few years ago. And everybody knows this is what we need to do. This is Andy Burnham raising something. As you say, it's been around a long time. Nobody's addressed it. He's not told us how he's going to address it, but he's saying something important which people want to hear and parents want to hear.

40:04Ed Balls: And, you know, we'll see whether they've actually got a plan they can deliver or whether reaction will set in as it so often has in the past.

40:09George Osborne: So two other things that lots of prime ministers recently have said, two other areas of policy that prime ministers have talked about are, first of all, social care. So as Yvette said at the launch with Andy Burnham, there have been 22 attempts in recent years to solve social care by, what, seven, eight prime ministers. and if you think about it we had like there was a big report under tony blair gordon brown says he was going to deal with it the david cameron government had the dillnark commission theresa may fought in a general election on social care boris johnson had some initiative on it rishi sunak is so andy burnham is one of the people who's failed in the past to sort out social care when he was health secretary his his plan uh under the gordon brown government was torpedoed by yours truly in the in the 12th year yeah of a 30 no no that is not the time to introduce that reform no no no i remember exactly the meeting where i said we're going to

41:09Ed Balls: call this a death tax and let's go out and destroy it you and robert jenwick this morning in his press conference where he slammed the death tax so what do we think though i mean i think i just

41:20George Osborne: think we've discussed social care before you know we'll come back to it again and again i'm interesting think fundamentally there well there's two questions out there two issues one is are they serious about a consensus i mean you've already got kemi badenock saying this week well i'm happy to take part or my parties have to take part in some conversations but no new taxes reform aren't even invited to the table which is a slightly odd decision i would think and the greens nor are the

41:47Ed Balls: greens who said they wanted to be there yeah they clearly came up with the idea of um the cross-party discussion late they didn't contact kemi badenock or ed davie until the night before and ed davie was abroad and kemi badenock had a kind of a routine health thing she had to go and do so neither of them could be there but i have said on this podcast consistently since we started unless you build a consensus on this issue you've got no chance as happened on university fees or on the minimum wage or on bank of independence you have to go after that but i think that the well

42:22George Osborne: Well, hold on. I think they're different examples because I think university fees or indeed the state pension age, there was a kind of independent report. And there was a private agreement between Labour and Conservatives to sort of sign up to these reports. The Deering report, the Adair-Turner report, the Brown report, the Brown with an E in the end. Whereas actually Minimum Wage Bank of England Independence were contested to begin with. Yes, are more like slightly different things, which is you establishing that it just becomes very difficult for the opposition to oppose. But two years into a parliament, three years to a general election, fundamentally, the problem with social care is unlike Bank of England independence, indeed, or even a minimum wage.

43:03George Osborne: Someone's got to pay. And that is when politics gets really contentious.

43:07Ed Balls: That is true. But I think that we did succeed on establishing consensus on a tax rise for the health service. By the time we got to 2010, you and David Cameron were fully signed up to, you know, I'll cut the deficit, not the NHS, even though it was contested in 2001 too.

43:24George Osborne: The most recent attempt to introduce an increase in national insurance to pay for social care. Catastrophe. Rishi Sunak was chancellor. He introduced it. It was a health and social care levy. Opposed by Rachel Reeves. Opposed by shadow chancellor Rachel Reeves. Reversed by Liz Truss. and then it was the only thing, even though it was Sunak himself who became prime minister, he felt he couldn't undo the Liz Truss month in office.

43:48Ed Balls: So this is my big point. I think the cross-party consensus is a good thing to go for. And I hope that Kembe Benock and Ed Davey don't turn against it at the start, even if it was a bit last minute. And it is good that Louise Casey is doing a consultative review. Although, let's be honest, building that kind of cross-party consensus is very, very hard. And Louise Casey is a very kind of experienced, capable person who will have zero name recognition with any voters out there. There is no way that her independent review can bear the weight. She can't build this consensus. It's going to have to be billed by politicians.

44:25Ed Balls: But this is the point. What happened with the Oneless Review in 2001, too, is we worked so hard.

44:33George Osborne: This is when you establish the need for additional funding.

44:36Ed Balls: Exactly. You have to establish why the status quo won't work. If you jump to the tax rise, the solution, I think there's a danger Andy Burnham wants to get to how we're going to pay for it.

