310. Gordon Brown: ‘I’d tell Trump he’s unpopular’

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21:53Robert Peston:I mean, on that important challenge, which you mentioned, Gordon, which is getting more young people either into employment or training or education and the numbers being failed at the moment, incredibly depressing. I understand that you think, and you were, of course, the Chancellor who gave independence to the Bank of England, one of your most important achievements. I think you think the Bank of England could have a role here. Can you explain that? I think we're coming up to 30 years since the Bank of England was made independent. And that was a decision we made in the first days of the Labour government of 1997.

22:28I think generally people would say it's been a success. I mean, the government sets the target, the inflation target, and the bank then is the operational vehicle for achieving it. So this is proper accountability. The accountability in the end is to the public through the government. And the Bank of England is not just free to do anything at once, irrespective of the conditions of the country. I think what happened after 1997 is that we wanted inflation and employment to be seen as twin goals of the Bank of England. In other words, low inflation and high employment were the aims that the Bank of England were to follow.

23:03I think generally speaking that has happened but perhaps in recent years the emphasis has been on financial stability and the Bank of England taking on more financial sector responsibilities for administering and supervision of the financial sector and perhaps it's been diverted into looking at some of these issues perhaps more than I had expected and more than perhaps is consistent with what I think is a more fundamental objective of the Bank of England and that is to achieve economic growth through low inflation and high employment. So I think the 30 years is up, and I think people, there'll be a time for reassessment.

23:39As you know, in the Federal Reserve in America, the new governor, head of the Federal Reserve, has got six, I think, working parties looking at a number of issues related to the aims of the Federal Reserve and its accountability. And I think these are issues we'll want to discuss over the next few months.

23:54Robert Peston:But can I just be clear that I understand what you're saying? As it happens, it was clear in the mandate that you gave to the Bank of England, which has been renewed by every successive chancellor and government, that the prime aim was to keep inflation, that was the target, at 2%, right? And although there is a subsidiary cause, which says something like, subject to the other economic objectives of the government, it was a very simple mandate. Now, in America, they do have a broader mandate, where essentially the health of the economy, more broadly, including unemployment, is taken into account much more directly by the Federal Reserve.

24:34Robert Peston:Are you saying that the time has come for the British government to perhaps adapt the mandate of the Bank of England to make it a bit more broad so that the Bank of England could have a much more explicit role in, for example, tackling what is a very significant problem of rising unemployment, particularly among young people? Well, we've got these issues of youth unemployment, which is very high. I mean, a million young people outside the labor market is a terrible tragedy for these young people, but a waste for the economy. And we've got the pressures from AI, which are bound to hit us. And one of the issues is whether AI will lead to a very substantial loss of jobs in certain sectors.

25:14And these would be possibly the middle class professional jobs, more than even manual jobs, which have been the jobs that have been automated in the past. but I'm not suggesting the Bank of England necessarily change its mandate. I am saying that when we made the Bank of England independent, we were very clear that high levels of employment were part of its objective. And although the legislation has a primary objective and the employment objective is side by side with it, we did think of it in similar ways that we think of the Federal Reserve in America, that employment has to be taken into account.

25:50Now we are facing quite big inflationary problems at the moment. So I would expect the Bank of England to pay attention to the rising level of inflation as a result of energy prices and the effect of the Middle East war. But I think we cannot as a society ignore what is happening in the labor market, that while more people are working than perhaps 10 years ago, 20 years ago, so the numbers of people in work are high because women are working more than they used to, and people are working longer than they used to, there is still the real danger that unemployment will go from 5%, 6%, 7 % and that is a real problem.

26:30When we had the recession in 2008, the global financial recession, we tried to keep unemployment as low as possible. And I think while in America it went above 10%, in Britain it never went above 7.5 % and then started to come down quite quickly before we left government. So employment must be at the centrepiece of everything that a government is thinking of. And of course, once you have people in employment, you have tax revenues, as well as having growth and higher living standards, and it does help pay for public services as well.

