Is Andy Burnham coming for Keir Starmer’s job?

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1:54This is Political Cone Scene. with Ed Balls and George Osborne.

2:08Ed Balls: So it's Thursday and we are back recording remotely today. This is supposed to be a podcast about politics and the economy, but it's going to start off today as George Osborne travel loving. In recent weeks, we've had messages from George's former driver, Sean, via Jake Richards, sending his best wishes. We've now been besieged this morning after last week's episode. First of all, by Darren Cook, the captain on the BA948 flight, which flew George out to Munich a week ago. Could you please pass on my thanks to George for the mention at the beginning? It made my day when I heard it. It was a pleasure to fly him out to Munich.

2:49Ed Balls: Glad we got there on time. apologies for the remote stand and bus to the terminal no idea why we were made to park there hopefully see him again also from Gavin who is a tube driver good evening just a quick question for George after listening to the latest EMQs it was heartwarming to hear his and his son's declaration of love for the underground as a driver on the tube it's nice to hear something positive said about us rather than the usual criticisms I'd love to offer George and his son a cab ride whenever he would like but i'm not sure how else to send him the offer so please let him know cars planes tubes george you're in heaven i am actually i mean the offer to go in a london underground cab seems about the most exciting thing i could think of right now do you think it's against the rules well i hope not i think you need to check well but let's okay let's not tell anyone i've been made the offer how about that okay i mean i've run i've ridden in the cab of a bullet train in Japan.

3:45I've been in a fighter jet.

3:46Ed Balls: Anyway, this is supposed, as I said, to be a podcast about politics and economics rather than about, you know, planes, trains and automobiles. We are the Steve Martin and John Candy of our generation. Yeah, well, I'm quite happy to be Steve Martin. And to be honest, I was about to say, I was literally about to say, I'm the Steve Martin, by the way. I know. I know, little and large. Come on, let's get on with this podcast. Yeah, listen, we've got to talk about hunger.

4:12George Osborne: That's the big gathering in New York, the annual gathering for the General Assembly of the United Nations, where Britain, among other countries, recognised Palestine, the Palestinian state. And Donald Trump once again grabbed all the headlines. So we're going to be having a look at this week in New York.

4:29Ed Balls: Then we're going to look at the reaction to the Trump speech here in British politics, because it's caused a lot of ripples on the Labour side and kind of tweaking some of those leadership tensions that we talked about a week ago. But also Ed Davey at his conference last week was trying to grab the headlines in response to Trump and Nigel Farage chasing after him. Nigel Farage has also been under a bit of pressure this week. So Donald Trump setting the agenda in British politics. That's what we'll look at second.

5:00George Osborne: We're also going to be talking about a wealth tax. There's a lot of speculation about a wealth tax in France. There's talk about it in the United States or some parts of the United States like California. And of course, there's quite a lot of speculation that it's what Labour needs to do to fill the black hole here. And we're going to have a look at what our wealth tax is. Do they work? Why do they sometimes fail? and could one work here? So lots to get on with. Should we start with the United Nations and Unger Week? I'm going to plead ignorance here because I never went to this gathering when I was chancellor.

5:35George Osborne: And I don't know if you ever went, Ed, in the various jobs you did. It was always something that the prime minister and the foreign secretary and, in our day, the development secretary would do. And it's the annual gathering of the United Nations. All the leaders of the world give a speech, either in person or on video conference, to that kind of famous room, the General Assembly Room of the UN. It's a big jamboree. All the leaders who turn up are there and can have lots of side meetings. In the past, the kind of Clinton operation would put on a side show. These days, Mike Bloomberg puts on events as well.

6:13George Osborne: In the past, I would say it's been normally dominated by development issues, millennium development goals and the like. and, you know, it was a coming together of the world to commit to things, including more recently on climate targets. Very different now and quite a different week. And we should sort of unpack, shouldn't we? Because your partner, your wife, Yvette Cooper, our Foreign Secretary, kicked off the week. She went instead of Keir Starmer, who's chosen not to go, by making this pretty historic announcement about Britain's position on Palestine. I stand before you today beneath the emblem of the United Nations to confirm the historic decision of the British government to recognise the state of Palestine.

7:02I imagine, we'll get on to the substance of it, but I imagine for Yvette personally, that must have been quite a moment.

7:08George Osborne: I remember there was a gathering in the United Nations Security Council, which is the other famous room with the kind of secular table, which I attended as Chancellor. And I couldn't help. And I was by then I'd been chancellor for a few years, given lots of budgets and things like that. Even for me, a bit jaded by that point, there was a kind of shiver down the spine as I sat in the United Nations Security Council meeting where the kind of Cuban missile crisis unfolded and so on. So I thought Yvette as the new foreign secretary, that must have been quite a moment. Right. And it is a very significant moment for British foreign policy.

7:41Ed Balls: It's also a sign that we've come a long way. I mean, of course, on one level, it's logical that if you champion the two state solution, then of course, there have to be two states. And therefore, you have to at some point recognise Palestine as a state. But we've never been at that point before in the UK. Most other countries have recognised Palestine as a state, but the Americans were always opposed. the argument was it's the wrong time you should only play this in at the key moment in the negotiation you remember back in 2014 there was a vote in the house of commons it was a backbench motion but ed milliband and douglas alexander on the labor side decided that labor should support this call for palestine recognition very controversial at the time i think you'd have abstained because the government front bench abstained en masse i didn't vote in that um in that vote that day.

8:34Ed Balls: I'm not sure whether I was away or what, I actually can't remember. But at the time, it was very controversial. Now, I mean, there is a debate about whether tactically it's quite right. Good piece by Danny Finkelstein in The Times this week, making the argument for this move, but saying, is it the right moment? Are they getting their maximum negotiating leverage? On the other hand, when you have all these countries coming together to do it. France, Australia, New Zealand, Britain, a number of other countries, Canada, all kind of doing it at the same time, at a time when there was such pressure on Israel.

9:12Ed Balls: I mean, it's really interesting. The Americans have been very dismissive. I think the US Secretary of State said, you know, this is just Britain and France jumping to domestic political pressures. He went slightly further and said, you know, all these migrants are changing their politics, clearly saying that for domestic political consumption in America. On the other hand, last week, when Donald Trump was at the press conference with Keir Starmer, he didn't choose to make a big deal of this. And I guess the question is, is it a gesture? Is it inward looking? Or will it actually lead to something bigger?