44:48George Osborne: First of all, he has to have voters saying this isn't going to work. But everyone knows social care is the best. Well, I'm not sure yet. The problem is either people pay for it out of general taxation or people who have saved in their life and own a home have to pay for it. That's the fundamental policy choice that every time a government's tried to choose one of them, it gets hit around the head for politically.

45:15Ed Balls: So you've just admitted in this conversation that in 2010 you killed it.

45:21George Osborne: And that was a general, that was a levy, a levy on all the states.

45:25Ed Balls: We then know that when there was a Dilnot review, you and the Treasury killed it. And by the way, fine.

45:32George Osborne: Louise Casey, I think, takes a pretty dim view of the Dilnot review as well.

45:35Ed Balls: We then had the Boris Johnson tax rise, which then got killed by a range of different people. The common thing in all of these was, as you say, who's going to pay? But nobody had won the big argument about for what and why. If you don't win the argument that this is massively unfair, the NHS is going to fall over. You're going to end up with people who are being treated terribly badly. and there's going to be more and more, unless you have people saying, look, you can't just set your face against it. Unless you come up with an answer, it's all going to be terrible. Unless you've won that argument, then you've got no chance of winning the tax rise.

46:14Ed Balls: And I think that that's what he's got to try and do. And it's going to require political leadership. It might fail. And as you say, it's failed lots of times before. But the moment you get to, let's debate the best way to pay for it

46:28George Osborne: without establishing what it is yeah although you need to you should take your time yeah although i think you need to know in your own head for all the talk of consensus where you're going to end up

46:39Ed Balls: different point different point so you absolutely don't rely upon the independent review to come up with the answer you in power have to do that work i think that's what the government has announced this week that is what's going to be going on with the treasury with local government i think Yvette's chairing a committee, number 10 at the heart of it. There's a Louise Casey consultation as well, and she's going to do an independent report. But frankly, if you don't win the big argument about the why, if you allow Robert Jenrick just to say, no, we don't want to change anything because it's a death tax, and that be something easy for him to say, then you've got no chance of reform.

47:18Ed Balls: So maybe this is not possible.

47:20George Osborne: Yeah. No, no, it's a fair point. You have to put him under, or people like him under pressure. Exactly. You know, we just mentioned in passing, we've got the announcement tomorrow about regional devolution. I think they look like they're going for an idea that I was talking about for the House of Lords Economic Committee, which I've been before this year, which is a good idea, which is apportioning income tax revenues to areas. But you're already beginning. I remember saying to that committee in Parliament, OK, but be prepared. The thing about regional devolution is you want some areas to succeed and innovate and go faster, like Manchester.

47:52George Osborne: But there's an implication of that, which is, of course, some areas therefore will not be as successful, will not go as far ahead, will not innovate, will fail, basically. And that's already coming. The reason why devolution ultimately gets squashed in England is because people want at least the appearance of equity. So what do you think they're going to say?

48:11Ed Balls: I've always been a champion of devolution. all the work I did at Harvard Kings, big champions, but all the people we spoke to... The Brown Treasury, great devolution. All the people we spoke to are very cautious about this tax devolution and the apportionment. We're not talking here about allowing areas to raise an extra tax. That's not what they're talking about. There is this new tourist tax. It's about existing income tax or corporation tax and saying you and your area can have apportion to you, say 20 % of it. What that means is if the number of businesses or the number of people working increases and therefore the pot of money gets bigger, you're incentivized for that to happen because you get more money.

48:56Ed Balls: The problem is, I actually tried to do this with John Healy when we were in the Treasury in the mid-2000s around business rates. It was business rates uplift. We said what we want is to incentivize local areas to support businesses by saying if you get more business rates, you can keep the extra. But of course, the problem was, even if you tried to do that, the number of businesses being set up in Barnsley was just massively lower than the number in St Albans. So if you didn't just do the uplift, which is small, but actually said the stock, the problem was that the amount of income tax or corporation tax being raised in London or Surrey or the Thames Valley was just much bigger than in Manchester or Leeds or let alone Barnsley or Grimsby.

