124. Can Labour Restore Public Trust in 2025?

0:11Hello and welcome to The Rest is Money with me, Steph McGovern. And with me, Robert Paston. So we've got another questions special. What are we going to kick off with? Yeah, we're doing a bit of nostalgia, I think, in this one, because we've had quite a few questions from our listeners. Thank you to everyone who sent them in. Just about things that have kind of stood out to us, really, from what we've heard from people who we've interviewed on the show. because obviously we've interviewed all kinds of characters and players over this past year or so. You know, everyone from business leaders to global economists and political leaders and everyone else in between.

0:49So Oliver Sandman asked this question. What's something that a guest has said on the podcast that has stuck with you the most this year? You know, apart from you calling me a knobhead repeatedly, I'm going to think about something else that has stood out for me. But what stood out for you, Steph? Do you know, I think for me, it was when we had Professor Liardon, who's this brilliant economist who talked about how happiness should be the aim and everything else will fall into place if political leaders, if as economies, we focus on happiness. Now, before we spoke to him, I was a bit like, ah, that's a bit wishy-washy, happiness.

1:33How would you even measure happiness? What does that even mean? Happiness is relative, blah, blah, blah. How is that a target for a business or for a politician? But then when he explained it to us and he gave us those amazing kind of, I guess they were like benefit to cost ratios of, which were examples of it, it really kind of triggered something in me that thought, yeah, maybe he's right. So some of the examples he gave us were like the average road scheme only produces benefits worth three times the cost. And he gave some examples of particular ones, whereas structured wellbeing lessons in school have benefits that are 27 times the cost.

2:21Now, again, there's obviously a lot of questions around how you measure all this but that's like a really standout thing isn't it if we focus more on making people happy then that will make them more productive it'll make them you know look after their health more they'll be happier probably because they are healthier and that will mean that you know there's less pressure on services and public services so i don't know i just that for me was something where i thought it was where i changed my mind from thinking that is wishy-washy to actually know maybe that's what we should all be focusing on.

2:52Look, I agree with you. I thought it was an absolutely gripping episode. He's an economist. I think he's now in his 90s. And he has literally devoted his life to trying to change the framework of policymaking and indeed economic analysis so that it takes much more account of happiness. And you can just see its applicability to a country like the UK at the moment. There is such a link between health, happiness, and indeed, prosperity and growth. And one of the great failures of this country in the last 20 years is just the sheer numbers of people who are less healthy than they should be in a rich society like ours.

3:39They're out of the workforce. Many of them have mental health as well as physical health problems. And if we devoted much more resource to stopping people getting ill in the first place, I think that the knock-ons to almost every aspect of the things we want from a society would be so positive. And now this is the government talks to talk about doing this, but in terms of a genuinely ambitious program to improve our lifestyles, to improve the way we eat, to get more exercise, to get much more earlier diagnosis of when things are going wrong, both physically and in a mental sense. If we just devoted way more resource to that sort of end of what you might call public services, I mean, the knock-ons would be enormous and they would be measured, frankly, in us being a much happier place.

4:36And also, if you look at a lot of the problems we have as well, it's health is a massive one, but it's also that kind of, there's a lot of toxicity around, isn't there? And I really was interested in the point that was made by Professor Laird about how a lot of that comes from this kind of forced personal competition against each other and this kind of toxic nationalism and, you know, it's us versus them. And instead, if we thought more about this kind of collective missions, and he cited the Scandinavian countries and how they often rank happier because they have these kind of egalitarian values and community focused upbringing, that the science is there to show that that thing does happen.

5:19I see myself with my little girl now at school. There's already competitive things in there, like who's got a prize for them in the best behaviour and who's got the most points for this and who's... And you're like, can we just let them not compete against each other all the time? So I was also very struck that when we interviewed Lauren Mistry from Youth Employment UK, she said that one of the most striking findings of this very ambitious poll they've done of attitudes of young people is actually how anxious and unhappy they have been made by this sense that they've all got to compete with each other.

5:58Yes, the kind of pressure of competition was something that ran through all of their research that they did in terms of it being something that hampered lots of different parts of their lives. So they were saying that young people feel in constant competition with each other for jobs, housing physical mental health care and then they'll be put off applying for jobs because they'll be worried about the competition and then they'll kind of not feel like they're going to get the health care they might need because again they're worried about how many other people are doing it and even just in terms of where they live the lack of affordable housing it affects what jobs young people apply for and where they go and there's this constant thing of I'm against someone else.

