Is Robert Jenrick’s defection a threat to Nigel Farage’s leadership?

0:00At the top of this podcast, full disclosure, while we were recording it just as we're getting to the very end, news came in that Robert Jenrick had been fired from the Shadow Cabinet by Kemi Badenock because she says he was plotting to defect to defect to reform. we don't cover it at the beginning of the show but we do at the end so stay and listen full disclosure george osborne is just the person you want to get the first reaction to this sacking from and a fascinating conversation but first let's get on with the podcast

0:44This is Political Codency with Ed Balls and George Osborne

0:57So after the Christmas break and remote last week. We are back in the ACAR studio and I have to say it is dry January here in Hoxton. In all the records we did in December, there were chocolates and biscuits and sweets. It was so Christmassy. I've just been into the kitchen here. Nothing. The table is bare. This is dry January austerity in Hoxton. Yeah, there is actually a little card from Amazon Music saying, We absolutely love what you do, Ed and George. And here are some cupcakes. Where are the cupcakes? Pluralo cupcakes. Where are they? They've been nicked. I think that arrived over Christmas, and I think they were eaten by Ellie and the production team.

1:39But here in Austerity January, where are the cupcakes? Also, by the way, have you noticed what else has been nicked? No. Our mugs. That is true. Our special political currency red mugs have gone. It must have been a Christmas run on kitchen cabinet subscriptions. The other thing just to share with our listeners who weren't going to see this, George Osborne, you know, suited George Osborne, you know, the former politician, the city slicker, the banker, went off last week to California and he arrived this morning in the studio. He is wearing a hoodie and carrying a rucksack with a laptop in it. He has become a tech bro, or at least he's assumed the uniform of the San Francisco tech community.

2:24I mean, you know, what a makeover. Not your first makeover ever, I've got to say. No, I'm getting with the future, you know, I'm getting with the programme. I mean... Just put your hoodie on for a second. Look at this. I don't know. Anybody watching this on YouTube? I think you're fine with the hoodie. The whole point is you don't put it up. Thank God your young kids are too young to be embarrassed and your older kids have seen it all before. I don't care. Because if not, it would be so bad. If I am embracing the future, I think you're embracing the past. because I saw a tweet from you or a post from you saying that you now have a tease made by your bed.

3:02Which there'll be, many of our listeners have got no idea what a tease made is. And if I say it's a bit like a Terry and June sitcom, also most people will not know. You are back to the 1970s. Yvette bought it for me for Christmas, my own tease made. Explain to people what it is. My mum had one and my dad in the 1970s. It's a 70s piece of high tech, but it's quite low tech now. And it has an analog clock and you pour the water into a tank and then you set the alarm. Before you go to bed. Before you go to bed. And you put your tea bag in the teapot. And then at 3.45am for me, because I'm in Good Morning Britain, Monday to Wednesday, it turns on and there is a sort of bubbling and then a big...

3:44Right. As the water goes over into the teapot and I jump out, pour my cup of tea and start the day. Do you know what I then do? I then reset the teas made so when a vet wakes up at seven o 'clock, she can press the button and make her own cup of tea. So our foreign secretary wakes up refreshed with the cup of tea you've sent for a couple of hours earlier. That is exactly how it works. You didn't nick the mugs to go with the teas made. Well, all of those, quite a lot of Good Morning Britain mugs on the shelf. But I posted this overnight and I have had like tons of people on Instagram all saying this is so nostalgic.

4:18what used to happen though in our household about every three to six months my mum because she made it with tea leaves not with tea bags she would forget to empty the teapot but she'd put the water into the kettle bit and then it would then swoosh over into the teapot which would be half full of old tea it would spill out and flood the bedroom and i would hear this as my mum would see the tea spilling onto the carpet. And so that is an unorthodox way to wake up in the morning. But a tea's made. Honestly, it is so cool. I'm absolutely loving it. And every day you could have a different teabag if you wanted.

4:56I mean, as a different type. Talk about austerity. As in a different type. You are allowed a different teabag. What I mean is you could have peppermint or red bush or earl grey. A different type of teabag. Not very 1970s. Do you know what we do? We actually throw the teabag away and have a new one every day. But just to say, to reassure any of the production team, we compost. We compost the team. We should start. We are going to link to the terrible situation in Iran. We're just going to say it. Terrible situation in Iran, isn't it? Protests on the street as we record this podcast or massive crackdown.

5:31Trump intervening. We're going to discuss that situation and how the British political environment has reacted to it. Then last week on the podcast, we discussed U-turns and the U-turn underway around extra help for the pub industry following the business rate change in the budget. And we said there is a U-turn, which we thought was happening that day, a week on. We're still waiting for the details of that U-turn, although it looks like they're U-turning on the U-turn because it's now going to go wider than the pub industry. But there's been another U-turn in the last 24, 48 hours, at least one more, certainly a U-turn on mandatory digital ID cards.

6:07But it looks like things are underway on the social media space, maybe at Northern Rail as well. So we're going to have to, for the second week running, return to the U-turn culture, which seems to be gripping the government in Whitehall. Yeah. And then finally, we're going to look at what's going on in the United States. And in particular, Donald Trump's attacks on the chair of the Federal Reserve and the criminal indictments. That's the way that the chair of the Fed, Jerome Powell, has described it against him. and what this means for the interest rates that you, the listener, are going to be paying on your mortgages, because it doesn't just affect the US, it affects global markets too.

6:46So we're going to have a look at that too. But we're going to start with the roller coaster of American global foreign policy in January. We've had the Venezuela invasion, the removal of the president. We've had the ongoing row about Greenland. And then in the last few days, Donald Trump absolutely raising the temperature in Iran. It could be fair to say that these protests which started in Iran over Christmas, I think that the media, the foreign policy establishment probably underplayed their significance. But as the protests grew in scale and as the regime started to crack down in a very heavy handed way, Donald Trump has intervened on Monday announcing a big rise in tariffs for any country exporting to Iran.

