EMQs Young People Special: Why won’t politicians listen to the next generation?

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2:03George Osborne: The Chancellor of the Exchequer. Getting a lesson from the Shadow Chancellor on how to balance the books is like getting a lesson from Dracula on how to look after a bloodbath.

2:12Ed Balls: Ed Balls. A steady-as-she-goes budget. What kind of ship does he think he's on, the Titanic? They're married, Celeste.

2:20George Osborne: Welcome to EMQs from Political Currency with Ed Balls and George Osborne.

2:31George Osborne: Hello and welcome to this summer edition of Ex-Ministers Questions, EMQs.

2:37Ed Balls: Now, for the month of August, we are answering your questions around particular themes and topics. We get loads of questions sent in to us and we thought we'd corral in this episode all of the questions which we really wanted to answer, which were broadly about young people and whether they are kids or teenagers, school, university, getting jobs into the workplace, kind of wider issues of young people and politics. And so that's what we're going to do this week. And we're going to start with a question absolutely on this theme from John from Hampshire. Hi, I'm George. Loving the podcast. Young people today are leaving university with large debts, which increase with interest at 3 % above inflation.

3:23Ed Balls: For me, that means that£250 is taken out of my pay each and every month, and yet the loan is still growing. Homes are becoming increasingly unaffordable for many young people, and we won't get the same generous defined benefit pensions that today's pensioners enjoy. The OBR said the cost of the triple lock on state pensions will by the end of the decade increase to three times its initial estimate, and the burden of this will fall on young taxpayers. Meanwhile, politicians and the media obsess over winter fuel payments. Why is it that the concerns of young people barely register in our political debate?

3:54Ed Balls: And what can we do to change this? Thanks. So that is a really kind of interesting and challenging question, John. And here are three different takes on it for me. First of all, the trite answer. Why is more attention paid to older people's issues? Well, because they're more likely to vote. but I think that's the trite answer because if you actually look at you know the last election the battle between the parties whether Angela Rayner Michael Gove when he was in the cabinet before the election talking about about reforming rents around reforming the planning system about house building that is all politics trying to talk about an issue the affordability of housing which is very very big deal for um for young people um and i also think i think this is the more um kind of sophisticated thing to say is that older people i think really care about young people and their issues i think you know if you want to persuade grandparents to vote for you you can't only talk about issues which affect the wallets or the aspirations or the life chances of older people you've also got to think about their grandchildren i think they worry about can they afford to go university are they going to get a good job and so if you have you know squeeze on living standards which is really impacting upon young people working age people then i think that is a problem for um for older people too so i think you know the idea that um it's sensible politics only to focus on you know older people in fact if you look at america if you look in Germany with the rise of the AFD, resentment amongst people about the status quo has increasingly been reflected in populist politicians appealing to young people that they are being excluded and not listened to.

5:53Ed Balls: So I think to ignore young people politically is a very dangerous thing to do.

5:57George Osborne: Yeah, I mean, I'm actually going to, I mean, obviously what John says is right, that there's a lot of politics around the benefits that pensioners get, and we've had the big row about winter fuel payments and there's an ongoing row about whether the triple lock that i introduced is still affordable the triple lock on the operating of the state pension and you know what ed says is you know it is true that all the people um more likely to vote i don't think by the way that means they're necessarily going to vote conservative i think that's i think for both parties to assume both main parties to assume that that's the case is to misunderstand stand the last 30 years where the pensioner vote well you know golden brown made a big effort when he introduced things like the winter fuel payment to win the pensioner vote and did switch it towards labor and then it it's what switched back towards the conservatives and um it doesn't it's not an you know neither party should take it for granted that that would be the case in the future but more specifically to the younger kind of the situation the younger people face so some of what john says is absolutely true you know uh younger people now pay for their higher education with student loans although i say younger people those loans have been around for 20 years but you know the consequence of that has been a massive expansion of higher education so many many many more young people get a chance to go to university than did 20 years ago and or indeed further education college and um the the loan system is heavily subsidized and many people don't pay back those loans because they don't hit the income thresholds later in life so it's it's actually a huge state subsidy towards younger people so that'd be one observation to make second it's interesting if you look at some i think it's sort of taken as read what John is saying, that in our politics, that young people have never had it so tough.

