How’s Britain and George Osborne, 10 years on from Brexit?

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0:55George Osborne: This is Political Currency. with Ed Balls and George Osborne.

1:08Ed Balls: So we are live in our brand new studio here in Hoxton. A refit. Do you like the wallpaper?

1:15George Osborne: Actually, I think it might be Osborne Little. They certainly used to have this stripy wallpaper back in the 1980s.

1:22Ed Balls: There's absolutely no way Persephoneca and our podcast could afford Osborne Little. Are you serious?

1:28George Osborne: Well, they didn't ask for a discount. That's true.

1:30Ed Balls: I mean, the Speaker of the House of Commons, Derry Irvin, could afford wallpaper of such expense for not political currency.

1:39George Osborne: No. Do you know the other great wallpaper story in history is, of course, Napoleon, who was killed by his wallpaper. Did you know that?

1:46Ed Balls: well look only somebody who is he was the heir to a wallpaper empire could know about the napoleon

1:53George Osborne: wallpaper story well napoleon had a proper empire i'm sadly i'm not sure the osborne little empire is quite the same but we should get on with that look you have to tell us how he died okay well so when he was imprisoned on saint helena by the british after losing the battle of waterloo in a little house it was such a damp island in the middle of the atlantic the green coloring in the wallpaper had been made with arsenic. That's how they got the green colour back in those days. But the damp conditions basically meant the arsenic infused the rumour and over a period of time he died.

2:27Ed Balls: Well, look, that just makes me slightly worried about the green stripes in our studio. Did you enjoy the football? We're recording Thursday morning in the World Cup. England played a match at the beginning of the World Cup and did really well. I mean, you know, culturally, this is quite confusing.

2:43George Osborne: Yes, I watched it by myself at home and I loved it. You know, you're right. Quite often those opening games can be a bit boring and sort of tense. And, you know, you're looking for a 1-0 win. I mean, that was cracking. I mean, every segment of the game. Of course, it's now, you know, it's not really a game of two halves. It's a game of four quarters with the hydration breaks.

3:03Ed Balls: I also, I mean, this is rather sad. I also watched it at home alone. Yvette's in Egypt. We should have got together. I know. We should have had a viewing party. We could have taken a photo with us awkwardly drinking half a lager. But then, do you know what I then did? I watched the game. And then because it was in the Dallas Cowboys Stadium, I then watched the first episode of Series 3 of American Sweethearts, the story of the Dallas Cowboy cheerleaders. I don't know if you've watched it, but it's utterly compelling. Greg Whiteley television. It is so good because of the first two series. They're now really famous.

3:41Ed Balls: and therefore all these dancers from around the world want to join the auditions for the new season for the cheerleaders. I mean, you've got to watch it.

3:49George Osborne: I don't think you'd be the first middle-aged man whose wife's away who turns on at 11 o 'clock at night and the story about the Dallas Cowboys cheerleaders. A bit of light entertainment before they go to bed. But listen, we've got serious business to talk about, haven't we, this week. The voters of Makerfield are voting today in the by-election. And we actually did discuss last week whether the World Cup affects politics. So who knows, maybe the England win has had some effect on how people feel in Makerfield today.

4:18Ed Balls: That is right. That is our first topic. People are voting now. I think there's a pretty widespread expectation that Andy Burnham is going to win this by-election and that therefore this is going to see a cascade of events over the coming days and weeks. I have to say, if Andy Burnham loses this by-election, If Keir Starmer can't win in Maker Field with Andy Burnham, I think it makes the crisis deeper and may even mean events happen faster. But look, if Andy Burnham wins this, politics is going to be in chaos for weeks.

4:52George Osborne: Yeah, I think Nigel Farage wants Andy Burnham to lose and I think Keir Starmer wants Andy Burnham to lose privately. But anyway, we will know the result shortly. And as you say, people are expecting Burnham to win. We're then going to talk about the backdrop to this unfolding UK leadership crisis, which is the global economy. And in particular, the impact of the Iran deal, which Donald Trump has just signed with Iran. If you can call it a deal, we're going to get into the reads on that. And what impact that is having on things like oil prices, inflation. and how has the Federal Reserve reacted under its new leader, Kevin Walsh, who had the first monetary policy meeting this week?

5:35Ed Balls: And then, of course, Tuesday marks the 10th anniversary of Brexit. And having turned down the Today programme and News 9 and Channel 4 News, George Osborne, the architect of the Brexit referendum, or at least one of them, is here to tell us, did it really make a difference? was the last 10 years inevitable? Is Brexit shaping the future of our economy and politics in a positive way or a negative way? And that's what we're going to talk about last.

6:05George Osborne: Yes. Oh, lucky me, revisiting all of that. So the make-a-field by-election is underway, but obviously the debate about how Keir Starmer is going to respond to the outcome is already started. And it's been started by Keir Starmer himself because he's been at the G7 and he's been very active. on the domestic policy front with things like social media ban. We've had the resignation of not just the Defence Secretary, which we discussed on our podcast last week, but also the Minister for the Armed Forces who Ed introduced to the world, I'd never heard of him before, Al Cairns, if you've been regularly listening to this podcast.

6:45George Osborne: Let's just have a little medley of things that have been said over the last few days to frame the conversation that's about to kick off. I can announce that the government will ban access to social media for all children under the age of 60. Just yes or no, no circumstances. I'm not going to walk away. I'm going to fight. No circumstances you would step aside. I'm not walking away. I'm going to fight. This is the age of hard power and rising threat. This is not the moment for calibration or incremental change. This means bigger politics, bolder priorities, harder choices. And Britain's challenge now is the transformation and the rearmament of our armed forces.

7:32Ed Balls: After Thursday's by-election, when the results are in, I hope the Prime Minister will at that stage reflect on his own position and set out a timetable. I think that would be a better way forward for everyone. Lots of people have come to support the campaign because I think they recognise there's a breath of fresh air possibly coming into Labour thinking. So we'll see where it takes us. But I end the campaign feeling good.

7:58George Osborne: So that was Keir Starmer announcing this big move on banning social media for under 16s, something which we'd been told he was against and he'd argued against for many months. and to be fair, was something originally proposed by the Conservatives and their education spokesperson, Laura Trott. Then he's telling Beth Rigby he's going to fight on. Then you have John Healy's resignation statement in the House of Commons. Then you've got Wes Streeting saying he's getting ready to fire the starting gun. And you've got Andy Burnham talking about the future. That's all in the last week in British politics.

8:32George Osborne: And I think we could probably safely say next week's going to be even more intense, right?

8:37Ed Balls: That is right. Look, Keir Starmer is undoubtedly wanting to own the space to lead the debates. You know, the social media ban. It now seems he's about to make an announcement about the Heathrow runway extension, the defence investment plan. I think there is a debate happening in Westminster about what is going on. I mean, is this Keir Starmer, knowing that the writing is on the wall, knowing that he has to make Andy Burnham lead the demand for change and to say, you know, I'm carrying on, but here is my legacy? or is this Keir Starmer actually genuinely doubling down for the fight? And I have to say, rather a lot of the signals coming out of 10 Downing Street, both in the media and more widely, is that Keir Starmer is going to fight it out with Andy Burnham if there is a challenge in the next few days.

9:33Ed Balls: But the tactics have changed. They've been more subtle this week. Last week on the podcast, we said that Keir Starmer saying any person in his cabinet who supported Andy Burnham would have to resign. That was a nightmare. It would have just led to a whole series of resignations. But in that Beth Rigby interview, as well as saying he was going to fight on, he said, I want Andy Burnham back into my cabinet. The first priority has got to be winning the mayoral election. What Keir Starmer is doing is playing for time, but putting the onus on Andy Burnham to come in and challenge. I think that Andy Burnham is not going to want to do something very fast, not in the first 24, 48 hours.