6:40And that is having an impact in lots of different elements of young people's lives. So it feels like if we did what Professor Layard's saying, where we put happiness and collective missions at the forefront, that would then change that mindset and make us a better economy because of it, not just happier, but also having more chance to grow and prosper. I mean, there was one other complimentary interview we did on all of this. I think you were away at the time. I had a chat with an economist, Danny Blanchflower, used to be on the Bank of England's monetary policy committee. And more recently, he has been devoting himself, actually doing work for the UN on this, developing research that he's been doing for years on the issue.

7:25basically young people have become more unhappy. I mean, there has been this extraordinary shift over the recent decades. 20, 30 years ago, when you measured how happy people were through the life cycle, it was older people who were unhappy and young people were typically optimistic and positive and happier. And it's almost completely correlated with the rise of the smartphone and social media. But over the last 15, 20 years, older people, relatively speaking, have become happier. But rather worryingly, this is deeply troubling, younger people up to mid to late 20s have become significantly less happy.

8:18And, you know, we've seen at the extreme end a rise in people taking their own lives, you know, when they are younger, but just a massive rise in mental ill health, depression and other mental ill health conditions. and just a general rise in the unhappiness, which he is absolutely convinced as a result of his research is correlated with, as I say, the proliferation of smartphones and social media. And he persuaded, I mean, I don't know what you think about this, but I am now of the view that actually young people should not get smartphones or indeed full access to social media until they're much older.

8:59And, you know, I think I am now in favour of saying that you should not have a smartphone until you're 16 and that some other kind of rather more basic mobile communication, fine, but a fully-fledged smartphone, I do think it would be healthier for the whole world if people didn't have them until they were 16 because the evidence of psychological damage is just unanswerable. So this is the exact thing I'm going through within the parents' WhatsApp group I'm in about when is the right time to kind of let your child have a phone, be connected, as it were. But there are levels of phones. I don't think a paired back communication device, but it's the access to particularly social media and all the psychological, emotional pressures that that brings on young people and the addictions that I think are now unanswerably causing terrible harm.

9:55Yes, but here is the constant battle you're having, right? So my little girl uses the iPad to watch things on YouTube, to play games, there's educational games on there, there's all sorts. That is the way of the world. We are all connected all the time. At what point do you let your child be connected where it's not dangerous because they're older and they understand it versus they get left behind because they're not using the technology everyone around them is? That's the kind of debate you end up in or your child being bullied because they're the only kid in the class who doesn't have a phone or you know that this comes back to that point about collective missions to be honest I think we've decided in our group we're all going to try and decide this together about when we give our kids phones or whatever but you know only takes a couple of pens to just give them now and that causes chaos for everyone else.

10:49But I'm saying something to be perfectly frank much more controversial than what you're saying I'm not saying this should be I'm I'm not saying, you know, this is a voluntary thing for parents. I'm saying there should be a government rule that says they are illegal until you're 16. But they'll find a way around it, Robert. It's so impossible to police that it's a bit like back in the day, like underage drinking. I did loads of underage drinking as a kid. Sorry if my parents are listening. But, you know, at 12, 13, I was knocking back the white lightning on the park bench. Yeah, sure. Look, I wasn't knocking back the white lightning, but in my day, I'm a bit older than you.

11:23actually they didn't even bother to ask you if you went in I was 13 went into my local pub and they'd serve you a pint but to be clear though just because there are ways of getting around a rule yeah you should still have the rules that the rule shouldn't be there I mean there is definitely less underage drinking because it's illegal right and there would be less damn if if these you know yes of course people would get around it and yes you I agree with you If you were to bam smartphones till somebody was 16 or 13 or 14, I mean, obviously, there's a debate about what the right age would be. But of course, you then have to have workarounds in making sure that kids still learn about how to program, use AI, get all the technological education that they need that's going to make them competitive for their lives.

12:13But I do think reducing their access to the services that we can see cause psychological, significant psychological and emotional damage. I just think the costs now are so great to us as a society. We have to do something radical about it. But, right, I totally agree with you. I hear what you're saying. But now the world is so connected that there isn't, I think social media is not even going to be a phrase we use in the future because everyone's just connected and talking to each other all the time. If you're a kid playing a game, you're normally playing it with somebody else who's not in the same room as you online.

12:49You know, most gamers are playing with people from all over the world. Is that social media? Because that's where they're talking to each other as well. It's chat rooms. It's so much bigger than it just being like Instagram or X or whatever now or Snapchat. It's in every aspect of our life and that's only going to get bigger and bigger. So is it not about education more than anything in terms of teaching kids about safety and all that? Just as much as it was back in the day, it was don't talk to a stranger if they want to show you their puppies. Now it's like actually more about the education we need to do.

