EMQs: Are robotaxis coming for London?

0:00Ed Balls: There's one place for the newest drops in wellness and performance and the biggest sale of the year. It's the drop by GNC, curating the best of what's new, handpicked by the pros who know what works. And right now, get it all, buy one, get one 50 % off during the semi-annual LiveWell sale. From crushing workouts to leveling up your nutrition and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the LiveWell sale on the drop by GNC. Hey, this is Paige DeSorbo from Giggly Squad, and this episode is presented by Depop. Okay, be honest, how many things in your closet are just sitting there waiting for their next main character moment?

0:41Instead of staring at them, list them. You can list an item in just a few taps on Depop, snap a photo, and their AI-powered listing fills in the details, and you're done. It's not giving stressful, and it's giving efficient. And make money easily with no selling fees on Depop. No seller fees means what you earn is yours. Your personal taste has value. Someone is literally looking for what you're not wearing. Download the Depop app and list your first item today. Hey, this is Adam Grant, host of Ted's podcast, Rethinking with Adam Grant. Have you heard of Bill? It's the intelligent finance platform that uses AI to help you avoid costly errors and optimize cash flow.

1:21Ed Balls: In fact, Bill reports that over 90 of the top 100 US accounting firms trust them to manage, move, and maximize money, proven by over a trillion dollars in secure transactions. Eliminate the friction and start scaling with the proven choice. Visit bill.com slash proven to talk with an expert about automating your business finances and get a$250 gift card as a thank you. That's bill.com slash proven. Terms and conditions apply. See offer page for details. The Chancellor of the Exchequer. Getting a lesson from the Shadow Chancellor on how to balance the books. It's like getting a lesson from Dracula and how to look after a bloodbath.

1:57Ed Balls: Ed Balls. As steady as she goes budget. What kind of ship does he think he's on, the Titanic? They're married, Celeste. Welcome to EMQs from Political Currency with Ed Balls and George Osborne.

2:16Ed Balls: So hello and welcome to Ex Minister's Questions, EMQs. I'm sitting opposite George Osborne. We are remote recording this i think he's not currently in california but you are spending a lot of time on airplanes in this new job racking up the air miles but it must be exhausting it is quite tiring and obviously i miss my family it's also i think a new job just making sure i'm you know across it it's a combination you know it's a company based in california and my remit is a global remit so the combination of those two things means that yes the air miles are definitely clocking up do you have to do space or go to space exactly i mean just what is where does your remit stop i mean you know in your your global footprint are you thinking about kind of spacecrafts or other planets or you confining yourself to this world well there is an argument about data centers in space actually that is exactly what i was referring to no i think it's quite terrestrial rather than extraterrestrial although it's a good question i always think if someone said to me tomorrow you can go on a rocket into space for a few days and then come back i would say yes please would you whereas i think a lot of people i know would go no way i don't want to do that don't remember the space shuttle taking off and crashing well yeah but there was like one or two of them two of them crashed but there aren't that many manned trips into space i mean there's not that many i've done a parachute jump i've done a bungee jump you have done any of these things um no no what have i done i think i must have done some scary things i climbed kilimanjaro you know it was quite high is that a technical term is that is that is that a sort of is that a sort of hillary tensing that was quite high it is so interesting with george osborne that when i use the word high your mind completely goes to other definitions of the word high i don't know what it is in your background i was talking about mountain hillary and tensing were mountaineers oh i see i thought you were thinking about mr's whiplash all over again you're the pop star now you're in the rock band now we know we know what rock bands get up to you and peston i've been tasered beat that but um i'll tell you what i have noticed talking about technology and things we've been talking about on the podcast so you know when i'm in san francisco i do use these driverless cars which are called waymo that's the name of the company it's owned by google and uh you know these cars drive around the city you get a waymo app a bit like an uber app this car arrives you get in it and it heads off and it doesn't have a driver but they're very distinctive because they've got these radars on their roof and lots of sensors on them to obviously see where they're going and i have noticed in london i saw one in hoban near the british museum i've seen them in notting hill a lot suddenly these waymos these cars are driving around london now the moment this is my observation as a pedestrian there's a driver in the seat so there's someone sitting behind the wheel but they're not touching the wheel so presumably the kind of requirement is that they do have someone in the driver's seat there's no one in the passenger seat as far as i can see but they're clearly trialing the technology in london and getting ready for a launch here so um i have to say my own experience of them has been nothing other than positive so we will see but obviously i know that's a controversial view because lots of people think maybe we shouldn't be allowing these driverless cars and in fact we have got a really good question on this from arthur and he does know what he's talking about as you will see from his question hi evan george arthur k here my question is around george's ride in a robo taxi and its implications for european technology sovereignty i sit on the boards of transport for london and the royal academy of engineering european cities like london are being pressured by big tech companies to approve fleets of robo-taxis this year.