10:15Ed Balls: He wants Keir Starmer to own this, for Keir Starmer to be setting out the timetable in a conciliatory way. But I thought Andy Burnham's people saying yesterday that Andy would not accept a position in Keir Starmer's cabinet was the wrong call. That felt confrontational. That felt ungenerous, uncollegiate. Much better for him to say, look, I'm really pleased Keir Starmer wants me to be part of it. But let's have a conversation over the weekend or on Monday about what is the best way forward for the party, the government, the country. That felt the wrong call.

10:49George Osborne: Well, I wonder if that's the case. I mean, wouldn't it look completely sort of false and fake for Andy Burnham to say I'd take a job in his cabinet? I mean, he's explicitly coming into Parliament now to challenge for the Labour leadership and to unseat Keir Starmer. And I do think in passing, we should say, what if we were going to come on and talk about, you know, Andy Burnham's prospects. But it has been pretty gutsy of him to give up the Manchester morality, go for this by-election. Everyone said it was going to be very tough to win. And he's forced a spirited campaign and, you know, doesn't at the moment appear to have sort of put a foot wrong in the actual campaign itself.

11:25George Osborne: So, you know, I think we should note he is like gone for it. Definitely. I think for Starmer's point of view, what else can he say? I mean, he can't say I'm not going to offer Andy Burnham a job in my cabinet. And I think he is, I've used this analogy before, or this phrase that we used to use in opposition as conservatives, which is he's gone for the kind of Mr. McCorber and John Travolta strategy, which is staying alive and hoping something's going to turn up. Everything he's doing at the moment is, look, of course, you know, I'm going to fight on. we have to wait for this Manchester mayor by-election, which is going to be potentially pretty tricky for Andy Burnham.

12:06George Osborne: If Labour loses it to reform, which is quite possible, despite what happens in Makerfield, that will be quite a sour legacy for Burnham to arrive in Parliament with. So I think Stam is just playing for time and seeing what's going to happen and how the cards are going to fall. And he knows there are other people out there like West Streeting, you know, who are trying to put together the numbers. and no doubt people like Angela Rayner are having a good look at it. And what else can you do in his situation? I mean, the alternative, which we've discussed on this show, and I guess is still open to Starmer, although he keeps kind of closing the door to it, is, look, you know, I accept the verdict of the party is that they want to move on, but I want to create an orderly process.

12:48George Osborne: I want more time for a proper debate about policy and issues. And I will go, you know, in the autumn after the Labour conference. and then he would give himself some sort of breathing space. But, of course, he would be conceding that he had gone. He would be giving up what most people would now regard as the slim chance that he could survive.

13:08Ed Balls: I think you are right to say that Keir Starmer has to have a line up to the by-election result now. I said two weeks ago he would have been better off owning the timetable in advance of the by-election. He's not taken that strategy. But seriously...

13:21George Osborne: But it's not really a strategy, is it? because it's not a strategy to survive as prime minister. It's a strategy to have a more dignified exit. So I'm not sure, is it? I mean, you would only do that if you really thought, I've got next to no chance of clinging on.

13:36Ed Balls: But that is right. But that begs the question, is there a strategy where Keir Starmer can survive as prime minister? The idea that after the by-election, which Andy Burnham has won, there's going to be weeks and weeks and weeks in which this is all going to be held in suspended animation for the Manchester mayoral election to occur. I mean, it's for the Byrds. You've got West Streeting demanding a timetable in the clips we just saw. We've got Andy Burnham's people telling his supporters, no, I don't want immediate resignations. Keir needs to have the time. But if Keir just looks like he is playing for time, I think the frustration boils over and suddenly you're into a Rishi Sunak, Sajid Javid, challenge to Boris Johnson moment.

14:19Ed Balls: And at that point, Keir Starmer completely loses control. And this is the...

14:22George Osborne: So that's when senior members of your cabinet start resigning on you and the whole thing becomes... People remember those few days with Boris Johnson where his whole cabinet is integrated.

14:31Ed Balls: And number 10 have been briefing this week. Ed Billaband is on resignation watch. Shabana Mahmood is on resignation watch. I mean, they're saying from number 10, this is the 110 metre hurdle strategy. We're putting hurdles in the way of Andy Burnham to try and make, to trip him up. in the coming weeks. And look, Andy doesn't want to be the guy.

14:52George Osborne: I think the world record's just been set for London. It only takes about 10 seconds to run London. So there's not much of a strategy if you're trying to delay the contest.

15:00Ed Balls: I think Andy wants Keir, after by-election, to say, OK, let's have an orderly transition. Here's my timetable. And by the way, I support you, Andy, and therefore have a coronation. That's what he wants. If it looks like, on the one hand, Keir Starmer is just playing for time or is up for the fight, or you have West Streeting saying, look, what's happened to Andy Burnham? At least I'm willing to put up. I think in that point, the pressure on Andy Burnham becomes too great. So it goes to this question, what is Keir Starmer really up to? And if he thinks he can win this election, maybe it's worth rolling the dice.

15:38George Osborne: Do you think he can win?

15:39Ed Balls: I don't think he can win.

15:40George Osborne: Do you think there's 80 Labour MPs who would support him in a leadership contest? I mean, he's already in the leadership contest as the leader. But I mean, has he got any support left?

15:50Ed Balls: Look, there are definitely people in the cabinet and more widely who are thinking, why is this happening now? This is very destabilising. The voters are going to be very angry. Can't this all just go away? They would rather Keir Starmer had more time. I'm not saying that they think he should fight the next election.

16:10George Osborne: And they probably think, I quite like my ministerial job and I'm not sure I fancy my chances in a new administration.

16:16Ed Balls: That is right. But once you're into a situation where Keir Starmer and Andy Burnham are on the ballot and potentially West Streeting as well, although, you know, I think West Streeting's chances are strengthened if Keir Starmer is not standing rather than if Keir Starmer is standing. Once that occurs, are people going to be actively campaigning and saying, no, we don't want Andy Burnham or West Streeting? we'd rather stick with what we know. The polling all says that doesn't work within Labour members or more widely in the country. And it's a huge risk for Keir Starmer because we were discussing legacy rather than, look, as I said a couple of weeks ago, if he announces a timetable, he is acclaimed at conference.

16:55Ed Balls: He can celebrate his achievements. People sort of slightly, you know, put to one side the things which have gone wrong because it's all changing. If you have a leadership contest, the absolute fight is the last two years. What went right? What went wrong? Who's to blame? Keir Starmer gets trashed. The first two years of the Labour government gets trashed. Most of the cabinet gets trashed. The Labour Party looks divided and riven. It's not a debate about how we address the country in the future. It's all about the here and now. Even if Keir Starmer wins, it's quite scorched earth. I think it's quite scorched earth for Andy Burnham if he wins in that situation as well.

17:38George Osborne: Scorched earth is precisely the strategy you deploy when you've got no other option. You literally burn everything as a way of surviving.

17:45Ed Balls: It depends. If Keir Starmer thinks his duty is to be prime minister and that overrides the future of the Labour Party, the unity of the government, the election victory in two years' time, then it might be worth the gamble. And if the probability said he was going to win by 90%, nobody would challenge him. But actually, if he's going to get challenged because people think he can't win the next election, he can't even win the leadership election, and he's willing to scorch the earth for him in the small hope he might prevail, I mean, that is utterly legacy-destroying for him.