13:21And of course, these, whatever we're calling them, these companies need to absolutely be on top of it and not have young people seeing things they shouldn't be seeing. But I think it's just too much about education. So I think education is really important. And obviously, we should be doing way, way, way more in helping young people understand what safe use of these services should be. And we need, you know, the big digital companies to better enforce age restrictions on all sorts of services. Of course, all of that is true. But the more fundamental issue, which I accept is complicated. Yes, as a gamer, am I saying that no young person should have access to computer games and therefore have access to the kind of social experience when there are multiple gamers playing?

14:10I think that would be very hard to enforce. But if I just think about the simplicity of my childhood and indeed your childhood, even though you're a lot younger than me, where the social circle was relatively confined to the community in which I lived. and I did not feel the need to expose what I was doing hour by hour to an enormous audience and then I wasn't exposed to commentary on that and feedback on that. These new social worlds that young people are being forced to join in as a result of having these smartphones, they just put pressures on them that I think are unsustainable. Right, I think we should probably have a quick break and then after it, We'll find out, what is the thing that stood out to you from what has been said on this podcast over the last year.

15:08So let's have a quick break. We'll see you in a couple of minutes.

15:35now we're talking before the break about what's kind of stood out to us in terms of things that have been talked about on the show things that the people we've interviewed have said what's the thing that stood out for you robert so it wasn't one interview but it was a theme that we talked about a lot before the general election and we talked about it with torsten bell uh who at the time was running the resolution foundation he's now a labor mp he's even got a sort of very junior ministerial, you've got the most junior sort of government job within the cabinet office now. He's part of this government.

16:08We talked about it with Paul Johnson, head of the IFS, which is probably the most respected forecaster of the public finances. Paul actually leaving the IFS. But what I talked about with them, and I'm pretty sure I also talked about it with former chief economist of the Bank of England, Andy Haldane, this is before the election we talked about how there was no money in the kitty for whoever won the general election and in fact we talked to Paul Johnson and to Torsten Bell on the day that Rishi Sunak called the election you know I remember talking to him about how the amount of money that any government was going to have to find to stop public services from completely collapsing was 30, 40 billion, maybe more, right?

16:59So, you know, we were clear on this show, I'm talking to people who are absolute experts, that there was a black hole in the public finances. And then we went through the entire general election. I mean, it's not surprising, given it was a black hole created on their watch, the Tory party denied the black hole. The bit of it that I still find shocking, and I think actually was a massive strategic mistake made by the Labour Party and by Keir Starmer, is that they refused to engage until they were in government with the fact that they were going to have to raise taxes to fill this black hole. And over a period of a year, I actually interviewed both the now Chancellor Rachel Reeves and Keir Starmer.

17:46During the general election campaign, there's an interview that I did with him, which I looked at again recently, in which I said to him, you're going to have to find 40 billion pounds. Be honest with the electorate. You're going to have to put taxes up. And he refused to engage in all of that. And then after the election, they came up with something that is semi-spurious. It's partly true, but partly not true, that they suddenly found this black hole. Right. So, yes, the public finances, there was some overspending by the last government that they didn't recognize. But to be clear, the majority of the black hole was there for everybody to see for weeks and months before the general election.

18:30And Starmer and Reeves refused to acknowledge it. They then put taxes up. And it's little wonder that trust in this government has collapsed since the general election. because when they now say, oh, this is all a terrible shock, that is utter rubbish that it was an utter shock. They just decided that they were too frightened before the election to talk about the taxes that they needed to put up. And they even did something that I think you and I both agree was incredibly stupid, which is they ruled out putting up the taxes that frankly would have done less economic damage. They ruled up putting up income tax, corporation tax and VAT and national insurance.

19:16And so they've ended up putting up one part of national insurance on employers, which I would regard as actually the most damaging, economically the most damaging tax they could have raised. Right. Because it will suppress wages. It is damaging confidence. It is undermining business confidence and therefore also reducing investment. So it's also putting up inflation. Let's be doing a whole variety of negative things to the economy. and this was self-harm and harm to the British economy that could have been avoided if they had simply done what experts who came on to this show told them to do, Torsten Bell, Paul Johnson, Andy Haldane, and basically say, this is what Starmer and Reef should have said before the election.

19:55If you want a health service that is not collapsing, if you want schools that are not collapsing, if you want to increase the security of the country by giving the armed forces the resources they need, your taxes are going to have to go up. You're telling us that's your priority if you vote for us. Look, we're sorry to say we will have to put taxes up a bit to pay for these things. My own view is that would have not only been an honest message to the electorate, and we wouldn't have seen that collapse in trust subsequently, but I also think actually voters would still have gone for Labour in those circumstances.