7:29I think in particular he means China. Then an astonishing tweet on Truth Social. Iranian patriots, keep protesting. Take over your institutions. Save the names of the killers and the abusers. Help is on its way. He added the acronym MIGA, make Iran great again. This was Donald Trump on CBS. Well, now we're hearing that they're going to start hanging protesters tomorrow. So it comes back to the question, have they crossed your red line or has the line moved? I haven't heard about the hanging. If they hang them, you're going to see some things that I don't know what your where you come from and what your thought process is.

8:08But you'll perhaps be very happy. What do you mean by that? We will take very strong action if they do such a thing. We will take very strong action. And this strong action you're talking about, what's the end game? The end game is to win. I like winning. What's happened, though, overnight is Donald Trump has been trying to dial down the temperature. There has clearly been contact between the Americans and the Iranians. The Iranian foreign minister out saying that they aren't going to hang protesters. They're going to stop the killings. And Donald Trump having raised the temperature, trying to cool things down somewhat.

8:45This is what he said overnight. We've been notified and pretty strongly, but we'll find out what that all means. But we've been told that the killing in Iran is stopping. It's stopped. It's stopping. and there's no plan for executions or an execution or executions. So I've been told that a good authority will find out about it. I'm sure if it happens, we'll all be very upset, including you will be very upset, but that's just gotten to me some information that the killing has stopped. But to say things are on a knife edge is an understatement. The British Embassy in Tehran has been evacuated overnight.

9:27the Americans don't have an embassy in Tehran. The UK does, which is why there's always a kind of a great sensitivity about how the UK talks about what's happening in Iran. But that evacuation has happened. But who knows what's going to happen next? It's interesting. I mean, I think the difference between Venezuela and Greenland and what's going on in Iran is I think this started without, you know, American provocation. This is Trump reacting to events, not driving events. And what seems to be the case is that the complete failure of the Iranian economy, indeed the complete failure of this terrible theocratic regime that has led Iran for decades.

10:06And the success of sanctions. And the success of sanctions and potentially a covert action on the currency, which has always been part of the kind of Western weapons against Iran, has created a kind of genuine organic process on the ground of people in the Iranian people who want to, you know, many of whom would like to live in a freer and more prosperous society. So that's the first thing. I mean, here are people risking their lives and losing their lives to fight for freedom. And I think we should respect that and applaud it because it's not something we have to do in our own country. So that's the kind of first thing.

10:42I think second, it is interesting, isn't it, that Trump, you know, had to sort of ramp things up. Essentially, I mean, promise said help is on its way, you know, carry on these protests. We're about to intervene and then didn't. And there are various explanations for why that's the case. one of which is an interesting one, which, you know, there was such a buildup of American forces around Venezuela that they're just not in the region able to carry out the kind of strikes you might carry out against, for example, the Iranian Revolutionary Guard. Although the fact that the British Embassy is being evacuated, the fact that American non-essential personnel in other countries like Qatar are being evacuated on bases suggests there's still a possibility of action and or at least a fear of Iranian reaction.

11:25I guess America is keeping its options open. I mean, Donald Trump doesn't like to say things and then not follow through. He never wants to look weak. He says that he's been told the killing's stopping. But if the killing carries on, you know, would you rule out in the coming hours or days either an American military incursion into Iran along the lines of the attack on the nuclear facilities last year, or even an intervention to target particular individuals, which they've also done before? I mean, I don't think you would rule out Trump thinking that his amour proper requires action. Yeah, although I suspect they just don't really have anything planned.

12:01I bet they will have looked at, they did look at regime decapitation, didn't they? Well, except that, of course, it was the United States who told Israel they couldn't go after the head of state in Iran, the supreme leader, the so-called supreme leader. I think there are sort of two broader observations because it's a fast changing situation. And frankly, there's so little information coming out of Iran because they've suppressed the Internet. And obviously, there are no journalists there. But I sort of make, you know, two observations. I mean, one is this is if you took a step back, I think we often say, you know, the West is in retreat.

12:34Democracy's on the back foot. We've got the rise of these authoritarian powers. You know, countries like China are thinking long term. Our political systems don't allow us to do that. But, you know, the protests in Iran are yet another blow for this sort of axis of authoritarianism. You know, we've put for Russia, China and their allies around the world. It has not been a great few months. Venezuela was an ally, the Duro regime. There were Cuban soldiers based in Venezuela. That regime has been decapitated. We've got these protests in Iran. Their nuclear facilities were knocked out months ago and they were simply unable to retaliate.

13:14despite a kind of strike on their homeland. In China, the economic situation, which we discussed before on this podcast, is not great, remains the case. And, you know, Russia, for all the menace it poses to Europe, remains completely bogged down in Ukraine and its much vaunted military has over several years made, you know, very little progress. Don't forget to add to that list also the rapid toppling of Assad in Syria. Right, quite right, yes. And I think one of the things you always have to have in your mind... Key Russian ally, Russian base there in Syria. Yeah, absolutely. And, you know, it's so easy to say that in Iran, things will happen slowly.

13:56But of course, Syria is the counter argument to that. There was a really interesting piece by Peter Frankopan on his substack, an expert, I know a friend of yours, saying that the thing you have to watch for is what happens in particular in the Iranian military. You know, is the regime change going to happen? Is it a shift from an autocratic regime change to a takeover of the Revolutionary Guard? But do the military more broadly, who have very many kind of family members and friends who are involved in the wider protests, do they go along with that? Or do you start to see fractures? I mean, you know, we are a long way away from the protesters overthrowing the regime Syria style, but doesn't mean that change isn't underway.

14:45But what that change means and whether that is stabilizing or destabilizing, whether it is less authoritarian or more authoritarian, who knows? I'm not totally sure myself whether Donald Trump or the Israelis threatening kind of, you know, incursion and intervention or trying to take credit for what's happening. I'm not sure that helps the forces of protest and liberal change at all. But, you know, who knows? No, I mean, because it enables the regime to essentially make a kind of patriotic nationalist appeal, doesn't it? But I would just observe that, you know, if you're sitting in Beijing, if you're sitting in Moscow, it's not the case that things have been going your way in recent months.