6:01These robo-taxi fleets are backed by companies like Alphabet, Amazon and Nvidia, whose market capitalisation rivals or exceeds the GDPs of most European economies. What trade-offs and risks should cities and mayors consider before allowing these systems into the city and indeed to scale? Does the sheer power of big tech undermine European technology sovereignty and shift the balance between governments and corporations. So what do you think? Is this American big tech landing here or is this just, you know, innovation? This is the next revolution in transport?

6:37Ed Balls: Look, there is, as is often the case in public policy, a tension between the importance of things being safe and the importance of things being kind of open and cheap and competitive. If you want to go for the safe option, if you're a London mayor, you want to make sure you, a bit like with Boris Bikes at the very beginning, you have one large company which is allowed to have the rights to provide these kind of taxis. And that's how you can set the safety and the regulatory standards, rather than saying anybody who wants to can enter this market, set up a driverless taxi company and get into the market because they're much harder to police and regulate and to make sure that you have safety standards.

7:27Ed Balls: But if you don't go for the open competitive model, you're going to hand over the power to a large existing incumbent company. And the chances are at the moment that will be a large American tech company. When we talked about this a few months ago, I was talking about a new lake, which becomes a tourist attraction and what do you do if you are an ice cream seller and if you're smart you get in first and you set up six different ice cream shops all around the lake you squeeze out the space for anybody else to come into the market knowing you may make a loss to begin with but once you've seen them off you don't have to keep all of them open but you have become the dominant ice cream seller at the lake and at the moment if you are a large incumbent likely american tech company, if you can get in first and do a deal with the regulator, the London mayor, to say we're the safe option, you see off all of the competition.

8:24Ed Balls: And I would say that is the dilemma for these mayors. Do you hand over power to a large American company or do you take a risk in a more open competitive market with people's safety? And the revealed preference normally is for governments to take the safe option. But as Arthur says, that will make it much harder for European entrance against American behemoths. I'm not sure I completely agree with this. I mean, I think there's definitely a question on innovation and whether you kind of allow for innovation. Obviously, the safe thing is to say we're not going to have any driverless cars in London, right?

8:58But then you might find yourself in a situation a few years time where there are driverless cars in Paris and Rome and New York and, you know, London looks like a really kind of backward jurisdiction. And I think that was the argument with Uber. I mean, often, you know, At the time, I got a lot of kind of taxi drivers saying, why are we allowing Uber into London? But can you imagine like London, and this is true to other British cities, being the only place, you know, places where you didn't allow Uber? But it was very controversial at the time. But I think that's all sort of being pro-innovation and change.

9:28Ed Balls: It handed over massive power to one big American company. Yes, but it wasn't actually specific to Uber. It was like it did allow for other ride-hailing apps. But now if you go to, I mean, you talk about my travel. I mean, when I arrived at these airports, like I was in Amsterdam a few days ago, and you turn up and there's a whole section now where the ride-hailing apps turn up at the airport, you know, sort of parking bays and so on. So, you know, I think it would be mad to say no to this technology. And, you know, it's a bit like saying we're not going to have motorcars because we like the horse and car.