49:40Ed Balls: and so therefore you then have to have you know a way and a fairness mechanism you say okay well it's going to be 20 percent of apportioned in manchester but maybe in london it's only going to be 10 you essentially have i mean it's basically it's a barnet formula on steroids it's an argument about fairness in which you just have to admit that some places are going to need more support from the collective pot because they aren't going to generate as much themselves do you want devolution to get mired into a big fairness argument between London, the South East and the rest of the country? Andy Burnham did an interview a couple of weeks ago in the Times where he said, you know, I want Manchester to stand on its own two feet through growth and therefore not have to be subsidised by London, the South East.

50:25Ed Balls: Well, that's fine as an aspiration, but right now that's not where we are. Do you really want this apportionment thing to become the framing of the devolution debate and to make an argument about relative fairness and who keeps what amount

50:40George Osborne: yeah no i think i broadly agree with you that that's that's the problem you're going to run into but there are ways i think you can do it through things like imputed growth so you know if you think barnsley's you know if you're expecting barnsley to grow by a couple of percent over the next two years but barnsley council or more more to the point south yorkshire area can get the area growing by 5 % because they're business friendly and they're attracting investment and they're good at training the local kids and all that kind of stuff we've been talking about, then they should see some benefit.

51:13George Osborne: So there are ways of doing it. But I agree.

51:14Ed Balls: Do you remember after Brexit, that whole movement? Well, you know, if we can be independent from the European Union, why can't London be independent from the rest of England? These are dangerous debates. You just have to be careful where the politics takes you, especially if you're a Manchester mayor. who's now become prime minister. Just, you know, economically and administratively, I see the argument. Politically, it always worries me that you plunge us into a Barnett-style fairness debate.

51:42George Osborne: Do you remember Rishi Sunak reassuring Tories in Tunbridge Wells that they were going to do all right? At a garden party. Oh, my gosh. Now, listen, what about the Treasury in all of this? John Healy, we've talked about the setup in Number 10. What do we know about that? Apart from the fact he's put a soldier into his private office. I know. He's got a military attache in the Treasury. I'm not sure that's as new as he's making out because I always had a military. There was always a seconded military officer, a pretty senior person. I remember there was a vice admiral. There was a vice air marshal.

52:15George Osborne: Not in the private office, but who was seconded to the Treasury and who I would spend quite a bit of time with whenever we were discussing defense issues and went on. But anyway, he's made that change. Any other things we've picked up from the Treasury? Where's his head balls? That's my question.

52:32Ed Balls: Andy Burnham is undoubtedly still raising expectations. The pressure on John Healy to resolve this in the budget in the autumn is going to be huge and intense. And this is very, very challenging, and not least with the international situation. John Healy's been putting his team in place. Good news. He's brought in as a chief of staff, somebody politically experienced, Will Straw, son of Jack Straw, worked in the treasury back in the day was involved in the Remain campaign been running the Prince's Trust the King's Trust as chief executive over recent years he's brought over his political team from the MOD into the treasury

53:09George Osborne: where's his economic thinking? I mean that's the role you perform that's the role Rupert Harrison performed for me.

53:16Ed Balls: It looks to me like he's taking his time to put that person into place because I don't see them there yet and that is just vital because looking across policy, media, but also the economics, the macroeconomics. And the scorecard. And the scorecard and all of that. I don't think, you know, we'll see. I don't think that person's yet been hired. And that's a very, very important decision for John.

53:38George Osborne: And whoever that person is, and quite a few recent chances haven't been able to find anyone like that. They are going to be taking a close look at developments on the other side of the Atlantic and the decisions of the Federal Reserve, which have a huge impact on the British economy. And we're going to turn to that next.

54:04Ed Balls: So welcome back. The Federal Reserve decided last night not to raise interest rates in the United States, despite lots of speculation. A divided vote, 9-2-3. The Bank of England today has followed suit. They are not raising rates or cutting rates. They've kept rates here on hold. I think that was the expectation here in the UK, but there was quite a lot of expectation in the US. The rates might go up, the American economy markedly stronger than Britain. And this was a big test for Kevin Walsh, new in the job, chairing the Federal Reserve, because I think there was a lot of debate. He's made a thing about not wanting to issue forward guidance to shape market expectations.

54:49Ed Balls: And so I think genuinely, people didn't know what the result was going to be until he announced it in his press conference afterwards. And any new job when you start, especially a comms job like this, is complicated. And this is delicate for him.

