Week from Hell for Reeves and Starmer

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1:54Ed Balls: This is Political Codency

1:55George Osborne: with Ed Balls and George Osborne.

2:07Ed Balls: So we are back Thursday morning. We're remote. It's a hot and sunny day. They're not as baking as earlier in the week.

2:14George Osborne: And not as hot as it's going to be at the Water Rats later on. This venue to see Oasis and Bob Dylan, not Bob Villain, Bob Dylan. We are going to have your band, aren't we, later tonight? I mean, that is like, it's a momentous week in British politics because you're back on stage.

2:35Ed Balls: We are for Action for Stammering Children, Speakers for Schools, Robert Peston Singing, John Wilson, Chris Taylor, Roland Water, and me. I'm playing the drums. And our set includes, we've got new songs, The Eurythmics, Sweet Dreams, The Kids Are All Right, The Who. You're not kids anymore. We have I Love It by Charlie XCX. I still think you should be playing Guess.

2:57George Osborne: There is a Light to Smith's, Boys Don't Cry. Well, we're going to be coming on to that in the program. Lines you up. Right. Okay, it's going to be very exciting. I'm full of awe that you... Are you coming? I'm going to hope to come, actually. I said I was going to put an appearance at the spectator party, and then I might end up at King's Cross watching you.

3:20Ed Balls: Look, people remember your dancing film last time.

3:23George Osborne: For the right reasons or the wrong reasons?

3:25Ed Balls: They just remember. That's all I'm going to say. I know they loved it. Your enthusiasm was infectious. Let's get on with the podcast.

3:32George Osborne: Yes. So, look, obviously, we've got a lot to talk about. particularly this week in British politics those very very hard to watch scenes of Chancellor Rachel Reeves crying in the House of Commons yesterday during PMQs but we're going to take a bigger view of what does this mean for the government's economic policy the retreat on welfare what does it mean that the bond market is spooked when they think that the Chancellor may not survive in her office these are very very big questions for the Starmer government and for the rest of the country and we're going to delve into that. And then we are about to have the first

4:08Ed Balls: state visit of the French president since 2008. Emmanuel Macron and his wife Brigitte are going to be here in the UK at the beginning of next week. We're going to look at the state of Franco-British relations. We're going to ask, is this Macron's last state visit or, you know, could there be

4:26George Osborne: another? And then we are going to take the opportunity of this being, or at least tomorrow being the anniversary of the general election last year and therefore Labour's first year in office to take a look at Keir Starmer and how he is doing as Prime Minister and reflect on what's gone right for him and what's gone wrong.

4:47Ed Balls: But we're going to start with what has been a tumultuous, I think it's fair to say, torrid week for the government in Parliament. A week ago on this podcast, it was pretty clear a U-turn was coming, I said at least, that to U-turn on the bill, cobble together something at the last minute was risky, better to pull it and then come back with a more considered position later on. And the government didn't take that advice. And they did U-turn after U-turn over the course of a week, which ended up in yesterday's dramatic Prime Minister's questions where, as you said, Rachel Reeves was in tears in the chamber as Kemi Badenok was questioning Keir Starmer.

5:31Ed Balls: We now know that there was a personal event happening in her life, unconnected to politics. But as we all know, these moments, those images at a time when the government and the Chancellor are under a lot of pressure, those images go around the world. Let's remind ourselves of the week we've just seen. So we will now ensure the new four-point requirement will only apply to new claims from November 2026. This means no existing claimants will lose PIP because of the changes brought forward in this bill. So it is with a heavy, broken heart that I will be voting against this bill. This is crazy, man.

6:14Ed Balls: This is outrageous, man. This bill isn't fit for purpose. We are going to remove the Clause 5 from the bill at committee, but we will move straight to the wider review, sometimes referred to as the Tim's review.

6:33George Osborne: By all accounts, this is chaos. Why are you getting it so wrong? Luke, as my colleague, the Working Pensions Secretary, said last night, I wish we'd reached this conclusion in a different way. She is a human shield for his incompetence. In January, in January, he said that she would be imposed till the next election. Will she really? Prime Minister, she certainly won't. So that was a medley, wasn't it, of Liz Kendall making the first of the U-turns at the beginning of the week, or reporting to Parliament on the U-turn that future claimants only would be affected by changes to disability benefits.

7:17George Osborne: Then we had some emotive Labour MPs speaking in the chamber. And then you had Stephen Timms, the welfare minister, junior minister, but much respected in Parliament. announcing the U-turn. Then you had Kemi Badenoch...

7:32Ed Balls: Doing a U-turn on the U-turn.

7:33George Osborne: Doing a U-turn on U-turn, but not ending up in the same position. No. Then you had Pat McFadden, who, by the way, people are saying may be a future Chancellor of Exchequer, but is currently Chancellor of the Duchy of Lancaster, trying to defend the government's position. And then you had Kemi Badenoch at Prime Minister's Questions asking about Rachel Reeves' future. And Keir Starmer not really understanding that Rachel Reeves was in tears next to him, which everyone else could see, because I guess he couldn't see what was going on next to him because he was standing up in the dispatch box and trying a kind of lame joke about Kimmy Baden-Ock.

8:06George Osborne: So I would say a pretty disastrous, I would say perhaps the worst week of the 52 weeks we've had of this Labour government because it's a mixture, isn't it, about the future of key people in the government, the Chancellor's Exchequer, tied into the overall economic credibility of the government. So we've had big movements in the last 24 hours in guilt and the value of the pound, reflecting what international markets feel about the government's position, all tied to terrible parliamentary scenes where a government with a big majority lost control. And I guess an overall feeling that domestically, at least, the government's adrift.

