Will Starmer's attack on Farage pay off?

0:13This is Political Coency with Ed Balls and George Osborne.

0:27Ed Balls: so greetings we are not in the studio today we are remote again so i'm staring into a computer screen seeing george with a um ming vase behind him well i wish it was a ming vase sadly it's not

0:40George Osborne: but um i am aware that darren jones you know he's the new labour mp who's in charge of downing street said this week that Labour politicians were always trying to outpour each other, always trying to say that they had had a worse upbringing and a tougher upbringing. And it was a bit like that famous comedy sketch with John Cleese and people, the four Yorkshiremen saying that they'd been born in a kind of pothole in the road. And I felt recently, Ed, you've been trying to outposh me with Downton Abbey.

1:08Ed Balls: George, there is no way I could outposh you.

1:10George Osborne: Well, I thought so, but I was getting worried. Anyway, I've been to stay at Chatsworth this week. I took the British Museum trustees to an away day at their amazing facilities there. And we were incredibly well looked after. And it's a very impressive team. And we engaged with local stakeholders, got local MPs around to talk to us. But I feel like order has been restored.

1:32Ed Balls: Were you twirling your bow tie above your head at 5am standing on a table in the Great Banquet Hall?

1:38George Osborne: No. Is that what you were doing, Achievement?

1:40Ed Balls: Definitely not. I think your credentials are just, you know, exemplary. Although, you know, as somebody who didn't go to Eton, they're not quite exemplary enough to be the top table of posherati.

1:52George Osborne: I just accept the crumbs from their table. Always have.

1:55Ed Balls: Well, you know, a lot of crumbs. I think we should just welcome a new show into the fraternity of political podcasts. I'm going to refer to it later on, but there's a new podcast, The State of It, from the team at The Times and The Sunday Times. I think their first episode dropped yesterday, being made by Caroline Wheeler, the massive story getter on the Sunday Times, and her colleague, Gabriel Pugrand, who's got some great scoops over recent years. And he's the co-author with Patrick Maguire, the third person of the podcast. We often talk about Patrick as the writer of the books about Keir Starmer, but also the oracle about Labour and their political editor, Steve Swinford.

2:30Ed Balls: So a new podcast. We wish them luck. And in fact, as I said, I'm going to quote from them later.

2:36George Osborne: What happened to that Times podcast with Peter Mandelson? Why don't they revive that now that Peter's available?

2:42Ed Balls: Well, that is a good question. I think Danny Filkelstein was one of his co-podcasters. I think Sally Morgan took his place and, you know, maybe they decided he was better.

2:50George Osborne: Let's talk about what we're going to be talking about today, because having won that big election a year ago, we should talk about the Labour conference a year into office, shouldn't we? Keir Starmer's speech, the attack on Farage, Farage's response, and the Conservative conference, which is about to get underway. way.

3:07Ed Balls: Then a week ago, we disagreed about the importance to recognise the state of Palestine by the British government and other European international governments at the UN a week ago, and things have moved on in the last week. We're going to talk about whether I was right and you were wrong, that Palestinian recognition has led to a massive breakthrough in the Middle East peace process, or whether you were right. We'll talk about the Middle East second, including the role of Tony Blair.

3:33George Osborne: Tony Blair back in the fold. And then, of course, we've got the big autumn budget beginning to loom. It's still two months away, but I have a feeling it's going to dominate politics for those two months. Rachel Reeves made an interesting announcement this week that she was essentially looking at replacing the twice a yearly OBR forecast with potentially just one OBR forecast. Seems like quite a small change. Certainly wasn't a central part of her conference speech, but it could be very significant in the way the OBR operates and in the way the UK's economic framework is seen overseas and have quite a big impact on our domestic politics.

4:13George Osborne: So people might not notice it. So we did. And we're going to talk about that at the end of the podcast. But let's start with the Labour conference. It's come to an end. It's two days after Keir Starmer's big speech, which I think was the dominant event. What did you make of it, Ed? Let's go straight in. What did you think of the big speech? Because you had said earlier on this podcast in the weeks before the conference, this was going to be an absolutely critical speech for the Prime Minister.

4:36Ed Balls: There's no doubt that Keir Starmer comes out of the Labour conference politically stronger than he went in, certainly within the parliamentary party and in the Labour Party. Although that's because he went in in a very weak position, that kind of rolling assault from Andy Burnham, that Keir Starmer was the most unpopular leader in British political history. The early days of the conference dominated by would Keir Starmer need to be removed over the next year if Labour were to recover their opinion poll lead. And I think that his speech definitely stabilised the situation internally. It was a speech which was, you know, delivered in a Keir Starmer way.

5:18Ed Balls: I mean, you know, he's not the great orator, but he had a very strong response in the hall. Lots of standing ovations. I think it was revealing about him. I sat and watched the whole thing and I thought it was the best speech I've seen him give. There was lots of authentic Keir Starmer moments and some big political message. In the immediate aftermath, the talk was that he's bought himself time. But I think if you look at the unfolding commentary in the 48 hours after, the commentary basically says nothing's really changed. The big moment this autumn is going to be the budget, a very difficult budget where taxes are going to have to go up substantially.

6:00Ed Balls: And even if they don't break the manifesto pledges and the government spent all week saying they stand by the manifesto, which has been slightly hard to understand what they quite mean by that, It's certainly going to break the pledge from Rachel Reeves a year ago not to raise taxes again in this parliament. And then on the basis of these opinion polls, the local elections and the Scottish Welsh elections next may look very challenging for Labour across the UK. And I guess it gets to a kind of a bigger point about conferences and how you go about them. And neither you or I were at the Labour Party conference this year.

6:38Ed Balls: Sometimes that's a disadvantage if you're wanting to understand what is going on politically. And sometimes it's an advantage because my sense is that within the Labour halls, actually the mood really improved. Ministers who've had a torrid year suddenly found they went to events where they got clapped and cheered and people wanted selfies. And Keir Starmer made a speech which absolutely roused feeling in the hall. And the truth is, for Labour, if you commit to reducing child poverty and absolutely lambast virage and reform, you're pretty guaranteed a strong response in the hall. But the test is, how's it being seen outside the hall, outside the Labour conference, through the television screen to voters around the country?