18:21George Osborne: Your point is the cabinet wouldn't let him ultimately. They'd just resign on him.

18:26Ed Balls: But Keir Starmer does not need any nominations to stand. No, no, yeah. So therefore, he can decide to do this anyway. That is what is very striking.

18:35George Osborne: I guess he's saying, you know, I'm going to fight on because if you say anything other than that, you've given up entirely.

18:41Ed Balls: I think lots of people think actually there are people in his ear saying fight on. And I think that there are, you know, different Keir Starmers who it depends upon the most recent conversation there are undoubtedly people saying to him screw Andy Burnham you got the mandate see them off yeah and Keir Starmer is angry and maybe he thinks screw them but I have to say if he has been well advised that is not the advice he should be

19:10George Osborne: listening to the problem is he's at the G7 summit and that is the worst place in my experience for prime ministers to have any sort of self-reflection because they're sitting there with Donald Trump and French president thinking, only I can do this. I've learned so much in the last two years. I'm very experienced. This mayor from Manchester is not going to be hopeless if you're sitting in this chair. I mean, Margaret Thatcher, there's echoes, isn't there? Margaret Thatcher got the result of the leadership ballot while she was at some grand conference in Paris marking the end of the Cold War. So I can imagine sitting there in Evian when you're surrounded by Evian, not just where the water comes from.

19:46George Osborne: It's where the summit is. You know, I can imagine, yeah, thinking I'm quite enjoying being Prime Minister and I'm quite good at it and so on. What about, I'll tell you one thing. I mean, everyone has ignored the Tony Blair call of a couple of weeks ago to have a debate about policy before personality. And I would say Andy Burnham, although he's been fighting the by-election and saying some things about Makerfield, we're not really clear he's got an answer to the where's Labour's plan for government, which was the single biggest charge against Keir Starmer, that he came into office and he didn't have a plan for government.

20:20George Osborne: I don't think anyone thinks, hmm, I'm pretty clear what Andy Burnham's plan is. Now, maybe a by-election is not the place you can unveil it, and maybe we're going to hear a lot more in the coming week or so. I think, to be fair to Wes Streeting, he has been trying to set out a plan. I think his tactic is, in this leadership campaign, you know proxy leadership campaign um i'm going to be the policy rich person i'm going to be setting out ideas uh so that puts burnham who doesn't want to be nailed down into a hard position and you know the critics of burnham are always well you know that's the problem with andy burnham he doesn't you know what does he actually believe in so what did you think of wes streeting's um economy so he gave a big speech on the economy this week which i we should declare he sent to both of us because as we know he is a big fan of this podcast i thought it was a good speech and um and we're not just saying that because he's no no gold subscriber no it was a

21:18Ed Balls: good speech because he actually made an economic argument about what drives the growth process in the uk how do you get growth and he talked about the importance of talking you know of getting energy costs down. And he talked about the importance of investing in infrastructure. And he talked about the regional growth imperative. But he also said you need competition and entry. You need the big companies to be challenged by the new idea, the new entrant. You should be doubling down on the side of the new idea and the new discovery and the new entrant against of the existing power and incumbency.

21:59Ed Balls: Totally right. The opposite of what we've seen in the last two years, where the government has retreated from competition policy. I've been saying to you, you've got to be about markets and dynamism and a Schumpeterian sense of created destruction and allowing markets to work. And that's the argument he made. And he also said on capital gains tax, while he wants to align the capital gains tax and the income tax rates in a Lawsonian way, you need lower rates of capital gains tax for the entrepreneur and the person who was investing their own capital in a new idea, completely right. So I actually thought it was good and well worth making and exactly the kind of argument you need to hear in a leadership election.

22:39George Osborne: It was a bit Ed Bullsmark too, wasn't it, Wes, I'm afraid. I'm not saying that's a bad thing necessarily, but it was exactly what you... I mean, it was a return to the kind of New Labour, Gordon Brown economic policy of the late 1990s, wasn't it? You know, you need a stable monetary framework. You need tight fiscal rules, aggressive competition policy. It's a big, in my view, maybe a retreat is too strong a word. It's a big clarification of this capital gains tax plan, which had been presented as capital gains tax. Yes, it was going to be a wealth tax, you know, where capital gains tax goes up to 45%.

23:14George Osborne: And suddenly it's turned into, well, we might have, you know, 45 % capital gains tax for, you know, passive capital gains. But if you're an entrepreneur, you're going to get something like Gordon Brown's 10 percent revolving rate. And essentially, I think the argument we discussed this when we were talking about the Tony Blair essay a couple of weeks ago, within guardrails, let the private sector compete and be successful. And then we can use the proceeds of that to invest in public services. It's not I thought it was interesting he called himself a social democrat, not a socialist, because Keir Starmer calls himself a socialist, doesn't he?

23:50George Osborne: I thought it was also there's a swipe at Andy Burnham when he says, I don't think we've had 40 years of some neoliberal, you know, wreckage. So I thought it was very, you know, I thought he was sort of putting himself to the new Labour mast. And I mean, the new Labour mast of Blair and Brown, not just Blair.

24:11Ed Balls: Look, he consciously quotes Gordon Brown, prudence for a purpose. And you have to focus on the prudence, but also on the purpose. and it is about what the government has to do. It has to intervene to make markets work in a long-term way. So it's not free market or, let's say, fair. I have to say it is not only fully consistent with the kind of conversations I would have had in government with Andy Burnham about how the economy works, but I also think, as we discussed last week, the Manchester model and Manchesterism has always had an embrace of markets and a partnership with the private sector at its heart.

24:49Ed Balls: So I don't think this needs to be divisive between Andy Burnham and West Streeting or even across the cabinet, but it is a marked change from the rather more status and less market focus we've seen over the last two or three years. And it just contrasts with the lack of economic argument we've seen from Keir Starmer and Rachel Reeves over the last couple of years. It's been so frustrating. I think the other thing just to say, because that was one contribution this week from West Streeting. And there's not been a lot of economic or policy from Andy Burnham this week. We did have the social media announcement from Keir Starmer on Monday.

25:27Ed Balls: Stephen Bush, very powerful column this week in the Financial Times, where he said both on defence and on social media, I mean, these announcements which Keir Starmer is using to secure his legacy, they go to the heart of the Starmer problem. On defence, Keir Starmer travels around the world saying, I'm going to invest in defence because Britain must be a leader. But when it came to the actual decisions within government about the expenditure, he didn't deliver, didn't put the money in place. On the social media ban, this is the Keir Starmer who last year within government was telling everybody a social media ban won't work.

26:03Ed Balls: It's just a gimmick. He was against it. Now he's not only fully in favour of it without working out the details. In that press conference on Monday, he never once mentioned the name Liz Kendall, who is the technology secretary who's done all the work to deliver this social media. But I didn't mention Jess Phillips, who resigned because Keir Starmer was enthusiastic about it. If you want to understand what has gone wrong with the Keir Starmer premiership, it's not just the flip flops. It's also he had the chance to be generous about the people who have delivered this policy for him, which, by the way, he was sceptical about a year ago.

26:39Ed Balls: none of that and that is just a mistake politics is a team sport yeah i thought on the legacy point

26:46George Osborne: and we should come on to can prime ministers shape their own legacy when they know the writings on the wall um of course this whole the legacy the biggest legacy is is hinted at in that uh conversation about defense which is you can have the west streeting you know dynamic competitive economy and whatever andy burnham wants it's still this huge problem which is how on earth you're going to fund all this because you've got these enormous defence pressures, taxes have already risen, and the most recent tax rises most people now think were very damaging towards things like employment. And, you know, there's not going to be a huge spurt of growth anytime soon.