10:01I think the problem, and this is a broader problem that is not specific to this, is that these large American tech companies, and full disclosure, I work for one, the money that they have invested to get to this point is enormous. They have spent tens of billions of dollars designing these cars, designing the software systems, designing the AI systems, the radars and whatever. And it's not like, you know, to your point, if you said anyone can operate, and maybe that is what Transport for London has said, the truth is there's no one else available to do it. And certainly no European company. I mean, the interesting thing is the only other kind of companies like this in the world that can do this kind of thing are Chinese.

10:41And I have been in a driverless car in China. It's obviously a very similar experience to a driverless car in America. And it's a bit, maybe these Chinese cars, a bit like with electric cars, they've really kind of scooped in the market. And British car companies have not delivered the level of innovation in the electric car industry. And I don't see a British company or indeed a European company in the driverless car space. And that's a much bigger question. But it's not really about are they allowed to operate? It's that even if you allow them to operate, they don't exist.

11:12Ed Balls: I'm not disagreeing with you. And I think this is a bit of an Aunt Sally. I'm not saying, look, instinctively, I think driverless cars are a nightmare. You know, how hideous. I realise that that's a bit kind of Luddite in my mindset. So I'm not arguing against allowing driverless cars. All I'm saying, because Arthur asks, what trade-offs and risks should cities and mayors consider? And the answer is the trade-off risk is, do you go for a license for somebody big and established, which will be an American company, or do you have a lighter touch regulatory environment, which is more open to entry and competition, but also makes it harder to police and makes it more likely things might go wrong or there may be safety risks.

11:55Ed Balls: That's your big risk trade-off. And that's all. I'm just saying that is the dilemma. Instinctively, I would want to be more pro-entry, but I'm not saying that that wouldn't mean that, to begin with, it would still be big American companies doing it. Very interesting. Thank you, Arthur. You're going to be dealing with these things as a board member. Anyway, so we'd like to get some updates for you as things go along. Our next question is from James. Hi, Ed and George. It's James from Edinburgh. I've increasingly had the impression that the UK Treasury is structurally reactive rather than proactive when responding to global economic shocks.

12:30Ed Balls: At the spring statement, the Chancellor didn't seem to adjust policy in response to escalating tensions in the Middle East, despite the potential impact on energy prices, inflation and growth. We saw something similar after the invasion of Ukraine, ultimately leading to very costly interventions like the energy price cap under Liz Truss. Given both of you have been inside the system at the highest levels, why does this keep happening? Is it an institutional feature of government, a heavy reliance on official forecasts and OBR processes that discourages acting ahead of the data? Or is it political, that governments prefer not to level with people until impacts are unavoidable?

13:08Ed Balls: So thank you, James. We actually talked about this a little bit on our main podcast when we were reflecting upon the aftermath of the spring statement. Because at that time, Rachel Reeves didn't try to jump ahead of what were likely to be big changes in the forecast and the economic environment. She decided to sort of start off with saying her plan is working out of rather cursory reference to those risks. But I don't think that, I mean, I think that was a choice that she made. I don't think that says something about the nature of the Treasury. On the one hand, it is inevitably the case that the forecasts and the data are going to be a bit lagged.

13:48Ed Balls: And in that case, the Office of Budget Responsibility forecast couldn't have been based upon the most recent innovation. But the thing about policymaking is in your language and in the decisions you make, you absolutely can't be backward looking and only relying upon the data. You have to be thinking what's around the corner, what's to come. Are we getting ourselves into the right place? are we anticipating what's going to turn out? We also talked about the decisions central banks are set to make. And the idea as a central bank that you would only look at the past inflation data, what they're doing all the time is thinking what is going to happen to inflation one or two years ahead.