15:24You know, key allies and your key interests in various hemispheres have been retreating. I thought the other observation, I mean, I'm waiting for the champagne glasses to be raised by all those champagne socialists thanking Donald Trump for, you know, stopping the hangings. You know, the opponents of capital punishment on the British left who campaign for the death penalty to be abolished in states like Texas. I'm waiting for them to say thank you, Donald Trump, because your threats have got the Iranian regime to stop executing these protesters. Indeed, isn't it kind of striking? And, you know, you had those huge protests.

16:02I mean, in many cases, you know, with very legitimate concerns about what was going on in Gaza and the humanitarian situation in Gaza. Huge protests came up and lots of conversations, you know, I would have with my friends and lots of disagreements around dinner tables and so on. And yet here we are. We've got an Iranian regime. It's literally killing young people who are protesting on their street, asking for more freedom. This is a theocratic regime. This is a regime that does not in any way support a role for women in civil society. This is a regime that is, you know, makes homosexuality illegal.

16:36And now it's using violence and threatening capital punishment against protesters. And I don't see the demonstration in central London saying, you know, down with the Iranians, you know, all that. Well, what's going on there? Why? Tell me, you know, I know these aren't your bedfellows at all, but, you know, it's your half of the political landscape. What? Why? The Corbynista types, they just they never called out Iran, did they, for decades? Look, the Socialist Worker Party in its warehouse of placards doesn't have a big already printed set of anti-Iranian placards. They've got them to demonstrate whenever there is a demonstration against Israel, but certainly not against Iran.

17:22And the problem is, as we all know, and Danny Finkelstein did a good piece in The Times a couple of days ago, pointing this out, the things Jeremy Corbyn was saying 10 years ago about Iran, that unless a protest and a demonstration fits into the anti-American, anti-Israel, anti-capitalist, anti-imperialist kind of mindset or ideological frame, then it poses a big dilemma for the hard left because they're not quite sure what to make of it. And it's why they always find it quite hard when you have, you know, the Uyghurs and China or what's happening in Myanmar or certain things in Latin America as well.

17:58So you are totally right that it doesn't fit the ideological frame. And that's why you don't see those hard left demonstrations. I wonder whether Zach Polanski didn't miss a bit of a trick here, because actually he's trying to be different, the new green leader, trying to show that he's doing things in a different way. He could have been the champion of the Iranian protests. I think he was slow into that, and that was probably a trick he missed. It doesn't surprise me that Jeremy Corbyn's not making a big fuss about this. And as for the British government, whether it's a Labour government or a conservative government, as I was saying earlier, you always have to be kind of, to be so careful because, you know, we have prisoners in Iranian jails at the moment.

18:37I was on Good Morning Britain earlier in the week talking to the son of Craig and Lindsay Foreman, who are currently being held in Iran. We also have that embassy there. And so it has always been a kind of complicated balancing act. We had Priti Patel on the programme kind of demanding that the government gets behind Donald Trump in the more aggressive language. But of course, when this happened in 2022 and James Cleverley was the foreign secretary you had you know a much more careful and balanced approach which you have to do if you're actually the government in the UK yeah no I mean obviously it's a it's a fast changing situation and yet another reminder that international events can overshadow what you're doing at home because we are still I think technically a couple of weeks into the government's relaunch on the cost of living aren't we although that has been overshadowed by their own domestic u-turns as well and we're going to turn to that next welcome back well we're not u-turning on our policy of discussing u-turns at the beginning of this year i want to play you a clip from wes streeting this has been quite widely circulated and Kemi Badenot used it in Prime Minister's Questions.

19:55This was him at the Institute for Government conference on Tuesday. It's, by the way, proof of an important rule in British politics, which is no one has a sense of humour in British politics. So this is what Wes said at the IFG conference. If people think we're getting it wrong, then, and we think that they're right, far better to do the right thing rather than to spare one's political blushes. In the NHS, we have an initiative called GURF, Get It Right First Time. That should be our New Year's resolution for 2026. Let's try and get it right first time. Let's try and get it right first time, i.e.

20:33let's not have more of these U-turns. Wes was actually commenting on the U-turn, which we're going to come on to, because there might be another U-turn on that, on business rate increases on pubs. But later that day, the government announced, Darren Jones, who's the kind of prime minister's minister, if you remember from the last time they reshuffled Downing Street, he announced that they were not going to go ahead. The government was no longer going to make it mandatory for workers to have digital ID cards when they're introduced in 2029. And this was significant because one of the main justifications for ID cards, that was a Tony Blair idea that was then shelved and has resurfaced, was that now it would be used to tackle illegal working or illegal immigration and the kind of black market in illegal labor.

21:21And so this announcement came rather out of the blue, although I have to say, I'm going to say this for the second week running, my podcast host here, Ed, he called it when this was first announced. You did predict that they would have to U-turn on this ID card announcement when it was first made last year. I did. Look, it's not the first time on this podcast, I mean, we do sound a bit like broken records. We keep saying that the U-term was inevitable. But to be fair to us, on the winter fuel allowance, and then on the farming inheritance tax change, and then on disability benefit reform, and then last September on mandatory digital decals, we said at the time, this isn't going to work.

22:03And have they thought this through? And it is so frustrating. There is a briefing from Downing Street to Pippa Carrera in The Guardian today saying, you know, stripping the barnacles off the boat, we are U-turning on the things which are not working because we want the public to focus on the cost of living crisis. But the problem is, it is politically draining to keep having to change course. And having sent your backbenchers out to defend the policy, then to say we're no longer supporting the policy. And I think the question is, why can't the government get things right the first time round, as Wes said?

22:37I mean, he did it as a joke, but it is a serious point. Who in the government is looking around corners? Who is the person saying or the people saying, don't just look 24 hours ahead to the headlines, but where will this announcement leave us in one, three, six months time? Are we sure that we've thought this through in advance? You really need to do that in the weeks before you make the announcement rather than the weeks after. And if you go to this digital ID announcement, it arrived on the Friday before the Labour Party conference. out of the blue from Keir Starmer, as it happens at the Tony Blair Institute event.