20:29So do you think if Labour would have been honest about this, they would have still got in? Yes, I'm absolutely convinced they would have still got in. I mean, all the opinion polling said that the priority of the British people was to fix the health service. Right. And British people are not stupid. Right. They don't believe that the tooth fairy is going to pay. In this case, what we've what we've seen since the election is an announcement of 22 billion going into the health service over a period of about 18 months. You can't get that sort of money from the tooth fairy. You have to put taxes up.

21:02And my own view is, you know, if they basically said, look, we understand it's been a tough time. We're not desperate to put taxes up. But, you know, the burning priority for the UK is to fix core public services, especially the health service. And in order to achieve that, we fear that all of our taxes are going to have to go up a bit. I actually think, obviously there'll be people at the time of the Labour Party who'll disagree with me, but I do not believe it would have had any impact on their ability to win the general election. So if you're saying it wouldn't have impacted, let's look at it now.

21:42Does anyone care that they actually weren't honest about it beforehand? You obviously do. You and I have talked about this. But do you think the electorate cared? Do you think that they care that they might have just fudged it and not told them? Because that's the other thing here. They were probably on balance thinking, well, once we get in, are they going to be that bothered if we announce it and we weren't honest beforehand? Look, it's clear that voters really care. I mean, it is extraordinary how fast the popularity of Starmer as an individual and Labour as a party has fallen since the general election in which they won this enormous parliamentary majority.

22:26I mean, it's sort of jaw-dropping how unpopular they've become in that time. Now, the decline in their rating doesn't quite compare with the way that the electorate sort of turned against Liz Truss in a matter of a few weeks. But she really was an anomaly. I mean, we'd never seen anything quite like the chaos in the Tory party that led to her being chosen as leader after the fall of Boris Johnson and then the chaos in the financial markets that were caused by her mini budget. But in terms, therefore, of what you might call more mainstream political changes of power, general election in which somebody in the form of Starmer and his party win an enormous majority, you know, the way that the electorate has subsequently turned against them is incredibly unusual.

23:14but also just to develop a point that I've already made, they put themselves in this straitjacket where they were very restricted. They had to raise the money. They did it by putting up national insurance on employers by a staggering£25 billion. That makes it harder for them to grow the economy and grow living standards. And if they don't deliver on living standards, this collapse in trust in them that we've seen in these opinion polls will be translated into genuinely outright hostility among many voters. If Starmer cannot raise living standards in the course of this parliament, I think their prospects of winning the next election are pretty slim.

24:03As things stand now, what do you think their chances are of restoring that trust? Look, there are four and a half years to go before the next general election. What's the maximum time? I mean, you know, most parties want to go to the country normally about a year before the last possible date. But, you know, if nothing went well for them, you know, they've got up to four and a half years to go to the country. It's a long time. Right. But it's quite difficult to be optimistic about growth over the next year. At the moment, actually, as it happens, average wages are rising a bit faster than inflation.

24:39So maybe living standards will improve a bit over the next year or so. Although, as we've talked about before, and this is something that poor old Joe Biden suffered from, or Kamala Harris, you know, as his successor, suffered from, Even when living standards rise, it takes quite a long time for voters to feel it and acknowledge it. If you particularly talk to people on low incomes, they still say they're massively struggling at the moment. So, you know, if I just look as far as it's possible to realistically forecast at the moment, I cannot see the economic conditions are going to improve enough for Starmer and Labour to feel confident that their popularity is going to improve anytime soon.

25:36But, you know, to repeat what I'm saying, it's a long time till the next general election. Can you imagine if you are Keir Starmer listening to this podcast now? I mean, one of the things that's really, really striking to me, he is plainly somebody who has enormous self-belief and also loves being prime minister. You'd have thought, given the number of things that have gone wrong for him so far, that, you know, you'd be able to sort of see the burdens of office etched on his face and in his body language. but actually, you know, I saw him yesterday and he's chipper. He's buoyant. It is, I mean, you know, it's remarkable.

26:13Fair play to him. Yeah, totally. I think we should wrap things up there. Thank you for that question though, Onovo, because that was a good one just to kind of look back on what we've been saying over the last year. We will, of course, try and answer as many questions as we can over the next year too. So do send them in at restismoneyatgmail.com. Since we have been looking back at the last year, I just want to say thanks to all of you for listening. And just to repeat, we love to talk about the things that matter to you. So don't be shy in telling us what matters to you. Yeah, very good point.

26:51Right. That's it from us then. Bye bye. All the best. Goodbye.