27:22George Osborne: And the global outlook is poor. None of the Labour candidates for this leadership election, putative or otherwise, are sort of trying to solve the conundrum Starmer couldn't solve on public expenditure.

27:34Ed Balls: They aren't, although if Andy Byrd have asked for my advice, I would say depress expectations. Explain to people how hard it's going to be. As you know, I've always been worried about the sort of outsider populism of Westminster is all wrong and I'll come in and I'll turn it round because actually the moment you're in there, you're no longer the Westminster outsider. But the truth is on the economy and on tax and spending and on defence and welfare, this is going to be incredibly hard and the NHS too over the next couple of years. If I was Andy Burnham, I would be spending more time explaining to people why it's going to be tough and how I'm going to approach it rather than kind of rather giving the impression that my arrival is, you know, in itself a thing which solves a problem.

28:21George Osborne: The risk is very similar to the one that Keir Starmer made. There's a kind of history repeating itself that you think that you yourself are the solution, you are the change. now in the case of starma is i'm not the tories i'm this upright honest you know non-politician burnham will be you know i'm not starma i'm not from westminster i'm from manchester and like two weeks in suddenly well how are you going to fund this defense investment and are you going to try and get the plp to cut welfare in which case which taxes are you going to put up or are you going to risk you know unsettling the bond markets with some change the fiscal rules i mean you know, these problems don't go away.

28:59George Osborne: And if you just think you are the change, that's a mistake and you need the central plan for governing. And, you know, it's up to Burnham to spell that out. What about these other, I mean, can a prime minister on their way out? Most prime ministers don't really get a chance to find the legacy in office because, you know, they lose an election, like John Major over Gordon Brown, and they don't do the sort of victory lap. Tony Blair did. He had an almost year-long victory lap when he agreed a timetable and stepped down with Gordon Brown. And he gave these sort of big speeches on the future of the media and future public services and so on.

29:35George Osborne: Keir Starmer looks like he's doing some of these things. I mean, history is not great when you look at the kind of success. I was looking up. So Theresa May announced as her kind of parting gift to the nation an office for tackling injustices to monitor social inequalities.

29:53Ed Balls: That sounds like the Cones hotline.

29:55George Osborne: It was. Well, and then if you look out, if you get the kind of report, what happened, it says the organisation never became fully operational or convened because following May's departure from office, it was disbanded and it's now in the Office for Equality and Opportunity within the Cabinet Office. And then Rishi Sunak announced £35 million investment for grassroots cricket in April 24 as part of his sort of departure plan. And then current status. The£35 million package did not materialise. Instead, the government has shifted it to a£1.5 million pledge for an all-weather dome in Luton and Preston.

30:30George Osborne: So that's the problem with Prime Ministers. When they're gone, they're gone. And these sort of smaller bits of trying to secure a legacy don't really survive your success.

30:41Ed Balls: Don't you think, though? I mean, look, we've discussed this before. John Major and Gordon Brown's historic legacy improved over time in retrospect as people look back. And because of Chilcot, it became harder for Tony Blair afterwards. But Tony Blair was still the guy who won the elections and put in place all those reforms, the Northern Ireland Agreement. By the way, I don't think anything which happened in 2006-7 is really remembered as part of Tony Blair's legacy, the going after the legacy. If you take Keir Starmer right now, what is the top line of his obituary going to be? I'm afraid it's going to be he won a historic majority, but then made mistakes in government and didn't deliver.

31:23On the other hand, if he doesn't have a massive bust-up

31:26Ed Balls: with Andy Burnham in the next few months, he can go to the Labour Party conference and do his final speech where he talks about independence for Palestine, the rising minimum wage. You won't need to mention the Winter Allowance or Peter Mandelson, and he will get applause and he will be remembered in a positive way. And it might be over time people will start to appreciate some of the things he's done in a slightly rosier way. If there is a fight for the next three months, he's not going to get a Gordon Brown 2009 riff on his achievements.

31:58George Osborne: No, I mean, the Labour movement does love a heroic loser, doesn't it? I mean, they wallow in failure.

32:07Ed Balls: I'm not sure whether Michael Foot or Jeremy Corbyn are hugely celebrated for the manner of their defeats. No. And Gordon Brown's legacy is about much more about what he did as chancellor and then as prime minister on the on the economy, the global financial crisis rather than what happened in the final months of his premiership. I mean, Gordon Brown didn't spend the final few months of his time in number 10 trying to secure his legacy. He tried to win an election, which in the end he didn't manage to do, although he did stop you getting a majority.

32:37George Osborne: Didn't feel like I'd lost when I was sitting there in number 11.

32:39Ed Balls: Well, anyway, as you as you as you look across the table at Nick Clegg, Danny Alexander and Ed Davey.

32:45George Osborne: Yeah. Ed Davey voted for all my budgets. Never, never, never breathed a word of complaint.

32:50Ed Balls: They were all more friendly to you than most of the conservatives.

32:52George Osborne: That's for sure. Look, I think history will say Keir Starmer was one of a number of prime ministers who only served brief periods in office in the 10 years after 2016. and that speaks to what was happening in the global economy and the sort of geopolitical unrest and to the aftermath of Brexit. And that he'll be, you know, it'll be a kind of pub quiz test. Can you name all the prime ministers between 2016 and 2026?

33:20Ed Balls: I think you are right, although David Cameron probably gets remembered more for losing the referendum and what happened afterwards than anything else. And for Keir Starmer, this will be his frustration the thing which will have the biggest impact upon his historic legacy will be what happens at the next general election. In fact, you know, if Andy Burnham wins a by-election, becomes prime minister, wins the next general election, that is all good for Keir Starmer. But if Andy Burnham takes over and you still see, you know, a Nigel Farage premiership starting at the next general election, that will be not just bad for Andy Burnham, it will be bad for Keir Starmer and the whole of this Parliament.

34:00Ed Balls: It's interesting, is it? Look, Fanny Burnham loses this by-election, and we don't know. I mean, I personally think that ups the pressure on Keir Starmer. No. Honestly. Even Andy Burnham can't win in Makerfield. There'll be an even faster challenge to Keir Starmer than otherwise. Sorry.

34:18George Osborne: If Burnham wins, he's the Prime Minister potentially within weeks. If Burnham loses, there may well be a leadership contest, but there's not a single other candidate who the Labour Parliamentary Party might coalesce around at this point.

34:31Ed Balls: Could be Ed Miliband, could be Angela Rayner. What I'm saying to you, there is a faster challenge.

34:39George Osborne: I'm not saying it's worse for Keir Starmer. I agree it's not a great situation, but he lives to fight another day, potentially.

34:46Ed Balls: On the other hand, if Andy Burnham loses his by-election, great for Nigel Farage. But if Andy Burnham wins his by-election, the Greens, the Liberal Democrats,

34:56George Osborne: out so Tories will all say yeah but you know we weren't really involved there will then be

35:01Ed Balls: in the coming days a real inquest into whether Nigel Farage and reform have lost momentum whether in fact the restore threat to their right is actually really damaging them you know it's quite uncomfortable for reform as well.

35:17George Osborne: Anyway we're going to talk anyway we're going to turn to that global economic situation and the legacy of Brexit after this.

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36:15Ed Balls: So welcome back. In the last few days, much talk of a peace deal brokered between the US and Iran, a suggestion that may actually be publicly announced and signed today or tomorrow, although people are still quite cagey about the details. And J.D. Vance, in his commentary, has rather given the impression that it's going to be quite general. And there's a lot of detail still to be worked out in the coming 60 days and more. But this is Donald Trump celebrating.