8:48George Osborne: Would you agree with the characterization this has been the worst week of the Labour government?

8:53Ed Balls: I think it's been the worst week of the Labour government. I think it's been the worst week for Labour governments for a long time. A year ago, Rachel Reeves in Parliament was announcing immediate action she was taking to close what she called a£22 billion black hole, which she said she'd inherited from the Conservatives, including taking away the winter fuel allowance for most pensioners. Well, there was a U-turn on the winter fuel allowance after months of pain and pressure from backbenchers and more widely. the consequence economically in budget terms of this massive u-turn on tuesday is that there is now a five billion pound plus black hole which is caused by u-turns which she's now got to deal with in her budget in the the the autumn but more than that you saw on tuesday the deputy prime minister angela rayner and the work and pension secretary liz kendall with the chief whip meeting backbenchers saying, what do we need to give you to stop you rebelling against our legislation?

9:56Ed Balls: Essentially negotiating away clauses in the bill, which had a direct fiscal cost for the Treasury, clearly changes which the Treasury had been resisting for days before. So it's a huge blow to the Exchequer. But then also for the Prime Minister, he had said a week ago, it is essential that we carry on with these vital reforms to the welfare state to control costs and make it fit for purpose. And within a few days, because of political pressure in Parliament, pretty much the whole bill was removed. And so the next time the Prime Minister says we must take big long-term decisions for the future, backbenchers will say, well, that's what you said to us last time.

10:39Ed Balls: And I think we always think it's important to reflect upon these moments. There were rebels who will be upset that they had to rebel. There'll be cabinet ministers, not least Liz Kendall, who clearly said to Rachel Reeves and Keir Starmer back in March, don't do it this way. Don't announce a welfare reform where you lead with the scale of the savings you're going to make, because it will all unravel. And she was put out there to defend a position she was very worried about. She wasn't listened to. And she and the government pay a big cost for that. But you've also got all those Labour MPs who supported the reform, who wanted to support the leadership, but actually also thought these reforms were important, who went out to back the Prime Minister and the Chancellor, and then saw the reforms they supported withdrawn at the last minute in Parliament on the Tuesday.

11:28Ed Balls: And they'll think, well, hang on a sec, we were supporting you, and where were you?

11:33George Osborne: Let's start with, what is the political significance of Rachel Reeves' breakdown in Prime Minister's questions? I think it has been generally accepted across the political spectrum that there, the explanation that there's some personal issue, which quite understandably she doesn't want to talk about. But of course, a chance the exchequer is also a very public figure. And the fact that as she was crying in the parliament the markets were moving shows that you don't have and it's of course a brutally unfair thing about politics that you don't just don't have that sort of personal space when you have issues uh that you can't you can't hide away from what's going on and what do you what do we think now about that imagery there's a lot of a lot of personal sympathy which i certainly feel towards Rachel.

12:26George Osborne: But what does it say about the government? Is this going to be an image that is going to stick with the government?

12:33Ed Balls: Well, of course, and that is just the unfair nature of politics. It's an image which goes around the world and is on the front page of every newspaper today. There's clearly something personal, which is hugely upsetting. And as you say, for which everybody feels kind of sympathy and worry. That's not been explained. But maybe, I mean Rachel Weaver is a human being and she has a right to a private life and she has a right not to explain personally difficult things which are going on but of course that happened alongside first of all we know a row with the Speaker of the Commons going into Prime Minister's questions just before about Treasury questions on Monday where he had said in Parliament on Monday her answers were too long she had sort of rebuffed him in the chamber he clearly was very critical of her to her face just before PMQs, which was also very upsetting to her.

13:24Ed Balls: But more widely, as I said, Tuesday was a humiliation for the Treasury in terms of reforms that they said were vital for their budgeting being essentially ditched by No. 10 Downing Street, the Prime Minister, and the Deputy Prime Minister against clearly the wishes of the Treasury. So the problem in politics, when you have these moments of imagery, however unfair it is, it becomes attached to events of the day. So if you think of Rishi Sunak calling the election and being soaked in the rain, that image captured a sense of a beleaguered and bedraggled Prime Minister. Margaret Thatcher, with her tears in the back of her car leaving Parliament in 1990, captured that sense of regret that she had been thrown out.

14:14Ed Balls: Think about Ed Miliband's bacon sandwich, which very unfairly became an image of a guy who wasn't quite comfortable in his skin in the job. That's how it was seen. And so look, there's no doubt the bottom...

14:26George Osborne: John Major with his head in his hands. He was actually just looking down at his notes, but it became the kind of image of a beleaguered government, didn't it?

14:33Ed Balls: Exactly. And the thing in politics is you can't really complain about that. John Major may say, I was trying to compose some rhymes for a joke in my speech, but head in his hands was on the front page of the newspapers because it captured a sense of the state of the government. And so however unfair it is, and however separate the event is, which was upsetting Rachel Reeves, the bond markets interpreted the last week as a blow to the credibility of the Treasury. And when the Chancellor looked like she was reacting to that and the Prime Minister wasn't supporting her in her job, then the markets went into turmoil.

15:08Ed Balls: And that picture, I don't think there'll ever be an escape from it. Of course, look, the world moves on and Rachel Reeves will bounce back and she's a strong person and she's in the job and she'll be out and about like today, I hope. But that image is powerful, not because it was somebody crying. It was because it was a metaphor for the government, wasn't it? Exactly. It captured how people saw the treasury in the government in these days.