7:26Ed Balls: And that, in a sense, was the perspective that you and I have had, because we weren't on the inside. And it did feel to me a conference which was talking to itself. Keir Starmer had a big political task to turn around his standing internally. And he did a bit of that, although it looks as though it's going to be challenging for his chosen deputy leadership candidate, Bridget Phillipson, to see off Lucy Powell in the deputy leadership election, which is unfolding. But out there in the country, people worrying about the cost of living and the economy, what's changed, worrying about what's happening on our borders, small boat crossings, immigration, a very big salient issue now in the opinion polls, in the National Health Service waiting times.

8:09Ed Balls: None of those things have changed. And I'm not sure that at this conference, Keir Starmer was seeking to speak to the country. I think it was a very internally focused conference speech and conference, maybe necessarily, because he had a big internal political confrontation with Andy Burnham and more widely to deal with. But when the commentators in the days after say nothing's changed, and it's still very tough for Keir Starmer, the budget, the May elections, they're right. And I'm not sure this conference has changed that.

8:41George Osborne: Yeah, I don't necessarily disagree with any of that, but except to say, I'm not that surprised, because I'm not sure a conference can change that mood in the country. That's not, you know, a conference is just an event. These days, of course, far less covered, probably far less watched than it would have been in an age when more people were tuning into the, you know, 10 o 'clock news and reading the newspapers than they do today. Although I suppose the clips have gone all over social media. But I think, you know, Keir Starmer should be pretty satisfied with the last four days, given, as you say, where he started.

9:15George Osborne: I mean, I was, you know, one of my favorite cartoonists is Peter Brooks in The Times. And he did a really brutal cartoon on Monday of Keir Starmer in Liverpool. You know, that's where the conference was, essentially standing before the Labour were faithful. And they're all kind of singing back to him. He's a real nowhere man sitting in his nowhere land, a bit of the, you know, Mersey beat from the Beatles. I think four days later, he's in a much stronger position internally. That's quite a thing to pull off. when you start with such a febrile kind of conference environment and lots of talk of leadership.

9:50George Osborne: Now, Andy Burnham, who, you know, I like, but I mean, he turned up, effectively said, I'm a challenger, you know, didn't say, I'm not talking about leadership, said, I'm happy to talk about leadership, and then ended up saying, oh, I'm not challenging for the leadership. And he, in fact, left the conference just before Keir Zahmer spoke, which I don't think was necessarily the best look. I think what came across was more of a sense of unity than you've seen from Labour in the last six months. So if you ask yourself, what can you achieve in one conference? And I totally agree that you've got the budget and immigration challenges and all that coming up.

10:25George Osborne: But in terms of what can you achieve in one conference, particularly if you're the governing party, it's not the same as the opposition. Maybe the opposition, this is their only chance to speak to the country really during the year, whereas the government's got a chance every week. I would say job done.

10:40Ed Balls: Were there particular things that you pull out? Maybe we should just talk about Nigel Farage first, because actually Keir Starmer chose from the Laura Koonsberg interview last Sunday through his speech to raise the standing of Nigel Farage, to say that this was his opponent, that stopping a reform government was his purpose. And he was very disparaging in his speech, but also in the interviews. I mean, he referred to the reform immigration policy on indefinitely to remain as racist to Laura Koonsberg. But this is what he said in his conference speech about Nigel Farage and actually gave Nigel Farage a platform to then issue a big public statement straight after the speech.

11:23Ed Balls: Let's hear Keir Starmer first.

11:24George Osborne: When was the last time that you heard Nigel Farage say anything positive about Britain's future? He can't. He doesn't like Britain, doesn't believe in Britain, wants you to doubt it just as much as he does. So he resorts to grievance. They all do. They want to turn this country, this proud, self-reliant country, into a competition of victims, saying to you, to working people, don't trust in each other. You can't fix this. This is not a great country.

11:55Ed Balls: And the nudge of Farage struck back within an hour. I used to think the Prime Minister was a decent man, somebody that I could talk to and chat to. We might disagree on world view, but I thought he was a profoundly decent human being. I am completely shocked at his behaviour. I hope when he wakes up tomorrow morning, he feels ashamed of what he has done. This is a desperate last throw of the dice from a Prime Minister who's in deep trouble. But I'm sorry to say, I now believe that he is unfit to be the Prime Minister of our country.

12:31George Osborne: Well, I don't think Nigel Farage was shocked, or if he was shocked, he was only shocked because he's thrilled to be so centre stage. I mean, first of all, I can't imagine a Labour leader's speech in my lifetime which had fewer references to the Conservative Party than this one. I mean, the Conservative Party is barely mentioned, barely mentioned, and there's certainly no mention of the Conservative Party leader, Kemi Baden-Ock. It's a very interesting decision, which I don't know whether Labour started by talking up Farage a year ago because they wanted to keep the right divided and it was a good way of essentially confining the Conservative Party to the margins of irrelevancy.

13:14George Osborne: And over the last year, they've increasingly started to think, well, not only is that kind of a tactic to deal with the Conservatives, reform is our big threat. Certainly some of the Labour MPs I've spoke to the last couple of weeks are very clear that they see reform as the absolute central threat to them in their own constituencies. I saw the headlines from the speech. I normally think, you know, your conference speech as a party leader is your only time you really get to sort of unpack all of your vision and your values and so on, even if you're the prime minister. and it's a bit wasted therefore if the headlines for the speech are an attack on an opponent rather than selling people about yourself and that was my immediate reaction i walked past a sort of one of those news billboards in the street that had an lbc headline that said you know starmer attacks farage i thought what a waste of your speech but the next morning i was thinking well maybe it is actually quite a clever tactic because it both united the hall in the way we just described, United the Labour movement, and kind of sets up, doesn't it, Starmer, as in a sort of triangulation position, which is, if you don't want to have the extreme left, you want to have the extreme right, you've got me.

14:22George Osborne: There are risks of doing that, because if you're just the kind of anti-candidate, you know, that's dangerous, as others have pointed out in the last couple of days. That's what Biden tried to do with Trump, saying, you know, I'm the only person who can stop Trump. And in the end, people didn't kind of care, and they voted for Trump. But I think it has It does provide a kind of coherent political narrative to what the Starmer government is about and what he's about, even if it's cast in this rather sort of negative terms of like, I stand for everything that Farage doesn't.