7:56George Osborne: The systems react against them. They can't participate in the British dream, is how some politicians put it. And housing has become unenfallable. It's interesting. That is a charge you can make for what would be called the millennial generation. But if you look at the current generation of very young people, Gen Z, that come after the millennials, these will be 18, 19, 20, 21. And it's quite interesting, some of the statistics at the moment. So, for example, their incomes relative to everyone else's incomes are higher than they were back in 1997, for example. So, you know, the wages of an 18 to 21-year-old today, adjusted for inflation, so you can compare them directly, they're currently£24 ,000 a year.

8:42George Osborne: In 1997, on the same measure, adjusted for inflation, they were£18 ,000. In other words, younger people are paid more than they were back then. The Generation Z of 30 % of them have savings compared to 15 % of millennials, 5 % of boomers at this point in their life. So the youngest generation of adults actually have more savings than their previous generations did. and they're much more financially literate and engage much more in discussions about their finances than previous generations did as well um so i i don't i don't think it's straightforward to say things are getting ever worse for younger people in our society i don't think that's true and i

9:28Ed Balls: don't think the statistics bear it out very interesting and um thank you for that question john um our next question is from nick chambers um who's also a kitchen cabinet uh member and and somebody that George and I have both worked with over the years.

9:44George Osborne: Hi Ed and George, it's Nick Chambers, CEO of the charity Education Employers, loving the podcast, enjoyable and informative. I wanted to highlight the OECD report just published, which reveals a massive mismatch between the careers young people aspire to and jobs in the UK, especially in growth sectors. It shows that their aspirations have actually narrowed over the last 20 years, with 50 % now considering just 10 mainly traditional roles like doctor or lawyer. It helps explain why we've got nearly a million young people not in education, employment and training yet at the same time employers are struggling to find people often having to recruit from overseas.

10:24George Osborne: Our research shows that student aspirations are formed from a young age and are limited by who they know and who they see. That's why we've created Inspire in the Future so people from a wide range of industries and professions you can easily volunteer to chat to them. Nearly 100 ,000 people are already volunteered, inspiring half a million young people every year. And this could be scaled up very quickly.

10:48Ed Balls: It would be great to get your perspective on the responsibility of government on ensuring our young people fully understand the opportunities open to them

10:56George Osborne: and that we have the workforce we need for our future economic growth and prosperity. Thank you.

11:02Ed Balls: Very interesting question from Nick. And to explain the background, I actually worked with Nick when he was at Business in the Community in the late 2000s. We were trying to work on how you could get schools and business working more closely together. And I think there was a view at the time that that meant people from business going in and teaching classes. And that's really not what it's about. What it's about is getting businesses either to help schools with how they run or to get people from companies to go in and inspire the next generation of young people to think more widely about their career opportunities.

11:45Ed Balls: And the charity Nick has run subsequently, Inspiring the Future, is all about raising aspiration by opening young people's minds to opportunities out there. and as he says that OECD report is very powerful it shows that that actually there was a very big income-based divide in aspiration things have gone backwards somewhat and that if you actually have those kind of contacts then you're much more likely to get onto a career path to work hard and do well and if you don't have those kind of contacts while you're at school age with people in these kind of jobs and professions and open your mind to career opportunities then you're much more likely to um do less well post-school in terms of work and earning so um the work they do as a charity getting employers into schools in the hundreds of thousands to inspire the next generation seems to me to be really important work yeah and it's um well first of all it's

12:45George Osborne: great what nick and his charity are doing and you know of course this is you know the the kind of great challenge isn't it on on creating a fairer society which is you know what what can the state do to compensate for the fact that people born in families which are poorer and aren't as exposed to as many opportunities as richer families are what can the state do to correct that and when people are in school you can do things to show them a wider range of careers and opportunities in life than they might have been aware of in their home environment. I think the kind of question then Nick asks is, should this be done essentially by the state, or should the state support and provide access to charities that do it?

13:38George Osborne: Now, I've not been, I mean, it'd be kind of interesting to get your perspective, Ed, because you've actually been the education secretary, the children and school secretary, but you've handled this system. and I haven't directly. I think a kind of great big state-run national careers service, and I know there's been like a big lively debate about this over the last 15 years. I just wonder whether it will kind of be as kind of creative and flexible and expose people to all the different options in our society in the same way that a good charity like Nix would. And I think the state, it shouldn't be the assumption that because something needs to be done or we as a society decide something needs to be done that the government needs to provide that service the government may need to support that service they need to pay help pay for it may need to you know provide access on government properties like schools to that service but i think a big state kind of national careers service my guess would be wouldn't be as effective as getting charities to continue to perform that role and maybe perform it on a bigger stage.