9:43Ed Balls: Is it a moment? Is this a time where there could be momentum in the wider peace process? I don't know the answer to that. But some of the criticism is, why would you do this in order to put leverage on Hamas. Surely that strengthens their position. Their counter-argument is this isn't actually about Hamas. This is about the other countries, the Arab League, who all are saying now Hamas is not part of this solution. Is there something which can come out of this which is significant? I don't know, but this could be a moment which gets forgotten. It could be a moment which starts something and one of those moments where time will tell.

10:20I mean, I couldn't help but feel it was a bit more of a whimper than a bang. I mean, we're going to come on and talk about what the real story this week has been at the UN. And it has not been this big move by most Western democracies to recognize the Palestinian state. And I think the reason for that is twofold. One is, I think when people had envisaged this moment of the recognition of the Palestinian state, it would have been the kind of crowning moment of the actual creation of that state at the end of a or towards the end of a historic peace negotiation, like the kind of Camp David Accords or the Oslo negotiations.

10:55And so this would have been the moment of celebration when there at the UN, the Palestinian state is recognised. Well, of course, the truth is the opposite right now.

11:04George Osborne: You know, a Palestinian state has never been further away in my lifetime.

11:07Ed Balls: Are you sure?

11:08George Osborne: Yes, I think so. Because I think...

11:10Ed Balls: I mean, I think it depends whether Hamas stays in control. There's no evidence that they are, you know, losing control. And I would say, you know, the two key countries that are required to recognize a Palestinian state, Israel and the United States of America, have both come off a position they were on just

11:34George Osborne: a couple of years ago of seeing a two state solution as something that they formally supported and wanted to see. Now, you could argue not really, and maybe they didn't do anything to make it happen. Although historically, of course, it was the Palestinian leadership who turned down the two-state offer when it was made by previous Israeli governments. But, you know, Israel now, or at least the current Netanyahu government, explicitly says we're not in favor of a two-state solution. And the president of the United States says he's not.

12:04Ed Balls: The only counter I'd put to that is the American, we're going to move on to something else in the same vein. The American president says things and then sometimes ends up saying something quite different soon after. At the moment, Hamas is massively weakened. The Arab League is now talking about a post-Hamas solution. The Israeli government is trying to be strong, but actually still hugely vulnerable politically within Israel, as well as isolated internationally. And the question is, how long does American patience last? And are they looking for a different path? And I don't know that we know the answer to that.

12:40Ed Balls: I'm just not so sure everything would teach us from history that it's all going to run into the sand. And therefore, if you would say probabilistically, was this a big moment? You'd say no, definitely not. But I'm not sure if you are right to look at Israel and the Israel-American relationship and say that's strong at the moment. No, but I think it's hard to say. Certainly the way people envisage the two-state coming about, which was negotiations probably hosted by the Americans between the Israelis and the Palestinian leadership, leading to a general consensus that this was now the answer and then a big UN agreement.

13:13That feels like, you know, we've literally got the Israeli army fighting in Gaza City right now, condemned by most of the world.

13:19George Osborne: And indeed, of course, powerful forces within Israel and Israeli politics, most notably the chief of staff who's actually carrying out the operation who expressed his concerns and former Israeli prime ministers. And then in terms of kind of Palestinian, you know, in some ways, it's an exposure of the weakness of everyone other than the United States in this conversation. And I'll give you the best example of that. In all previous years, the leader of the Palestinian Authority on the West Bank, Mahmoud Abbas, has come to the United Nations and given a speech. And he is having to do it by video link because Donald Trump won't let him into the country because this meeting happens in New York.

13:57And so at the very moment when the Palestinian state is recognized, in which this man would presumably at the moment be the most likely person to be president of, You know, you got to get a visa to get into the United States because the American president won't let him in.

14:11George Osborne: So it just felt to me like not a sort of acknowledgement of failure rather than a big step towards peace. And I hope I'm wrong. Look, I absolutely hope I'm wrong.

14:22Ed Balls: Unless it's a precursor to a shift. And the second significant thing which happened this week was a, again, very unexpected shift in the Trump position. This was, I think, done through Twitter. But at a time when Zelensky was at the UN to address the Assembly, suddenly Donald Trump kind of boldly shifts position on the question of Ukraine, saying that he's, you know, he's now very frustrated with Putin, appearing to give the green light for NATO to take action against Russian planes going into Estonian or wider NATO airspace, and suggesting that maybe Ukraine now should be aiming to get back to their previous territorial borders, when a few months ago it looked like Donald Trump was trying to do the deal to give Putin the land he's taken from Ukraine.

15:10Ed Balls: I mean, a very, very big shift in the American position, maybe, but then maybe not. Don't you just feel with Trump on foreign policy? It's so wild and uncertain. You never quite know what's in his mind or what is going to be in his mind next. And when you see these signals, it's very easy to look at the Palestine thing and the Abbas visa and say, this means one thing, but actually could be a precursor to something else. And who knows what is going on in his mind about Putin and Zelensky? I think the main thing going on in his mind at the moment is why the escalator at the United Nations headquarters stopped working the moment he stepped on it with his wife.

15:46And his telepompter also broke down at the UN. So any love he had for the UN, which I suspect was pretty limited, is presumably evaporated as a suggestion that his visit there was sort of deliberately sabotaged.

16:00Ed Balls: That was on his way in to make his speech, wasn't it? And he's supposed to make a 15 minute speech. Everybody has a time restriction. I think this UN event is a bit like a party conference where you have the speaker on the platform and people come in to hear some speeches and go out again. There's a huge fringe happening around it and lots of meetings and bilaterals and drinks going on. But you're supposed to speak for 15 minutes or a red light flashes on. I think Donald Trump did an hour. Yeah. Before I come on to that, just on the Ukraine, let me just say it's extremely hard, isn't it, to sort of anchor your policy if you're the Ukrainian government or indeed Europe around what Donald Trump says about this.

16:37And it feels he's still playing this kind of art of the deal, kind of like blowing hot and cold on his talks with Russia in order to force them to the table.