15:32George Osborne: So we won't do too much of like, how do we get into this mess? Because we went through this on the podcast last week. We did. And you were very clear, you know, as you said, pull the bill, or at least if you're going to do a full U-turn, and then, you know, they made a complete mess of it. The Prime Minister says this morning, he's going to reflect on what has gone wrong. Let's come on to the kind of really hard choice about the economics in a moment. But before we do that, just on the kind of handling of the Labour Parliamentary Party. I mean, this is a big majority historically, way bigger than the Cameron-Clegg coalition or the Boris Johnson government, bigger than the Blair-Brown last Labour Parliament.

16:14George Osborne: You know, how is it that they're not able to get things through with a majority of 165? Is it all about parliamentary handling and the disconnect between the chief whip and the Treasury and number 10? And is it kind of internal wiring or is it that the nature of politics has fundamentally changed, that these MPs feel under a lot more direct pressure because of things like social media, that the kind of camaraderie of a parliamentary party doesn't exist in the same way it used to? It's quite odd for a government with such a big majority to be struggling.

16:48Ed Balls: I think it's partly to do with the way they went about the reform. to say that we've made this choice to take away the winter allowance or to take away personal independence payments even though we don't want to because we have to because we need to make cuts because the moment you frame it in that way and that's what Liz Kendall I think warned against and certainly we did at the time of the spring statement but that is how Rachel Rees and Keir Starner characterises this then the question immediately arises well why are you making that choice why poorer pensioners or the disabled rather than other groups who could instead bear the burden and I think that they didn't go after the deeper principal argument for long-term reform they allowed it to be seen as a treasury imposed cuts agenda so there's something about the way they went after the reforms and by the way I think the content of the reforms because I don't think they should have taken the winter allowance away from poorer pensioners and I don't think that they should have gone after personal independence payments in the way in which they did there were other ways to do these reforms more consistent with their principles but then it's also about the political handling and you know it's not that they weren't warned and when Keir Starmer says that he was busy until the last minute when he focused I'm afraid if you're prime minister and you're the chancellor you have to be listening to the politics and listening to colleagues listening to um in this case the secretary of state for work and pensions at a much earlier stage rather than assuming you can plough on because you're in charge until late in the day when suddenly number 10 panics and imposes a u-turn think back to the um blair or brown years which i saw very close up prime minister tony blair had senior backbenchers as parliamentary private secretaries bruce grocott or david hansen who were in the room with him not just for pmq's preparations but very many of their meetings with that eyes and ears about how parliament will react in the brown years uh and keen advising soon i the political operation about what was happening in parliament ian austin angela smith who became the leader in the lords and i just feel as though the political operations in downing street and the treasury have become disconnected from what's going on more widely in parliament.

19:03Ed Balls: And they only seem to face up to the fact that they're not going to get things through or there's going to be a huge backlash too late in the day. And either that means they haven't got the right people telling them there's a problem or that when they're told, they're not listening. And if you don't listen until it's too late, you end up in huge messes.

19:23George Osborne: I think it's, isn't it, partly that they had a very successful election a year ago, But fundamentally, you know, they got quite a small share of the vote. The right was split. And Keir Starmer looked like a credible alternative, but hadn't really sketched out a plan for what the economic policy and vision and domestic policy of the government would be. There's not a sort of guiding principle that enables them to align individual decisions around. And I think it is fair to say, and a lot of people would say this is a good thing, but it certainly produces its challenges, that Keir Starmer is himself not very political.

19:57George Osborne: He actually makes often a point of this. I'm not a career politician. You know, I came to this late. He's one of the oldest elected prime ministers we've ever had elected for the first time and prime ministers we've ever had. And so he doesn't exude like I'm I'm completely political. I'm on this the whole time. Hence, he says things like, oh, I'm sorry, I was a bit distracted. I was doing things internationally. And there wouldn't have been an ex-prime minister in the country listening to that or anyone who worked for an ex-prime minister say, not screaming like that is the job, mate. I mean, that is things are coming at you all the time.

20:29George Osborne: And managing that is the key skill. What about this? Because there's so much we could talk about. But the key choice, it seems to me, and, you know, you have warned about this. You actually warned about this before the general election on this podcast. You know, they made two big commitments, the Labour Party, at the election. The first was that there would be these fiscal rules, which although they've been fiddled a little bit, fundamentally the government have held to. And second, they ruled out a lot of tax rises by saying there wouldn't be tax rises on working people and there wouldn't be increases in capital taxes.

21:06George Osborne: Now, of course, that didn't mean they didn't then go and increase national insurance on business. But fundamentally, they're quite constrained by those commitments. And I think the key thing that has been revealed over the last week, although some people saw it coming, was that they also don't have the capacity to make serious reductions in public expenditure, particularly welfare. I mean, no one is going to believe anything they say now in the future about cutting or constraining welfare. The idea there's going to be some Tim's review and some future change to PIP, personal independence. Forget it.

21:40So they are now held in this straitjacket.

21:43George Osborne: That's what the market is reacting to. Do they either break their fiscal rules or do they raise taxes? Because what they can't do, the third thing, which is run a Labour government on essentially a constrained public expenditure plan. And which one of those two gives?

22:05Ed Balls: Well, it is going to be a very painful few months now, because last year we had the July statement about the Tory black hole and all those months of speculation up to the tax rises in the autumn budget. Now we've got a winter fuel allowance, welfare reform, slower growth black hole, which is going to lead to lots of speculation between now and the budget. I'm not sure they've got any option. I don't think they're going to do an emergency statement. There's going to be months of this speculation. I think there is no way now that any Labour Chancellor can move on these fiscal rules. Just look at the market reaction yesterday.

22:41Ed Balls: There was an opportunity to do so earlier in the year alongside the Germans in a concerted move about defence. I think that is now gone. As you say, there is no way they're going to get any savings from welfare reform easily in this parliament because all the savings they were aiming for have been wiped out by this week's U-turn. And there's no way the Tim's Review is going to be proposing big cuts in welfare spending in the final year of the Parliament. Rachel Reeves could seek to reopen the spending review she's just completed, but those spending review settlements are already very tight for many departments.