27:03Steph McGovern:Just on the point of employment then, and how the Bank of England would contribute to its success, you know, the levers is, you know, it's either quantitative easing or interest rate changes. If you look at the situation now, in order to increase employment, you would cut rates, wouldn't you, to increase demand, to encourage more jobs and more business. But that would be against inflation, so potentially push inflation up. So these things are currently going against each other. On top of that, you've obviously got government policy that's made it much more expensive to employ people now. So we've seen double digit increase, particularly in employing young people now.

27:39Steph McGovern:So on top of that, you've got the national insurance contribution rises. All of these other things mean that would be very difficult for the Bank of England to be able to have any input in employment if the cost of employment has gone up so much. Yeah, I said I would never second guess the Bank of England when I made them independent. And it's probably 30 years on is not the right time to start doing so. But you have always got to balance the concerns about inflation with the need for growth and employment. But I think we're pretty far away from a crude Keynesian that says all you do is increase demand and therefore you get jobs.

28:12I think there are huge supply side issues in the labor market that could be addressed. I mean, employers still say that they don't have the skills to do the jobs that they want done. I mean, in my own area of Fife, we've got an expansion of the defense industries and an expansion of renewables serving the North Sea wind power and everything else. and employers say they don't have the skills for these jobs. And I think this will be true of Middlesbrough as well as true of Fife, Steph, that you have young people leaving school and you'd like them to get apprenticeships, but they don't have the qualifications to get an apprenticeship.

28:48So we've got to do something about pre-apprentice training. And one of my proposals has been to get one of the redundant shops in the high street in Kirkcaldy, my town. Marks and Spencer are closed, Debenhams are closed, all the big stores, as you know, are leaving the high streets in many towns. And to make that a training center for pre-apprentice training for young people who've left school, perhaps without any qualifications whatsoever. So take young people out of what they might say is an academic environment, bring them to the center of your town, give them the chance to develop skills that they don't have at the moment.

29:21This has worked in Barrow, by the way, where, of course, there's a big nuclear submarine building program, and they have a submarine in the center of town in one of these old supermarkets where young people are trained how to be apprentices in the shipbuilding and ship repairing industry. So I think there's a huge amount can be done on the supply side. And if it were only a problem of increasing demand, we would return to the old Keynesian ideas of the past. But it's also a problem about supply and how you can get the labor market working better. I think if you look at the number of vacancies, of course, that's pretty static.

29:58But if you look at skill shortages, it's something that we really should address. And again, when we came into government in 1997, we immediately set up this youth employment program, New Deal. And we said young people had four options, but not a fifth. In other words, you could not now be unemployed if you were a young person. You had to be on one of the four options. And I think this is what the government is planning to do as a result of the report that's being done at the moment. But the sooner this is done, the better, because I don't think we could let another year pass without giving young people who are outside the labour market many, many depressed about their ability to achieve their own potential, feeling that nobody values them.

30:37We've got to do something about that as an urgent necessity.

30:40Steph McGovern:And we talk about that all the time on this, and it's one of our big beefs. But there's something else we wanted to ask you around all of this as well.

30:47Robert Peston:Yeah, I mean, look, obviously, when it comes to whether it's in the world of communities or indeed national renewal. None of this is exactly cheap. Although, you know, if it generates additional growth, greater social cohesion in the longer term, obviously this stuff pays for itself. I was slightly struck in your book that you said both the money-raising reasons and reasons of social cohesion, that you think we should look very seriously at having a wealth tax. What would a Gordon Brown wealth tax look like? Well, actually, there are many wealth taxes at the moment. So I don't say that in as direct a way as you think.

31:26There are wealth taxes at the moment. And the question is, do you replace them, which is something that I think may be being considered at the moment, and have one sort of kind of wealth tax? Or do you reform the existing ones? That's the point I'm making.