36:46George Osborne: It's a very strong deal. Nobody knows what it is, but it's very strong. And And most people seem to be very happy. Who's really happy is the market, because the market's gone up thousands of points over the last four or five days since hearing about it. And the straight is going to be opening, it's already partially opened, it's going to be opening up soon in full over the next day or two. And the market has gone wild and oil has come tumbling down. Oil is at$73,$74. and it's getting to very close to where it was before the crisis. The difference is now we have Iran without a nuclear weapon. So we'll see how that all plays out.

37:28George Osborne: I think people are going to be very happy. But there's nothing so smart as the market and the market loves it beyond anything that I've actually seen. That's Donald Trump at the G7. Nothing so smart as the market. Andy Burnham, are you not listening to the President of the United States with all your attacks on, you know, neoliberalism and capitalism and all that. What do we think? First of all, the actual Iranian deal. I mean, he says, I mean, Trump says there, no one's seen it, but everyone loves it, which is potentially, you know, a contradiction in terms. But maybe the success here is precisely that it's so vague.

38:07George Osborne: The details, which are obviously where all the politics are and all the difficulties of the negotiation, have all been parked. But everyone's happy because everyone wants this thing to end. It allows everyone to sort of gently climb down and the strait to reopen and situation ante bellum to resume.

38:26Ed Balls: I think this is a moment of great danger for Donald Trump and also for the world economy precisely because of that generality and because as the details start to emerge and the issue is still to resolve, there is a big danger of a backlash within America against what is being agreed. I mean, you know, it is not clear at all that anything substantive has been agreed on Iranian nuclear enrichment. There is going to be substantial easing of sanctions and money paid to Iran. Is Iran actually going to allow the strait to open properly? Are we sure they've given up their ambitions to have control or tolls in the strait?

39:08Ed Balls: What happens if Israel decide not to play ball and to ease off their fights with Hezbollah in Lebanon? And what happens if Donald Trump and J.D. Vance under pressure politically with the midterms coming think, actually, the only way for us to take back control of what looks like a messy and politically unpopular situation is to say, these Iranians, we gave them a chance. They've not delivered. They can't be trusted. And we're back into the conflict again. I think that the chance of the conflict coming back is material and the uncertainties and the risks are grave. So Donald Trump may be right that the markets are in a good mood today, but, you know, a bit of water to flow under that bridge.

39:50George Osborne: I mean, I think you could say if you were trying to be generous, you would say that what is different from the situation before the conflict? I mean, the first is...

39:59Ed Balls: Well, the strait was open. Yes, the strait was open. And it might reopen. and there wasn't a war and we may not have a war and the Iranian regime is intact and probably as extreme or even more extreme than before, titular changes at the top.

40:13George Osborne: Titular changes, they were assassinated.

40:18Ed Balls: And do you think that the underlying Iranian regime is easier for the Americans to deal with than before?

40:23George Osborne: I have absolutely no idea, although I can't help but note that no one has actually seen the leader of Iran in any form. There's not even been a photo of him. for, well, since his appointment, apparent appointment. So something odd is going on there. I think you could say, I mean, you could say two things, couldn't you? A little bit paradoxical. I mean, I think the first is, you know, you'd be a brave Iranian regime to genuinely try and push again for a nuclear weapon, knowing, you know, what would potentially happen to you personally and to your country. And second, it's interesting, this whole, you know, American reconstruction plan, which was not really on the table before, i.e.

41:01George Osborne: money for Iran. And you could imagine it's been much messier than Venezuela, but a kind of strange outcome where Iran sort of drifts more into the American orbit as American money flows. But who knows? It's a long way off.

41:16Ed Balls: Isn't that a little bit like making Gaza into a sort of tourist resort and real estate opportunity? In Congress, are the Republicans really going to look at this and think, that's a great deal, President. We're right behind you. We're really pleased you're giving all this money to Iran and we're really pleased you're easing sanctions. And actually the nuclear deal, well, compared to what Obama legally negotiated before, it's...

41:40George Osborne: No, I was a very much, you know, I was part of the government that played a part in negotiating that deal. The interesting thing, isn't it? I mean, in some ways, the beginning of the war, which many people think was kind of very much agitated for by Benjamin Netanyahu, people spoke of the closeness of the US-Israeli relationship. And as the war ends, people are talking about the very public falling out between Israel and the United States and the fairly dismissive language that Donald Trump is using about the Israeli president or the sort of patronizing language. So I think that is an interesting...

42:16George Osborne: Now, whether that's all, you know, lost in the wash and one of the truths about the world at the moment is Israel's emerged as the kind of big, big military power in that region. essentially unchallenged. And that's not going to change. But I think that the Israeli-US relationship is one of the most fascinating issues at the moment in geopolitics, isn't it?

42:36Ed Balls: But there is a wider question for America in the Middle East, which is, do you think other Arab states are now more trusting and more willing to rely upon the US than three, six months ago, or less. And I think that, you know, it may be that the American-Israeli relationship is somewhat fractured. But I think the other Gulf states will think we're gonna have to deal with this Iran now. And I'm not sure America has been a reliable ally. And if you were Andy Burnham, taking over as Prime Minister, you know, focused on the domestic agenda, you would be wanting to use all the leverage you possibly can behind the scenes from number 10 in the foreign office to try to keep this deal on track because if it fractures this is very destabilizing economically so if you

43:29George Osborne: take a look at the wider economic picture um well first with the uk we have had some important economic data in the last week or so we should know so inflation didn't go up in the way people expected curiously because food price inflation is down which is completely contrary to the sort a political narrative around the cost of living. But wage growth, private sector wage growth is slow, the slowest it's been for five years. The job market looks weaker than it's been. So the UK remains, I would not say in desperate trouble or anything like that, but just very flat and sluggish. And you've still got some of the sort of pent up inflation from what has happened in Iran to sort of thread through the system.

44:09George Osborne: And we'll see how the Bank of England responds to that. But we do know how the Federal Reserve has responded under its new chair who we've talked about on this podcast for and you know i described going to see his swearing in at the white house uh kevin walsh i thought it was a pretty strong opening performance by kevin i'm very party free so people should understand that because he's a good friend of mine but if you think of the sort of central charge against him it's that this guy sucked up to donald trump to get the job by promising to cut interest rates which is what donald trump wants. But the outcome of the first FOMC, that's the Federal Open Markets Committee, our equivalent is the MPC.

44:51George Osborne: The first meeting that Kevin Walsh shared with the FOMC, you know, the markets drew the conclusion that the next move in American interest rates is potentially going to be up, not down, which is what people have been expecting, certainly at the beginning of the Iran conflict. And he has done some things to make sure that people think that. So he has, for example, you know removed the language about the expectations of future rate reductions he's removed this thing called forward guidance and there were these things that he particularly criticized which are these sort of spot projections which is basically every member of this committee they're like in the uk they're independent of each other they get they tell people where they think interest rates are going to be in the future and he hasn't managed to persuade his colleagues yet to not do that in the future.

45:39George Osborne: But he has no look. He himself doesn't make a projection. Anyway, the long and short of it is the market thinks he's actually a bit more hawkish than we thought. He's a bit more anti-inflation focused than we thought. He's not taking the Trump White House line. And as a result, rates may go up in the US.