23:15Ed Balls: Even the Health Service, publishing its 10-year plan today, has health spending rising below the historic average. the pressure on public spending is going to be upwards rather than downwards for departments. So it's very hard to see public spending sorting things out. So she can't change the fiscal rules. She can't cut non-departmental spending and she can't cut departmental spending further. The only move is going to be now on taxation. And they've got a choice. Either they're going to have to say the world has changed and therefore we have to go back on some of our tax promises. it would have been possible to do that i think before the end of last year we've opened the books now because it's the consequence of their u-turns much harder to do that they're going to be scrabbling around looking for billions of pounds in tax revenue which doesn't break the manifesto very hard to do the other thing just to throw into this pot oh no but let me just pick up

24:10George Osborne: because i think you've made a really good and interesting observation which is from you i think something a new observation which is they can't actually now ditch these fiscal rules because earlier in the year you were saying you could use things like the trump uh presidency and the tariff war or the renewed risk of uh conflict in the world and the increase in defense spending to to basically break out of the fiscal rules but you're now saying if you look at what happened yesterday so for those who didn't see it the you know the guilt market and the pound slumped interest rates went up in britain it was very similar to the kind of liz trust moment but it was quite quickly contained when keir starmer eventually came in later in the day to say racial reasons safe in her job you know that shows the labour government the cost of now seriously breaching or changing the fiscal rules there may be adjustments you can make at the margin so you're saying now it's got to be tax rises i don't think there's now any choice i mean

25:11Ed Balls: it may be growth will turn out to be stronger, but all the pressure seems to be downwards on the OBR in terms of their growth forecasts, which drive tax revenues. Look, I was the person who wrote Labour's fiscal rules in 1995, two years before the 1997 election. I'm a firm believer in them. And I think that you can write them in a way which allows you to have flexibility to the economic cycle, to public investment. And I think there was some flexibility around defence earlier in the year, that is gone. There is no way now this administration can do a further shift in the fiscal rules without paying a huge cost in terms of debt interest.

25:48Ed Balls: They can't do stuff on spending and welfare where tax is going to be the only thing which they will be able to give on. The other thing just to throw into this pot, George, because we've talked about this before, you've also got a few weeks ago Keir Starmer was opening the door to a move on the two-child policy in payments to children. Hugely controversial. Controversial goes back deep into the folklore for Labour. I was contacted by Harriet Harman, who said, she said, you weren't factually correct, she said, when you said in your podcast last week that in 2015, I advocated supporting George Osborne's reforms.

26:20Ed Balls: Actually, I called for Labour to abstain against people who wanted people to vote against. But of course, at that time, the abstention was seen as de facto support. The thing which was really controversial in those days, though, was Harriet saying that Labour should support the two-child cap that you were proposing. And very controversial, opposed by the other leadership candidates, firmly by Jamie Corvin. Those things kind of go into the collective memory. But, you know, how does Labour, how does Keir Starmer now find some room for manoeuvre to stop child poverty rising when he's got this huge black hole in front of him?

26:59Ed Balls: We were talking the other week, I think you said to me, would you do Sure Start or the two-child policy? And of course, I'd say I'd rather do both. And I think for the long term, Sure Start has huge impact. But right now...

27:09George Osborne: You can't do either.

27:10Ed Balls: Well, if I could, I would go from two to three children. How is this Treasury going to find the money to close this hole and move? But that's going to be very unpopular with the very same backbenchers who caused carnage for Keir Star on Tuesday. So it's a huge dilemma for them.

27:25George Osborne: I mean, the tax rise, five billion pounds of tax increases, it's not that impossible to find. I mean, you can freeze the income tax threshold. I mean, that's what I would do in her situation.

27:35Ed Balls: But the National Institute say that the growth slowdown, aside from any other measures, could be billions and billions more than that 10, 20 billion pounds a year.

27:45George Osborne: No, no, you're actually anticipating my point. I think you can fill the black hole by freezing income tax thresholds, which is also what Rishi Sunak did for year-off, year-off, year. Yeah, so it makes it very difficult for the consumer.

27:55Ed Balls: Although that is a tax rise on working people.

27:56George Osborne: It is absolutely a tax rise on working people.

27:58Ed Balls: That is a manifesto breach.

28:00George Osborne: It's a classic stealth tax. Yeah. And I thought they made too much in the budget of saying they weren't going to carry on freezing income tax thresholds. So it's quite easy money. But as you say, the problem is the deteriorating economy puts the whole fiscal rules in doubt. Just sort of final point. I guess you could use the getting rid of your chance, the exchequer, as a moment to change the fiscal rules. It's very hard to see how Rachel Reeves could survive as Chancellor with new fiscal rules, because so much of her credibility is tied up with it. But it has to be said that, you know, Keir Starmer has overnight said he is absolutely committed to our fiscal rules.

28:38George Osborne: So do you think, you know, what some people are speculating is that, you know, he will get rid of Rachel Reeves, but use that as a moment to ditch the fiscal rules. I mean, we would generally say that there may be a reason that you want a different chancellor. But if it's to save your bacon as prime minister, that normally has not worked in history. There are almost no examples that I can think of, of prime ministers who fire chancellors and think that they're out of the woods. Because fundamentally, they're first lord of the treasury and they signed up to all these decisions.

29:11Ed Balls: That's true. And in the end, when Margaret Thatcher de facto allowed the removal, the resignation of Nigel Lawson, provoked by her, she went a year later. When Boris Johnson presided over the forcing out of Sajid Javid as Chancellor, it was in the end Sajid Javid, along with Rishi Sunak, who plunged the knife into Boris Johnson a couple of years later as well.