14:30Ed Balls: But at the same time, you also can't move too quickly before you've seen whether or not something that you worry as a risk is actually going to manifest. And that's why I think assuming a big supply shock through high oil prices, which lasts for a long time, is not the right decision for central banks to make. So the answer to James's question is that you always have to be simultaneously looking at the data you've got, taking cognizance of forecasts, but also saying, what's the trend? Where are things going? Are we anticipating that? And using your communication to do so. And I don't think that is about treasury process or culture.

15:09Ed Balls: I think those are political and policy choices, which good policymakers make. And we'll often use the phrase behind the curve. You never want to be behind the curve, and you'll get behind the curve if you're only waiting for the official data and the official forecast. But that's not what any good policymakers should be doing. Yeah, I mean, I certainly agree with that. There's lots of things that government do that is, in fact, preparing for a future that may not happen. I mean, I'll give you a really classic example, like defense spending. You invest in militaries, you train soldiers to fight, you buy equipment that may never be used.

15:46You know, there are plenty of British warships that have never fired a missile or engaged in combat. And that's a classic use of government money to anticipate things and partly in that case to be a deterrent for things happening. But it's things you might never use. And there's a lot of kind of scenario planning in Whitehall and exercises for events like a terrorist attack. You know, there's that kind of scenario planning. And even, you know, the COVID inquiry is looking at this, at whether there was enough kind of pre-planning for a pandemic. And everyone's saying, oh, why didn't they kind of have lots of exercises to anticipate a kind of non-flu-like virus?

16:29But there was a lot of planning for a flu-like virus. And that's why, for example, those Nightingale hospitals were able to be set up very quickly because that actually had been pre-planned. It just turned out it wasn't particularly what was needed in the case because they ended up not being much used. So the problem is there's so many different – government ultimately is the kind of backstop to all that might happen in the world. You know, if you think about it, you know, the British state, this would be true of other countries, ultimately, you know, has to be the responder to anything that might happen.

17:00some natural catastrophe, some nuclear war, some pandemic, some economic crash, some, you know, technological disaster, you know, whatever it is, and whether anticipated or not, the British state has to at least attempt to be the backstop for the citizens living in the country. And you can do as many exercises and forethought and foreplanning, but fundamentally, like human history is quite difficult to predict. And I would draw a distinction here, therefore, between things which, you know, are absolutely on the radar and might well happen. So, you know, if you have been listening to our podcast for the last three months, you know, we've been saying there might be like American action in Iran because American forces are moving in that direction.

17:48And there will be no excuse for the British government not thinking ahead about that, both the economic impact, what it might do to oil prices, which would be an obvious thing to think about, or indeed the pre-positioning of British forces, which I'm a bit critical of, they didn't do more of. And it's only now that the kind of ships are sailing. So I think there's a difference in those things. And actually, I mean, I'm not a big fan of Liz Truss's time as prime minister. But I think to be fair, it was quite hard to anticipate, you know, an invasion of Ukraine, which no one had predicted until it was suddenly upon us, doing this huge kind of shock to European energy prices and to domestic consumer prices.

18:33And therefore the Treasury had not wasted huge amounts of time kind of designing what you would do if there was suddenly a big energy shock. And actually the Treasury, a bit like during COVID, with the furlough scheme, proves to be very good and quick at moving to design systems for unanticipated events. So I would draw a distinction between you cannot plan for everything that's going to happen, but the British state ultimately has to respond. And things you should obviously, you know, are quite likely to happen or could happen and are already on the radar.

19:05Ed Balls: As Donald Rumsfeld famously said, known events, known unknowns and unknown unknowns. So the unknown unknowns, which are really hard to deal with. Thank you, James, for your question. We're back shortly after this break.

19:47Ed Balls: We'll be right back. and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the Live Well Sale on The Drop by GNC. Hey, this is Paige DeSorbo from Giggly Squad, and this episode is presented by Depop. Okay, be honest. How many things in your closet are just sitting there waiting for their next main character moment? Instead of staring at them, list them. You can list an item in just a few taps on Depop, Snap a photo and their AI-powered listing fills in the details and you're done. It's not giving stressful and it's giving efficient.