16:47George Osborne: I don't think there's any real prospect of a big upsurge of US military support for Ukraine, which is what the Biden administration was providing. But Trump has found something which Biden didn't do, which is this other kind of route to hurt Russia, which is these secondary sanctions on countries that import Russian oil and gas, most notably India and China. And that's tied up with those countries trying to settle their separate tariff negotiations with the US. And he's threatened that again. And he also, you know, appeared to back any NATO action to stop stray, if they are stray or deliberately stray, Russian drones over NATO airspace in places like Poland.

17:29George Osborne: So, you know, it was significant. But as you say, it does it last. But if I'd said to you, Ed, when we were talking about this last week, actually, the real story from the UN would have been the safety of paracetamol and whether it causes autism or that Donald Trump would have used that platform, the United Nations General Assembly, not to attack the, you know, axis of evil, as previous American presidents have done, or to talk up the benefits of development in the developing world, but instead to lay into European liberalism and the twin monsters, to use his language, of the climate con, again, to use his language, and mass immigration.

18:15You know, we would not, we might have predicted,

18:17George Osborne: maybe we could have anticipated that he would return to that kind of theme of bashing up his allies, although he's gone rather quiet on it in recent months. I don't think Tylenol was high on our list of things that might come up at the younger week, was it?

18:31Ed Balls: No. We ought to play a clip of his speech because it's astonishing. I love Europe. I love the people of Europe. And I hate to see it being devastated by energy and immigration. This double-tailed monster destroys everything in its wake and they cannot let that happen any longer. I look at London where you have a terrible mayor, terrible, terrible mayor. And it's been so changed, so changed. Now they want to go to Sharia law. But you're in a different country. You can't do that. Both the immigration and their suicidal energy ideas will be the death of Western Europe. If something is not done immediately.

19:15Ed Balls: It was such a wild speech. And we're going to talk about the reaction to it in a moment. But in the room, back in 2017, if you remember when Donald Trump last addressed the UN Assembly, people openly laughed at one of the things he said. I think it was about North Korea. And there was no laughter this time around. I guess it's a different kind of Trump administration second time around. whether you're talking about American media companies, ABC, Jimmy Kimmel, all countries around the world, if people slight the president, he directly retaliates with the level of tariffs or wider diplomatic or economic attacks on them.

19:58Ed Balls: So there's all these people in the room thinking, you know, I'm here to represent my country and the UN General Assembly, maybe laughing at the president on behalf of my nation isn't quite the right thing to do in this moment. So they all, I mean, it was a rather short applause at the end, but they took it in silence this time around. It reminds me of one of my favourite jokes by Bob Monkhouse. Remember the great Bob Monkhouse? It was a big feature of television in my childhood. And he has this joke. People used to laugh at me when I said I wanted to be a comedian. Well, they're not laughing now.

20:31Two things to end on this.

20:33George Osborne: I mean, first of all, Trump does tap into domestic debates we have in this country and across Europe about the high price of energy. Right. That's the kind of attack on climate. And, you know, are we pricing ourselves out of heavy industry and car manufacturing and all that kind of thing? And the second, of course, the immigration debate, which is obsessing all the British political parties at the moment, including those the centre left government, Labour government. So, you know, I think he, you know, again, he, you know, he spots the kind of weak point and goes for it and often goes for it in an over top way.

21:07George Osborne: But, you know, it will resonate. And there'll be people listening to that in Britain because it was quite widely broadcast in Britain and on social media. They go, yeah, well, he's kind of got a point. And again, I think the final thing is this man remains the absolute center of the global political conversation. conversation. I mean, presidents of the United States always are very important players, but Trump remains the kind of center of the conversation and you just can't get around it. You know, you can have a gathering of all the world's leaders. You can have China today making a big announcement about carbon reduction.

21:43George Osborne: She's televised speech to the UN, but it doesn't really cut through because Trump grabs everything. And I thought we just, we should just end this section with the literal way in which Trump stops anyone moving around and doing what they want to do. Because people may have seen this on social media. If not, they should look it up. President Macron, the president of France, could not leave the UN headquarters and wasn't allowed to cross the road because he'd already abandoned his car because it was impossible, because the whole place had been shut down for the arrival of Donald Trump. And he's basically, the president of France is stopped by a New York police officer who says, I'm sorry, sir, you just can't cross the road.

22:25And in the end, President Macron turns to phoning Donald Trump up personally on his mobile phone in front of cameras that are following him. And it's just that I thought

22:35George Osborne: it was a metaphor for the way that Trump continues to be by far the biggest force in world politics at the moment.

23:37I imagine Keir Starmer listening to that is rather glad he didn't go himself this week. But that Trump performance at the UN has had a big impact here on British politics, on the Liberal Democrat conference, on Nigel Farage, but also on the Labour Party.

23:52George Osborne: And of course, there are lots of things going on in Labour as they approach their conference. And we're going to turn to that next.

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25:17Welcome back.

25:18Ed Balls: So as we said, the Donald Trump speech and his wider contributions to geopolitical debates have caused a stare around the world. And we thought we would look at how it's been impacting on the government and Labour, the Liberal Democrats, and also on Nigel Farage and reform, because all of them have been caught up in different ways in the Trump crossfire out of the UN this week. Let's start with Labour, because in a way, the most shocking moment in British political terms was when Donald Trump called out Sadiq Khan and basically said, you know, repeated his regular mantra that he's a bad guy. But also he's trying to impose Sharia law on London.

26:01Ed Balls: Now, I mean, to be fair to Donald Trump in this latest spat, he didn't start it first. I mean, Donald Trump was flying. And as we said last week on the podcast, he was flying into London at the invitation of the king for a state visit. And Sadiq Khan chose to get to go on the attack against Donald Trump on his arrival. You can imagine Donald Trump being rather upset about that. He decided to retaliate. Sadiq Khan's spokesman said we are not going to dignify his appalling and bigoted comments with a response. but that line lasted less than 24 hours before Sadiq Khan decided to dignify his comments with a response saying on a bus promotion event yesterday I think President Trump has shown he's racist, sexist, misogynist and Islamophobic and so yeah I think that is a response.