23:11They've been a big champion of this. And, you know, obviously, they're kind of very heavily into the sort of wider kind of tech agenda. The following week at the Labour Party conference, Keir Starmer didn't mention it in his conference speech. You then had other cabinet ministers, Wes Streeting, saying, well, voluntary ID cards, OK, but are you really going to say for the use of the National Health Service, we're going to mandate every pensioner must have an ID card. The Home Office were saying, well, we already have a mandatory e-visa for people who are here legally in our country. And if you are illegally here and illegally working, not clear quite how the ID card system helps because if somebody's paying you cash in hand under the counter.

23:54There was a spending review in July where there was no financial provision made for the billions of pounds it would cost to introduce this mandatory ID card. It wasn't owned by the Home Office or the Health Department. Darren Jones was told, going into work with Keir Starmer as the Chief Political Secretary, his job was going to be to drive through this ID card. Four months later, no campaign, no intellectual laying of the ground, no detailed policy work, public opinion clearly shifting against it markedly in a vacuum, and suddenly they announce they're not going ahead. But how could they have got themselves into that situation?

24:32You should do the work and win the argument in advance rather than trying to win the argument after you've made the announcement. And if you're going to try and win the argument, do it wholeheartedly, not halfheartedly. And this is just like a case study of how not to make policy. The point you made there, the vacuum is the key thing. They announced this policy and then nothing happens. I mean, David Blunkett made this observation. You know, there are plenty of other people who would agree with what you were just saying. He says the original statement was not followed by a narrative or supportive statements or any kind of strategic plan which involved other ministers and those who are committed to this actually making the case as a consequence those who opposed the id scheme for all kinds of different reasons some of them inexplicable he's a fan of them fan of the id cards were able to mobilize public opinion and get online opposition to it up and running you know funnily you know i have more sympathy on some of the budget problems because, you know, I experienced some of those.

25:27And sometimes you announce things which, you know, they're not very popular, but you just get them done. No one likes to pay more taxes. Other times, you know, you should have anticipated budget problems. But they're kind of, you know, they're a different kind of U-turn to this. You know when you're announcing ID cards that it's a huge, big, controversial issue. Nobody in the cabinet knew it was being announced until it was announced, including all the people who were supposed to be responsible for delivering it, paying for it and championing it entirely out of the blue. But that's why it's very different from, you know, the exact rate of business rates on pubs and the hospitality sector or changes to inheritance tax on farming estates.

26:07Although that came out of the blue as well. Steve Reid, the Environment Secretary, didn't know about that announcement. Now, maybe you could say that's budget secrecy. If you're the Chancellor... You didn't tell the DEFRA minister what you were doing on budget day, dude. On tax? Well, yeah, yeah. Really? Come on. I mean, if they were, they were given the nod. You don't share the whole budget with the cabinet. But I think if you're going to do something massively controversial, which is going to impact on one sector, you do try to get the cabinet minister on side. Fair enough. But I'm just saying what's odd about these ID cards is it speaks to a bigger problem.

26:42An inability to, before and after announcements, have a sort of strategic, I wouldn't just say it's a communications plan because that's a cop-out. But it's a like a delivery, but delivery in the sense of how are we going to get the comms right? How are we going to get the handling of the parliamentary Labour Party right? How are we going to get this through Parliament? And then how are we actually going to get it delivered by government? The other really interesting thing that Wes Streeting said at the Institute for Government conference this week was stop blaming other people when it goes wrong.

27:08Stop blaming the civil servants. There was a piece by Paul Ovenden, former Downing Street advisor in The Times over Christmas, railing against the lobby groups and the establishment and the civil service and the vested interests who keep blocking the government doing things. And West Streeting says, stop blaming other people. It's our job to win arguments. And you have to win the intellectual argument. You have to get the stakeholders on side. You have to know who are your supporters. You have to know who is going to have to be persuaded. you have to know who's not going to be persuaded and have to be defeated in the argument but it's always been like that in every generation there are people who are going to oppose what you're trying to do i think the civil service generally wants to support the government doing what the government wants to do if they understand what they're doing and why they're doing it and how it's going to be paid for but i think that this idea that every time you get blocked you say oh well you know it's the forces of conservatism it's the blockers it's actually a political failure I know, I totally agree with that.

28:08We should move on to some of the other U-turns. I do think trying to establish your identity in an AI age is going to become a big, big issue. So it may not take the form of ID cards, but the state is going to have to be able to help citizens prove who they are and indeed prove that they're human beings in their interaction. Which is a requirement at the moment to travel, to work. It's just going to become a bigger and bigger issue as it becomes easier and easier to fake people's identity but you know how kind of deep in the psyche the id cards issue is in in the uk i mean that dates back some decades before the invention of the the tease made so you know it is it is politically challenging but if you're going to do it you have to do it we never had to show our papers exactly where are your papers so therefore we're not going to do but the point is you have to therefore have a concerted strategy and go after it and if you don't then it just collapses into mess.

29:02Just briefly before we get onto a U-turn I fully applaud on Northern Powerhouse Rail. Can we just touch on business rates? Remember the background to this was that during Covid there was a big reduction in business rates designed to help the hospitality sector. Tories did nothing about reversing that once Covid had passed and then you know essentially slipped out in the budget without many people noticing they had returned to the sort of pre-Covid situation with business rates, although they would say it was actually marginally better than it had been pre-COVID. Then at the beginning of the year, you know, I'm talking only about a few days ago, due to a campaign on pubs, the Treasury signaled a U-turn on pubs, but said it doesn't apply to the wider hospitality sector.

29:49And that's a big deal because think of all the restaurants out there that pay business rates or hotels and the like. And now it seems like they may have to U-turn on that too. And that's going to be pretty expensive for the Treasury. Pubs are one thing, but if you talk about the whole hospitality sector, that's a big chunk of the business rates budget, isn't it? The head of the Valuation Office Agency, Jonathan Russell, on the front of the FT today is saying very clearly, we told... This is his moment. This is when the Valuation Office gets its moment in the headlines. We told the Treasury regularly before the budget the big impact the business rates of valuation was going to have on taxpaying.

30:24And it feels as though the Treasury missed that. Either that, or they just underestimated what a big deal it was. When the signal came last week, we were doing our podcast as it was happening, the Treasury were 100 % clear this is only pubs. Although, as you say, it's not only pubs who've been impacted by these re-evaluations, and it's not only pubs who are struggling in the 2026 economy. Rachel Reeves has now signalled that she's looking at pubs and the wider hospitality area. Look, I think probably what she needs to do is stand back and have a broader conversation about how business rates are working in our economy, which I think was a promise from Labour before the election.