14:47George Osborne: So that would be my instinct. I don't know what you think.

14:50Ed Balls: That is why you have charities like Nick's in thousands of schools. It's why you have the charity Robert Peston set up Speakers for Schools. I've done lots of talks in schools. So have many other thousands of people. Individual head teachers in individual schools can decide what will work best for their school and mandating from the centre you must do it this way I think you're right is undermines creativity takes away discretion makes it much harder to experiment with things which work doesn't mean that you can't say that you know within the curriculum there must be space for careers advice doesn't mean that you can't have programs of accreditation or training for people who are working in careers advice but if you mandate the detailed program from the center and then i think you're right that that's not going to to work and allowing individual schools and school leaders to find the path and the organizations which will work best for them doesn't mean government can't promote and push and champion doing these things but saying you must use this particular charity or this particular piece of curriculum support and that's not the way to do it and it's not the way in which it works in our education system i think most head teachers would would um would react badly to that

16:14George Osborne: so i think you're right you know and um when i was at school uh so i went to a you know a private school in west london so i'm not saying this is directly comparable to situations that some state schools will face but they did put on a careers fair while i was there as a kid and they got the parents to come and essentially sort of have little stalls so you'd get like a mom or dad who was a lawyer to do a little thing on being a lawyer or mom or dad who was a doctor to come and do like a thing and nick mentions those careers and the thing about those careers is in some ways they're they're sort of quite easy to understand what the job is and it's quite easy to understand the path that you need to follow to get the job you need to study and you need to get these qualifications and so on and it's true also true of very big companies they'll have like graduate schemes or uh well you know apprenticeship schemes um anyway my my dad who'd set up his own business had a stall which was setting up your own business and he told the story about like all these you know so the kids would kind of wander around these these this careers fair with their parents who were also there you know parents who weren't They didn't have their own stalls.

17:25George Osborne: And he says, you know, just as these kids would sort of wander towards the setting up your own business stand, their mom or dad would say, no, no, little Johnny, don't you want to come and see the, you know, the big solicitor firm over here? And I think it's true of a careers fair, one of the kind of problems. And I remember this when I was at university, too, with what they used to call the milk round, which is when the companies would come to the universities and try and get you to sign up to be, you know, banking or law or whatever. there are so many jobs out there that that are like self-starting or self-employed or you set up your own business or you know you that don't neatly fit into here's a career you can follow and they're never really represented at these kind of careers affairs because almost by definition they don't have the infrastructure to kind of turn up and say here's how to set up your own business and i would say since i was at university all those decades ago one of the things that's really sort of taken off in our society are people who whether it's on kind of social media platforms like um you know instagram or tiktok have set up their own little business where they sell something or founders of you know they don't have to be like elon musk and mark zuckerberg but founders of small tech businesses or people who are self-employed contractors that's a whole world of people and there isn't like the stall at the either university or school careers fair that says go and be a you know self-employed contractor or go and sell things on etsy you know so that's

18:58Ed Balls: actually a challenge with careers advice it is i think the the for lots of schools the most important thing is having somebody who was at that school 10 years or 20 years ago who goes back in and says people like you because i was once like you age 14 can go on to do set up a business or be a soap star or be an engineer. I think the biggest challenge with lots of young people is them just thinking that those aren't the kind of jobs that people like me do and getting people who are like them, who've done them in telling those stories. And I think you're right. What TikTok and Instagram do is that they show people like them doing these jobs.

19:38Ed Balls: And I think we probably would have seen much less of that 30 years ago when we were in school. We'll take a break and then we've got another question.

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21:52George Osborne: Welcome back. Here's a question from Andrew.

21:55Ed Balls: Hi Ed, Andrew here. My daughter's currently spending a year abroad as part of her Cambridge MML degree. And despite the post-Brexit costs, the admin hurdles and delays, she'll return with great confidence and valuable experience. like many MPs you George and Yvette have studied abroad did you find the time abroad valuable and do you believe that joining Erasmus Plus will be a significantly better choice than the rather

22:22George Osborne: ineffective Turin scheme well Andrew's asking you Ed he didn't ask me I think we are inching our way

22:30Ed Balls: back towards the Erasmus scheme following the the talks between the UK and the EU a few weeks ago

22:37George Osborne: not secure we should explain shouldn't we the erasmus scheme was a scheme that enabled young people when we were in the eu to go and study uh abroad in other eu countries right wasn't it

22:49Ed Balls: yes although i'm not an expert on the detail because i went and studied in america um so i never did an erasmus program within the european union um maybe i should have done the thing i think to answer andrew's question why it's so important i mean you know it's it's it's to travel and to experience new places. But I think actually there's a deeper point here, which is that it's very easy to think that people are like us. And if we have a shared history or a shared language, I remember going to America in the late 1980s and thinking that it would be familiar and suddenly discovering that despite cultural links and linguistic links, they were just so different.