31:41Robert Peston:What's your preference? If you had to choose between those two paths, Gordon, which would you go down? Well, the truth is that in Britain, income is taxed quite heavily and wealth is taxed not so heavily as in other countries. The funny thing is that property is taxed quite heavily in Britain as part of a wealth tax. So I think you've got to look at a reform of existing taxes rather than you've got capital gains tax, of course, as well, which is another tax on wealth. So you've got these wealth taxes, and I think you've got to look at the consistency and the coherence between them. If you're taxed on property only because it's the council tax or when you transfer your property, which is the stamp duty, then people may say, well, you know, is that the best way of taxing wealth?

32:27And I think that's what the government should look at.

32:28Steph McGovern:What about people like Gabriel Zuckman who talk about this 2 % wealth tax on, you know, particularly rich people? Do you think we should have anything like that? Because that could be the thing. that's a very clear message to people you want to bring together and bring this social cohesion. It's a real like, yes, we are going to go after the rich. It doesn't necessarily bring in masses of money, but it plays to that point of people feeling like they, you know, the rich are paying their fair share. So Steph, you know, this is a global issue because basically if people can move their wealth, then if one country has a wealth tax and others don't, then there's obviously a huge opportunity for it to be evaded and avoided.

33:06We wanted after 2010, 2009, after the financial recession, Robert may remember this, we wanted a levy on the banking system so that we could insure ourselves against future banking failures. But the problem was if only one or two countries do it, then you're disadvantaged in an international economy. And the same thing goes for wealth. If the wealth can be moved to Dubai or moved to Liechtenstein or moved to Switzerland or to Luxembourg, then it creates a difficulty for those people who are trying to have a fair taxation system because people will eventually say that it's unfair, that some people can just walk away and other people can end up having to pay the bills.

33:47So I think you've got to be very careful about these taxes. is I've always said that it takes time to persuade people of the need for change. So I think I mentioned road pricing in the book. That's another issue that has got to be dealt with at some point because obviously if people have electric vehicles, then the existing forms of road taxation are not working. But you've got to persuade people. You've got to show people what the possible alternatives are. You've got to show people why you need to change. You've got to have quite a big public consultation before you make these changes.

34:20Robert Peston:Now, another big chunk of the book is about how countries like the UK have to make common cause with other countries that share our values in a world where you have these extraordinarily powerful countries, America, China, Russia, obviously, not in an economic sense powerful, but in a military sense behaving in a way that is hugely detrimental to the world. our interests. I was struck that in your call for much greater cooperation to solve some of these big global challenges between countries like the UK, Japan, France, Canada, you did some polling. And it was quite interesting to me that the country that I think you polled, what, 100 ,000 people or something?

35:15Robert Peston:It's an astonishing number of people. And the country they, in a sense respect most at the moment to show that kind of leadership is Canada. Is that because, in your view, it is Mark Carney, who is pretty much more than anybody else, stood up to Donald Trump in a pretty explicit way? And do you think Andy Burnham could take a lesson from that? It's interesting. I'm glad you asked the question about international events, because the starting point for this book was actually the breakdown of the world order. And I've been tracing it back to it really if you're not involved in your own local community you're 50 percent less likely to support international cooperation so there's a connection between the local and the global not just because global events like energy shortages or wars affect your standard of living but because what you think locally affects how you actually act and feel about local about international issues as well so i i think this issue about what we do about the world order which is every pillar of the world order is really crumbling.

36:21You know, everyone, human rights, rule of law, multilateral cooperation, humanitarian aid, environmental stewardship, all the things we took for granted are now under pressure and to some extent being diminished by a number of populist nationalist leaders around the world. So the question is what you do about it. So if you wait for America or China or Russia to take the lead, as probably people thought in the Cold War years it was Russia or America, now it's China or America, then some of the things that we think important will not happen. But 75 % of the votes at the International Monetary Fund and the World Bank, 12 of the 15 seats at the United Nations, they're held by countries other than the satellites of Russia, China, and America.