31:02Doesn't seem to have happened now. So it is a bit of a U-turn on a U-turn, but the alternative way to say this is it is a progressive and iterative piece of policymaking, which may lead to better outcomes at the end than at the beginning. The other kind of U-turn-ish stuff going on, which is really interesting, is in the social media sphere on the one hand we've had the horror of um x through grok this is elon musk's ai vehicle that's right producing or allowing people to ask for and then producing images of adults women and children without clothes on or in bikinis or nudification exactly and this was um highlighted in the last few weeks tech secretary liz kendall had strong language at the weekend about how shocking and horrifying this was Ofcom should act and have the powers to act.

31:51And it sparked at the time some very kind of aggressive counter arguments, not just from Elon Musk, but also from the White House saying, you know, the British government, if they care about free speech, they should be focusing on Muslims and the grooming gangs. I mean, it's quite aggressive. Keir Starmer then doubled down a big tonal change from the more careful language he was using last year when the tech deal was still being negotiated. Heavy language on Monday and Tuesday. And it's actually been Elon Musk and X who've done the U-turn in this area in the last couple of days. I think that Keir Starmer was right to change his tone.

32:26X has now said they're not going to allow this for anybody, including paid subscribers. So that is like a good piece of policymaking. The other thing that which is also happening, Kemi Badenok and Andy Burnham, he supported her, an unlikely Alliance joining what is a growing swell of opinion that we need to look at the availability of social media for children under the age of 16. The Australians have already led in this area by saying that there will be a ban in Australia on the use of social media by under 16s. I mean, I think it's complicated and hard, but public opinion is strongly supportive of action because parents are very worried.

33:03Keir Starmer, for reasons I don't fully understand, has set himself against this very hard. He's said things which are unequivocal and hardline opposing this. Peter Kyle, the former tech secretary, now the business secretary, saying it's the wrong thing to do. But public opinion is shifting. Parliamentary opinion is shifting. I would say this is going to be on the agenda and on the government's agenda in 2026. And this is another example where you think to yourself... Why box yourself in? Yeah, exactly. If they move now, it'll be a U-turn. They don't need to U-turn on this. They and listen and be more light touch you know because you could definitely say look it's a very complicated issue but we totally understand their concern of parents we're going to follow closely what's going on in australia it seems to have been a personal thing that keir starmer wanted well don't you think it's all it must be tied up with the negotiations with the trump administration around the trade deal last year because the kind of american threat was that if you curb the power of the social media companies or indeed if you had a tech tax that was another of thing you know we're not going to let you off the tariffs it's probably tied up with all of that it's either that or sometimes as you know in politics there can be you know a relationship you have or a conversation you have which kind of shifts your mind in a particular direction and it may be that his um 15 year old niece told him whatever you do don't stop me using instagram and got that into his head but it's certainly it's certainly an area where there's i think going to be quite a lot of movement, not just in this country, but in other European countries too.

34:35And Australia is going to be really interesting to see what happens in Australia. Just finally, on Northern Powerhouse Rail, I mean, I love the phrase because it's mine. You know, the Trans Pennine... That was in your suit phase rather than your hoodie phase, wasn't it? That was when I gave a speech in the Power Hall of the Manchester Museum of Science and Industry with a bunch of Labour Council leaders and mayors. The really important news here is there's actually been a lot of work on improving northern transport in recent years so things like the old tall cord have been built in manchester the old pacer trains have been phased out and 11 billion pounds is being spent on the trans penine route and so quite a lot of what has been announced i would say is also already baked into spending plans and rail plans and so on i thought the really significant thing and it people will feel yeah but it's years off you know it's never going to happen was essentially the u-turn on rishi sunak's cancellation of hs2 from birmingham to manchester now they're not calling it hs2 and so on but they have said they will now build a train line from birmingham or if you're being technical about it actually from crew up to manchester the significance of that it may not they're saying it's not gonna happen until the 2040s you know hopefully we'll still be around then but i think the significance is they're not going to sell the land that the government had bought to protect the HS2 route.

35:54And that is quite significant. And they are talking about a new Manchester to Liverpool railway line. But in fact, if you look closely at that, a lot of that is the original HS2, bits of the kind of key HS2 approach into Manchester, the old plan through Manchester Airport. That is significant. It was the single thing the Sunak government did. I say the Sunak government, I think he just did it. I don't think anyone else and the government knew he was about to announce they were cancelling it. But, you know, it was an act of kind of infrastructure vandalism. I'm really pleased it's been reversed.

36:27What I liked about the government's paper on Northern Transport was two things. They engaged with the mayors in a way I think they should do much more of. I know there's lots of personal politics and Andy Burnham winds them up and so on. But, you know, it's really important. And it's the best answer we've come up with in this country in the last few decades to how we're going to improve the performance of areas outside of London and the southeast. And then, you know, I thought it was also good that they were actually borrowing and doing what you always tell them they need to, which is make an argument and have some real kind of thinking going into it.

37:01And they borrowed the Jim O 'Neill theories about cities agglomeration, how if you bring the cities of the north closer together, the whole is bigger than the parts. So it wasn't just like we love the north you know margaret thatcher close the mines we're gonna do that kind of i think rather sort of shallow labor analysis used to have in the past this is a well thought through argument by the treasury by the transport department and by the northern mayors and it certainly gets a big thumbs up from me i had a call yesterday from the treasury pointing out that the harvard king's work we did about regional growth and local transport is and the academic paper quoted in the um it wasn't burnham's it was balls no it was it was um about winning the argument and drawing upon all the work others are doing whether this is actually a high um a u-turn on high-speed rail we'll have to wait and see because it's not clear that the there won't be a new birmingham to manchester will be high speed but it will be potentially a new line but potentially without that the west coast main line is going to fall over and you know some people say it's very slow and they're taking their time there's only a billion pounds in the first phase but actually I think in the case of HS2, they went too fast.