23:38Ed Balls: And American society is so actually foreign when you first arrive as a 20-year-old Brit. And to see a society where, for example, religion plays a much greater part in many people's lives to something which is quite striking and which you learn from. And so I think one of the reasons why it's so important, Andrew, is that if you want to understand how the world works and how societies work and to understand people that you deal with in your professional or wider life, you need to understand that to look beyond ostensible similarity and to find the difference because that's how you understand and how you avoid making mistakes.

24:23Ed Balls: And I think international travel and international study is a really powerful way to do that. And it was certainly important for me.

24:30George Osborne: Yeah, well, I strongly agree with that. I mean, like you, I studied in the States, not for as long as you did. And I did it rather curiously in the year I had between my school and my university. So I went to a college in North Carolina called Davidson College, which was a small liberal arts college. It's what they call them in the US. and had a very famous basketball team. Not that I was on it, which was, I guess, why it was famous. Because it was very, very good. Did you go to the trials? Do you know the odd thing, walking around the campus, there were these really tall people.

25:12George Osborne: Basketball players are really tall, I mean, when you come across them. They're very, very striking. I absolutely loved it and it was you know such a kind of seminal moment in my life I was 18 it was you know living away from home um uh you know it was brilliant and it gave me an enduring love for the United States and for that society and people were so so welcoming I remember when I arrived i had like this enormous suitcase um full of like all my good stuff for a month and um i got this taxi to the campus i basically missed the plane was late i'd have missed the person who was supposed to be picking me up at the airport so i got this taxi to the to the campus which was outside of charlotte now is a big charlotte's a big like thriving hub of the united states at the moment but back then it was more of a backwater and we got to this campus and i literally couldn't move the suitcase it was so heavy um i actually had two suitcases very heavy and i just and i sort of just stood there going what am i supposed to do like dusk is coming in i don't know anyone here um i've missed the person i was supposed to be met by and um the first person came up and said hi can i help you and i was like i was very british i said no no i'm fine thank you and the second person came i was like you know you you look like you're new here can i help you i'm no, no, no, I'm fine.

26:36George Osborne: And it was again, very British. And the third person said, you know, can I help you? I said, yes, actually, I have no idea where to go, who to be. I can't move because I got these two heavy bags and, uh, they helped me and they took me to the kind of Dean's office and, and it, it was just so different. And I wonder in a British campus whether, you know, if there was an American stuck there with, you know, how many Brits would go up and say, oh, can I help you? Anyway, so they were really warm and I have a long, long affection. I'll tell you years later, this is totally off the subject, but so what?

27:11George Osborne: Years later, when I was the chancellor, I didn't have much contact with this college afterwards, Davidson College. And I've been on a scholarship called a Dean Rusk scholarship. Dean Rusk had been an American secretary of state who'd wanted to promote British American exchanges. Anyway, I got a letter from Davidson college saying please could you help us chancellor as an alumni of davidson college because we are trying to get hold of general davidson's campaign wallet now it's not a wallet like you or i might have in our pockets this is like a like a portfolio thing a leather sort of thing you keep maps in please could you get general davidson's wallet he was a rev he was a revolutionary war general on the side of the American rebels.

27:57George Osborne: And he was killed by the British. And his wallet is in the public records office in the UK. And we'd like to have it back in Davidson. And so I investigated and I got this response from the public records office as chancellor, which is, well, we don't give anything away you know that's like britain's rule um something i'm quite familiar with now as chair of the british museum as an issue and uh so you know they can't have it and maybe they can have it on a kind of we can end it for a few months and i was like this thing has literally never been seen in public since it was picked up by the british army in the 18th century and it's just been sitting in a box somewhere in you know queue or wherever it's kept and um and yeah i I arranged for a long-term loan.