26:48I mean presumably you know you and I both know Sadiq and I actually have a lot of time for him. Lots of conservatives don't but I've always got on very well with him and certainly speaking with my British Museum hat. He's a very good interlocutor as mayor of London. But he'll love this, isn't he? I mean, he's like elevated onto the world stage. He's literally singled out in the President of the United States speech at the UN. And he goes toe to toe with Donald Trump. I mean, there's not much downside from Sadiq's point of view. And I suspect there's quite a lot of people in the Labour Party who are saying, yeah, well, why aren't, why isn't Keir Starmer and why aren't

27:26Ed Balls: the cabinet saying this kind of thing well see and that i think is what is interesting because um there wasn't a big response from keir starmer to these comments about sadiq khan but the cabinet minister who did step in was west streeting whom who was quickly out on twitter sadiq khan is not trying to impose sharia law on london this is a mayor who marches with pride who stands up for difference of background and opinion who's focused on improving our transport our air our streets our safety our choices and chances we're streeting the health secretary who was also very critical of what donald trump said about um tinolol and the idea that taking that paracetamol based drug is dangerous in pregnancy i mean he went out of his way to get involved this week we're streeting i think by the way rightly on the health issues and rightly on sadiq khan but what is going on here what's going on here is a week ago we were talking about andy burnham and his strike for the Labour leadership.

28:23Ed Balls: Andy Burnham has been accelerating all week, a new statesman profile, now an interview in the Daily Telegraph. He's taking the fight to Keir Starmer. I'm being told by Westminster they want me as their leader. Sadiq Khan, the London mayor, is thinking, why is this Manchester mayor getting all this publicity? So he's out there doing something very popular in the Labour Party, which Keir Starmer's not doing, having a go at Donald Trump. Wes Streeting, I would think, probably raising a lot of eyebrows in number 10 by going out there, choosing to go out there on the attack against Donald Trump, a break from the strategy of a week ago.

28:59Ed Balls: And then this morning we have in The Spectator, a piece by Tim Shipman, front page of The Spectator. He did get that job at The Spectator. Where did we hear about that first? I think we got him the job because we did references to him live on our podcast. He's now out there with a profile of Shabana Mahmood in which the piece basically quotes very senior number 10 aides. I don't know if that is Morgan McSweeney, the chief of staff, although, of course, we all know he's very close to Tim Shipman. It's very senior number 10 aides saying Shabana is the one. In fact, she's now eclipsed West Streeting as the favoured candidate of the centre.

29:40Ed Balls: I think they say one of them's got balls and the other is a man. And so there we are. It's all been kicking off. Donald Trump has been stirring up all this Labour leadership speculation and everybody's jumping in and getting their oar in. OK, but come on, this is where I've got to interrogate you a bit. So what on earth is going on at the top of the Labour Party? I mean, they only got elected a year ago. They've got a prime minister who's got a majority of almost 200. you have Downing Street aides openly speculating with journalists about who is going to be the next Labour leader, when, as far as I can see, they've got a leader.

30:15All this kind of like, we'll come on to Andy Burnham a moment, but like Shabana Mahmood, Wes Streeting, look, he's the health secretary. He absolutely has a job in going out there and speaking the truth about paracetamol. You could potentially argue he's a London MP, so maybe he should say something about the Mayor of London. But I agree with you that I'm sure he had in his mind that this wouldn't go down too badly with the Labour Party faithful. Shabana Mahmood, you know, I think, by the way, both Wes and Shabana are big fans of this podcast. So we should hopefully they're listening to this conversation right now.

30:49But they've both come up to me before and said how much they enjoy it. She's the new, you know, it thing in politics, the new big rising star in the cabinet. Tough job as Home Secretary to stay on top, but we'll see how she does.

31:05George Osborne: Why is Downing Street allowing all this speculation to take place among the Cabinet? And separately, what on earth should they be doing about Andy Burnham? They're obviously not remotely. They are in control, or they should be normally at least in control, of members of the Cabinet who they choose to put there and they can choose to remove, or the Prime Minister can choose to remove. Andy Burnham is a different kettle of fish. mayor of manchester for the last 10 years very much the kind of king in the north in kind of labor mythology i know again i you and i know andrew very well i mean he's not going out of his way is he to dampen down speculation he's on the eve of the labor he's not going out of his way to i think he is going out of his way to to build up and provoke massive speculation i mean it's not subtle the standard response to this kind of thing would be i'm not interested in leadership I'm right behind Keir.

31:56I'm only interested in doing the right thing for the people in Manchester. Whereas instead, he's doing the exact opposite, which is he's saying, well, actually, yeah, quite a lot of people are coming up to me and asking whether I want to be the leader. And, you know, I think the Labour Party is in a real mess and it's a terrible atmosphere

32:13George Osborne: and Labour MPs feel put upon and the fault is Downing Street. I mean, these are his words. These aren't like people close to Burnham. And, you know, to choose on the eve of the Labour conference, when you're not the cabinet, you're the mayor of Manchester, to do your interview in the Daily Telegraph. I mean, that is very deliberate from Andy. And I was wondering whether he has not drawn a lesson from Boris Johnson when he was mayor of London, who used to cause us a huge amount of trouble at the party conference. In the build-up party conference, he'd have a speech there, so he could not have the mayor of London give a speech.

32:49George Osborne: But that day of the conference was always dominated by Boris Johnson. Whatever else you did that day, it was always the Tuesday, in our case, of our conference. And people say, well, is it going to work? Isn't he just going to be kind of get a reputation being impossible and a troublemaker and disloyal? But of course, what it did was it made him front and centre, essentially the kind of alternative to the Cameroons, which he ultimately turned out to be when he was elected as prime minister or leader of the Tory party by the Tories. So isn't Andy doing that? I mean, he is a candidate because he's announced if in effect he's a candidate.

33:24Ed Balls: He has, although it's a complex path. I mean, there are a number of questions to me there. So let me take them in turn. What should Downing Street be doing? I think, to be honest, I think I would have had Keir Starmer out at the UN announcing this historic moment and being involved in global conversations about Ukraine, Russia, the future of the world economy, because that is Keir Starmer's strength. that's one thing he's been doing really well on in the last nine months. That's a very good point. Why, wasn't it? I mean, I assume because they thought he's spent too much time on foreign policy and he needs to get his conference right.