29:35George Osborne: I mean, Liz Truss survived only about a week after firing her Chancellor, Kwasi Kwarteng.

29:40Ed Balls: another very relevant answer here. And Keir Starmer and his people may be asking themselves, were we on top of what the Treasury was doing on the winter allowance or on the disability reformers back in the spring statement? And should we have been more engaged in the detail and the politics? But the reality is Keir Starmer is so implicated in all of these decisions and has defended them so hard, while, by the way, then doing last minute U-turns, which he imposes on the treasury very hard for him i think to just sack the chancellor and um and then from that i think he's you know in one bound clear and the idea that that doing that would give him room for maneuver on moving the fiscal rules i just think that is completely for the birds the thing which liz trusted was bring back in jeremy hunt to tighten her approach to fiscal policy rather than the other way around to tighten the importance of the obr rather than the other way around that any solution to this has to come from Keir Starmer and Rachel Reeves sitting down and asking themselves what have we got wrong?

30:45Ed Balls: How have we ended up in such a mess? How have we ended up with the Treasury and number 10 not functioning together in moments of crisis and working out what their collective plan is? And that's a tough one for both of them. And I'm not quite sure where it takes you in terms of what you actually do. But I think people saying to Keir Starmer, in one bound you're free if you sack Rachel Reeves, I don't think that works at all for him.

31:09George Osborne: No, well, I agree with that. Although I think it is an open question of whether she's going to be Labour's chance exchequer at the next general election now. So listen, that's going to be the ongoing topic of conversation for the rest of this year, and maybe in the years ahead. We're going to turn to what's happening next week. I don't know if you're sitting in number 10. Are you relieved that President Macron is coming on a big state visit with lots of flummery and marching bands and, you know, elaborate banquets? Or are you thinking, oh God, that is going to tell up hours and hours of our time when we need to be focusing on our domestic problems.

31:45George Osborne: We are going to discuss that next.

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34:09George Osborne: Welcome back. So President Emmanuel Macron is coming for his first state visit to Britain. He's been president for quite a few years now, but this is the first time he's coming in an official capacity as the president of France to be welcomed by our head of state, King Charles. This is in fact the return match because King Charles went to France in 2023 on a state visit and became the first British monarch to address the French Senate. And this is what he said there. This is my 35th official visit to France. Each and every time I have been struck by the warmth of the welcome I have always received.

34:50In the rich and complex tapestry of the relationship between France and the Kingdom, the gold that represented my mother will always shine.

35:05George Osborne: What's he saying there, Ed?

35:07Ed Balls: It was in French. But I mean, I thought it was very moving, actually. He was very proud to represent his mother. What about Le Complex Tapestry? What do you think that is? I think he was talking about the French love of tapestries, which are quite complex. Having been to see the Bayeux tapestry, may I say, I love a French tapestry.

35:28George Osborne: It's quite interesting to say, isn't it? I'm going to ask you a very mean question, which I have not given you any pre-warning of, which is, who is the president of Germany? No idea. Right. I just looked it up, to be fair. So it is Frank Walter Steinmeier. Steinmeier? Yeah, the reason I say that is... Oh, really?

35:49Ed Balls: How interesting. Oh, Steinmeier.

35:53George Osborne: There's Chancellor Friedrich Mertz. He is the head of government, a bit like the British Prime Minister. But the head of state in Germany is Steinmeier. Now, the reason why these state visits are odd is quite often the person coming on the state visit is not by any means the person running the country. But often they are. And when they are, then the state visits are important. There's a lot of ceremony around them. They've been, you know, going on for hundreds of years. But when you get the president of France or the president of the United States, you are also getting, of course, the key decision maker.

36:25George Osborne: And I think the fact that this is the first time that Macron has come, despite being president for, what is it, like eight years or something, it speaks for itself that, you know, it wasn't possible to invite Macron before. Macron didn't want to come before because of the complex relationships with those Tory governments over Brexit. And in fact, people in the kind of Brexity bit of the Tory party think that Macron was not a friend. But in this visit, there will be moments of kind of grandeur, but there's quite a lot of politics to be done, isn't it? And I'm going to suggest to you that the single most important thing, other than what we've just been talking about on the economy, which is very important, that this Starmer government has to sort out is the small boats crossings from France.

37:16George Osborne: I mean, that is proving a real problem, as it did for Rishi Sunak and the Conservative Prime Ministers before him. But those crossings are up, aren't they? They are up 48 % this year or last year, 75 % on the year before. That's 20 ,000 people almost who's come. And they're coming from northern France. And so the Starmer government has got to conclude a deal with the French government on this, because it's an open saw that reform can exploit. And I think amongst all the kind of state banquets, that's got to be the substance of this visit, the political substance of this visit.

37:56Ed Balls: I think that is right from the British government's point of view, not necessarily from the French president's point of view. although clearly he will want to do things if he can, which are work in the interest of the British government in the hope of getting something in return. And the British government desperately needs the French to do more. They've said they are going to change the law in order to allow the French border force to go into the sea to apprehend people getting into boats. These taxi boats are coming down in the warm weather from other places and then filling up in the ocean, which up to now the French have been unable to tackle because they can't go into the water operationally.

38:34Ed Balls: operationally but the speculation in the newspapers matt dathan from the times had a good piece on this a day or so ago that there is also discussions going on between the home office and their counterparts in france around an agreement on returns on the ability of the french to send certain categories of people to the uk if there's family ties and vice versa to increase the sense of deterrence to the boats just being able to come and people being able to stay i got in touch with a old friend of this podcast, Sophie Pedder, who is the Paris editor of The Economist. She wrote the book, Revolution Francaise, Emmanuel Macron and the Quest to Reinvent a Nation.