28:51George Osborne: I think it was, from memory, like a thousand-year loan. Anyway, maybe it was 100 years. I can't remember exactly now. But it was a really long-term loan of General Davidson's campaign wallet to the college I'd been to when I was 18 years old. So that was the bit I did as alumni. All the other alumni were giving millions of dollars, but I sent back the Leather's portfolio.

29:14Ed Balls: May I say that was a fascinating story, And we have come so far from Andrew's question that he will be sitting there thinking what the earth is going on.

29:24George Osborne: You know, I think there's no, look, we've had a discussion on this program about whether Labour should have joined the single market, customs union, all that. And it's all a bit moot. But I don't think there's any political damage to be done now for Labour doubling down on some aspects of that we miss from not being members of the EU. and one of them is the free movement of young people to study in uh without kind of a lot of bureaucracy and visas and the like in europe and yes they will get nigel farage and you know if the tories are there stupid enough to complain about it but you know they're already they're not going to get kind of really brexty people who are against you know having anything to do with the eu voting for them next time anyway uh they've already bitten that bullet in my view rightly so with the trade deal they've done.

30:09George Osborne: So I think, you know, signing up for kind of like whatever the way you could sign up for Erasmus these days would be, I'm strongly in favor of. I thought it was a good idea, as I think you did, to have that youth mobility scheme for people under the age of 30. And, you know, if anything, it comes back to the earlier question we had on this about young people voting. Why not make part of your offer to young people at the election that you are the people who've enabled them to have some of the opportunities that you and I had when we were young to travel around Europe without having to get visas and you know the like and although we didn't take it up because we went to the states we could easily have studied in Europe and that's much harder now for young people so um if I were Labour I would double down on some of these things and I'd essentially trap the Conservatives into sort of rather petty opposition to them.

31:00Ed Balls: Very good. May I congratulate you on finally returning to Andrew's question, which I thought you did admirably.

31:05George Osborne: That's my liberal arts education for me, getting back to the point.

31:08Ed Balls: We're now going to go to a question from Harrison, and his question is voiced by one of our producers.

31:13George Osborne: Dear Ed and George, I'm an A-level politics student and recently completed my first politics paper in which I made multiple mentions of George Osborne. However, that made me think about politicians' legacies. Other than prime ministers, which politicians do you think were still be mentioned in a hundred years time making appearances in people's essays love the podcast

31:35Ed Balls: it's perfect for a break from revision that is a great question harrison and um you know i don't know what grades you need for you know your university career but you know i just hope mentioning george osborne lots and lots of times has not been there's not been a negative for you in in the marking of the essays you know fingers crossed it will be okay well i think if he's

31:55George Osborne: written that i saved the economy from the mess that ed bulls created he should get an a star shouldn't he um do you think nine do you think people would be scored there do you think people

32:05Ed Balls: will be citing that achievement in a hundred years i think they will yeah do you think do you think you'll still be being mentioned in a hundred years time if this nation should live

32:14George Osborne: for a thousand years people will say this was their finest hour well look the problem you've

32:22Ed Balls: got is you've not got a day named after you which is actually you know a much better way because do you think in 100 years time people will still be celebrating at ball's day um i think even in a couple years time that might be a stretch no part of the problem is you know as twitter is going into reverse so the um the salience of that that meme is undoubtedly dwindling so forget that let's do

32:44George Osborne: for each other i mean i think you will um forever your your achievement but you achieved it as an advisor rather than the principal is bank independence isn't it i mean that will be written about and always in the history books whatever that's um if you were to pick one thing i think that would be it and there'll still be there'll still be lots of debate because i've The debate on bank independence or how monetary policy is conducted is going to go on for many hundreds of years unless money is replaced by crypto.

33:21Ed Balls: Although I think in 100 years' time, they'll be talking about Gordon Brown's decision to make the Bank of England independent. And you'd have to be doing a kind of sophisticated history thesis to mention me in it. Yeah, but that's the way to get the star. There we are. A tip for you, Harrison. what would yours i mean yours will be the debate about um austerity and whether aggressive tightening of fiscal policy through spending cuts in 2010 to 2012 was the right strategy or whether it ended up um depressing growth and kind of productivity growth and rising living standards and that sort of debate about the right macro fiscal response to a deficit will be will

34:04George Osborne: be the intellectual thing yeah i'm sure that is the um subject of these um these a-level essays i'm sure um austerity i think the um interesting thing is that i probably you know which i don't resolve from at all i think the uh the thing that i'm there are lots of things you know i'm proud we did in government but the thing i think that i did that no one will now reverse and may have the kind of longest lasting real effect was introducing a tax on sugar. Because I think that, you know, that was a kind of political decision that lots of people saying we shouldn't do it. It wasn't very partisan because it was supported by the Labour Party at the time.