45:56Ed Balls: I don't think this is a surprise to you or me or the markets, but it may be a bit of a surprise to Donald Trump. This is going to be rather, I mean, I was going to say continuity Jay Powell is probably slightly more hawkish than Jay Powell. But then Kevin's reputation was always for being more hawkish when it came to the inflation risk. And the idea that he was going to, in advance of the data, punt on AI productivity, I mean, I never thought that was what he was going to do. But as you say, the underlying conjuncture in America is an upward pressure and tightness. The underlying conjuncture here in Britain is a softening of the economy.

46:32Ed Balls: And therefore, Bank of England probably looking away from rate rises, the opposite of what's going on in the Fed. We should just mention, because the World Development Report also came out this week, this is the World Bank's annual report on what's happening to the global economy, with a focus on emerging and developing economies. And they say, as a result of what's going on in the Middle East, inflation, energy prices, global growth is going to be slower this year than before, the lowest rate since the COVID-19 pandemic. And if you look at the level of per capita income across emerging developing countries, excluding China and India, it's not expected to return relative to the rich countries to pre-pandemic levels until 2028, implying a decade, nearly a decade of lost income convergence.

47:21Ed Balls: And so these events in the Middle East, which have a very material effect on politics in America and in Britain, the interest rate decisions of the Fed and the Bank of England and the ECB also depressing growth of living standards across the developing world and holding back a whole decade where developing countries have not made any ground on the rich countries. It's kind of depressing.

47:49George Osborne: Now, talk about a lost decade. Next Tuesday is the 10th anniversary of the Brexit referendum. Oh, joy of joys. And we are going to turn to that next.

48:25Ed Balls: and ready to act when someone they trust makes a recommendation. We're Acast, and we put them right in front of you. Browse thousands of the world's leading podcasts, book host reads or run your own ads, and track every conversion in real time. Same skills you already have, brand new results. Acast. Acast.com slash advertise.

48:54Ed Balls: so welcome back so um the world banks say a lost decade for developing countries because of what's happening in the middle east i remember doing an interview i think with the sunday times early in the 2010s in which i said george osborne was delivering us a lost decade because of the impact of his austerity measures it was only a living standards it was a lost decade of you

49:16George Osborne: not being in office but then it was your last decade and you're countries and you're trying to

49:21Ed Balls: divert attention from austerity by talking about the lost decade in the last 10 years since the brexit referendum vote although i think it's a really interesting question has the brexit referendum really made much difference to anything very much what do you think well i thought we

49:37George Osborne: thought we'd frame the conversation like that rather than go back to 2016 and that day and all that and you know i've taken part in a bbc series that looks back at the events of that time i think

49:50Ed Balls: we should take a moment i mean you know it was a bit of a screw up wasn't it yeah totally but i was against having a referendum i know and so was michael go what was this guy coming up to what was the labor party up to not campaigning well that is also true um jeremy corbyn it wasn't his finest i mean look what was his finest of the lack of finest hours over the year that was not I have to say, can I ask you this one question? If Remain had won by two percentage points, would it actually have made any difference at all? I don't think it would.

50:21George Osborne: So I think that is a very good question. Why don't we take that as the sort of organizing principle for this discussion? So I'm going to start with the kind of the policy, what it meant for what is meant for our economy and our kind of place in the world. And I think it would have made a difference if we'd stayed in the EU, even if the vote had been narrowly won. So the other way around, 52, 48, we can come on to the chaos that would have caused within the Conservative Party and so on. But fundamentally, we would have been in the EU. I mean, that instead of outside it. So British prime ministers would have been turning up and they would have been attending the European Council.

51:02George Osborne: British ministers, British officials would have been shaping EU policy for the last 10 years. And I think that would have made a big difference both to our economy. Obviously, there are lots of estimates about what impact Brexit has had to the economy. But it's very hard to find any reputable economist who doesn't say that the British economy is somewhere between 3 % to 6 % to 7 % smaller as a percentage of GDP than it otherwise would have been. And that's like hundreds of billions of pounds in terms of cumulative loss of national wealth for Britain. And I think if you take the G7 summit, the British Prime Minister, it's not just that he's Keir Starmer at the moment, cuts a lonelier, less relevant figure because they're not representing one of the big EU players.

51:50George Osborne: And so, yes, there would have been all sorts of problems with the aftermath of a 52-48 result the other way. But fundamentally, Britain would have been better off. We would have been in the EU and Britain would have had more influence in the world. and although this is you know hard to know exactly but i think the eu wouldn't have necessarily taken some of the decisions it's taken in the last 10 years because britain would have been in the

52:15Ed Balls: room i hear you although in this conversation you have to decide what the counterfactual is i mean the reality is that britain was um in a conflicted state of angst about its relationship with europe in the 1950s and then in the early 60s when wilson applied and then in the 70s when Labour had a referendum and then throughout the Conservative and Labour governments. And it may be the separation was always going to happen. I fear that is true, although I do think that we could have tried harder to make the argument. But the reality is, even if you'd won in 2016, don't you think there would have been a leadership election?

52:58Ed Balls: Boris Johnson would have won it. Most Conservative members, most conservative voters had voted to leave the European Union. Boris Johnson would have been the prime minister. There would have been a general election in 2019 with Boris Johnson as prime minister and would have left the European Union. So is the counterfactual that we would have been in the European Union in the last 10 years or would it have only deferred the inevitable by one or two or three years?

53:21George Osborne: Well, the truth is, I don't think there are many things that are completely inevitable in politics. I mean, that's one of the reasons it's so endlessly fascinating of people listening to this podcast is because you just don't really know. You never know what's going to happen tomorrow. And the scenario you set out is very plausible. I mean, there's no doubt I thought, as the person who was most likely to be in that leadership contest after David Cameron stepped down, which he had already said he was going to at some point in that parliament, that I would have been one of the candidates and Boris Johnson would have been the other.

53:54George Osborne: and there would have been a very sort of angry Tory party or elements of the Tory party who felt...

54:00Ed Balls: You ended up voting for Liz Truss. Well, you know, they were... Even though she was a Remainer, because by that point she was a Brexiteer and they were desperate for a Brexiteer. They'd have been even more desperate if you'd just won this referendum. Osborne betrayed us. We should have taken back control.

54:14George Osborne: Right. You would have heard all the rows about, you know, so-called project fear, although the Treasury's medium-term economic projections turned out to be spot on. Better than the short-term projections. They're better than the short-term projections. But in the scenario you lay out, A, Cameron stays on as prime minister for a period of potentially a couple of years. B, okay, Johnson may well comes in cabinet as part of a sort of let's get the band back together again attempt by Cameron. And then maybe people would have seen Boris Johnson in office. and, you know, generally people were not as impressed by Boris Johnson in office than they were by Boris Johnson wanting to be in office.

54:54Ed Balls: And you wouldn't have made him foreign secretary, would you?

54:55George Osborne: No, I think you would have had a nice, interesting domestic department like Health to show how cake-ism works in practice.

55:05Ed Balls: This is the equivalent of me saying that Keir Starmer should have put Andy Burnham in February and put him in charge of farming.

55:09George Osborne: Yeah. Anyway, look, I don't think, you know, there would have to have been another referendum. It's a bit like Scottish independence. OK, you could say 10 years on, the nationalists are still in charge, the independence argument hasn't gone away, but Scotland is inside the United Kingdom. And we haven't had another referendum. And you just don't know whether there would have been the kind of alignment of the stars to allow for a second referendum. I think the other interesting question is not so much like a what if, if we voted to remain, but what if we'd had a kind of softer Brexit? It wasn't just the result.