39:15Ed Balls: She wrote that book when things were going a bit better for Macron. He's had a bit of a tougher time since. And I asked her about the state visit. And she said the French love the royals.

39:24George Osborne: I thought they chopped their heads off the royals. She said the French love the royals. Oh, their own royals, not ours. They love ours.

39:29Ed Balls: Exactly. They got rid of theirs. They love ours. Small boats is a total non-subject in France. It doesn't mean that Macron can't give something easier if it's a non-subject. Battling the UK actually doesn't give him any domestic gain anymore. It's all about internal French politics. She said for him, the big question is now binding the UK into the wider European security operation and deepening defence security cooperation bilaterally between Britain and France. there was a Lancaster House agreement 15 years ago, and it's a bit out of date, needs to be revamped and revitalised. And I said to her, well, is that actually about Britain's membership of the European Union?

40:11Ed Balls: And she said, no, actually, it's less about institutions and more about wider Europe. The Macron in his later period now thinks about Europe, not really in terms of the institutions of the EU, but broader European defence and cooperation.

40:25George Osborne: That's very encouraging, I would

40:26Ed Balls: Very encouraging. And I then said to her, you know, a final thing. I said, you know, he's almost at the end of his time. What does he want? What's his game plan? What's he looking to achieve in his career? Because, you know, he's still very young, but he's about to time out. And she said, look, the French constitution only bans two consecutive terms. Nobody's ever done three. But in 2032, he'll only be 54. So her theory is he needs a five-year project before he comes back to campaign for the third Macron term as French president. Historically unprecedented and therefore being the sort of the great uniting European as the Americans withdraw from Europeans' defense.

41:11Ed Balls: being the sort of, you know, the European leader. And of course, the French like a returner, or at least French politicians like to believe they do. They like a Napoleon. They like a Giscard d 'Estaing, who came back to lead the European... Or Charles de Gaulle, famously. Of course, Charles de Gaulle.

41:23George Osborne: In his house in Columne Les Deux Églises, which I visited, you know, he was waiting for the callback and he got it. Yes.

41:29Ed Balls: So Sophie Pedder's view is, Macron will be waiting for the callback to be a president for the third time in 2032. And in the meantime, the other thing she said, which was really interesting, she said that he thinks Starmer, is somebody that he can definitely do business with yeah he's somebody who's good to work with which is really interesting he thinks he can get a lot done with stamm as you said yeah i mean um

41:51George Osborne: i've heard also that theory that he can run for a third term after a gap and i definitely think his kind of impact in europe is not going to end when he ceased to be the president in about two years time and he probably will have a big european role potentially as well and i think he's you During his presidency, France has emerged as the kind of clear political leader of Europe, whereas when I was in office, it was Germany under Angela Merkel was the clear political leader in Europe. And the fact that the boat crossing is not a big issue in France, as you say, means that he can grant concessions.

42:25George Osborne: And I think that the French can extract a very high price from Britain because it's so important. You know, it, as I say, did such damage to the Conservative government. It will do damage to this Labour government if they don't solve it. And this visit, whether it's resolved at this visit or not, it's the central issue. Second is deepening the trade ties, which obviously they started with. The Stama government did with the EU deal earlier this year. I want to know what you're going to look like dressed up as a penguin.

42:56Ed Balls: Well, this is where I need advice, George, because I'm actually going to Windsor next Tuesday to the state banquet with President Macron and the King. What are you going to wear? I've never been to one of these state banquets before. I managed to avoid it for the last 25 years. You mean you haven't been invited for 25 years? Okay, no, you are right, actually. It's true, I've never been invited. I've been to very many Privy Council meetings and very many meetings with the monarch and the Prince of Wales, but I've never had to go to a state banquet. And you have to wear a white tie. mate never I've had to rent it I've never done this before but George you know we all know from past photographs that you I mean if you were a bit fatter I'd have borrowed yours but I mean you know all about wearing white tie don't you you are gonna love it you're drinking champagne do I have to jump on the table at the end of the meal no that was that was a different gathering

43:52George Osborne: I was at no uh I tell you what you are gonna love it it's so grand I mean I went to I was lucky enough as chancellor to go to the equivalent of these banquets in in all sorts of places including paris and washington and beijing and new delhi and so there is nothing like the british state banquet it is so grand it's just a sight to behold really and it's actually quite enjoyable as a result and um the one story i will tell from one of the state bankers i went to was when President Obama came and he's at Buckingham Palace. And these things go on late. You'd think they all finish early. They don't.

44:32George Osborne: It's like it was kind of getting close to midnight. Everyone had the dinner. Everyone was standing around having drinks. And Obama's there looking like a film star in his white tie, like a kind of Hollywood idol with his coterie. They're all having a good time. And the Queen came up to me and said, Chancellor, will you tell the President it's time to go to bed? I was like, yes, Your Majesty. And I just looked over thinking, what am I supposed to do? Am I supposed to go up and tell the guy the Queen says it's bedtime? And thankfully at that moment, the excellent private secretary of the Queen stepped in and said, Chancellor, we heard what Her Majesty asked you.

45:16George Osborne: Don't worry, the situation is in hand.