14:50Ed Balls: Look, there's no doubt that Keir Starmer over these next three years has to tackle the issues which are a big problem for the government in the eyes of a potential reform voter. The small boats, immigration, the borders, illegal working. and they also have got to turn around the cost of living worries and get people feeling better off. So, you know, absolutely, that is right. And secondly, you need people in your operation who are exposing what reform actually says on the economy, the sums don't add up, that their pledges are woolly or deeply unfair in certain aspects. The question is whether you want the prime minister to be the person who puts that centre stage in the way that Keir Starmer did.

15:38Ed Balls: On the one hand, using language of race and racism to talk about reform policies, it immediately leads to, well, does that mean reform are racist? Is Nigel Farage racist? Are you racist if you think about voting reform? Labour politicians have spent the last three days saying, no, that isn't what they mean. I'm not sure whether explaining to voters you've got a legitimate worry that no, we don't actually think you're racist is quite where you want to be.

16:08George Osborne: I mean, explicitly, sorry, just on that point, I mean, explicitly in his speech, Keir Starmer was saying that Labour had patronised working people in the past for their views on immigration and that it wasn't racist to have concerns about immigration. So he was obviously doing, I think, a bit of kind of course correction because the racism remark came in an interview rather than in the speech, right?

16:28Ed Balls: That's true, but it's run all week, partly supercharged by cabinet members popping up and repeating different versions of it. And clearly there's lots of Labour people who want to say that they are racist. And then you saw today, Keir Starmer's out in Copenhagen talking about asylum seekers and tightening the rules and repeating the announcement from early September that family resettlement has been put on hold because there's been a big rise in the number of people who are coming over, claiming asylum and then bringing their families over very quickly. But he called the asylum system a golden ticket.

17:04Ed Balls: And again, do you want a Labour politician, a Labour prime minister to be using that kind of language, a golden ticket to come to Britain? Keir Starmer needs to stop a leakage of votes from Labour over to reform. But that has been a small part of his polling challenge. His much bigger polling challenge is losing voters to the Liberal Democrats and to the Greens, who will be, I think, pretty appalled by the idea that Keir Starmer suddenly thinks the asylum system has become a golden ticket. So I'm sure you're right about talking about the policy issues which reform is highlighting. But you have to be careful that you don't hype up the rhetoric as opposed to hype up the delivery.

17:46But do you want to make these accusations against Nigel Farage

17:51Ed Balls: the centrepiece of your political communication? I mean, two weeks ago, Ed Davey was complaining about the BBC giving Nigel Farage too much publicity, given that he's only got five MPs. Keir Starmer has given the green light to a quality of treatment between Keir Starmer and Nigel Farage from now until polling day, whether that's next May or the general election two or three years time. I'm not sure how wise this is for the prime minister, but he did it because under political pressure internally, that was absolutely a way to galvanise the conference hall. Just not sure how wise this politics is.

18:23Ed Balls: What else did you notice in this speech?

18:24George Osborne: I thought there were quite a few interesting bits. I thought, by the way, he's not the greatest orator, as you say, but I thought as a piece of rhetoric, it was well constructed. And there were a couple of very strong passages about his values and the values of the labor movement and the values of the country. And he kind of pulled out examples of people who helped in their community. And he said, Britain's not broken. And this is very different from the Britain you see on social media clips. I thought that was interesting. The other couple of things that caught my attention. So first, I mentioned it before, the triangulation.

18:57George Osborne: He explicitly talks about essentially people sort of selling snake oil, snake oil merchants, a miracle cure. This is part of an attack on Farage. But then he goes, as examples, tax cuts that magically pay for themselves, a wealth tax that somehow solves every problem. The Brexit lies on the side of that bust. We can see these snake oil merchants on the right, on the left. and so he's you know he's aligning supporters of a wealth tax there'll be plenty of labor and peace who have advocated a wealth tax and hoping that rachel reese will introduce a former wealth tax in the budget and he's aligning them with the faragists uh so i thought that was a pretty interesting piece of triangulation and the other thing that caught my mind particularly when it comes to the sort of where you position yourself politically was an attack really on New Labour.

19:49George Osborne: I mean, he obviously doesn't say I'm attacking New Labour. But when he looks at kind of what's gone wrong in our country, he does say it wasn't just Brexit. And by implication, it's not just the Tory years. He says the global financial crisis is when we were exposed, when a new Britain should have been born, but we had placed too much faith in globalisation. Immigration was a problem that we hadn't renewed the infrastructure. We had an attitude that it didn't mind if industry leaves the country. I mean, that is an attack on kind of Blairite, new Labour views around globalisation around the turn of the millennium.

20:27George Osborne: Definitely. And he, you know, he very deliberately dates it not to the election of a Conservative government or coalition government in 2010, but to the global financial crisis when we're exposed. But that's after 11 years of Labour government that we're exposed. I thought that was very interesting and of course there's no mention here in the speech of Tony Blair or Gordon Brown there's no praise for their achievements either.

20:52Ed Balls: I have a slightly different take on on that let me come to it in a second you know first of all I think you're right about the triangulation between um kind of Andy Burnham and Liz Truss I thought that was smart and well done in the speech I think he's always in danger of a sort of slightly inauthentic feeling working class language, because he needs his coalition to be broader than working class. And to be honest, Keir Starmer may have come from a working class background, but he doesn't look so working class anymore. But I thought the stuff he did around child poverty was very important, and the expanding higher education to higher education and apprenticeships was a good thing for him to do.

21:32Ed Balls: I think on that political point, I know what you mean about Tony Blair and Gordon not being mentioned and the financial crisis, but I heard it in a slightly different way. And this returns to something I think crops up in Keir Starmer's speeches and has done for the last five years and which I react badly to, I'm not sure it's anti-New Labour. I think it ends up being quite anti-politics. He started his speech talking about Hillsborough and then the post office scandal and other scandals. And it was about politics having let you down. The state government, the financial crisis was one in that list.

22:04Ed Balls: That is true. But he actually was talking about politics having failed. And then later on, when he comes back into the end of the speech, he talks about mere politics cannot break Britain. People don't want control to go to politicians. They want it to go to real people. It ends up being quite... Keir Starmer, I'm not really the politician like all the rest of you. We've talked in the past about him attacking the Westminster culture. In the next two or three years, as Nigel Farage doubles down on the anti-government, anti-Westminister, anti-civil service, anti-establishment, they're not on your side rhetoric.

