Burnham’s Budget gamble: Why the PM could trigger a snap election next week

0:02The Telegraph.

0:37In 2010, newlyweds Debbie Cooper and Jamie Starbuck set off on a round-the-world honeymoon, but something wasn't right. We kind of started to scrutinize things a lot more. What exactly is going on here? Debbie was missing. We just looked at each other and said, so what's the next step? And it's like, police. He was a lovely little boy, but something happened to him to turn him into a monster. There's nothing off her, he just erased her. Missing Debbie, a new Bed of Lies podcast from The Telegraph. Out now. Not another one. Brace yourselves, there could be an election on December the 10th. With predictions of a generous budget and Burnham flaunting his ideological Europhilia, we examine the chances of going to the polls before Christmas.

1:23His polling isn't quite good enough. but he hasn't had a string of polls that give him a lead he's had one or two that have pointed in that direction i think he'd want to see a post-budget poll that put him firmly ahead yeah and then it's a huge gamble huge gamble he'll be the second shortest prime minister after liz camilla is away but i'm honored to be joined by jacob instead who's gonna be with us for the whole week building up to the budget and i've been told to plug this very hard which we are going to be reporting live as it happens. You and I can do some live. Well, you're used to that.

1:59Well, no, I'm used really to sitting in the chamber and trying to work out what on earth the chancellor's saying and what's really happening against a speech which is trying to pull the wool over people's eyes. Not, of course, conservative chancellors never did that, but it's a lot of spin in the words of the budget. What matters are the documents that come out immediately afterwards. Well, you say spin. It is not unlike covering a tennis match. And you can join us for Wimbledon slash The Budget this Wednesday from 12.30, when we'll also be joined by Georgie Frost, who is a financial journalist.

2:32Now, I've also been told by production to ask about your hair. I don't quite know why. What have you done to your hair? Well, Charlotte noticed that I'd had a haircut, which was long overdue because I have a wonderful barber who retired formerly many years ago, but still comes and cuts my hair. He's well into his 80s. But he was on holiday. and I had to wait for him to come back from holiday. But by the time he'd got back and we had the Tory party conference, he'd gone on holiday again. So in the end, I had to get somebody else to do it because otherwise I was about to look like the long-haired lover from Liverpool.

3:00Did you look like a hippie? I didn't notice. I was heading in that direction. When I was a boy, the barber I used to go to, who I think charged four pounds for a haircut, those were the days, he would cut your hair with one hand and smoke a cigarette with the other. So you'd come out of the haircut with less hair, but more fag ash on your head. Well, I'm older than you are. My haircuts in Midsummer Norton in the 1980s cost 50p. Oh, there you go. Those were the days. Now, as I say, we can discuss cost of living post-budget, but what I want to pick up on today is a couple of things related to the Prime Minister.

3:37One is he appears to be teeing us up for rejoining the EU. Now, in the classic Andy Burnham way, he won't make a commitment and just say, at the next election, I will be campaigning for us to rejoin the EU. He keeps framing everything as we need to have a discussion. We need to be honest. And the latest salvo is he says, we need to be honest about the impact of Brexit upon immigration control. Now, his argument, and one his it made a lot, and I really want to know what your answer is to it, is that Brexit has changed the nature of immigration in this country. That beforehand, it was all about people coming from, say, East Europe to do a job and then go home.

4:18But because of Brexit, well, first of all, we lost our returns agreement with the continent, which means we can't automatically return people. That's simply a lie. I must interrupt you on that because that's just untrue. The Dublin Treaty meant we took more people than we sent back because we accepted most of the applications that came to us. And the applications we made to other people were 96 % refused. Okay. Okay. So that's just untrue. Okay. So that's part of the argument. But the other part of the argument is that, excuse me, because we're no longer taking polls and Romanians, but because we still need labor.

4:51And in the wake of Covid, the then Tory government decided it needed a lot of labor. We've been taking people from outside Europe who have been coming not just to work, but to settle. Because the unspoken deal is come here and you won't be paid very much. But after five years, you can apply to stay and bring your family. So what the Prime Minister is saying is, is Brexit was meant to control immigration, but all it's actually done is change the nature of immigration, and it might be a more controversial form than it was under the EU. Well, there's one way of looking at this, where Andy Burnham is advocating a racist immigration policy, where it's all absolutely fine and dandy to have white people coming from Europe, and it's not so fine and dandy to people who are non-white coming from the rest of the world.

5:38I don't think that's what he means to say, but that underpins it. The second thing to say is the people who came from Eastern Europe stayed, and not just from Eastern Europe. When the scheme was set up for guaranteed residence when we left the European Union, we expected 2 million people to apply. These were people who had come under freedom of movement and had stayed, and we thought it was 2 million. Do you know how many it turned out to be? How many? 6 million. Right. So the numbers who came and stayed were enormous. And this was part of the issue with Brexit. It was not that these people were disliked or that they were bad people or anything like that.