34:03Ed Balls: But it's definitely the one thing which works for him. And then secondly, I think rather than briefing Tim Shipman about a leadership election to come, I think I'd have been working on the conference speech because Keir Starmer's conference speech is now absolutely vital. And for all the noise which happens, and there's going to be massive noise over the next few days, the speech he gives is now so important in terms of its confidence, its direction, its message, its guile and skill in the way in which it's delivered. Secondly, I would be finding the people in number 10 who are briefing up alternative leadership candidates and give them a very, very tough message.

34:44Ed Balls: We said last week, the one thing which will embolden everybody else is if they think it's coming out of number 10. That's what the Tim Shipman piece is. I could speak to David Cameron. I'm sure this is true of other premises. If someone in number 10 had been saying, I think that George Osborne would make a very good prime minister, or I think that Boris Johnson would make a very good, they would have been out the door. I mean, Cameron would not have tolerated that for one second. But if you look, they're talking up Shabana Mahmood at the moment. I really like Shabana I think she's really good but I'm not sure this is wise from either Number 10 or the people around her she had a campaign video out a few days ago, a Home Office video on Twitter, you know, strong Shabana with a backdrop of newspaper headlines they included it's up to Shabana Mahmood to save the government, was one of the headlines, the other one was that she herself put up there in her own name, Shabana Mahmood has saved Starmer once, can she do it again?

35:44Ed Balls: So they've got that headline with Shabana on a Shabana Mahmood video put out by her team with number 10 support. They must have seen that and it's still up there. They weren't told to take it down. What on earth do they think they're doing? It's absolutely mad. Wes Streetie in those circumstances, reading he's not the flavour of the month, goes out there. You know, he's got a difficult seat to fight in London, but he also wants to be a contender and what is the point in him being loyal when they're briefing against him to the spectator and then as for Andy Burnham I mean you know he is thinking well if this is the moment they seem to be you know everybody else is acting like it's like the moment I might as well get involved for Andy this is so complicated because you know he's been there before and at times different times he said different things but you know we are where we are today.

36:35Ed Balls: He's not a member of parliament. To be a candidate, he'd have to be elected to be a member of parliament. You can't stand for the Labour leadership. Yeah, but he would walk a by-election in Manchester. Come on. Would he walk a by-election? Well, both Graham Stringer and Andrew Gwynne, the two people touted that they were going to stand out for him and said that they won't. Lord Gwynne, I can imagine. Anyway, look, he might walk it, but it's not without risk. he's then got to get to 80 nominations and we all know how difficult it is to get the nominations within political parties if you are seen as being the guy who was causing the torment the Hesseltine factor back in 1989-90 which kind of was what Gordon Brown was all very worried doesn't always apply though Ed no I know he who wields the knife never wears the crown that's not I mean Margaret Thatcher wielded the knife

37:26George Osborne: and wore the crown she did in the Tory body

37:28Ed Balls: And so did Boris Johnson. I'm not saying it can't work for him. I'm just saying it's complicated. He's out there now saying, if only we could rejoin the European Union, we need to ignore the bond market or be less in hock to the bond market, while at the same time saying in the Telegraph today that we need to borrow£40 billion more for new council homes. I mean, Paul Johnson, the former director of the Institute of Fiscal Studies, has been out this morning saying we can't avoid being in hot to them by reducing borrowing. We struggle now because our borrowing and debt are extremely high. Mr Burnham wants to increase borrowing.

38:05Ed Balls: I don't know whether Paul Johnson was rung up by number 10 or the Treasury and asked to put that quote out or whether he just felt that he wanted to contribute to the debate. But for Andy, given Liz Truss, this is not without risk. It totally sets up the Rachel Reeves-Burnham fight over the future of fiscal policy for the budget to come. I mean, it's fraught with risks and dangers for Andy. But on the other hand, as you say, you know, everybody else is doing it. Why doesn't he get involved? Yeah, but first of all, he's not, you know, the Chancellor's Exchequer. So he can deal with the bond market when he's either Chancellor or appointing the Chancellor as Prime Minister.

38:39It's worth remembering last week we talked about the bond market And we discussed how the stability of the Labour leadership could itself be an issue for the bond market. And Labour leadership speculation could lead to people taking fright in the capital markets. You know, if you set out like, stop being worried about all these, you know, the gnomes of Zurich, as I think Labour leaders back in the 1960s and 70s used to talk about the bond market and bankers. Let's stop worrying about the bankers. Let's spend more money on cows housing. I mean, that's a leadership pitch, isn't it?

39:15George Osborne: And the fact, as you say, it sets up kind of Rachel Reeves versus Andy Burnham. Well, yeah, but hold on, he's the mayor of Manchester. It shouldn't be a contest with the Chancellor of the Exchequer at the moment. What do you think? I mean, you talked about the speech. There's also the substance. So what I've picked up from people I've spoken to is that there may now be a big move from the Labour government on ID cards. There's been quite a lot of speculation about the ID card scheme. the Blair government formally committed to ID cards and they were scrapped in 2010 when we came into office. But already by that point, they weren't going to happen.

39:48George Osborne: But in a new age of digital identity, mass migration, fraud online, there's a renewed push, isn't there? Originally by Tony Blair some months ago, in fact, around the time of the incoming Labour government a year ago, to revive this idea. And from what I hear, I don't know, obviously I don't know, I'm not part of the government, this might now be a big conference announcement that Labour's committing to ID cards. And that is a response effectively to what we talked about earlier, Trump's claim that Europe's being destroyed by mass migration and the rise of Farage here at home.

40:24Ed Balls: Well, there may be an announcement. I don't know whether that will come in the conference speech or at the weekend. I think Keir Starmer's speaking to you, a big global progressive conference on Friday, Saturday, so maybe it will happen there. We'll have to find out whether they've really thought through the policy and the politics of this because, you know, I mean, I think having an ID card is fine. I have a driving license and a passport. I don't mind having an ID card. I'm not one of the people who kind of feel strongly about it from a civil liberties point of view. But point one, if they say this is about tackling illegal migration and illegal working?