22:42Ed Balls: I just don't think Keir Starmer can attempt to compete with Nigel Farage as an anti-politician. He can't come at it from a populist. A Labour Prime Minister has got to persuade people that in values and purpose and optimism, he is about making things better using the power of politics and government to make people's lives better. And his speech feels to me there's a tension between him wanting to talk about the good things he wants to do and the fact that all around him he sees politics failing and that sort of anti-politics populism I don't think that's the right place for a Labour leader to be it may be what he feels in his core you know Keir Starmer the lawyer the guy who didn't really ever see himself as being a politician but he is a politician now he's leader of the Labour Party he's the Prime Minister of the country and so that part of it, it just makes me concerned that isn't the way to make people feel confident and believe that politics can make a difference in their lives.

23:38George Osborne: I guess I would say maybe he's tapping into, you know, it's naive to think you can just avoid the anti-politics mood in the country. And maybe he's sort of trying to harness that to his own benefit and indeed make something of his background, as you say, as someone who came late into politics and whom his critics say the problem is he's not enough of a politician. What else in the speech? Is there anything else that caught your attention?

24:00Ed Balls: I think the one other thing I thought was very striking, and this goes to the way this Downing Street has operated and what they need to get better at in the next year and three years, but it was an omission, which was ID cards. Last week in our podcast, we said it looks like there's a big ID cards announcement coming, a big reform, came rather out of the blue. We got that right.

24:21George Osborne: Come on. We got that right. It was a think tank report. We were 24 hours in advance for everyone else. we said there was going to be a big ID cards announcement.

24:28Ed Balls: The big idea, patriotic renewal, the ID card as a way of tackling illegal working. ID cards weren't in the Prime Minister's speech at all, nor were they mentioned by any other cabinet minister that I could see. I mean, it barely mentioned throughout the week at all. It ends up, I mentioned that New Times podcast, The State of It, in their first episode.

24:54George Osborne: Very generously, I thought you did.

24:56Ed Balls: I did. In their first episode, they talk about what they describe as, and this is in the Times today, cabinet backlash against digital ID to stop boats. Well, a number of cabinet ministers saying that this was presented as a fait accompli, came out of the blue, not clear it will do anything to stop illegal working, expensive, complicated. What will end up happening is they'll recreate what already exists, which is e-visas for migrants. it wasn't mentioned if the Friday before your conference your big idea is ID cards you've got to stick with it for more than 24 hours there have been times when the government has done a good job of delivering in a strategic way if you think for example the way which Steve Reid has gone about water regulation the way which David Lammy built up to Palestinian recognition the preparing of an argument over a long period of time you could say the same thing about Rachel Reeves and the fiscal rules and the importance of fiscal discipline, but the times when they've got into trouble, of when the things have come out of the blue, winter allowance or welfare reform, without preparing the ground, and all the times when they say something, Keir Starmer, his comments about migration, and then move away from it almost immediately.

26:08Ed Balls: And they've got to find a way in which they prepare the ground and make the argument for something over a longer period of time, so the policy announcement becomes the answer to the question they've already raised and then they then stick with it for more than 24 to 48 hours. I'm an ID card sceptic I have to say in terms of solving these problems but if you announce it as the Prime Minister you can't then drop it within 24 hours and I suppose my worry about this conference you know we said at the beginning the budget is the big thing coming up in two months time are they preparing the ground properly to explain to people what's happened over the last year, which means now a tax rises the imperative, is half-hearted.

26:52Ed Balls: Keir Starmer didn't really address this in his speech.

26:54George Osborne: I think Rachel Reeves did a bit, didn't she? I mean, in her speech, she talked about tough choices to come, talked about changes over the last year, and started to make the link to the real world environment in which people pay higher interest rates if you don't control your public expenditure, which we've been urging her to do for the last year.

27:10Ed Balls: That is right. But this was a prime minister and a chancellor who said, we fix the foundations. We finish phase one. That was just a few weeks ago that we've done the tax rises for the parliament. And now they're in a position where there's a big fiscal gap, they're going to have to raise more taxes. And they've needed for the last year an argument to explain why this is a five year plan challenge. But it's about global economic uncertainty, the public finance deficit, a diagnosis of the growth problem. I still don't feel that they are making that argument in a way which is going to be understandable, even if it's not compelling when it comes to budget tax rises in the end of November.

27:52Ed Balls: You are right that Rachel Reeves began to address that on Monday. But if I said to you, what is the reason why Rachel Reeves now thinks she needs a multi-billion pound tax rise when last November she said it was all done for the parliament? Could you tell me what the argument is?

28:09George Osborne: No.

28:09Ed Balls: That is a problem about the way they go about politics and communication.

28:14George Osborne: What about the Conservatives? They're about to start their conference. I mean, I remember the second conference in opposition. I was working for William Hague. It was absolutely miserable. I think the Sun put up a front page of William Hague as a dead parrot, like the Monty Python sketch, and the Tory party being dead. So, by the way, it's a reminder we've been here before, and then we had 14 years of Tory prime ministers. So the idea, I think, that political parties as old as the Conservative Party are finished forever is maybe wishful thinking on behalf of some people. Probably not true. But clearly there is this enormous problem of relevance.

28:54George Osborne: We've just been talking about Nigel Farage. You know, presumably Kemi Baden-Ock and the party high command is very worried there'll be another defection because Danny Kruger, the Tory MP, defected a couple of weeks ago. So, I mean, I think the best answer, but it's going to be painful and I've been there, is you've got to just start making an argument you're going to repeat and repeat and repeat and repeat over the coming years, which is the Conservative Party is the party that is genuinely committed to business, genuinely committed to enterprise, genuinely committed to controlling public expenditure, and therefore genuinely committed over time to trying to get taxes down.

29:28George Osborne: And there's a bit of a gap in the market for that. Labour's trying to reclaim that territory that it had at the general election, but it's clearly lost it. But, you know, I have a lot of sympathy for my colleagues, former colleagues, going into what is going to be a really, really difficult conference because people are just not going to pay any attention.

29:47Ed Balls: If Keir Starmer's speech was a bit make or break for him on Tuesday, it's definitely a make or break conference for Kemi Badenoch. And she's going to pull the focus even more onto her by having two speeches rather than one. So she's got to deliver twice. She's going to talk, I think, about immigration and the European Convention at the beginning of the week to try to get onto the economy. You were, I think, talking a week or so ago about Ian Duncan Smith and his quiet man speech. And then the quiet man gets a bit louder.