45:18Ed Balls: you don't need to do anything look i bet you and david cameron in your white tie grabbed the president and said let's go on to the after party we can have breakfast on a punt at dawn

45:28George Osborne: i think obama would have been up for that kind of thing he was um definitely he enjoyed his late nights anyway i think you're going to enjoy it you can report back in as much as you're allowed to on this podcast as what goes on at the uh state banquet and i think the reason we've brought it into this show is not just to talk about these funny stories because of course there's such a contrast, isn't there, between Keir Starmer's challenges domestically and the mess he is in domestically and his deft hand on the international stage and the fact that this state visit from the French president is part of a pretty coherent policy from the British government of engaging in Europe and engaging with the United States and engaging with the world.

46:08George Osborne: And we're going to use in the final part of this podcast the opportunity of the first anniversary of this Labour government to talk about that contrast and how Keir Starmer might bring the lessons from the foreign stage to the domestic arena.

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48:08George Osborne: So, tomorrow, the 4th of July, is the first anniversary of the general election last year. That saw Labour win that big majority. And a day later, the 5th of July, Keir Starmer became our Prime Minister. It's been a pretty rollercoaster year. And what we're going to focus on is how Keir Starmer has himself talked about the job and how he's taken to the role of Prime Minister and get some reflections on what he needs to do in the next three or four years that he's got in this parliament. Here's his personal reflections on his time as prime minister over the last year. Are you too boring to be the next prime minister?

48:51George Osborne: The only thing that's boring is opposition. That's what's boring. I have to say to people, being leader of the Labour Party is a bit like being the England manager, where everybody can do your job better than you. You have to shut it out and remember it isn't about you. This lack of trust can only be healed by actions, not words, end the era of noisy performance and a return of politics to public service. Have we done what I wanted us to do, what I planned for us to do? The answer to that is yes. Along the way, there's bumps and sidewinds, which, you know, I prefer we hadn't been pushed by. We've become friends in a short period of time.

49:28He's slightly more liberal than I am, to put it mildly. We stand slightly on the left. but for some reason we make it work. She asked me if we're going to change the law and close the Luke poll in question one. I said yes. She asked me again in question two and I said yes. She asked me again in question three. It's still yes.

49:47George Osborne: John Curtis, polling guru, said this week that this was the worst start for any newly elected prime minister in history. and that is certainly reflected in the opinion poll ratings. I've got my thoughts on that but let me ask you first how do you think the last year has gone and how do you think if you're Keir Starmer you'd be thinking about it?

50:12Ed Balls: In that piece where John Curtis was setting out that polling he also said that after a year the British people still don't know who Keir Starmer is and what he really stands for and what he wants to achieve And if you go back to the conversations we had before the election, reflecting upon Keir Starmer, we had some conversations with Tom Baldwin. Tom wrote the book, didn't he?

50:36George Osborne: He wrote a biography of Keir Starmer. And there's a new version coming out, the paperback version coming out.

50:39Ed Balls: We noted that he was quite loyally, would move from case to case, issue to issue. Wasn't political in the sense of knowing how to reinforce again and again a message. but also that he had managed this huge transition from being in the Corbyn cabinet, defeating the Corbynites to become the leader, all the way through to winning a general election. And that, you know, as with Neil Kinnock compared to Tony Blair, for Neil Kinnock there was a huge challenge of wrenching the Labour Party from 1983 to 1992. And in the end, people didn't quite know what he stood for enough because he had to change. Tony Blair inherited that and could be much clearer in his sense of mission and purpose and we wondered whether that would be a challenge for Keir Starmer because let's be honest at the last election the main thing he said was I'm going to end the chaos we're not the conservatives and it was as though not being the conservatives was enough to explain how he was going to get on in government and then as you say lots of I mean there have been achievements but also lots of U-turns and missteps and that big slump in the opinion polls.

51:50Ed Balls: There were three different long form interviews in the last couple of weeks with Keir Starmer, Tom McTague in The New Statesman, Tom Waldwin in The Observer, Josh Clancy in The Sunday Times. I mean the interesting thing was that the same stories were there in all of these interviews about how you know he hadn't read the Islands of Strangers speech before he gave it, the great emotion he felt when he had to go and clear his brother's house, the tension between the public and the private realm he feels with his family and in doing the job. But the bigger questions, I mean, this was a big opportunity, these interviews, and you're thinking, well, how's he going to use them?

52:28Ed Balls: What's the strategy here? Is he going to say, here's what I've learned about the huge challenges facing our country? Or here is now what I now know is my mission? Or here is what I've now learned about what you have to do to really deliver change and I felt that um they were just a missed opportunity because because although he repeated the same stories he didn't really get to any of those big questions and you didn't come away from them thinking you understood really what he was about and how he thought he was going to to do things in the Tom McTague interview which is so fascinating I mean Tom McTague essentially concludes look he's an ordinary guy good guy doing this job but without a great sense of mission or purpose or intellectual drive about how his story about the future of Britain fits together coherently and I think that is a big part of the challenge you either have to lead because your personality is so overwhelming the force of personality carries you forward or you have to have a message about your purpose which is so overwhelming that people come with you on that journey and i don't feel as though yet keir starmer has either found a way to articulate a force of purpose or to demonstrate a force of galvanizing personality and that is why john curtis says people still don't quite know what he stands for what he's trying to achieve i agree

53:58George Osborne: with everything you said there and that essentially the kind of things you bring into office stick with you. They're very hard to get rid of. You know, I used to have this rule that what makes you as the Prime Minister is also what breaks you as the Prime Minister. So, you know, Margaret Thatcher, strong, getting a grip, in the end, too strong, too domineering. John Major, not Margaret Thatcher, the consensus guy, the ordinary guy, in the end, you know, too grey, you know, not dynamic enough. Tony Blair, the very slick communicator, you know, a voice of modernity in the end, you know, not trusted and, you know, not not Labour enough for Labour.