20:23And make money easily with no selling fees on Depop. No seller fees means what you earn is yours. Your personal taste has value. Someone is literally looking for what you're not wearing. Download the Depop app and list your first item today.

20:38Ed Balls: Parles-tu français? Hablas espanol? Parli italiano? If you've used Babbel, you would. Babbel's conversation-based technique teaches you useful words and phrases to get you speaking quickly about the things you actually talk about in the real world. With lessons handcrafted by over 200 language experts and voiced by real native speakers, Babbel is like having a private tutor in your pocket. Start speaking with Babbel today. Get up to 55 % off your Babbel subscription right now at babbel.com slash acast. spelled B-A-B-B-E-L dot com slash ACAST. Rules and restrictions may apply.

21:23Welcome back. Now, here's a question from a serving police officer who quite understandably wants to remain anonymous. We're going to call him John. That's not his real name. And his question has been voiced by one of our producers. Hi, Ed and George. I often listen while on duty as an immediate response police officer. The podcast, which I love, helps me decompress and keep up with world events around shift work. My question is this. Is the government's approach to policing misjudged? Rather than focusing on forced mergers and headline recruiting drives of inexperienced officers who have a poor retention rate, should the Home Office prioritize improving pay and working conditions to pertain experienced officers?

22:02Or do you think the government would prefer to opt for a lower pay to inexperienced officers? More controversially, is it time to grant the police the right to take industrial action? John, two things. I'll deal quickly with your last question, which is, should the police have the right to take industrial action? I would say no. I mean, not that it has stopped them, because actually there was a big police strike in effect under the last government around pay. But, you know, I think essential public services like the police should not be able to take industrial action, Although that should be reflected in perhaps other mechanisms that are in place to hear grievances and reflect concerns.

22:40Where I do actually have a lot of sympathy is with your main bit of your question. I mean, I was, you know, part of a political generation which sort of fetishized, in my view, police numbers. It was all about how many police numbers you had. And it was like a big issue under the Blair government. David Blunkett and Jack Straw, the Home Secretaries of Time, were all about like increasing police numbers. It was all about visible policing, community policing, neighborhood policing. Bobby's on the beat was how people talked about it. It was a numbers game. And of course, there was some reason to all of that, which was people felt they weren't seeing the police on their streets so much in the way that they at least had a kind of folklore memory of seeing the police in the past on their streets.

23:25And it's certainly the case, you know, when, for example, your car is stolen and a police officer won't turn up to just reassure you that someone's doing something about it that can be very unsettling what's interesting is you know police numbers have then fell and i've of course you know before you all jump in and when i was chancellor police numbers fell but the crime rate also went down and various measures of police effectiveness went up and without i don't want to have a big about that period i would say the kind of main i for me what i want is not so much numbers i'm not saying numbers are irrelevant because you obviously do need numbers in certain policing situations but what you really want the police to be full of experienced individuals who've seen this before carry that experience into investigative work that you want them to be empowered by the latest technology so that they can they have all the you know most kind of up-to-date technology in fighting crime just like when fingerprinting was introduced in the 19th century was revolutionary You know, you want whatever other kind of new things.

24:29Facial recognition now is a big, big police tool. And I know there are civil liberty objections, but I think it's a very strong argument for deploying that more widely. And you want police effectiveness. And that's partly about removing the obstacles, the kind of red tape, the bureaucracy. I mean, anyone who's dealt with the police will know that they sit under a load of red tape and regulation and bureaucracy, which is not of their making. And so I broadly sort of agree with you that, John, in the sort of thrust of your question, which is we should spend more time, more care, and therefore more care with pay and rations for experienced police officers and seeking to retain them than simply playing a numbers game.