30:15George Osborne: Turning up the volume. The quiet man's here to stay and he's turning up the volume. But it turned out about three weeks later he was gone.

30:23Ed Balls: Kemi Badenock is turning up the volume. She's going to be totally in the spotlight. Can she make the argument that you're saying she should make? I think you're totally right and be heard. That is the big test. And let's be honest, Keir Starmer's conference at the beginning of the week was slightly overshadowed by the Donald Trump announcement of a peace process in the Middle East. We're now waiting to hear what the next stage of that is going to be. It's not impossible that the Conservative Party conference is going to be overshadowed by that in the coming days as well when Hamas responds or Israel responses to Hamas' non-response.

30:54Ed Balls: So, you know, it's going to be a fight for Kemi Begg not to be heard. And we're going to talk about that Middle East peace process next.

31:12George Osborne: Welcome back. Now, while we've been recording this, news has been coming in of an appalling attack in Manchester on a synagogue. it's very early moments in this and we're just seeing that potentially people have been killed and this is on the day of Yom Kippur the holiest day in the Jewish calendar so obviously our thoughts are with the families affected and it will be an ongoing and developing situation

31:38Ed Balls: yes it's appalling and devastating and on such an important day in the Jewish calendar

31:43George Osborne: but we are here to talk about of course the backdrop to so much of this anger and division and violence. That is the situation in the Middle East. And on Monday, Donald Trump met with Benjamin Netanyahu in Washington, announced this new peace plan for Gaza, or rather a plan that they challenged Hamas to accept. And there was a supporting role for Tony Blair, who's going to be part of a new authority that is going to oversee Gaza, assuming that this plan is accepted, which is a very, very big assumption. Trump, never one to underplay things, said that this was a path to eternal peace in the Middle East.

32:24George Osborne: This is what Trump said. And most importantly, we discussed how to end the war in Gaza, but it's just a part of the bigger picture, which is peace in the Middle East. And let's call it eternal peace in the Middle East. So there's lots to unpack, and it's already been unpacked by lots of other people. But I thought we could focus on a couple of things, couldn't we? I mean, the first is, you know, the essential elements of this plan are quite familiar and quite established, which is the IDF comes out of Gaza. There is eventually a path to Palestinian self-determination, although interestingly, there's not a commitment here to recognize a Palestinian state.

33:07George Osborne: But it's quite a big deal for Netanyahu to accept because it's quite counter to what he's been saying. And it's a very, very big deal for Hamas to accept. So although there are provisions for, you know, an amnesty and a decommissioning of weapons, which sounded to me a bit like Tony Blair's input from his Northern Ireland experience, there's not really a kind of off-ramp for Hamas that most people think they'll accept. I guess the question for us both is, we talked about this last week, and Britain's decision, along with others, to recognise the Palestinian state at the United Nations. And I said it was irrelevant, and you said, no, it could actually lead to something.

33:47George Osborne: Here's a clip of what we said last week, and we're going to hold ourselves to account. Doesn't mean we're necessarily going to change our opinions, but this is what we said. Is it a gesture?

33:57Ed Balls: Is it inward looking? Or will it actually lead to something bigger? Is it a moment? This could be a moment which gets forgotten. It could be a moment which starts something and one of those moments where time will tell.

34:09George Osborne: I mean, I couldn't help but feel it was a bit more of a whimper than a bang. You know, a Palestinian state has never been further away in my lifetime.

34:17Ed Balls: Are you sure?

34:18George Osborne: Yes, I think so.

34:19Ed Balls: I mean, I think it depends whether Hamas stays in control.

34:24George Osborne: But there's no evidence that they are losing control. The two key countries that are required to recognize a Palestinian state, Israel and the United States of America, have both come off a position they were in just a couple of years ago of seeing a two-state solution as something that they formally supported. So I think I stand by what I said, because I don't think the action by the UK, Canada, Australia, other European nations at the UN made the slightest bit of difference to this announcement. What I said at the time, I think still holds true, which is the key players in this are the United States, Donald Trump, Benjamin Netanyahu, and Hamas.

35:09George Osborne: And of course, we haven't heard from Hamas yet. And what is striking, if you read this plan, there's lots of reference to various countries like Jordan and the Gulf countries, lots of references to Donald Trump. There's next to no reference to Europe. There's one mention of the French. There's no reference to Britain. There's no reference to the United Nations' decisions on recognition. And as I say, it doesn't include a recognition or even a path to a recognition of a Palestinian state, if you look at their plan. It talks only in rather sort of weaselly terms that Palestinian self-determination statehood, which we recognize as the aspiration of the Palestinian people.

35:51George Osborne: It's not the same thing as their aspiration. And I'd make a sort of final challenge to you if you're going to say that, no, no, it did make a difference what happened last week. Isn't it striking that the British person who has clearly been most influential in all of this is not someone who's in office, not someone who's part of the government, not the foreign secretary, not the prime minister, not the deputy prime minister who was the foreign secretary, but one T. Blair. And he obviously knew a lot more about this, frankly, than Keir Starmer did.

36:21Ed Balls: Look, let's come to Tony Blair in a second. And, you know, there's no need for you to be defensive because, I mean, it's fine. I mean, it turned out there was in the days after Palestinian recognition a massive breakthrough. So I was right.

36:32George Osborne: Isn't the economist saying that it's not enough for things to be coincidental? You've got to explain causality.

36:38Ed Balls: Of course. And so, one, you are right. For 50 years, and it was the case last week, unless the Americans decide there's a breakthrough and they want it, it was not going to happen. And that's really what happened. Donald Trump decided this was his moment. You are right. The fundamental thing is both the Israelis and Hamas are boxed in badly. They've got no room for manoeuvre. It was humiliating for Netanyahu with Trump to have in his presence in the White House, ring up the Qataris to apologise. Hamas are under huge pressure. We'll see what they do in the coming days. But they've really got nowhere to go other than now to acknowledge the truth that they've lost support, they've lost funding, they're going to have to agree to something which essentially wipes them out of the future process.