38:09And in the end, that's partly why the contractual situation became a big overrunning mess. That's certainly the argument Heidi Alexander is going to make. But I'm going to agree with you. The right way to make policy is to draw upon external expertise, the academic papers, the think tank papers being written, to get somebody in like John Cunliffe's work on the water industry to kind of bring it together, to then produce your evidence. They've produced a pamphlet from MHCLG Treasury and Department of Transport about the intellectual underpinnings of what they're trying to do. They're drawing upon all the work that you did and the mayors are on side with it as well.

38:42The interesting thing is a guy that you'll know well, Tom Reardon, who was chief executive at Leeds City Council for over a decade, went into the health department a couple of years ago, moved over in the autumn to work for the Treasury out of Darlington on the sort of northern economic plan. and Tom is a consensus builder. And so I think he's probably had an influence on this strategy as well. This is the opposite of what they did on digital ID and mandatory ID cards. This is think it through, proper deliberative policymaking. And, you know, we'll see if this is the way they're going to approach the kind of economic policymaking in 2026, then this is a good sign.

39:21So thumbs up, Tom. I will also tell you something. There have been seven chancellors since me, six Tories and now Rachel Reeves, And not once did any of the six chancellors, or rather the officials at the Treasury, ever call me to say, well, we've got an announcement coming out, George, you thought you might be interested, including lots of announcements about the North, including the cancellation of HS2. And I did get a call from the Treasury in advance saying the Chancellor wanted you to know about this announcement we've got coming. So we both had a call in the last 24 hours. Good politics, though.

39:52And we are happy on this podcast to then talk about why the... Well, we're that easily bought, are we? Did you get a call on digital ID? I did not. On the winter allowance? No, I just thought it was, you know, the old politician in me thought, that's smart, putting in a call to me to say, you know, I thought, you know, that was, anyway, thank you to Stuart from the Treasury for the call. Tom Reardon and to the Chancellor Rachel Reeves. We'll take a break and then we're going to talk about politics over the pond. Because in America, in Washington, the debate between the White House and the U.S.

40:27Federal Reserve became kind of intensely fireworky political at the weekend. And we'll discuss that last.

40:47Welcome back. So there's a lot of politics going on with the US Federal Reserve. And that matters because it's the single most important decision making body in the global economy by far. And it affects interest rates all around the world. And what has happened is that the chair of the Federal Reserve, Jay Powell, he was appointed by Donald Trump during his first presidency. But they have spectacularly fallen out since. and the assumption is that's because Donald Trump is angry that he has not cut interest rates faster or his committee has not got interest rates faster. Anyway this took a new turn a new twist over the weekend when when Jay Powell made it public that he was subject to a criminal investigation from the U.S.

41:31Attorney's Office in Washington D.C. There's a close Trump ally who's in charge of that And the investigation is all around the renovations of the Federal Reserve building in Washington. So it all sounds pretty arcane, but it's significant because it's an attack from an arm of government, essentially, or from a Trump ally, right at the core of the Fed's independence and very kind of ad hominem against Jerome Powell. and you know there's some context here too because you might remember we discussed it on this podcast that one of the people who sits on the committee that sets interest rates in America Lisa Cook Donald Trump made a big case for her to be removed last year she wasn't there's a Supreme Court case about whether she can be got rid of and that's being heard this week and all of this is in the context of the fact that Donald Trump is about to choose the next chair of the Federal Reserve and the candidates for that job are having to be very nice to Donald Trump in public and in private, to put it mildly.

42:37So that's the kind of context to it all. It matters because people think that if the Federal Reserve is less independent of the executive in America, then there will be a tendency to cut interest rates because that's the kind of politically more convenient thing to do and therefore inflation will generally be higher this is i guess core theory around bank independence which ed will take us through uh and has taken us through before but here's just it's worth hearing first of all jay powell come out jrome powell called jay powell he he come he came out he said this and then i think people might be amused to hear the property developer now President of the United States, on his response to J-PAL.

43:20This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role. The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.

44:01I mean, that is astonishing from the head of the Federal Reserve. Will monetary policy be set in the public interest or be directed by political pressure and intimidation in the interest of the President of the United States? I mean, that is the most politically charged allegation against Donald Trump from within the American governing establishment we've seen so far in this term. And, you know, for the first 24 hours, the president was silent. And I think, you know, people wondered whether this was people within the administration kind of trying to do what they thought the president wanted, you know, courtier style politics.

44:44Trump's had a go at J-PAL very many times over the last year, but this was so astonishing. When I was down at Mar-a-Lago in 2017, making that BBC documentary, there was kind of footage of me with my mouth open at a shocking speech, which came from the podium. And the speech came from Judge Jeanine, Jeanine Pirro, who at the time was a TV shock jock. She's now the Attorney General in D.C. who is bringing this charge. I mean, was this, you know, trying to curry favour? But no, the president decided to double down. And after waiting 24 hours, this is what he said. I don't know. With this guy, you don't know.

45:22He's got some problems. But what he also did, he's building a small, he's renovating a small building. It's the most expensive construction job in history. And it's only a renovation. I could have done that job for$25 million. They're spending billions and billions of dollars. he either doesn't know what he's doing or it's worse than that and you know what i mean by words i mean it's first of all it is true isn't it the fed has somewhat opened itself up to attack with this extremely expensive renovation of his building i mean it is an old building or old by american terms and it's in a quite notoriously swampy bit of uh of washington but uh you know there have been lots of controversies in british history around very expensive buildings so there There is an element to it, which is they've given Trump an opening.

46:12And, you know, Trump, the property developer there saying, oh, I could have done this job much cheaper. But I guess we've all heard that from builders, haven't we? But as Jay Powell says, nobody thinks it's about the building. It's all about Donald Trump's obsession with wanting to take control over interest rates and get them down, get them down to 1 % rather than the above 3 % that they've been before. He thinks that this is the Federal Reserve trying to stop the economy growing, make it more expensive for America to service its debts. What we've seen in the last few days is an astonishing response from the central banking and wider economic establishment.