25:10Because if you're just playing a numbers game, you want to basically have the maximum number of police officers on the lowest salary, which will be the entry salary, and circulate people through and maybe get them to serve three or four years or say in the police force and move them on and i don't think that leads to kind of the best law enforcement john it is brilliant to hear that

25:31Ed Balls: you um listen to our podcast and that it helps you decompress around your job i'm not going to um re-litigate the 2010 to 2024 period of conservative government other than to say that the numbers game came back with Boris Johnson because the budget cuts you did had such a big impact upon numbers and neighbourhood policing. And that's why that then returned when they tried to reverse those cuts in numbers. But I... I'm critical of that. So you are trying to relitigate it. No, no, I'm sorry. Critical of the Tory promises in the 2019 election, which shifted from being about outputs from public services and all to inputs, like how many hospitals you could build and how many police officers you could hire.

26:15Ed Balls: But the reason they did that was because there'd been such a large fall in numbers and there was such a worry about the nature of policing in communities. But I think John is right. A numbers game, if the test is, have we got enough police officers? Or if the issue is, you know, how they're organised and managed, the number of police forces, the problem is you miss out the key thing, which is have you got well-paid and experienced police officers doing the job? and as an example to others coming through the force, which impacts upon the most important thing, which is public satisfaction in the nature of policing, which is actually what the kind of Blair-Brown governments try to introduce later in their time.

26:57Ed Balls: And I do think that that is not being valued sufficiently at the moment. And I think you make a very powerful argument. And I think you always have to think to yourself, when you are running a big public services department, if you were to ask the experienced people within the service who you trust is this an important thing to do would they be saying it is an important thing to do by the way i think there's actually rather a lot of people in policing who do think done in the right way some mergers are important and i think very many people would not think removing the right to strike was the right thing to do but if you think back to you know i would say borrowing powers for foundation hospitals elected police commissioners, privatising the probation service.

27:38Ed Balls: If you'd asked experienced professionals within public services, is that the right thing to do? They'd have said no. I'm not sure whether they would have agreed that abolishing NHS England was the right thing to do, which is one of the flagship things that Rachel Reeves and West Streeting are doing at the moment. What about merging police forces? I mean, that's a classic one, which obviously we should get on with. It's silly we've got 44 police forces or whatever. No, this is what I was going to say. I think if you asked senior people in policing or experienced people, maybe John, is this the right thing to do?

28:08Ed Balls: I think many of them would say, yes, it is the right thing to do if it's done in the right way. When I was at education, I said, I will not abolish SATs tests. It's good to let headteachers bring in new unqualified teachers out of university through Teach First. I said, you should have a master's process where you have a license to teach. so people don't just stay in the profession for years and years and years without updating their skills. There were lots of headteachers who said this was terrible. He doesn't understand what is going on. Get rid of the SATs tests. Everybody's got to be a qualified teacher.

28:43Ed Balls: But I spent a lot of time finding the experienced people in teaching, the good headteachers, talking to ASKAL, the headteachers' leaders. And actually, the good headteachers said, of course you need SATs, test and accountability. And it is good to let us bring in, in a sensible way, some new young people to shake things up and to learn on the job. And yes, you're right. We do have sometimes teachers who are in the job too long without updating their skills. So I think what you've always got to be doing, if you're a public service leader, if, as I said, if you'd ask them, should we privatise the probation service?

29:17Ed Balls: They'd have said absolutely not. You need to listen to the experienced professionals as well as making sure they're properly paid and valued. And John, if we're not doing that enough in policing, we should do it better in future. Right. We will be back with one final question.

29:48Ed Balls: by GNC, curating the best of what's new, handpicked by the pros who know what works. And right now, get it all, buy one, get one 50 % off during the semi-annual Live Well Sale. From crushing workouts to leveling up your nutrition and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the Live Well Sale on The Drop by GNC. Hey, this is Paige DeSorbo from Giggly Squad, and this episode is presented by Depop. Okay, be honest. How many things in your closet are just sitting there waiting for their next main character moment? Instead of staring at them, list them.