55:44George Osborne: It was the attempt to deliver a 100 percent zero outcome to a 52-48. So, you know, Boris Johnson and that government went for a complete separation from the EU. And, you know, the promise was always that that was going to open up the space to a sort of Singapore on Thames, light regulation, get rid of the EU bureaucrats. And instead, what happened is, of course, we got the civil service doubling in size. there's way more british regulation actually in quite a lot of sectors britain is less competitive than the eu in in some of its domestic regulation and and and that never and never materials whereas i think you could have gone for a sort of softer brexit you could have reflected the result which would have been like okay we voted to leave but we want to stay in things like the customs union And that might have created more space, actually, for a more deregulatory approach than the one that we have seen, because instead we just had to create these parallel structures.

56:47George Osborne: And the people who've really suffered are the small and medium sized businesses whose exports have been crushed. And Britain has become, if anything, a much more service oriented economy. One of the great sort of Brexit arguments was we're going to revive the north, the left behind parts of the country, the manufacturing areas that have been left out because of the elite kind of success of London. Well, if anything, that's been magnified by Brexit. And I think that attempting to go for the complete result, the complete, to use the phrase we were using earlier in the podcast, scorched earth victory, has left the whole question hanging still in British politics.

57:22George Osborne: Hence, you've got leadership contenders in the Labour Party, like Wes Streeting, saying, let's rejoin.

57:27Ed Balls: I mean, we are certainly not Singapore on Thames engaged in the global economy. As you say, there's been a sort of retreat, certainly in the Conservative years, from the sort of global economic engagement. And the only real thing which was done was these very small, very minor trade deals, which the Conservatives and then Conservatives, Keir Starmer and Rachel Reeves have trumpeted. I have no doubt the economic impact has been negative. Although, if you look at growth in Britain pre-2016, in the previous 10 years after the financial crisis, and then you look at the performance of other European countries in the 10 years since Brexit, I mean, it's not clear that being in the European Union pre-2016 or being in the European Union, if you're not British and a Northern European country since 2016 has been particularly good in terms of your growth performance.

58:23Ed Balls: The thing I think was really interesting is when you actually rack your brains and think, what's Brexit actually done? What are the things the government has done which they couldn't have done when we were in the European Union? What's on the other side of the ledger from leaving the customs union and all of the bureaucracy which comes, as you said, particularly for small and medium-sized companies? I mean, the trade deals are small. And actually, the European Union has been negotiating some of these trade deals anyway. On VAT, we've done nothing. On state aids, has there really been any substantive shift?

58:57Ed Balls: Bit of a change in farming, but it's all been actually quite continuity. The only big thing which has happened, which is markedly different, which you could say is a consequence of, a clear consequence of Brexit, is on migration. And that has been a fall in East European migration, European migration, and a massive rise for about five years in migration alongside the small boats crisis, and particularly from West Africa and the southern continent. And that wasn't an inevitable consequence of Brexit. It was a choice which was made. But the opposite of what we were told the choice was going to be in 2016, that actually may have been slightly better for the economy, as well as difficult for the politics.

59:37Ed Balls: But if you stand back and say, what's Brexit actually done? I mean, not a lot.

59:42George Osborne: The Brexiteers claim the vaccine rollout during COVID, but I think that's nonsense. And the idea that the EU would have blocked that is just bonkers. Completely. But I mean, the immigration thing is, you know, you could say that was sort of separate from the Brexit decision, but because that was just the Boris Johnson government allowing in hundreds of thousands of people from around the world. But, you know, of course, it kind of put a hole right in the middle of the Brexiteers' campaign that they would take back control and, you know, essentially stop immigration. Now, Brexiteers, some Brexiteers would say, well, we did take back controls because we decided to let these millions of people from West Africa and the Indians...

1:00:18Ed Balls: Would the small-base crisis have happened in the same way if we'd still been part of the European Union? You'd had sort of the reciprocal Dublin-style agreements. Well, exactly.

1:00:25George Osborne: You've been able to return people to France. You might have had more cooperation. You'd certainly have a less sour relationship with your European partners. And there's also, you know, this is more of a reform argument. I mean, you could argue culturally it was easier for Britain to absorb people from Eastern Europe who were often quite temporary, you know, came here for 10 years, returned to Poland, the same religion as the state religion in the UK, Christianity. And the kind of cultural assimilation is going to be much harder with people from other continents and other religions. And what about the politics?

1:00:57George Osborne: Because this is all drifting into the politics of all this. Could, you know, obviously Brexit was one of a number of examples of populism around the world, of which Trump is the outstanding example, but you only have to look at French politics, German politics, Italian politics, and so on to see other examples of it. I mean, would reform be challenging, or whatever it would have been called if we had voted to remain? Would reform be the kind of dominant party 10 years on? What do we think?

1:01:26Ed Balls: I think all the underlying pressures for populism, anger about free movement slash immigration, stagnant living standards, I don't think we have any reason to think that those wouldn't have continued in the year after 2016 and the way in which they were fuelling the Brexit vote in the years before 2016. the difference which has happened, and maybe this has just become more out into the open, in 2016, the bogey was Europe. And it was Europe doing these things and opening our borders and harming British people, in the words of Nigel Farage. And if we'd stayed in the European Union, he would have doubled down on the European argument.

1:02:11Ed Balls: For two or three years, the argument for reform was it's not having a proper Brexit, not having a hard Brexit. What's the reality of reform in the last three, four years? It's moved on from Europe. I mean, Europe is no longer the bogey. The bogey now is people who aren't white. I mean, it's actually become a more open, in the case of Restore, BNP-style argument about white people and being damaged by the ethnic minority population, but driven by restore. But Nigel Farage is following them. I mean, you know, talking about two-tier policing in which white people are being overtly discriminated against, that was always an argument which happened under the European argument pre-2016 up to 2019.

1:03:01Ed Balls: I mean, isn't it now more overt and very different and in some ways more dangerous? But that is a, a consequence of the Brexit vote and the aftermath.

1:03:11George Osborne: I mean, one of the things that happened after we lost the referendum and then I was kicked out of the government, I was kicked out alongside Michael Gove. So Michael Gove also was kicked out of the cabinet by Theresa May. And so we used to spend a lot of time together and rebuilt our friendship. But one of the things he used to say to me is, OK, George, look, I accept you're not going to be persuaded on the merits of Brexit. And I think, to be fair, Michael would always have said look, there's an economic price to pay, but it's worth it for the return of parliamentary sovereignty. And so I think he was more honest about that than many of the Brexit is.

1:03:46George Osborne: But, you know, he said, look, you've got to, you know, the good thing is that the Conservative Party has absorbed the populist pressures that we're mounting in our system in a way that European Conservative parties have not and the Republicans have struggled with in the US. And this was, as you build up to the 2019 election, the one that Boris Johnson wins, you know, the so-called Brexit Party essentially stands down. And it looks like in 2019, the Conservative Party has absorbed UKIP Brexit reform forces. And we're in a kind of more mainstream, at least on the right of politics at the time, of course, on the left, Corbyn's in charge of the Labour Party.

1:04:21George Osborne: That all looks utterly hopeless and deluded now. And, you know, if you look at one of the biggest losers of Brexit, politically, I think it is the Conservative Party, because the Conservative Party has no natural base now you know it has lost it basically traded away the prosperous middle half of the country for what it thought of as the kind of working class Essex council estate kind of thatcher vote but was more actually people who felt utterly left behind by globalization a less aspirational part of the population and you know that it became you know when I was a chancellor, a leading indicator of whether you were a conservative voter was that you had a college degree.