37:06So the question then is, can they come together as countries? And of course, when we ask people, do you want to come together, even if it meant a sacrifice of your own national interest? Now, that's a really demanding question. You're asking people to say, even if I had to compromise on my national economic and other interests, would I support cooperation? The majority, 55 % against 20 % said yes, as against 20 % saying no, and the others not sure about the answer. And so, yes, you're looking for countries that can lead this move towards greater cooperation. Now, it is happening in some areas.

37:43There's cooperation on the trade regime outside the World Trade Organization, so outside the power of America and China. There's a new treaty, a convention on crimes against humanity, and it's being led by Mexico and I think Ghana, one of the countries in Africa. And so there are initiatives coming outside the great powers. And when you look at the great powers that people are thinking, well, you know, who can make a difference other than the great powers? Canada, Australia, the United Kingdom, France, South Africa, I think also Brazil and Korea, Japan. These countries come up as countries that people respect as holding the same values that they hold.

38:24And at the same time, within these countries, there's a strong body of opinion that wants to cooperate with other countries. So what I'm really saying is a coalition of the responsible. I'm not suggesting just middle powers because there's the thing about middle powers coalition, but some of the middle powers would be taking the lead. But I think we can't wait for America to change its mind or China to change its mind, to take action on climate or to take action on human rights or on poverty around the world, humanitarian aid, or on just these big issues of peace and war. Now, in some cases, we'll have little influence because America's got power, China's got power, Russia has got the nuclear weapons that they can threaten people with.

39:04But in other areas, we can make a difference.

39:06Steph McGovern:Quickfire question for you. How would you deal with Trump if you were prime minister now then? Would you try and cooperate with him? It's interesting. I would tell, well, first of all, he's got a Scottish mother, so I would tell him we had something in common. But secondly, I would say to him, American public opinion is not with you anymore. I mean, if you look at the results that we've got from the opinion polls we've done, American people want to cooperate. They want America to be engaged in persuasion and not coercion. America, which used to act multilaterally in a unipolar world, has got to be persuaded to act multilaterally in a multipolar world.

39:43And the public of America are with us on this. And I think the midterm elections may be a wake-up call that the Trump view of the world, he does talk about reciprocity sometimes. So he does talk about cooperation in one respect, but the Trump view of the world that it's America first and only is something that is not actually held by the American people. And I would probably try and tell him that.

40:03Robert Peston:Well, I'm sure, since I imagine he makes a date, you know, a couple of times a week to listen to this podcast, Donald Trump will be hearing you loud and clear. I think if you offer to play golf with him, he might take you up on it.

40:16Steph McGovern:Yeah, this is very true. Thank you so much for your time. It's been great to chat to you. We will let you get on, but thank you very much.

40:23Robert Peston:Stimulating stuff as always. Thank you. Great to talk to you. Thank you. So I don't know what you thought, but as ever, I thought there were many, many interesting ideas that Gordon put forward in that conversation. It is really striking to me that 16 years after he's been Prime Minister, he is still totally engaged in the problems the country faces, actually the problems that the world faces. And I think, again, quite interesting talking to members of the government, senior officials. He's also still pretty influential in a sort of quiet way. People who matter talk to him. Yeah, I suspect that quite a lot of what he talked about today will end up in some shape or form as government policy.

41:16Steph McGovern:Yeah, because, I mean, Gordon Brown was one of those people who's been quite key in my career because when I was your producer, he was obviously Chancellor, then Prime Minister. And, you know, we spent a lot of time in Number 11, Number 10 together. And he's also the source of one of my favourite anecdotes, which I don't even know if he knows. I should have told him, but it's been mentioned a few times in the newspapers.