30:26You can list an item in just a few taps on Depop. Snap a photo and their AI-powered listing fills in the details and you're done. It's not giving stressful and it's giving efficient. And make money easily with no selling fees on Depop. No seller fees means what you earn is yours. Your personal taste has value. Someone is literally looking for what you're not wearing. Download the Depop app and list your first item today. Parles-tu français? Hablas espanol? Parles italiano? If you've used Babbel, you would. Babbel's conversation-based technique teaches you useful words and phrases to get you speaking quickly about the things you actually talk about in the real world.

31:07With lessons handcrafted by over 200 language experts and voiced by real native speakers, Babbel is like having a private tutor in your pocket. Start speaking with Babbel today. Get up to 55 % off your Babbel subscription right now at babbel.com slash acast. Spelled B-A-B-B-E-L dot com slash acast. Rules and restrictions may apply.

31:37Ed Balls: Welcome back. Our next question is from Emma. Hi, Ed and George. I love listening to your podcast. Great insights. I am a 29-year-old working in the private sector who tries to set aside a good amount for retirement. My pension has already been hit once by this government by the National Insurance Contributions Change on salary sacrifice. Now there is the proposed pension scheme bill, clause 40 investment mandate, that my own pension must be invested in UK infrastructure projects. This will add significant risk with no benefit for me. This was not in Labour's manifesto. I believe we should focus on making UK infrastructure projects more investable instead.

32:13None of these changes impact public sector pensions, leading to a growing gap in the way public and private sector workers are treated. Do you think the government should focus on reforming the gold-plated public sector pensions rather than constantly raiding private sector pensions?

32:28Ed Balls: I do agree with the fundamental argument you're making in your question, Although just in passing, I think there were probably arguments for sorting out the national insurance treatment of salary sacrifice schemes, although not in a way which hit 29 year olds trying to save for their pension. But on the big thing you say, are we to be mandating that pensions have to invest in UK infrastructure projects or more widely in UK equities? I would just say no, I don't think that is the right way for government to try and direct where people's savings go. The truth is, if you are wanting to have a diversified pension pot, it should be investing in equities from around the world rather than mandating it has to go into UK equities.

33:14Ed Balls: In the same way, I was very suspicious of a UK ISA, where you said we would only let your ISA be invested in equities if they went into UK equities. I don't think that is rational or sensible or in the interest of savers or pension holders. So I agree with you on that. By the way, on public versus private pensions, there's actually been quite a lot of reform, reform under both Labour and Conservative governments. And so I'm not sure whether the gold-plated public sector pensions argument still quite stands up in the way it might have done 30 or 40 years ago. But on your big argument, I agree with you.

33:49Yeah, I mean, I do as well. But I mean, let's be clear that the government has certainly signaled, they're not doing anything in practice in this space. They've certainly signaled that they want British pensions to be invested in British infrastructure, whether that's private pension funds or indeed things like local government pension funds and there's something called the mansion house compact which is what you're i think alluding to which is you know around the speech that rachel reeves has given well in fact she's given a couple of mansion house speeches now and the two most recent have kind of alluded to this and she's sort of got the pension industry working together and there's a kind of informal agreement and it has two elements to it.

34:29The first is that more of people's pension pots should be invested in things like infrastructure and venture capital and private equity, which sounds terrible, but is actually investment in new companies and private companies and so on. And certainly it's, you know, the British pension industry compared to the American pension sector and some other countries like Canada and Australia, you know, is probably not invested enough in these asset classes, gone for much safer asset classes, like bonds and kind of shares on the stock market. And as a result, not got as many returns over recent years. And as a result, the pension pots are smaller than they'd otherwise be.