37:25Ed Balls: So you're right about that. And nobody's saying that the moment of recognition in the UN from France or Britain made the difference. However, if you look back over the last two or three months, starting in July, and I think you have to give credit to Macron here, a process begins involving Arab countries, particularly Saudi Arabia, the declarations in July, which Keir Starmer signs up to, the Arab League saying that Hamas cannot be part of the solution. There is then a diplomatic process which is deliberately driving towards the UN week, which involves a number of things happening, including all those statements of recognition.

38:09Ed Balls: There's alongside that, you're right, a Tony Blair, Jared Kushner, Trump's son-in-law piece of work, which is also going on. But there's no doubt in the UN, there was a sense that this was a moment. Israel's got nowhere to go. Hamas is isolated. The Arab League wants change. Europe is backing it as well. And in that moment, Donald Trump decided, yes, they're right. This is the moment and I'm going to make the move, which he wasn't making one, three, six months ago. And his advisor, Vickhoff, was also persuaded this was the moment. And I think it's fair to say that that process of political pressure around recognition was part of creating the momentum, which was what I was hinting at last week to reach this moment.

38:58Ed Balls: And, you know, it's really hard because clearly Netanyahu was then fighting and trying to water down part of what went into that agreement. But they have, through kind of complicated language, accepted a process which can lead to a Palestinian state, even if they don't want that. And even if they're trying to keep troops on the ground, there's no doubt that the Israel attack on the Qataris absolutely changed the political dynamic within the White House. But I think Macron and Starmer and others saw the opportunity of that shift in the political dynamic, the way the White House was shifting its thinking, and saw them talking about statehood as a way to keep that political momentum going.

39:43Ed Balls: So I don't think we should underestimate the ability for Britain to act in concert with others to essentially persuade the Americans that this was what they should do. And it is true to say that Trump and Rubio were saying when Trump was over here in Britain in the days up to and through the recognition, well, you know, this is just being done for British political consumption or French political consumption recognition. But I think they may have been saying that publicly, but I think actually they were clearly thinking this is part of creating a momentum which is going to be unstoppable, but we now need to lead.

40:19Ed Balls: And that's what they've done. So that's why I don't think you are right to discount. I don't think it was irrelevant or not material, but I don't think it was the thing. The thing happened in the White House. The thing happened with the mistakes Netanyahu's made.

40:34George Osborne: Yeah, I certainly agree with you. The attack on Qatar, the failed attack on Qatar was a very mistaken move by Netanyahu and essentially removed the sort of benefit of the doubt he was getting from Donald Trump. Can we just turn to Tony Blair's role? I mean, isn't it amazing that a couple of decades after he left Downing Street, he emerges as this central figure who's clearly been working behind the scenes on the sort of practicalities, not Palestinians' recognition, which is an end game. But how do you actually deliver services on the ground? How do you construct a political authority on the ground?

41:12George Osborne: And apart from Donald Trump getting a lot of mentions in this statement and from Donald Trump. Tony Blair is singled out. And it is, you know, you have to hand it to him. For someone who has sought to stay relevant after leaving office, think of all the other ex-prime ministers who've got involved in, you know, the UN and various causes, Conservative and Labour. And here's Tony Blair, as relevant as ever.

41:39Ed Balls: I think we should give him credit and put it in perspective, would be the thing I'm going to say. I mean, if anybody wins a Nobel Peace Prize for this, it's going to be Donald Trump and not Tony Blair. But Tony Blair has doggedly since 2007.

41:55George Osborne: He should have got one for Northern Ireland, frankly. I mean, they did give the Nobel Peace Prize to David Trimble and John Hume. I thought it was a bit mean to cut Tony Blair out of that. So maybe he will get a second. Maybe he can be the joint winner with Donald Trump.

42:08Ed Balls: I could see the case for Tony Blair getting a Nobel Peace Prize for Northern Ireland. I think it's a stretch to think over the stretch of his career in office and since he's going to get a Nobel Peace Prize for peace in the Middle East. That might be rather jarring. He's been working with Jared Kushner, Trump's son-in-law, for some months on their report, getting to rather messy situations with consultancies doing reports which then had to be disowned. A week ago, it suddenly appeared in the newspapers that Tony Blair was going to be chairing this transitional authority. And it is one hell of an achievement to manage to unite Al Jazeera, Time magazine, The Economist, The Financial Times, and a number of commentators around the world all agreeing that the one thing that is not going to work is Tony Blair chairing this authority.

43:00Ed Balls: But of course, Donald Trump's going to chair it. You think Donald Trump's going to share it and Tony Blair is still in there in the mix and good on him. And if he can have an influence on that, then all to the good and it will be a reward for years of hard work. But frankly, I would be surprised if Tony Blair is going to be the decisive person in this process. I'd be very surprised indeed, because I'm not sure that the Arab world is going to allow that.

43:29George Osborne: What about a call to you, Ed? I mean, didn't you put in quite a lot of work on Gaza? You helped Gordon Brown with the report all about tomatoes being held up at the customs checkpoints and going rotten as a result.

43:41Ed Balls: I think you're talking about the Balls Cunliffe G7 report on economic cooperation between Israel and the Palestinian authorities and the West Bank and the Gaza Strip. And that was a report which was published and extremely influential for a very short period of time before Hamas then took over. And that was kind of the end of that process of potential economic cooperation.

44:04George Osborne: It's the seeds of the... I think you're underplaying your role. It's the seeds of the... It's not the UK's decision last week at the UN. It's the Bulls' Cundiff plan.

44:14Ed Balls: I'm underplaying correctly my role. I am underplaying the role that Tony Blair is likely to have in the next phase of this. And I think you're underplaying the role that European diplomacy can play in working with Saudi Arabia and other Arab countries to persuade Donald Trump that now is the moment to seize the initiative. And I think that was influential and he has done. We'll see how this goes, because let's be honest, history would suggest nothing's going to work. But this might be, I'm not sure about eternal, this might be the moment when there is a breakthrough. and it feels like potentially the most significant moment in the Middle East peace process since the Oslo Accords back in the early 1990s.

44:56Ed Balls: So Donald Trump, all power to your elbow, and Tony Blair, you've got a seat at the table, it seems.

45:02George Osborne: Yeah, he's always been good at getting a seat at the table and the big decisions in Washington. Listen, we will turn now back to domestic politics and the thing we mentioned at the beginning of the podcast, which is a potential downgrading of the role of the OBR over the year in telling us what's going on in the economy and with the public finances. And we'll be back after this.