40:58Ed Balls: Well, we currently now have a compulsory e-visa. Everybody who's not a British citizen has to have an e-visa. There's an e-visa database. The only reason why it's now possible to crack down upon all those car wash and delivery driver construction site workers who are working illegally is because the Tories proposed and Labour has sorted out a compulsory e-visa everybody who is working illegally everybody's not a citizen already has a digital id card so i don't think having a national id card system makes any difference at all to the issue of illegal migration it doesn't help with people on boats because clearly they aren't but even illegal working it makes a difference if you haven't got your e-visa the um the inspector can find out if you're on the database and if not you can be detained sorry

41:50George Osborne: How do you know whether that person could just say, I'm a British citizen? I mean, you want something that everyone has to be able to produce, don't they, when challenged. When the delivery driver or the construction site worker, you go, okay, well, have you got an e-visa? They say, well, no, I don't need one. You go, well, where's your ID card?

42:07Ed Balls: So you're saying that everybody in a compulsory way is going to have to carry an ID card.

42:14George Osborne: But it's not the idea of 20 years ago of like a physical card, but on your phone, a proof of your identity. We had it, by the way, during COVID. We had COVID passports, right? And we live in an age where fraud and identity theft online is getting a bigger and bigger problem, not least with the arrival of artificial intelligence. I think a lot of people would welcome an ability to prove their identity and not have to find the council tax bill, you know, or the utility bill with your address or the copy of your passport. If you had something on your face, I mean, I'm borrowing a bit from William Hague's article in The Times this week.

42:51George Osborne: And he was one of the opponents of ID cards saying, actually, maybe the time's come for that.

42:56Ed Balls: But let's go back to the substance. If you are working in Britain, you either are a citizen and we have a database of our citizens.

43:02George Osborne: Do we?

43:02Ed Balls: Or you have to have an e-visa.

43:04George Osborne: If you're a foreman of a construction site, how do you prove that this person is a British citizen? You don't have access to that database.

43:10Ed Balls: The Immigration Service can absolutely access whether or not you are a British citizen.

43:15George Osborne: Yeah, but if you just had to show on your phone, here's my ID card, I'm entitled to work, as a delivery driver, as a construction worker, you know, in the car wash, all the kind of things you're talking about.

43:26Ed Balls: Everybody's not a British citizen has to show their e-visa. They've already got an e-visa.

43:30George Osborne: But they don't have to show it when they turn up for work.

43:32Ed Balls: Well, I think it's the law that you have to check and hold a copy of somebody's migration status so they're not a British citizen. I don't think it makes any difference at all to the tackling of illegal migration. At the moment, if you're a non-British citizen, you have to pay an NHS surcharge in order to access the health service. You aren't allowed as an illegal migrant to access the benefit system. When we interviewed Wes Streeting on Good Morning Britain a few weeks ago, he was very clear that the idea of a compulsory ID as opposed to a voluntary ID card system, are you going to say to every 80 and 90-year-old they have to present their ID card in order to access the GP?

44:09George Osborne: I think they would welcome some form of identity that has the backing of the state. And by the way, Apple already have my ID and my facial recognition, which I now need to get into loads of my apps and whatever.

44:20Ed Balls: And then the question arises, George. All I'm saying is you've got to think this through. You can't go around saying it will help tackle illegal working. It won't. That is easy to do. It's incredibly complicated. Who's going to pay for it? At the moment, if you get a passport, you pay for it. Are we going to pay for our IDs or is the government going to pay for it? Well, we can pay for it. We pay for driving licences and passports. It's quite hard to operate without being able to produce a form of identity. At a time when government is probably less popular than any time in our lifetimes, the government is going to tell everybody, you must pay for an ID card to prove your identity to us.

44:53George Osborne: no it's not an id card it's a it's an online digital identity verified by the state actually

44:59Ed Balls: the home office will say fine to have an id card we're not paying for it because it's not going to help us we've got the visa we spend billions on that the the nhs is going to say that we'd rather spend the money on doctors and nurses in the same way as the home office would rather spend on police officers is the treasury going to pay for it well yeah it has to yeah all i'm saying to you is i don't think this big announcement is as straightforward as you think The civil liberties argument aside... We don't know if it's going to be made, by the way. We're speculating. Anyway, you're sounding a bit like Ed Davies' conference speech.

45:28He laid into ID cards and he made the point in the... I guess he took the kind of Sadiq Garb-Wed-Streeting line on Donald Trump, which, to be fair to him, he's consistently done. Although I think generally the Lib Dem conference

45:41George Osborne: was somewhat overshadowed by all this Labour speculation.

45:45Ed Balls: I know. I feel rather bad because, you know, we were going to talk about Ed Davies first and Ed Davey was complaining he's not getting enough attention and the BBC aren't reporting enough. And then we sort of pushed him down the running order, even on our podcast. You know, he boycotted the Trump banquet. He's calling out Nigel Farage, trying to turn Britain into Trump land. And he was our politician of the year 2024. And it's a long way to the election and they are doing okay in the polls. They should be doing better. But why didn't Ed Davey quite get the breakthrough he needed this week? Because there was bigger things to talk about.

46:19George Osborne: I mean, I'm very fond of him because, of course, he served in the cabinet alongside me and voted for my budget. So I'm a big fan of his. What about, let's just say something about Farage, because, you know, he's had to respond as well to the Trump comments. And we should just end specifically on Tylenol. You know, others came out very quickly and said nonsense, including actually the chair of Reform. But I thought Farage, you know, shows the difficult tightrope he's got to walk over the next three years between now and polling day with this, frankly, a not very impressive answer on LBC. Nigel, when Donald Trump talks about links between paracetamol or Tylenol and autism, is he right?

47:00I have no idea. You think he might be right? I have no idea. You know, we were told thalidomide was a very safe drug and it wasn't. Who knows? Nick, I don't know. You don't know. He has a particular thing about autism, I think because there's been some in his family. He feels it very personally. I have no idea. What do you mean you have no idea, Nigel? I mean, thalidomide, yes, was a morning sickness drug that caused unbelievable tragedy and deformity in children around the time that I was born. And was exposed by an amazing newspaper campaign led by Harry Evans. to compare the thalidomide scandal to a paracetamol and say, oh, I don't know about paracetamol.

47:39I mean, that is literally fueling the anxieties people will have out there

47:44George Osborne: of like, well, I don't know what the truth is. And this is literally, we're talking about paracetamol here.