41:36Robert Peston:I obviously know this story, and I think it stemmed from when I rang you up one night and said, we're going in to, I think it was number 10. Yeah, it was. He was Prime Minister. He was Prime Minister at the time, and I think I rang you up. There was quite a lot of noise in the background. Can I set the scene? And I said, we're going in tomorrow to do an interview.

41:52Steph McGovern:Yes, let me set the scene. I was in Hyde Park. I was working for Radio 2 as well, so I was moonlighting. I was your producer, but I was also doing the business news on Chris Evans' Drive Time show on Radio 2. And I had been at a party in Hyde Park with, you know, I'm just going to drop a few names, Kylie Minogue. And then you rang. And the thing about you ringing is, you know, it's not for a chat. You know, it's going to be like some big exclusive, especially at that time, because you were just constantly getting all the news. And so I was tempted to not answer. But, you know, being the diligent producer that I am, I did answer.

42:26Steph McGovern:And you're like, right, you can't really you tell anyone Steph but we've got an interview with the Prime Minister first thing tomorrow at number 10 you can you sort the crew I mean you're a bit nicer than that but not much and so I then was drunk having to ring the crew desk and go I need a crew for tomorrow at number 10 and they were like why and I was like please can you just sort the crew because obviously we were conscious of this information not being leaked as well I obviously sounded drunk and was drunk and there was all and by the way I wasn't on duty I wasn't drunk on duty I was off but in the nature of news you're never off and so ended up sorting out the crew and then and they were really questioning my sanity on the phone the the team back in the newsroom at the BBC and anyway it was all sorted and I thought you know what I'm not leaving this party I'm gonna stay which meant I ended up going back to Chris Evans's house with loads of the gang and because and then woke up the next morning at some ridiculously early time my alarm went off and I was like oh my god I've got to get to Downing street teams for the Bramster.

43:25Steph McGovern:I know. And I walked into Chris Evans' kitchen and I said, I need to be in Downing Street in an hour. And he went, take the Ferrari. And literally, one of his team drove me in the Spy 100 Ferrari to Downing Street. And then I rock up and I'm walking down Downing Street, hammered. Then we go in to do the interview. And one of the interesting things about Gordon Brown, which is the same in this interview we've just done with him now is he doesn't have an entourage. He's got his security, but he doesn't have this like massive entourage. And he didn't. And we were in the setting up to do this interview.

44:00Steph McGovern:You asked me something about your hair. Like you were like, does my hair look all right? Or do I look, am I, do I look all right? And I said, yes. And then Gordon Brown asked me the same question. And he slightly, his hair was not right. And I thought, do I go and help him with his hair, with the potential I might throw up on the prime minister? Or do I just tell him it's fine with the potential of getting in trouble afterwards because his hair wasn't fine so what did you do i just kind of did this thing i was going oh just give it a and then about an hour later or whenever threw up in the toilet at number 10 i was in my 20s i was in my early 20s work-life balance

44:37Robert Peston:yeah of course that was the precedent for all the people who threw up during covid when they're

44:41Steph McGovern:in their covid parties yeah well yes i mean i wasn't breaking any rules and you know are you

44:48Robert Peston:still living that kind of high life?

44:50Steph McGovern:I'm definitely not. I've got a six-year-old child and I'm well past any fun like that anymore.

44:56Robert Peston:I'm not drunk for this one. I'm reclaiming my teenage years. Yeah, I know you are.

45:01Steph McGovern:You really are though with the band, all the jewellery as well. You're wearing so much jewellery now. Is this the midlife crisis in action?

45:08Robert Peston:As I think I said in some interview, my entire life has been a crisis. So there we are.

45:13Steph McGovern:This is fair. I can vouch for that. Right, we should go. Thanks for listening. That's it from us on The Rest is Money. Bye-bye.

45:18Robert Peston:Goodbye from me.

45:48Robert Peston:It will be an adventure for the whole family. And watch the Oscar-winning phenomenon at home. This is sick! Avatar Fire and Ash, now streaming on Disney+. Rated PG-13.