45:36George Osborne: Welcome back. So on Monday, Rachel Reeves said, not in her conference speech, but on Times Radio, that the IMF has said that we should move to just one major fiscal event a year. And I agree with their recommendations. And to be able to do that, we do need to change the way that the OBR do their forecasting. And I'm going to give you the credit here, Ed. You spotted this in a way that I had not, I was not, I'm afraid, listening to the radio or had not picked it up in the reports afterwards, as being a pretty important potential change to the way the OBR operates and one that requires a change in the primary law.

46:14George Osborne: Tell me what you think is behind it and why it's so significant.

46:18Ed Balls: Well, we've talked before about Rachel Reeves' desire to have only one budget event a year. I think both of us said that we thought that was a mistake, that we would have carried on with having two moments where the Treasury sets out its economic and fiscal strategy. In our time, it was a pre-budget report and then the budget. I think you carried on with those two moments. She only wants one. The IMF prefers the idea of there being one moment a year.

46:45George Osborne: This is, by the way, what Treasury officials keep telling chancellors. Please, can we only do one piece of work a year? And a whole series of those Tory chancellors who came after me kept saying they were only going to do one budget. But to be fair to Rachel, she's a lasted longer than most of them, and looks like she's actually going to do something about it.

47:02Ed Balls: But the challenge for her is that the Office of Budget Responsibility is required to have two forecasts a year, not one. Required in law. So the question she's raising is whether in order to deliver her one fiscal moment a year, she needs to have only one forecast from the Office of Budget Responsibility every year. And that's what she's sort of floating in the interview at the beginning of the week. And And that is what people are wondering if that's what she is going to do.

47:35George Osborne: We should just explain, sorry, I'm just because it is quite technical, isn't it? I mean, just explain why, you know, why can't she just have one budget a year and let the OBR do two forecasts a year? Because that's what they're required in law to produce. So why can't you just have that situation?

47:49Ed Balls: I think she is thinking that if the OBR does a forecast which says that she's off track to meet her fiscal rules halfway through the year, six months before the budget, she can't then have six months where she's not forecast to meet her fiscal rules. And that compels her to have a second budget event. And that's what she's trying to avoid. avoid. She's saying, or she's hinting, that she might as a consequence need to change the rules by which the OBR operates, and gave the impression that the IMF is on her side. When you actually look at what the IMF said, it's actually a bit more complicated.

48:31Ed Balls: They say the OBR could assess rule compliance only once per year ahead of the full budget, while still producing bi-annual forecasts in line with best practice. So the IMF is saying, have two forecasts a year, but only assess whether or not you need to change course once a year in the budget, which is rather contrary to my description of the challenge he was trying to avoid. Of course, her problem here is this, the requirement to have two forecasts a year goes back to 1975, the Industry Act, actually taken through parliament by Tony Benn, the former Labour cabinet minister. When we came into government in 1997 and introduced new fiscal rules and legislated for them in a fiscal code, we confirmed that there would be a sixth monthly economic and fiscal forecast twice a year.

49:22Ed Balls: I think when you set up the OBR, you confirmed that too?

49:26George Osborne: Yes, sorry, you're right. The Treasury used to produce these forecasts twice a year. Remember, these are forecasts not just of GDP and unemployment. They're also forecasts of debt and deficit. So the Treasury was producing these twice a year, in the way that you would explain. I didn't know about the Tony Benn origins of all of that. And then when we created the OBR, we asked a distinguished economist and a person who had been Deputy Governor of the Bank of England, Alan Budd, to design this for us and design the primary legislation into that primary legislation that created the OBR that I took through Parliament in 2010 was a legal requirement to produce these two forecasts.

50:05George Osborne: The problem of the IMF's suggestion is, okay, so you sort of produce this forecast, but you don't make an assessment of whether the government's fiscal rules are being met. I mean, I wonder how realistic that is, because once you produce a forecast, it's pretty obvious to people whether the fiscal rules are being met. I always think the OBR is a bit of a repository for problems that people themselves are not prepared to confront. So, you know, conservatives want to cut tax. They say they want to cut tax, but they're not prepared really to cut spending in a way that makes those lower taxes sustainable.

50:38George Osborne: They certainly haven't been in recent years. And the Labour Party wants to spend more money, but is nervous of raising taxes to pay for it. And, you know, they both blame the OBR for not being kind of taking that all into account. And Rachel Reeves, or at least people who are trying to defend her, say, well, it's very unfair on Rachel Reeves that she's being judged on these rules all the time. And she was judged on them earlier this year and had to do exactly what you say, essentially a sort of mini budget, which is when she announced those disability benefit reforms that subsequently were ditched.

51:10George Osborne: But she sort of set a rod for her own back. I mean, she has set a lot of stall by these fiscal rules. We should have said earlier, perhaps, when we were talking about the Kirstana speech at the Labour conference. He said in his speech, the fiscal rules are non-negotiable. And they gave themselves very little headroom right at the beginning of the parliament to meet those fiscal rules. So that yes, every six months, you know, if things haven't gone exactly as according to plan, and the economy is a bit more sluggish and productivity is, you know, disappointed again, they find themselves off track.

51:42George Osborne: But they're the ones who elevated the importance of these fiscal rules, did not give themselves much headroom to meet them, made themselves very vulnerable to changes in circumstances. And it's a bit like, you know, calling out the ref and saying it's all very unfair because the way we're playing the game means, you know, we're committing more fouls. I think it actually goes further than that,

52:01Ed Balls: because of course, in the Liz Truss short-lived premiership, the thing that she did was a budget without an officer budget responsibility forecast. And Rachel Reeves said that is an outrage, an outrage, the OBR being undermined in that way. When she came into government, she said she was going to legislate to strengthen the role of the OBR. I think we can play you a clip of her explaining this. In the run up to the general election, I set out the crucial first steps in our economic plans to deliver economic stability. And that commitment stands. I emphasised this commitment in a meeting with the Governor of the Bank of England on Friday.

52:41Ed Balls: And I will do the same when I meet the chair of the Office for Budget Responsibility this week. These institutions are guarantors of our economic stability and I will not be playing games at their expense. That was her last July. What she actually did was she legislated to say any government event, fiscal decision, which has an impact of more than 1 % of GDP would have to be accompanied by an OBR forecast. So even if you'd done two already in the year, if you had another fiscal event, a big defence spending decision or whatever, you'd need to have a third forecast. If she says, I only want to have one budget a year, and then says, therefore, there should only be one OBR forecast a year, not only, as you say, would she have to change the law, but it would mean Britain would then be the only country in the whole OECD which had only one economic and fiscal forecast a year.