35:07And it also has the other adverse effect. There's not as much money circulating to invest in these things. Because these big funds that invest in Silicon Valley, what sits behind them? American pensioners or people contributing to American saving plans across the United States and indeed the world. That is a good thing to kind of push rather small-c conservative pension funds and insurers to invest in a broader range of things. Where I'm with you, Ed, and from the sounds of it with you, Emma, I don't think we want to buy British campaign. I mean, for a start, there's a whole question of how you define British these days, which is we won't go into, you know, depth.

35:44But for example, quite a lot of the companies listed on the London stock market may do none of their business in Britain, but they're still, quote, British companies on the London stock market. And second, I think you then kind of start to cross over a line, which is the people running the pension fund should really be doing everything they can to get the best possible return for you within the parameters you set about how much you're prepared to risk and when you want your money back and so on. And I think in this case, a Buy British campaign would be very counterproductive. And ultimately, it's about kind of packaging up British assets and investments in a way that's attractive to people because they think they're going to make money, not because they're told they've got to invest.

36:25After all, you know, the money flowing into America, or indeed the ability of Canadian and Australian pension funds to buy things like HS1 in Britain, you know, is because of their flexibility and the attractiveness of the way these investments were presented, rather than a kind of Buy British campaign. I mean, it's worth noting there are elements of Buy British already. So, for example, if you buy a gilt, i.e. you essentially lend money to the British government, you get a much better capital gains tax treatment than if you buy any other bond. So we do have some elements of the tax system which are quite old-fashioned and long-standing, which have a sort of British bias in them, but I wouldn't add to that.

37:02Ed Balls: I agree with that. And if there are regulatory or cultural barriers which are stopping British pension funds from investing in venture capital, in entrepreneurship, in infrastructure, we should tackle them. And that is, I think, what the government is aiming to do. And this was started by Jeremy Hunt before Rachel Reeves. And if that has the effect of increasing the pool of capital which is available to British infrastructure, venture capital entrepreneurs, that's a good thing. But it's the idea that you mandate that it has to be British, which is the problem. I remember going to, when I was Shelley Chancellor, Birmingham Airport.

37:42Ed Balls: At the time, a substantial stake in Birmingham Airport was owned by the Ontario Teachers Pension Plan. I mean, these big Canadian pension plans have invested around the world, and we should be, for the benefit of our citizens, investing in opportunities around the world. And if there are good opportunities to invest here in Britain, it's not clear to me why these international funds aren't investing here. So you slightly wonder sometimes whether it's the lack of opportunities here rather than the activities of the investors, which is the problem. No, although it wasn't, there weren't British pension funds investing in Birmingham Airport.

38:19I mean, that's the point that, in fact, they were being too conservative and they weren't investing in things that other people in the world said, well, those are good things to invest in in Britain.

38:28Ed Balls: I agree with that. But if the Canadians are willing to do it in Birmingham Airport, why aren't they doing other infrastructure projects around the country? Maybe there's something about the projects rather than about the pension funds, which may be causing the problem. Anyway, I totally agree with you. When you're talking about people's savings and their pensions and their future income stream, a small open economy like Britain mandating through the government that it has to be British investment, that is incredibly dangerous politically and economically unwise. What do you think about this idea of public versus private pensions that she also raises?

39:04I think you're right that the kind of unlevel playing field, if you like, has been level up quite a bit. I mean, it was always, you know, the public sector has, not in all respects, but in some respects, tends to pay less in terms of salary, but has more generous employment conditions, more job security often, and better pension. So it's always been more of a package. But I think it had got completely out of kilter, particularly as all the defined benefit schemes are closed in the private sectors. But things have changed now in their career average schemes and not as uneven as it once was.

39:41Ed Balls: And that's happened under governments of all colours, hasn't it? Thanks for your question, Emma. Yeah, that's all we've got time for in this episode of EMQs. And if you've got a question of your own, please make sure to send it along with a voice note to questions at politicalcurrency.co.uk. Yeah, make sure you review the show. It helps us reach more listeners. And we're going to be back on Thursday with another episode of our main show. See you then.

40:11Thanks for listening to Political Currency. This has been a Persephoneca production.

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