47:48Ed Balls: It is shocking, actually, because in politics, you have a responsibility because people listen to what you say and take it seriously. And I think to every serious scientist and medical expert has been saying this week, there is no link between taking of Tylenol or paracetamol and autism. And the idea that you should frighten pregnant mums in this way, I mean, as West Streeting said, you should ignore what Donald Trump says. But Nigel Farage didn't choose to do that. But he was also kind of speculating about whether or not were swans being stolen from St. James's Park, a rather Trumpian echo, at the beginning of the week, indefinitely to remain, to be suspended retrospectively, people who've been given the right to live in our country, been granted that stepping stone to citizenship, suddenly being told it could be your neighbour, your friend, the parents of the kids your kids go to school with, suddenly finding out that what they thought was from the government, a certainty about their life has been taken away.

48:50Ed Balls: I mean, hugely controversial and difficult. But I think there is a point here about Nigel Farage, which isn't only that he's experiencing what it's like to be judged not as the outsider, but also as a potential prime minister. And suddenly what he says about all these things matters a lot more because people think, well, what does that actually mean in practice? But also he's under pressure. And if you go back to the massive demonstrations in London the weekend before last, which we talked about, who were the heroes amongst the demonstrators of those demonstrations? Who made the big speeches? Elon Musk.

49:22Ed Balls: It was Rupert Lowe. Tommy Robinson. It wasn't Nigel Farage. as Nigel sort of tries to move slightly towards electability, he's now hugely under attack from the base, which he's always relied upon for support from people saying, well, you know, is he serious? And I think what he does is he leans back on the vaccines issue with Trump or ridiculous things about birds, the indefinite leader remained. He didn't need to go there. He was already in a stronger position than other parties for that constituency on mass deportations. I think he's worried that his base is going to call him out. I mean, the worst thing for him would be if Donald Trump popped up and said, you know, it's not just Sadiq Khan I'm worried about, this guy Farage, he's not really one of us.

50:07Ed Balls: Elon Musk has already said that about Nigel Farage. And he's caught, isn't he, between feeling as though Richard Tice will be saying to him, you've got to appeal to moderate conservatives who might be peeled away to the Liberal Democrats, who might stay with the conservatives. the base set pulling him back to those more Trumpian positions. And I think this week is a kind of an example of him not really quite knowing where he stands and as a consequence getting himself into quite a lot of trouble. I mean, you should say in this whole conversation, we haven't mentioned the conservatives who are the official opposition.

50:41And that is the big challenge they've got, which is in this arena who is listening to them. Although I couldn't help but notice that Rob Jenrick has just released one of his videos talking almost entirely about the economy, which I don't think is part of the shadow justice brief. But we will come back to the Tories when they've got their conference in a week's time. Let's turn finally to something, a policy that's also speculated about

51:04George Osborne: and speculated that a Labour government here might one day announce, and that is a wealth tax. And we're going to have a quick look at what is a wealth tax, who's talking about introducing one, and could it work? And we'll do that after this.

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52:37Welcome back. So wealth taxes. Well, what is a wealth tax? Well,

52:41George Osborne: in its simplest form, this is an annual charge of like one or two percent of your total wealth. So that's the value of your house, your shares, your potential pension, your art, your jewelry, if you want to do a proper wealth tax. And it has been tried in a number of countries over the years. There's lots of issues about assessing it. I guess the most successful current version of it is in Norway, perfectly sensible country, Norway. They managed to operate a wealth tax. And some US states have a version of a wealth tax because they assess the value of your property every year. New York State and California, big places.

53:18George Osborne: Now, the reason why it's kind of hit the headlines again is really twofold. Here in Britain is because I think there's pressure from the left, isn't there, for Rachel Reeves, if she's going to raise taxes, to raise taxes on very rich people and introduce a wealth tax. And then in France, where their situation is much more fraught even than ours. And essentially, there's a lack of governing authority on the domestic front. There's a lot of speculation that in order to fill their hole, they should introduce a wealth tax. And there's a guy called Zuckman, and he is an economist, Gabriel Zuckman. And he has proposed a wealth tax in France.

53:57George Osborne: And it's called the Zuckman tax. And the kind of leftist forces in France, who are quite strong at the moment, have come behind that. Let's start with, that, you know, did we, did you or I, I mean, I never looked at a wealth tax. I did look at increasing property taxes. I never looked at a wealth tax. Can it work? I mean, is it a sound concept?

54:15Ed Balls: Well, look, of course, a property tax is a form of wealth tax, as is an inheritance tax. Those are all taxes which you levy on, you know, the stock, the wealth of an individual at death with inheritance tax or annually with the council tax. A capital gains tax is a tax on the change in value, but the council tax is a tax on notionally the value of property, even if those valuations are rather out of date. And if you look at the OECD figures, we as a country have one of the highest levels of taxation on property, the combination of council tax and stamp duty, even though we don't levy capital gains tax on the first home and have generous inheritance tax reliefs for people's homes.

55:01Ed Balls: Both of us have considered in the past whether we would go further. I advocated a mansion tax, which would be more overtly on the value of properties, even the council tax. You proposed to David Cameron, considering looking at a version of a mansion tax when you were chancellor. We didn't win the election. You decided not to do it. Yeah. New council tax bans, which would be a sort of proxy. Yes.

55:24George Osborne: Well, what about a proper wealth tax? What about a proper like an annual assessment of your total wealth for very rich people. But it should be said, by the way, the Zuckman tax, you know, is only supposed to apply to people who have over 100 million euros. So very wealthy French people.

55:41Ed Balls: And it was a piece of work. It was actually done. It was commissioned by the Brazilian G20 presidency. He wrote a paper, a blueprint for a coordinated minimum effective taxation standard for ultra high net worth individuals. And the idea would be that all countries would agree to this and therefore you'd get around the problem of ultra high net worth individuals moving from Britain or France to Germany or China or America by getting all countries to agree to do it. Good luck with that. If we're going to wait for that and that's not going to solve Rachel Reeves's budget problems. When you look at the kind of question of wealth taxes it was most seriously looked at by a World University based commission back in 2020.

56:22Ed Balls: They said an annual wealth tax is a nightmare to levy because it causes all sorts of difficulties with kind of avoidance and behavioural change. What you ought to do is do it as a one-off tax, which you then collect over five years, but you avoid all of those difficulties of big behavioural change by only doing it once. Although, of course, very difficult to enforce the one-off nature of it. The problem is that even Dan Needle, the left of centre tax expert involved in writing a paper saying in the end, it doesn't work very hard not to have big exemptions, big behavioural problems, impact upon foreign direct investment and growth.