53:35Ed Balls: That would be a huge move away from transparency and scrutiny in the UK. That is the opposite of her respect the institution and its role in guaranteeing stability. She can't possibly do that. I cannot believe she can tell the OBR, you can only do one forecast a year. The OBR, by the way, have said to Parliament they are against that retreat from transparency. She can't say to them, you can't publish a fiscal as well as an economic forecast. She might say, I don't want you to spell out the detail of what it actually means for my fiscal rules, but that is absolutely there for everybody to see anyway.

54:12Ed Balls: And of course, even if there's not an OBR forecast, what is the reality of what's happened since that spring forecast? Every week, every month since then, we've had forecasters from the National Institute, from the Institute of Fiscal Studies, from city economists, all saying their own fiscal forecasts based on the latest data mean that the fiscal gap she is facing is now 20 or 30 or 40 billion pounds. So she doesn't escape from scrutiny, even if there's only one OBR forecast. But for her to make us the outlier in the OECD, the only country with one forecast, is obviously ridiculous. And as you say, look, Paul Johnson from the Institute for Fiscal Studies has just stepped down.

54:55Ed Balls: He's gone to Queen's College. It said on Twitter earlier in the week when she did this interview, he says, odd for a chancellor who made so much of importance of OBR and transparency to seem to contemplate reducing transparency and moving UK from accepted best practice by reducing frequency of forecasts. We've had two forecasts a year for 50 plus years, missing the underlying issue here. The underlying issue here is that if you have very narrow margins by which you're meeting your fiscal rules, then you're always going to be under pressure if small things change. Whereas, of course, if you have a bigger margin against those fiscal rules, you can have a forecast halfway through the year.

55:36Ed Balls: I don't remember us ever having a mid-year forecast which said we were not going to meet our fiscal rules, but that's because I think we had bigger margins. So I'm not exactly sure what they are planning. And if they're going to try and tell the OBR what it can and cannot say, I think that gets quite complicated and a bit self-defeating. But if they're actually going to legislate to make us non-transparent compared to other OECD countries, I mean, that would be a big step backwards. I do not believe Rachel Reaves is going to do that, because that is so contrary to everything she said in opposition.

56:10Ed Balls: I do think, I mean, I'll say one other thing about the OBR, but tell me if you think I'm wrong.

56:14George Osborne: No, I think you're absolutely right. I mean, I think it would be a very retrograde step and invite a lot of criticism and also create situations, you know, we don't know what the future holds. But, you know, for example, in 2008, 2009, with a rapidly changing economic situation, the government at the time could not be operating off an 11-month-old economic and fiscal forecast. I mean, I remember they were pretty dramatic, those statements from Alistair Darling, when he was having to update people on the public finances, but at least they were every six months. I mean, there's a point, I think, maybe the point you're coming on to make, which is because it's such a narrow margin that she's meeting these rules, the OBR has become much more tied into policymaking because government ministers think that some of the policies will make that sort of small difference if they take into account, like the planning reforms, whether they meet the rules or not.

57:04George Osborne: And I certainly, as the author of the OBR, that was never my intention, that the OBR would become kind of central to sort of broader economic decision-making.

57:14Ed Balls: I think it's partly the smallness of the margin, but I think something else has happened. When we were in the Treasury and we were introducing a policy like, for example, the Research and Development Tax Credit, we published what we thought it would cost. But at that time, the Treasury would never have published an assessment of what we thought the dynamic impact of that on growth and productivity would be over five years. It was just so uncertain. How could you know? And I don't think when you were Chancellor in the early years of the OBR, the OBR was line by line, measure by measure, publishing the growth impact of particular policy decisions you made.

57:50Ed Balls: But what happened after Brexit, the OBR was asked and said that Brexit would have an impact, a negative impact upon growth in the economy. And then others said, well, if you're willing to say that about Brexit, why won't you say it about other things? Liz Truss was quite loud in saying they should talk about how other things like a tax cut could positively impact upon growth. The OBR has ended up allowing itself to measure by measure publish growth assessments and therefore the fiscal impact of individual budget decisions. And what that means is, as you say, in the internal Whitehall discussions now, when the Treasury is talking to a department about this policy, a department about that, the business department about a loan to Jaguar, the Home Office about migration, the Treasury is saying, if you don't agree to what we want, then that will have this negative impact on growth as measured by the OBR, which will cost us this amount of money.

58:52Ed Balls: They've become a player in the internal Whitehall political argument, while the Treasury is also saying to the OBR, you need on planning and on other things to give us the credit for the things we are doing. And so they've been drawn into detailed policy debate where their estimates have a quite important political and decision-making impact on the basis of a forecast which is so uncertain they can't possibly know. So I think that's also what's become hard for the OBR. They become an internal political player when they need to be more independent. I don't know how they solve that. But I think probably if you're Keir Starmer and you keep being told by the Treasury or by other departments, you can't do that because the OBR will downgrade our growth forecast.

59:36Ed Balls: You think, well, what do they know? And, you know, how could you possibly know? That's so uncertain. That is not the same, you know, as the issue about transparency and forecasts. forecasts. And so I have some sympathy with the Treasury and Cabinet Ministers who feel that the OBR has become too detailed a decision maker about forecasts in such an uncertain way. But when it comes to the macro fiscal aggregates, they need two forecasts a year. That's the law. And Rachel Reeves cannot legislate to make us the least transparent country in the whole of the OECD.

1:00:09George Osborne: So I think we end the podcast with a bit of Ed and George triangulation. We were talking about that in the Labour conference and a bit of peacemaking. Talk about that in a much more serious situation with Gaza, because we've suggested, haven't we, that let's stick to the two forecasts that have been in place for 50 years, but maybe the OBR should back away from these sort of micro involvement in decisions that have economic impacts in other government departments and stop trying to second guess what the dynamic effects of some of those things might

1:00:41Ed Balls: be everyone should just step back a bit yes i think that is the right advice and um let's see how this um unfolds in the coming weeks before the budget but but let's hope they get to a sensible place that's all for political currency this week we'll be back on monday with ex-minister's

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