46:50First of all, you had all of the past Federal Reserve chairs signing a letter in support of J-PAL. We then had central bankers around the world, including Andrew Bailey, also joining in that chorus of disapproval. We had Jamie Dimon from JP Morgan coming out and saying how... Basically the world's top banker, right? Saying that the Federal Reserve is the centrepiece of the American economy and its credibility is vital. He also said that it would potentially lead to higher inflation. And it's interesting because I think Jamie Dimon has been quite careful in being on the right side of Trump and sometimes saying things that people have said, why are you too pro-Trump?

47:26So I thought his was quite a significant intervention. It was. And I think, you know, because the economy is going to be so important in this midterm year, that is significance. The interesting thing is that the market reaction, despite, you know, a massive public row between the head of the Federal Reserve and the president, the market reaction has been quite subdued. But to try and unpack that, although Donald Trump has been calling for interest rates to go to 1%, the market has never believed that was going to happen. The terminal rate, the lowest rate they thought US interest rates would come down to, has always been 3%.

47:59They never thought Donald Trump would be able to impose himself on the Federal Reserve. And I think they probably still think he won't. And actually, maybe it's harder for him to do so now. It's possible that Jerome Powell will decide when he steps down this spring now to stay on, which he's allowed to as a member of the FOMC until 2028. You've had Republican senators. And that's significant because it's a committee decision. I mean, in America more so than in Britain, the chair of the Fed has tended to lead the decision. But it would be the case that if they felt the chair's independence was compromised or he was an instrument of the White House, then the other committee members might assert their votes.

48:42That's true. The people who Donald Trump has been, it's been speculated he might appoint to take over from Jay Powell are also, you know, relatively conventional. Hassett, kind of your mate Walsh. I mean, these are not these are not mad ideologues. They aren't going to think Donald Trump's one percent plan is the right plan either. You've had Republican senators being very critical in the last few days about what Donald Trump and the White House are doing. That probably means that if they do try to put somebody in who is Trump's stooge, it will be harder for them to get that Senate committee approval, which they would need to take over the job.

49:20When they put the last Trump appointee in, he only just scraped through that approval last year. And so I think the markets probably think that this is weakening for Trump and that the US Federal Reserve is such a strong and established institution that it's bigger than Donald Trump and bigger than this White House. But on the other hand, you'd have to say, you know, if you're in the markets, if there's a political risk, it's a negative risk. And, you know, a year ago we were saying, why aren't the markets getting so worried about Trump's tariffs? When the actual tariffs were introduced in that White House press conference, the market reaction at that point was wild and unstable.

50:03So you don't rule out there being a moment in the coming weeks where this suddenly sparks into market discord. So far, I think that people think this is weakening for Trump rather than strengthening and strengthening for the Federal Reserve and power rather than weakening. And that's why so far this has not become a global economic crisis. But, you know, it is, I mean, as a piece of politics, it is wild. Yeah, I suspect the more important moment is going to come next week with the Supreme Court ruling on this FOMC Federal Open Market Committee member, Lisa Cook. Because if the court finds with the president, A, it will suggest that the Supreme Court really is sort of Trumpian or Trump stacked or Republican stacked, depending on how you describe it.

50:51And secondly, it has a real consequence because someone's off the committee and someone new will be appointed to the committee by the administration. And so that changes the voting weights. And there's also the Supreme Court ruling coming up, too, on whether the Trump tariffs are actually legal and whether it was acceptable for him to impose these himself. I think Congress, particularly in an election year, would be willing. The argument there is that Trump imposed the tariffs without going to Congress. No one says the United States can't impose its own tariffs. It's just that he did it without going to Congress.

51:23I think Congress, including Democrats, will be very nervous of saying no to Trump's tariffs on foreign goods. You know, personally. The technical phrase is fiscal dominance. If people conclude that the US Federal Reserve is setting interest rates not to meet the inflation target and to meet its mandate, but instead trying to do so to serve the interests of the White House and the fiscal policy of the American government to try and make it easier for them to borrow more, to try and reduce their borrowing costs. At that moment, there is an economic crisis because at that point, central bank independence is over and the central bank has become an arm of the state.

52:09I think at the moment, the markets don't believe that is what is happening. They believe that the Federal Reserve and Jay Powell are doing the right things by the inflation target and the wider needs of the economy. And I think they probably think that these events have strengthened the Federal Reserve's hand rather than weakened it. And if that is the case, then there'll be people within the White House saying who made this decision, because I'd be surprised if it was Donald Trump himself. Although, you know, he's clearly gone along with it. Yeah, maybe it was your mate down from Mor-a-Lago. Anyway, that's it for this week of Political Currency.

52:47Hope you enjoyed that. We're about to finish, but it's just come across my desk, George, that there has been a rather dramatic announcement from Kebby Badenoch. She is just, this is me reading from the BBC website at 11.30. Robert Jenrick has been sacked by the Conservatives for plotting to defect. Kebby Badenoch says she's been presented with clear and irrefutable evidence that Robert Jenrick was going to join reform, that he had a media plan all ready to go and a full speech. I think we can just play the clip she's just delivered to the media. Here it is. This morning, I removed the Conservative whip from Robert Jenrick after dismissing him from the shadow cabinet.

53:32I was very sorry to be presented with clear, irrefutable evidence, not just that he was preparing to defect, but he was planning to do so in the most damaging way possible to the Conservative Party and his shadow cabinet colleagues. It is my responsibility to protect our party. And faced with that information, I took the only decision that any responsible leader could. Because the British public are tired of political psychodrama. So am I. So Nadeem Sahawi defecting earlier in the week. It looks like Robert Jenrick was about to defect and Kemi Behnok has acted. Yeah, look, I think this story is pretty dramatic and it's very, very consequential for the Conservative Party and arguably for reform.

54:16These are my immediate thoughts. We're in the first phase of this story, which is Kemi Bainlock has sacked Robert Jenrick, and that looks like a position of strength from her. Indeed, we discussed on this podcast last year that he was so openly disloyal. I quite like Robert, but Kemi Bainlock had to do something. It was a traitor in plain sight. He was a traitor in plain sight. And, you know, a kind of act of strong leadership would have been to kick him out of the Shadow Cabinet. And as we discussed just before Christmas, actually, Kemi Benelok is in a stronger position, or at least was in a stronger position at the end of last year than she was at the beginning.