55:06George Osborne: Yeah, I mean, look, but here's the basic problem. And this is at least how he's responding to it. The basic problem is, of course, on the front page of the newspapers and the news, but on front of the news, which is, you know, the war and the situation in the Gulf has flared up again. oil prices are up again and oil prices feed directly through to cost of living and inflation and people and markets when they are choosing to lend money to the United States and governments like the UK are saying well hold on there's going to be more inflation in the system than I thought and therefore I'm going to demand a higher rate of interest and return to compensate for that and that is felt in the real economy isn't it by people paying more for their mortgage more for their loans.

55:47And in passing, we should say, you know, if you're trying to launch a cost of living

55:50George Osborne: campaign in Britain, this is a real problem for you because anything you do on bus fares is going to be blown out of the water, quite literally in the Gulf, by what's happening in international markets. And Kevin Walsh's response is to say, look, I know there are inflationary pressures, but the market's already reacting to them. So the market, the trading of US treasury bills, of US debt has already responded to this. And there's been a big jump in the relative to how much the bond market normally moves. There's been quite a big jump in the cost of US government debt and therefore in the kind of real interest states in America.

56:26George Osborne: And he's saying the market's reacting, the market's already charging more for this debt. So that's a squeeze on inflation. That's a tightening of policy. And I don't need or we don't need to react. And I don't need to tell you how things are going to react. There's an interesting clip he used here where, you know, when he was speaking to the media after the decision this week, where he says, look, you know, you just, people are following the ball rather than trying to check what the referee's up to the whole time. This is what he said. Market participants are learning to play the ball, not the referee.

56:59George Osborne: And market prices will continue to respond in the direction and magnitude they see fit. Now, what do you think? Because this is where already people are starting to say, Oh, no, no, no. This is, you know, not what we want. We want much. We want much a much clearer indication from the Federal Reserve how it's what its reaction function is to inflation. In other words, a form of the forward guidance that Kevin says we've had too much of in the past. And, you know, as a result, the only thing that moves markets are the decisions of the Fed or the statements of the Fed. We want to get back to a market economy.

57:36George Osborne: Well, you know, that's the emerging debate. I know it sounds quite technical, but believe you me, this is absolutely critical to the fortunes of the Burnham government and to indeed people's lived experiences of the economy.

57:47Ed Balls: I think it's messy and a bit all over the place. And that is inevitable when the new guy is taking over. I actually think on both fronts, he's right. I don't think the Fed should be raising interest rates at the moment. Yes, there's been a rise in oil energy prices. But the question is, is that going to kick through into underlying wage and price inflation? And so far, the evidence has been that that isn't happening. And I don't think that central banks spending huge amounts of time trying to shape market expectations through words, as opposed to allowing the data to speak for themselves, is the right way to go about it.

58:25Ed Balls: So I actually think that what he's aiming to do is right. But the reason it's messy is just because, you know, he's coming from the outside. This is the Kevin Walsh who was having a pop at the Fed for consistently allowing inflation to be above target and not doing anything about it. And now he's a Fed governor. He has got inflation above target and he's not doing anything about it, which means he looks a bit dovish. And then this is the Kevin Walsh who people said, is he going to be Trump's poodle? And he said, no, I'm going to be tough and independent. And then when the markets were expecting a rise, he then doesn't give them one.

59:01Ed Balls: So is he being dovish? And because they weren't doing the forward guidance, there were all these hedge funds who got into a, there's going to be a rate rise. Here's our market play. We're going to expect the yield curve to flatten a bit. So lower interest rates in the long end, offset by high interest rates at the short end. He doesn't do it. They unwind their plays. That looks like a negative market reaction. I think actually that is just hedge fund activity. What he mustn't do is fall into the, well, you know, do they think I'm a dove? Maybe I'm going to have to claw back some lost ground in September.

59:37Ed Balls: You've got to stick to it. But when I listen to that clip, I mean, if he's not doing forward guidance and they're not raising interest rates, you know, I'm not totally sure why he's then doing a 45 minute press conference where he has to say a whole load of stuff. I mean, just announce your decision with a paragraph and move on. And all the stuff about, well, you know, is he changing the inflation measure next January? And why is he having internal fights before they make decisions? There's a lot of colour here. There's lots of words. And I'm not sure actually it's helping and it becomes a little bit messy.