57:06Ed Balls: And those countries which have tried to do it always end up being kind of paired back to a rather more minimalist approach. In principle, you look at this and think, surely, even if it's only people with incomes over or wealth over$100 million, surely we can get a lot of money from them. Surely it's going to be billions of pounds. It tends to be rather smaller than that. And I think this goes to a challenge for Rachel Reeves and for this budget. Robert Peston was talking this week about a Treasury briefing to him that the gap is going to be£30 billion a year. That's what the Treasury is now looking to raise.

57:42Ed Balls: We talked last week about whether it would be£20,£30,£40 billion. The Treasury is saying that they're looking for ways which don't break the manifesto to raise that kind of money. the difficulty they have is that when you start to try to get into multi-billions of pounds from gambling taxes or from property taxes or from increasing the taxation of pensioners savings, very quickly you either get into very, very fraught politics and behavioural responses or you end up carving out exemptions which mean that you don't raise a lot of money. and the Office of Budget Responsibility, if presented by the Treasury with these kind of proposals in the coming weeks, are going to say, well, but how confident can we that we'll actually raise the money you hope to raise from this?

58:33Ed Balls: You remember the discussions we had when you were opposing me saying we'd keep the top rate of tax at 50 % and using the OBR and the Institute for Fiscal Studies to say that the amount of money which would be raised from that would be rather less than I said it would be because of supposed behavioural responses. All those same arguments will apply here in terms. So if you can find at the margin some ways to do it, fine. But the idea this is going to add up to multi-billions through some big, bold annual wealth tax, I think pretty much every expert who looks at this concludes it can't be done. Yeah, and you also have to have something called an exit tax, don't you, to stop people immediately moving their wealth from the moment it's announced.

59:15Ed Balls: Which means it has to be a massive surprise. And it has to be a massive surprise and it has to come into effect with an immediate effect. And you have to be able to enforce it so people can't just call their bank up and say, well, we're moving all our money offshore tomorrow.

59:25George Osborne: It's quite easy to poke holes in all these wealth taxes, and they have failed in the past. But I guess a broader philosophical point is the holders of wealth, capital, have become richer and richer compared to people who rely on earned income over the last 10, 15, 20 years. And it's one of the arguments, isn't it, made that, you know, for the rise of populism on the left and the right. You know, I can't help but noticing that 86 % of French people support a wealth tax. Even if it doesn't raise a huge amount of revenue, it helps kind of assuage a view that rich people should be making more of a contribution.

59:58And, you know, looking more forward, if you're in a kind of age of AI where, you know, people aren't earning as much, presumably, you know, you're going to have to tax the big winners who will be the holders of equity in these companies and these AI engines somehow.

1:00:13George Osborne: So, I mean, wealth taxes are definitely coming back into fashion. And the Californian proposition, which the Democrats advance there, is that you should be taxed on, you know, the potential value of your company in the future. So it's not even your kind of value today. I just think, you know, it's coming. I don't think it's a practical idea, not against, you know, taxing property and the like. I just don't think it practically works. And for an open economy like Britain, you'd just drive even more people abroad, which is a big problem anyway at the moment. But it's not to be dismissed, is it? And I think if you're looking at this budget, there are some proxies on there that, you know, I certainly will put up to me as budget options in the past when I was doing these things, which is you can do, for example, capital gains tax on the primary residence above a certain value.

1:00:58George Osborne: And that's been really openly speculated now about as being potentially in the budget. and there's something called capital gains tax on death uh so that when you die and before your assets are inherited and indeed assess for income tax you have to or your estate pays capital gains tax on the increase in the value of assets over your life i'm just saying we're going to have a lot more conversations about this in the years ahead and maybe in november in french politics

1:01:25Ed Balls: the guy zuckman who is a an academic in paris but also at berkeley at california dismissed as a mad lefty. I think actually his G20 report is thoughtful. And as you say, if you can agree to a global system to tax the ultra-rich, and if that's the direction the world moves in because of the way the wealth is being concentrated, that may be a conversation we get into. Olivier Blanchard, French-American economist, on Twitter endorsed the Zuckman proposal, saying that I've concluded, although far from perfect, a Zuckman-like tax seems the least bad way to tax the very rich although he says one percent is more realistic than two percent i think that's a slightly detailed point but getting to a global system is going to be really hard and individual countries doing impossible come on but individual countries doing on their own it's going to be very hard indeed and that's why you're right looking at individual ways of taxing wealth rather you know aspects of wealth aspects of capital seem more likely than than some broad based one-off wealth tax although didn't Rachel Reeves do an interview with the Telegraph before the election where she said there was not going to be any increases in capital taxes so I don't know whether that made the manifesto but that will be a challenge for her in the coming months well not as much as a challenge as her CBI speech after the last budget saying she wasn't that's it and there aren't going to be more tax rises I'd be surprised if wealth taxes are going to fill the fiscal hole that is going to be faced this autumn.

1:02:54Ed Balls: But you may be right, taking a longer term view, this may stay on the agenda. But I think more high level working groups and G20 seminars are more likely than budget announcements would be my prior. Anyway, the big surprise is the richest man in France, Bernard Arnault, who owns LVMH, is against it. You will be shocked to know. Anyway, that is all for political currency. We're going to be back on Monday and we're not going to do our usual ex-Ministers questions. We've actually got a special episode on party conferences

1:03:27George Osborne: because we'll be right in the middle of the party conference season. And we're going to share some stories about best and worst moments at conferences that we attended. And we've got some special guest contributors, which I think you're going to enjoy.

1:03:40Ed Balls: That's right. In the meantime, if you want to hear that episode and all our episodes earlier and ad-free, you can do so by becoming a member of our Kitchen Cabinet. you can find the link to subscribe in our show notes below and don't forget we are on youtube search political currency you can watch all our best episodes and interviews yeah and by the way

1:03:58George Osborne: the latest batch of mugs are on the way out to our new members sign up now and you can get one of those coveted things and that almost certainly is going to be worth a hell of a lot more in the future so that will be subject to a wealth tax no doubt anyway check it all out and subscribe if you've not already done so and we will see you next week see you then

1:04:24thanks for listening to political currency this has been a persifonica production

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