6:20It was that they put pressure on schools and on hospitals and on roads and on house building, none of which has been alleviated. The house building targets are way behind. We've had fewer houses being built because planning hasn't been reformed. And six million extra people who came to live here. That makes the Boris wave look like a drop in the ocean in comparison. But was that 6 million over a longer period? It was over a longer period. But nonetheless, it was 6 million against 1 million. And 1 million as a response to a very specific crisis, which you mentioned, COVID. After COVID, there was a panic.

6:58But we thought British people didn't want to work anymore. They'd got used to being on furlough. They were taking early retirement, etc. etc. And it was thought that we therefore needed a large number of immigrants to keep the economy going. This turned out to be wrong. We have in this country 9 million people who are economically inactive. That's gone up by a million in the last few years since COVID. What you need to do is get British people back to work. And there are a number of ways to do that. One is that in social care, you probably have to pay people more. The other is you've got to stop welfare being a lifestyle choice, that welfare provides a de facto minimum wage that is currently higher than the minimum wage.

7:36And so people will not work if the state gives them something for nothing. It's just not, actually, there are millions of people in this country who work even though they'd be better off on benefits. But that's quite a hard sell. We don't need immigration. It's a treasury myth that we need immigration. It doesn't lead to economic growth. It's led to a decline in GDP per capita because of this excess influx. And the ABR a year ago did a report on the economic benefits of immigration, which was either incompetent or dishonest, because if you read the footnotes, it said that it was excluding dependents.

8:16Well, it's no good excluding dependents, because if you have one person coming and working who comes with a wife and three children, you've got the cost of four dependents to offset against the one income. If that one income is marginally ahead over a lifespan, when you take the dependents into account, it is a massive economic cost. So what we've actually got to do is wean ourselves off the need for mass migration. And we do that, first of all, by tightening the criteria so it's harder to get in. And then by restructuring the economy so that British people will work. And that is making it economically beneficial for them to do so.

8:56If you were offered five million pounds a year, would you work in social care? I suppose I would, yes. Yes. So it's not actually about the job. Would you pick strawberries for five million pounds a year? For five million pounds a year? Yes, I think I probably would. So it's not that British people fundamentally won't do it. Yes. It's that they're not paid enough to do it. Yes. And when it comes to picking strawberries, you need to look at Dyson and how you mechanize it. and you don't have a labor force coming, and farmers who are dependent on cheap labor need to change their economic model. If you're doing social care, you need a bit of innovation and a bit of technology and a bit of AI, and you probably also need higher wages for some people working in it.

9:39But you can't have the safety net of welfare becoming a trap. So it pays people so well that they won't take the lower paid jobs. So I think what is often misunderstood among the public is some people think that voting for Brexit was it. The Brexit was itself the outcome. No, Brexit is the tool that gives you the power to do other things. The problem has not been Brexit itself. It's that successive governments, once given those powers, have chosen not to do those things. You are absolutely right. Brexit was about democratic choice and what you elect governments to do. So I suffer from one particular aspect of Brexit, very hardly actually, which is that there's VAT on school fees.

10:27That could not have been done when we were inside the European unit, specifically prohibited. But it was the freedom of a democratically elected government to use a power that it has. We're using gene editing. That is a democratic power that we're allowed to use. On and on it goes. Our AI is much more effective in the UK than continental Europe because we've chosen not to regulate it. It's where most of our economic growth is coming from at the moment is from technology. And that's because we're outside the European Union. So there are a number of things that are already being done, but there's a lot more to be done to make it work fully.

11:04And the same applies to the ECHR. A lot of people talk about leaving the ECHR as the answer to a maiden's prayer. Not if people don't do something about it. In and of itself, it does nothing. You've got to then change the laws that can be passed because you're not signed up to some international convention. Yes, the great late Christopher Booker lent his name to Bookerism, which is something where some daft regulation that we blame on the EU, when you look closely, you discover is actually daft British implementation of something the EU has suggested. His point being that very often we have in the past been blaming the EU for what is actually a reflection of British governmental culture that we have chosen to overregulate ourselves.

11:52And leaving the EU calls the bluff. It says, right, well, you can no longer blame Brussels. So now it's entirely on the politicians to decide how many migrants they want to have, what regulations they want to have, what taxes they want to impose. And this is wonderful because it holds politicians' feet to the fire, that it was so easy for politicians to swan off to Brussels and say, we're posing this terrible new directive. It's outrageous. We think it's appalling. Then normally abstain, not actually do anything to stop it. Then get back to London and say, well, there's nothing we can do. It's those awful Europeans.