1:00:13Ed Balls: So I think he'll find his rhythm. And I think they'll get beyond all this kind of speculation. conversation but maybe what he has to do is um provide less running commentary himself if he doesn't want to be in the forward guidance world if you've not got anything to say why are you doing

1:00:32George Osborne: a press conference i mean isn't the kind of big picture take a step back which is going to shape politics the next couple of years most of the time we have been doing this podcast over the last few years the expectation has been that interest rates are going to come down and as we've been doing the podcast over the years, the rate at which they were going to fall and the level to which they were going to fall that gradually slowed. Oh, they're not falling as much. Oh, they're not going to reach, you know, two and a half or 3%.

1:01:01Ed Balls: We're moving back into the earlier phase of the 40 years of neoliberalism.

1:01:04George Osborne: And now suddenly, put it this way, the one thing you'd say is the most likely move from the Federal Reserve, is it going to be up or down? The next move on interest, it's up.

1:01:15Ed Balls: I think that's right.

1:01:16George Osborne: And that is going to, and if you are, this is true of the American midterm elections, but it's certainly true of British politics here, that is a higher cost of living. There's more inflation and a higher cost of debt. That's right.

1:01:29Ed Balls: Although, by the way, I'm not sure that's actually right in the UK. I think in the UK, I think there may be rate cuts to come because I think the economy may turn out to be weaker. But to your point, we've talked about Nick Butler, energy expert, used to work at Number 10. good substack this week saying it's not just higher oil prices because of what's happening in Hormuz in the Straits and the fighting still going on you've also got the Houthis upping the ante against the Saudis which impacts oil flow through by Saudi Arabia China not wanting to release oil onto the global market Russian gas processing having been hit and therefore By Ukrainian drones, which we're providing.

1:02:11Ed Balls: All of this becomes a world in which energy prices are going to be higher in the next six to nine months a year, and which is going to squeeze the cost of living and impact growth and may be reflected in equity markets in due course. Whether that means central banks should be raising interest rates, it may well be that that squeeze is going to end up slowing economies down and it may go in the opposite direction. But, you know, for Andy Burnham, for John Healy, this is not a comfortable environment to be making policy in the second half of the year. And, you know, all year we've been talking about, is this energy squeeze going to be short lived?

1:02:47Ed Balls: I think it feels like it's going to last a bit longer.

1:02:52George Osborne: Which is why the one thing Donald Trump has said about our new prime minister is he's pleased he's going to be drilling in the North Sea again.

1:02:58Ed Balls: Which Andy Burnham is not clear whether he actually said. Who knows what actually went on?

1:03:02George Osborne: Yes. That's it for this week's episode of Political Currency. And indeed, this is our last regular political currency before the summer. As we said at the beginning, over the next four weeks, you are going to hear not just us answering EMQs, as we do regularly, but also special interviews with Kemi Badenok. That's the interview you've done. Yvette Cooper, I've spoken to. And then Sue Gray. Sue Gray and then Amal Rajan. So we've got that in store for your summer. I hope you're going to enjoy our summer listening smorgasbord for you. I say smorgasbord because I think you're off to Norway, aren't you?

1:03:40Ed Balls: I am off to Norway.

1:03:41George Osborne: Maybe that's a Swedish word, though.

1:03:42Ed Balls: I'm used to say. I'm not sure. Or even Danish. I don't know. I think you can say there'll be quite a lot of cured fish. Yeah. Whatever. There'll also be extra content from the interviews for our subscribers. And check out the show notes to find out how you can join. Kitchen Cabinet briefing will carry on throughout August. but we've got one more ex-military questions on Monday before we move into our summer EMQs and throughout August we'll be answering all your political queries and ideas do keep sending your questions we're back in September we will do our next EMQs at the British Museum with the Bayer Tapestry which will be absolutely fascinating

1:04:18George Osborne: that's a tale of the rise and fall of rulers and if anyone wants to send us a question about that tapestry of course they can

1:04:26Ed Balls: questions at politicalcurrency.co.uk on the bio tapestry or anything else. We always fancy a voice note. We will see you on Monday for EMQs. See you then.

1:04:43George Osborne: Thanks for listening to Political Currency. This has been a Persephoneca production.