34:50George Osborne: And if anything, the opposition came from the Conservative benches and subsequent Conservative Prime Ministers who didn't in the end reverse it. But this Labour government has doubled down on the sugar tax. And I think in terms of longer term benefit, hopefully in public health journals and the like, they'll still be writing about the UK sugar tax. I get a lot of requests, like you, I'm sure, get lots of requests from academics who are studying this period of history. I get a surprising number of requests from people around the world who are doing public health studies and theses on public health who want to talk about the sugar tax.

35:30George Osborne: So I'm not saying that's in the UK what I'm well known for during that period. and you're right that I think austerity remains the kind of central debate. But it's interesting that, in my own mind, is something that will still be written about in the years ahead.

35:46Ed Balls: And you're hanging the EU referendum defeat and leaving the European Union firmly around the neck of David Cameron, aren't you?

35:54George Osborne: Yeah, I think so.

35:55Ed Balls: I mean, that's absolutely him. I mean, you were against it.

35:59George Osborne: I'll take collective responsibility for it. Well, I mean, you know, I think time will tell that voting to leave the EU was not the wisest decision Britain's made.

36:10Ed Balls: I'm going to bail you out with an ad break. We've got one more question.

36:41Ed Balls: We'll be right back. Socks from the pros of socks. For another pro, you. Go to bombas.com slash audio and use code audio for 20 % off your first purchase. That's bombas.com and use code audio. Your team just added its 67th AI tool and also your 67th security blind spot. The good news? The Vanta agent works like a GRC engineer in the background, finding every app your team uses, scoring the risk, and drafting fixes for you. Vanta is the platform used by over 16 ,000 fast-moving companies like Ramp, Cursor, and Harvey, who are shaping the future with AI and staying ahead of AI risk. Get started at Vanta.com.

37:18Ed Balls: Hi, this is Monica Reinagle of Nutrition Diva. Today's show is sponsored by Nature Raised Farms. Grocery shopping can be a little overwhelming, especially if you're reading labels. and in my opinion chicken shouldn't be complicated which is why i appreciate nature raised farms it's chicken that's just chicken and their lightly breaded chicken nuggets are free from gluten dairy and soy look for nature raised farms on your next grocery trip and feel more confident about your choices

37:55Ed Balls: welcome back our last question is from nyasha who um somebody who i've known for a number of years done a lot of work with at harvard and king's she's now a barrister um but she sent us a question hi my name is nyasha and i'm calling in to ask you both a question about britain's water i'm the mum to two small boys and with the summer that we've been having they are absolutely desperate for somewhere to splash about in and get cool but I've heard on the news about the amount of sewage that is going into Britain's rivers being pumped out by Britain's nicest beaches and I just don't know what the future looks like for them being able to swim safely.

38:43Ed Balls: Alongside that, we've got a hosepipe ban, which means that it's really difficult to fill up a paddling pool so that they can splash around in the back garden. Meanwhile, all of the investors who got rich from the privatisation of Britain's water companies, despite their massive amounts of mismanagement, probably have private swimming pools in their back gardens. It somehow doesn't feel fair. What do you think the future looks like?

39:07George Osborne: Have you been radicalising Nyasha on this King's course?

39:13Ed Balls: I would say, George, that if you polled a representative sample of reform, Labour, Conservative and Liberal Democrat voters and asked them what their view is on water quality and sewage and pollution and the water companies getting big bonuses, I think there would be a very very common view you know it's not it doesn't divide party politics and they'd all agree with niasha that they've all made rather a lot of money whether they've got private swing pools i've no idea um while water quality has clearly gone down and that is a failure of regulation in terms of the way the companies have been regulated but also in the way in which environmental standards have been um have been um enforced uh and that was a decision and um but has water quality gone down

40:05George Osborne: or is it just not improved in the way that we would want it to and expect the water companies to deliver?

40:11Ed Balls: Well, enforcement of water quality has undoubtedly fallen off dramatically since the middle of the last decade.