12:25And they'd probably have wanted to pass the same regulation themselves, given half a chance. Look at how natural England has regulated since we've been out of the European Union. which governments could have done something to stop and nothing's been done. Why oh why is Burnham bringing this up? Is this ideological Europhilia? Because for all his faults, Keir Starmer recognised that he could only win a majority in 2024 by making certain pledges, which he tried to get around, but he did make them, won't raise tax, or the three key headline taxes, and also stay out of the customs union, no freedom of movement, etc.

13:01Why is Burnham, representative of a red wall seat, a man of the people who's supposed to have this natural affinity for the British Brexit working classes, why is he saying, I think we should be back inside the EU? Well, the oddest one is to say freedom of movement, because although freedom of movement is implicit in getting back into the single market, we can't be in the single market without freedom of movement, to stand up and say he wants freedom of movement is perhaps the most unpopular thing he could possibly say. We have just brought mass migration under control, actually, thanks to changes in law made by Rishi Sunak.

13:38To say now you want to risk the million Syrians who Chancellor Merkel let into Germany, the half million migrants who got into Spain who've now been given an amnesty, all of them coming over, they won't go home. They're not the Eastern Europeans of all. There's a whole change. What about all those rioters in France who might be free to come over? I think coming here is rather nicer than being in a ghetto in France. Free movement from Europe is not nice Polish Catholics anymore. It's people who may wish us harm, who may have had terrorist sympathies. But it's become a remain talking point. That's the thing.

14:20The idea that leaving the EU actually made it harder to control our borders has become a talking point. And whether it's accurate or not, I hear it said a lot. It's clearly stupid. We made bad choices. They're culpa and all that. Because I was in the government at the time about migration. But they were our choices. The problem is you, not Brexit, Jacob. Indeed. Absolutely. Up to a point. Up to a certain point. I wasn't in favour of this mass migration, it has to be said. But I wasn't in charge of it.

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16:53They've been told by the factory we can't fulfill it because we're doing a mammoth order for the Labour Party. More seriously, I have been contacted by sources in both the Conservatives and the reform, and I don't know why they're asking me, but contacted me to ask, have you heard December the 10th and do you think it's possible? Now, I think don't rule it out, even though the Prime Minister has. We're used to this. PMs always have to say, I'm not going to hold a general election, because the moment they say they are, the election's on. So they have to act as though it's not going to happen. But I think one reason why it might happen is because this possibly is as good as it ever gets for Labour.

17:36Politically, the right is still divided, and it looks from some polling as if the Conservatives are starting to replace reform. There's one putting the Tories at 24%, reform at 20%. Reform will push back and say these people always oversample Tories or else they always compare it to 2024 and they assume that the public will come back to that. So reform will complain about the figures. But the point is they're pretty much neck and neck. And what Labour does not want is a situation in which Kemi Badenok actually really takes off, really outpaces reform, and it looks more like a Labour-Tory choice.

18:10So they want to get ahead of that development. So politically, it's a good time to go. He is relatively popular. He right now is the only leader with a positive approval rating because of things like Gogglebox, seems like a nice bloke, etc., etc. But then there's the economy. Now, I know a lot of people will dispute this, but right now the economy is not all bad. We're growing fastest in the G7. I know that's a low base, but we are. Productivity is a little bit up. Some of the decisions that Labour took are starting to hit. Unemployment is creeping up. It's gone up by about 0.5%. And that's very probably because of the national insurance increase, which has particularly hit hospitality and those who are lower paid.

18:54So in other words, things can only get worse for this economy. And if we get a budget which is very light, which doesn't really do very much, which avoids the very difficult choices that might reap dividends or might do even more damage for two or three years' time, that could be signaling to us that he doesn't want to do anything that spooks people in advance of calling an election. I mean, it's a very interesting thought. And he was close to Gordon Brown when Gordon Brown didn't call the election. And then it was never glad, confident morning again. There is an economic scenario that's much more positive than you say.

19:32That is that after the midterms, Trump bombs Iran back to the Stone Age, reopens the straight form use, get some sort of peace deal between Ukraine and Russia, and the oil price falls to$40 a barrel, which is not impossible. It doesn't look immediately likely, but if that happened at any point... In the medium term, again, that brings me back to December the 10th, because in the medium term, prices are going to continue to go up over the winter. And I'd imagine there'd be... Prices would probably hit their highest around January, February. Not if this all reopens. If it reopens... Markets are predictive rather than...