1:05:02George Osborne: Now a leading indicator of whether you're a Labour voter is that you have a college degree. And the leading indicator that you might support conservatives is you don't have a degree. So we've traded away those areas. And you look around all the seats around London and the kind of middle class home counties, the conservatives have lost dozens of them to Labour MPs, Liberal Democrat MPs and so on. And where do they go now? If you look at the people who voted leave, well quite a few people voted leave have actually died because they were elderly but those who who are still alive overwhelmingly now support reform and the Tory party gets I saw you know seven million of the leave voters support reform and only two million now support the Tories and then on the Remain side you know where you know the Cameron government was for Remain you look at it and the you know the Tories do get quite a lot of Remain voters as it happens but nowhere near as many as Labour and Liberals and so on.

1:05:54George Osborne: And so where is the Tory? I still don't really know where the Tory party thinks at home is. And doubling down on the Brexit rhetoric is, in my view, making it even more unlikely that they're going to find that kind of middle class, prosperous, aspirational support that used to be the bedrock of the Tory party.

1:06:12Ed Balls: Look, it's for the Conservative party, a massive challenge. And it's made the debate on the right much, much nastier now that Europe is It's not the bogey person. It's people of colour. But I think the other thing which is interesting, 10 years on, and I'm not sure...

1:06:30George Osborne: I think reform would challenge your characterisation, I should just say. I mean, you know, they would say they'd draw support from ethnic minority communities. I'm not, I think we, you know, should have, you know, they wouldn't say it's just about ethnicity. You might say that's the underlying kind of drumbeat.

1:06:46Ed Balls: But Nigel Farage has been following Rupert Lowe and restore down the road of two-tier policing is avert discrimination against the white population. And that's not the kind of thing which was being said in our politics 10, 15 years ago. That is not the language which Nigel Farage used in the 2016 referendum. It's moved. The other thing I was going to say is that, and you mentioned the Labour leadership, putative candidates,

1:07:15George Osborne: they've all backed off advocating rejoining.

1:07:19Ed Balls: The interesting thing is...

1:07:20George Osborne: Why is that, do you think?

1:07:21Ed Balls: Well, no one, Labour, the Liberal Democrats, no leadership candidate feels able to make the political argument for rejoining in Britain at the moment. And I think the reason is because if you look at the ostensible opinion polls, which have clearly shifted against Brexit, if into that polling you say, but it will mean a return to free movement, contributions back into the EU budgets, potentially not getting our opt-outs back on Schengen or joining the single currency at that point, support for rejoining collapses.

1:07:56George Osborne: No, I think it would be pretty hard to negotiate a re-entry into the EU. Although I think some of the...

1:08:02Ed Balls: Davey doesn't want to campaign on that position, and neither is West Street or Andy Burnham.

1:08:06George Osborne: Some of them are false flags. I mean, I think you would get your opt-out again on the single currency, for example. But I think it's an interesting thing that 10 years on, Brexit is not at all settled. And the fact that people like Wes Streiging, but also Andy Burnham implies, and Keir Starmer has tried to essentially rejoin or reestablish closer economic ties with the EU shows that this is not at all sort of settled in British politics. And I guess fundamentally, the nature of the EU is changing. And I think, you know, was damaged itself by Britain no longer being part. But there is a more of a sort of multi-tiered, multi-speed Europe.

1:08:44George Osborne: A big question for Europe is actually Ukrainian accession, which is going to be a big issue in the next few years. And you could imagine a government, either a sensible Conservative government or a Labour government, finding a closer economic relationship. I still think a huge missed opportunity of the Starmer government was not to rejoin the customs union on day one. It would be two years in, in the customs union. You want an answer on legacy. That would have been Keir Starmer's, one of Keir Starmer's big legacies, whatever happens to his premiership.

1:09:16Ed Balls: Well, I'm going to end by taking us back to the West Streeting speech, which we talked about earlier in the show, because he says in that speech, talk about Britain being more connected in the long term. I believe that logic leads us back to the European Union where our special relationship lies. So he is willing to make that argument, but not on any this parliament timetable. But West Streeting's speech was about growth. and whether it's West Streeting or Andy Burnham or Kemi Badenock, unless you can find a way to get growth and rising living standards and a sense of optimism back into the cost of living challenged mainstream British population, then I'm afraid populism is going to continue to dominate and the Brexit sores are going to continue to ooze poison.

1:10:07George Osborne: anyway i think the whole thing was a huge mistake i had nothing i've seen since has uh in any way changed my mind well i have a feeling that maybe

1:10:16Ed Balls: calling the referendum in that way was a mistake and you know even if you had to have a referendum because it had been on a treaty or something advisory and then we could have had a debate after the referendum about whether or not we should stay in the european union or not the sort of in out referendum i mean it was you were right michael gove was right it was a

1:10:33George Osborne: No, I think I think everything about the Brexit debate, the question of whether to have a referendum, the question of whether to vote for leave, all of the mistakes, all of the downsides were spelt out at the time. They were known that this is not an unknowable. This isn't one of these things in politics where you go, I wish I had, you know, the hindsight then if I wish I'd known what was going to happen. all of it was knowable all of it was known all of it was articulated at the time although you could have resigned what not have the uh you could have left the treasury as chancellor

1:11:11Ed Balls: on the basis that to have the on your argument is a bit like gordon brown could have resigned and maybe would have resigned if tony blair had insisted on joining the single currency

1:11:21George Osborne: you could have done yeah i don't know here i will agree don't you slightly kick yourself No, I kicked myself that I didn't resign immediately after the result. I'll sit around for two weeks and wait to be fired.

1:11:34Ed Balls: That is a lesser point.

1:11:35George Osborne: That is a lesser point. Anyways, oh, I hope you enjoyed that. That was fairly gentle therapy. Anyway.

1:11:43Ed Balls: Cathartic, although kind of George is slightly shaking. That is it for this week's episode of Political Currency.

1:11:49George Osborne: Yeah, do join us on Monday for Ex Minister's Questions, where we're going to answer all your big political queries and ideas and some of your more trivial ones.

1:11:58Ed Balls: As we say every week, you can always get EMQs early if you're a Gold subscriber or a Kitchen Cabinet member. And then you get not only three days EMQs early without ads, but you also get bonus content, a mug, members-only chat. We do a newsletter every week. And we've also got, it turns out, an exciting offer.

1:12:15George Osborne: Yes. I'm not sure this is actually going to bring in more members. Maybe I'm being uncharactered. you get you get two for two lucky kitchen cabinet subscribers you are going to get free tickets to see centrist dad if you don't know i know if you think centrist dad who are they oasis blurb no they're the band that ed uh is the drummer in uh they are playing at the water rats every time i say i think whoever called to place the water rats anyway it's a it's a kind of cool pub venue near King's Cross and they're playing on the 2nd of July and all you need to do to qualify for these free tickets is to be a Kitchen Cabinet member and to send us an email to questions at politicalcouncy.co.uk with the title Centrist Dad.

1:13:03Ed Balls: Very exciting and we're playing Madonna, Madness, Beatles, Chapel Rowan, I'll be on the drums and George will be there to chat to you about Brexit if if you get bored of the singing. Well, I say he's going to be there. I don't know if he's coming. He has been before his pogoning.

1:13:19George Osborne: Normally Yvette and I are in the corner, talking about politics.

1:13:24Ed Balls: George's pogoning was memorable. And look, even if you're not a Kitchen Cabinet member, questions at politicalcurrency.co.uk is where you send in your voice notes. And we love your questions on anything. So do send them in.

1:13:37George Osborne: We will see you on Monday for EMQs. See you then.

1:13:47George Osborne: Thanks for listening to Political Currency. This has been a Persephoneca production.

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