54:49So if she was just getting rid of Robert Jenrick because he's disloyal and undermining her leadership, then I think we would see this announcement as an act of a strong Tory leader, or a Tory leader becoming stronger. What we don't know is what's about to happen next, and it may happen over the next few hours. Nigel Farage says, I'm very surprised this news is breaking. Speaking from Scotland, he says, I don't reveal private conversations to anybody. I've spoken to a number of very senior Conservatives over the past few weeks. But I mean, who knows how this is going to develop? I mean, she may just have been trying to put the best possible gloss on what will otherwise be a very, very bad moment for the Conservative Party, which is that a serving member of the shadow cabinet, one of the candidates for the Tory leadership, most people's choice or the person most people think would be most likely to be the next leader of the Tory party, whether it's to be a contest, has decided that their political future is better served by being in reform.

55:45And we've had lots of defections to reform from former Tory MPs, including Nadim Zahawi, who I'm a friend of, but he's not an MP anymore. So we've only had one, I'm being polite here, somewhat eccentric Tory MP, Danny Kruger, who has defected. It's easy for ex-MPs to defect, but you and I know we're ex-MPs. If you're an ex-MP, you're not in the game. But for Robert Jenrick, he is a very senior Conservative. There is plenty of scenarios in which you could imagine him being a future leader of the Conservative Party, maybe a future Conservative Prime Minister. Is Kami Bain not forcing his hand or is her hand being forced because he'd already made this decision?

56:23I guess we'll see. You know, she's certainly saying she'd seen evidence he was about to defect. No, then that is the proper sort of beginning of the civil war inside the kind of right about who is going to lead the right and what are Tory MPs going to do? Are they going to defect to reform? Is the pressure going to grow to have an alliance with reform? Or are they going to say, look, the generics of this world can leave, but we think the future lies with the Tory party. And, you know, there are parallels through history. There are times when parties have split in the 19th century. You know, Robert Peel, the Conservative Prime Minister, left the Conservative Party.

56:58That was a huge moment. The SDP, very senior people. There'd been chance exchequer and foreign secretary in the Labour government left. but you know what history tells you is that when that starts to happen to a party and that's true in both of those historical cases they are out of power for a very long period of time because the vote is split you know and people look at them and say well they can't run themselves how can they run the country so it's a proper crisis and at the moment it looks like kemi bane not being strong and you know i kind of applaud the way she presents herself there and i think she's got a good argument about psychodrama but if she thinks the psychodrama is over i'm afraid it's just beginning if she is right that this is what he was planning to do intending to do and it's hard to believe that she would have done this unless she had the evidence the one thing it does is it takes away from within the conservative party the one person who was her biggest um challenger at the moment robert jenrich does it buy her some space at a time when some people She was doing better.

57:59Yeah, but although some people say also the most effective communicator. Yes, but I think... But he's not going to challenge her as leader of the Conservative Party when he's not got the whip. He couldn't challenge... In fact, her stock was rising. The problem is now, as I say, someone who you could say had a pretty good chance of being Tory leader, better chance than any other Tory MP other than Kemi Batenauk, they've decided, and I don't think anyone says Robert Jennerick is anything other than very ambitious and wants to be the Prime Minister of this country, he has decided it's in his best interest to join the reform party to make that happen and that's his calculation the calculation may be wrong but there'll be a lot of people thinking how did he reach that calculation i was asking michael gove on good morning britain a couple of days ago about the zahawi defection and saying the one thing which is interesting about farage so far is he's shown no appetite for starting to structure reform to be ready for government he doesn't have a shadow chancellor, a shadow foreign secretary.

58:57It's a one-person band, really, although I'm sure MZ Youssef and Richard Tice would disagree with that. And I was asking Michael whether Nadeem Zahawi, is he going to be Nigel Farage's chancellor of the Exchequer if the reform went into government? Presumably, if Robert Jenrick is defecting and he is joining the reform party, he is a rather the stronger candidate to be the shadow chancellor and the next chancellor for reform than the guy Zahawi who was booted out. Well, for a start, Nadhim is not an MP. You know, now they do have two Tory MPs who have defected. I guess, you know, if you're looking for a sort of silver lining, you'd be like, well, thank God that guy's out of my hair.

59:39And if you're Nigel Farage, suddenly, you know, I don't think anyone thinks Richard Tice is going to bat the challenge Farage for the leadership of uh but you know they do now have a credible alternate leader in reform if he goes to reform we don't know we're recording this before all of this news has played out but i have to put you on the spot because we all remember the discussions of the um the secret george osborne lunch with um robert jenrich last year who else was at that david cameron did david cameron and george osborne advise robert jenrich to stay in the conservative party and fight for the future Yeah, absolutely.

1:00:14And did you have any wind of the fact that he was about to jump? No, I didn't know. So you've not said to him, go on. If you were playing it purely for maximum personal ambition, you didn't care about anything else, which is not how you should conduct your politics. If I was him, I would have waited just to see how things play out because you can make this move in a couple of years' time, couldn't you? I was watching The Traitors last night and we've had two faithfuls in the last week got frustrated. Well, don't reveal. And played their hands too early. And, you know, oh, I see. Am I revealing that?

1:00:46What I'm saying is, OK. We can't give a spoiler alert or generic a bain lot because we don't know what's going to happen. Let me make a more generic point. In order to win the traitors, you probably have to bide your time and not go too early. Look, it's 11.41. And this story is going to unfold over the course of the day. And we'll be returning to this next week on our podcast. But at least we had the opportunity to discuss it at the end of what's been rather a full show. and we will be back with ex-minister's questions on Monday. Yeah, and as a Kitchen Cabinet member, you can also get early access to that as well as access to our live recordings, our fortnightly newsletter, our members only chat and your own political currency mug.

1:01:24Where are our mugs? Where's the mug thief? We've had a defection. Our mugs have defected from us. And our newsletter, by the way, is also moving to Mondays if you're wondering why you haven't got it. So you're going to receive your first edition of that next week. See you then. See you then.

1:01:47Thanks for listening to Political Currency. This has been a Persephoneca production.