20:07So everything hinges on Donald Trump being bad and going to war with the Mullers. Okay. There is some economic prospect that is better. Yeah. The question for him is what level of majority would he be happy with? Yes. He's got 160. Now, what does he want out of an election? Rejoining the European Union without a referendum, I think, would be unwise from the Europeans' point of view, because the conservatives in reform will say, if you just do it by act of parliament, by act of parliament, we will leave. And we'll leave on a no deal basis. And we won't owe the Europeans any money. And we'll just leave.

20:49And you can't get around that. And so he'd have, I think, to have a referendum to make it permanent. That needs a bit of time anyway. Does he want a general election so he can raise income tax? But then if that's what the election's about, he'll lose because people aren't going to vote for an increase in income tax. But right now, just to step in that right now, he's handcuffed by Starmer's manifesto. You can write a manifesto which doesn't specifically say you are going to do these things, but which is worded in such a way that gives him greater freedom. It just is something. All it needs to be is a paragraph which says we will reconsider our relationship with the EU and you leave it totally open like that.

21:25It's the same with social care. Just say on social care, all you have to do is say we will follow the findings of the report, the Casey report. And that the findings report might say raise income tax. All that. But no, no, no. If he says anything that leaves it open to raising income tax, that's what the election will be all about. It will be the income tax election. Will you pay more tax? Vote Labour, pay more tax. And he'll be hammered on that every single day. And every press briefing will be the minister of the day being asked, are you committing not to raise income tax? And halfway through the campaign, they'll say, we're not going to raise income tax because it gets too difficult for them.

21:58Yes. And I think it's perfectly possible 10th of December. I think a snap election is what prime ministers want to do. I think constitutionally, it's a good thing. I think prime ministers ought to have their own mandate. Surprises your opponents. Neither of whom have right now got the candidates. I mean, that's another key thing. Labour has all the seats it could win. It's got candidates ready to run. Absolutely right. So you've got 400 seats where you've got candidates. The Conservatives have candidates in 130 seats, if that. Reform's got about half of them, I believe. Right, but half of them are bonkers.

22:30So that's a real problem for reform. Which, in all seriousness, the ITV expose demonstrated that this is the problem, is that the first two weeks of the campaign will probably be dominated with journalists just going through the Facebook pages of reform candidates. That's great for Kemi, because they're all very conservative. They don't switch from reform to Labour. The thing to bear in mind with the opinion polls is that the blocks, the left and the right, have been remarkably consistent. And the next election is going to be all about who can most unite his or her block. And if reform had a terrible fortnight because every candidate turns out to have said foolish things, those voters don't go to restore because you've got just as many silly things said by Rupert Slott.

23:15They go to Kemi. So there's a risk in that. There's a risk in the volatility of voters in recent years. And if you went back to 1983, it was easy for Margaret Thatcher to call an election because the opinion polls had moved and were steady and things didn't change much during election campaigns. 2017 upended all of that, and the opinion polls changed fundamentally during the election campaign itself. So all those clever people used to say, well, the campaign itself doesn't really matter. Oh, yes, it did. So it's not impossible. I think you're right that it looks pretty good for him now. His polling isn't quite good enough, but he hasn't had a string of polls that give him a lead.

23:58He's had one or two that have pointed in that direction. I think he'd want to see a post-budget poll that put him firmly ahead. And then it's a huge gamble, huge gamble. He'll be the second shortest prime minister after Liz. Well, depending on where you put Walter Grave and Bath, but assume we'll be glued Walter Grave and Bath. He would be the second-to-law's prime minister if he lost. Does he really want that? It is a risk for him. Final question then, and we're going to discuss more of this this week, so I don't want to say too much of it now. But if this budget is being trailed about things such as supporting people with energy costs, which is a very good thing to wish to do, but it doesn't reform welfare, It doesn't make substantial cuts.

24:43We're looking forward to a budget here which just repeats the Liz Truss mistakes, right? Although you probably think she didn't make any. But the point is that the big problem is the deficit. Is the deficit. We're spending too much money. And our expenditure is continuing to keep up. Our tax revenues won't go much further. They never do. You've therefore got$130 billion of deficit. and you've got another couple of hundred billion plus of maturing gilts that you need to refinance. That's 350 billion pounds you need to raise every year to keep things going and a gilt market that's demanding high yields.

25:17That's the problem. Yeah. And we've not had any discussion of that yet, which I find... No, nothing. It's the elephant in the room. Helping people with their energy bills without going on for Rose Bank and without going for hydraulic fracturing, you're not. It's a sticking plaster. It helps them for a few weeks, doesn't help them permanently. Finally, if there is an election on December the 10th, will the voters have the pleasure of being able to vote for you? I don't know, actually. I'd have to be selected for a seat between now and then. Right, OK. But I would like to give them this great opportunity.

25:49OK. Jacob Rees-Marc, thank you very much. Thank you, as always.

26:30We'll see you next time.

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