40:20George Osborne: I mean, let me say, first of all, there's no doubt the water industry is in a total mess. And I think of the various sort of privatized industries, this is the one that's got itself into this hole, which John Cunliffe, who's known to both of us, is commissioned by the government to try and find a way out of. And what happened to my mind is, first of all, they allowed these companies to be over-levered, i.e. to take on too much debt, essentially, because of the structure of the investors and the sort of private finance that came in in the later stage. This is not the initial period of privatization.

41:03George Osborne: This is much more recent. And then second, the regulator focused a lot on consumer prices because the regulator says how much money the company can make. And then the company takes that money and then gives it to the shareholders or uses it to pay off their debt interest in the case of water. But they were very focused on that the companies couldn't put up consumer prices. And as a result, the companies, what gave was investment in new water plants and new pipes and the like. now that is all changing and actually about to open is this huge huge infrastructure project which people don't really know much about because it's underground called the thames tideway tunnel which is this enormous tunnel under the thames river through london right through the center of london it's an amazing project and that will dramatically improve water quality around the capital and stop the sewage being dumped into the river when there's when it rains heavily and so on and i think the beaches you know that i think a lot of effort has been made to improve the kind of quality of the water around beaches and monitor it i was uh earlier this summer at western super met beach with my family and um you know it was actually you know looking pretty clean um to my mind anyway and not that i'm did any water quality testing but there wasn't you know i remember going as a kid to british beaches and it was quite often like a ton of plastic floating in the river is floating at the shoreline and so on you know i think that's all the case um but you so there does need to be further improvements they are coming and i think the future regulation of water is going to put more of an emphasis on this investment in water quality and infrastructure than it did recently so i think it's partly a failure of regulation rather than just like

42:49Ed Balls: capitalism gone bad i think that's right although i think you're focusing only on one part of the regulation, which is the price economic regulation of the water industry. But it's also the case from the mid-2010s, the Environment Agency moved into a much less aggressive mindset, a more deregulatory mindset when it came to enforcing environmental regulations. And that is also part of the problem that is turning around. Our former colleague, Sir John Cunliffe, former Deputy Governor of the Bank of England, but we both knew him well in the Treasury, is doing a report for the government on the future of the water industry.

43:32Ed Balls: I know for Steve Reid, the Environment Secretary, this is a bigger priority than farming or food security, important as though they are, because it has that sort of cross political spectrum appeal.

43:44George Osborne: It's certainly become a political issue in the way it never was when I was kind of active in politics, really.

43:49Ed Balls: It's true, but I think the other thing I was just saying -

43:51George Osborne: has been the great campaigner on this hasn't he absolutely brilliant campaigner starting from

43:55Ed Balls: doing river walks in north london onto you know becoming a total expert and great campaigner on these matters very very knowledgeable the one thing i would say to reassure niasha is that when we were young there was lots of problems around the quality of um of our beaches and it is possible to sort these things out with focus quickly and if there are problems now which i believe there are then it can be done again and uh john conness and steve reed and you know that cross-party support for action is the thing which is going to sort this out um so um to all of you having clean swimming beaches this summer yeah great and for anybody who um is a bit worried about the pollution the solutions in hand and that is it for this episode of our summer emqs

44:44George Osborne: yeah maybe we shouldn't have ended on pollution on our beaches might put people off anyway i'm wherever you are with your on a beach buy a paddling pool buy a swimming pool i hope you've enjoyed it and you can keep sending us questions and voice notes to questions at politicalcurrency.co.uk make sure you also review the show because that way these algorithms work that helps put it in front of other listeners and if you want the

45:09Ed Balls: episodes early and ad-free become a gold member or a kitchen cabinet member the links are in our show notes and we hope you enjoyed this week's episode. See you soon. See you soon.

45:29George Osborne: Thanks for listening to Political Currency. This has been a Persephoneca production.

45:43Ed Balls: Hi, this is Monica Reinagle of Nutrition Diva. Today's show is sponsored by Nature Raised Farms. Grocery shopping can be a little overwhelming, especially if you're reading labels. And in my opinion, chicken shouldn't be complicated, which is why I appreciate Nature Raised Farms. It's chicken that's just chicken. And their lightly breaded chicken nuggets are free from gluten, dairy, and soy. Look for nature-raised farms on your next grocery trip and feel more confident about your choices. Your team just added its 67th AI tool and also your 67th security blind spot. The good news? The Vanta agent works like a GRC engineer in the background, finding every app your team uses, scoring the risk, and drafting fixes for you.

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