54:39George Osborne: And I think in the case of Kirstami, you know, he was not the Tories. He looked like a very credible Prime Minister in waiting. And 12 months on, he still looks like a very credible Prime Minister. When he turns up in the Oval Office, you're not even if you didn't vote for him, you're not embarrassed. You know, the guy looks like our prime minister he doesn't look weak in that respect on the international stage but he has not been able to empathize and communicate in the way that we actually discussed with tom baldwin a year ago he's not been able you know he is a buttoned up guy who who finds communication at a personal level difficult with people and lots of people do but you know they don't necessarily lead our country and i feel he's he's still sort of struggling he's not going to find that communication gear because he doesn't have it like you either have it you don't and i don't think you know you can learn it in which case he's got to come up with a more coherent domestic message to your point if you can't do it on your personality you can still look the part as a kind of serious person but you're not going to be an personality that infuses people then you've got to have a program that infuses people.

55:49George Osborne: And I would say if he's looking for how to do it, I would actually look at his international agenda. Because he came in and I think we thought, well, maybe he's going to be a bit too much the human rights lawyer abroad, and that's going to get him into trouble. But actually, generally, he hasn't really pursued that policy as a prime minister. He's been much more pragmatic. He's taken some risks engaging with both Trump and with the European Union, taking on both kind of Brexity people, but also the labor movement in terms of his engagement with Trump. And that's paid dividends. And he's also built up around him a really, really professional foreign policy team of seasoned, you know, experienced people.

56:26George Osborne: And I think on the domestic front, there's still some big missing holes in the kind of hinge between the politics and the policy, particularly on the economic front. And there's not really any kind of coherence to the domestic agenda. I mean, we haven't even talked on this podcast about the 10-year NHS plan, which is being launched today, which should be a big moment. But, you know, it just doesn't feel newsworthy enough for us to dwell on it too much. And I think he's got to, what he's got to look at what's working for him internationally, where he has taken some risks, he's built up a strong team.

56:57George Osborne: And I think he's trusted his instincts more about getting things done and try and build that into a domestic program, which currently doesn't exist and not kid himself that things are fine. This is all a bit midterm. You know, the polling I've seen, and I've seen some private polling from people who came to present this to me, he is actually in real mortal danger. The Labour government is in mortal danger, not from the Conservatives at the moment, but from Farage and reform. That Farage's toxicity is way down. People are beginning to kind of get used to the idea he might become the next Prime Minister.

57:32George Osborne: And I think for Labour, just to say, that's impossible, we've got a huge majority, we're bound to get re-elected, even if I still think that's the most likely outcome, there's still a quite high chance that that doesn't happen and so you know I think is this is the moment to do what he says he's going to do today which is pause and reflect on the first year of what's gone wrong and try and fix it.

57:54Ed Balls: I think these historical parallels are also useful for forcing you to kind of think about about how to do it. Margaret Thatcher was quite unpopular in the first year of her government unemployment rising hugely economy into recession and And I don't think you would say at that time she was achieving a great personal connection, but she had such a sense of mission and drive and purpose that in the end, she took people with her. If you take Tony Blair, Tony Blair was clearly a moderniser. He wanted to change the Labour Party and he had a great personal touch. But Tony Blair and mission, I mean, I think he became stronger on mission the longer he was prime minister.

58:42Ed Balls: Sometimes I disagreed with aspects of his mission. But in the early period, he was a great communicator, but he had people around him. Gordon Brown on the economy, David Blunk on education and employment. It was actually DFE at the time. Jack Straw on policing, who were communicating a real sense of policy purpose, which Tony Blair was allowing.

59:03George Osborne: And he couldn't really pull together. He tried that third way stuff, which didn't really cut through, did it? I mean, he was also struggling to articulate what the overall purpose was, but there was enough going on and it was well run and it was getting through Parliament, crucially, that things were changing. There was a Scottish Parliament, there was a minimum wage, there was Sure Start, there was... And that's not happening on the domestic front, is it?

59:22Ed Balls: Whereas if you look at Theresa May, you know, she came into office as Prime Minister determined to tackle inequalities, which she never really mentioned again.

59:32George Osborne: She came in because she wasn't Boris Johnson.

59:33Ed Balls: Yeah, but she didn't come in.

59:36George Osborne: That's the same thing about Keir Starmer not being Tories.

59:39Ed Balls: She didn't come in with a great mandate. She didn't come in with a big connecting personality. She didn't come in with a great sense of purpose. Other people wrote speeches and asked her to say things. And you were never quite sure whether this was what she really believed. And in the end, you got to the 2017 election, and it was exposed as being quite hollow and shaky. And that is not the precedent that he wants to follow. And, you know, so it's not over for Keir Starmer. And he's got the chance for the economy to recover and for NHS waiting lists to come down and for some of the benefits of these trade deals to start to come through.

1:00:12But either he has to be connecting more effectively than he did in these recent interviews or have other people around that who are doing that for him.

1:00:23Ed Balls: Other cabinet ministers who are pushed forward. you cannot be in a position where every announcement and every article comes from Keir Starman when he's not kind of reaching through the screens to people and he has to have to the extent that he's not going to be the great Blair connector he has to communicate a more galvanizing sense of purpose and the sense that he's learning and changing and understanding and doing better and they've not got there yet but you know it's not too late and he is not dead man walking he's not we are

1:00:57George Osborne: going to conclude our um podcast today thank you so much for listening uh that's all from political currency we will be back on monday with ex-minister's questions and don't forget you can hear

1:01:08Ed Balls: us earlier and ad free if you become a member of our kitchen cabinet or a gold subscriber and you can find the links to subscribe in our show notes we'll see you next week bye

1:01:26George Osborne: Thanks for listening to Political Currency. This has been a Persephoneca production.

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