Badenoch woos WhatsApp plotters

0:06Here I am on the 23rd floor of Manchester's tallest building. It's the hottest ticket in town as the Tories gather here to celebrate the woman leader they owe so much to. 15th of May 1989. Nobody ever forgets the day they met Mrs Thatcher. She breathed new life into Great Britain and the rest of the world. But what does that tell us about the Tory party? The fact I'm stood here listening to Depeche Mode like some sort of, you know, spangled trader on the metals exchange in the 80s. I've just bought a big house in Basildon. I'm about to drive home in my Alfa Romeo. Life is good. Mrs. Thatcher's don't come along very often.

0:53You better recognise that. What does this obsession, pathological obsession with Mrs. Thatcher tell us? I think it tells us something quite profound. And it's not the message of this immortal song from Yaz. The only way isn't up. It's back to the future with this Conservative Party. And as it faces an uncertain present, it's taking solace in the past. Get away into the night and then you put your arms around me and we tumble to the ground and then we say, I think we're alone now. There doesn't seem to be anyone around. And that's what Kemi Badenok is feeling right now. Isolated within her shadow cabinet, doubted by her parliamentary party, but approaching this conference with a new resolve.

1:41She's doing what she said she'd never do, announcing policy. She's putting it all out there. But is it enough? Is she alone now? Trying to get away into the night And then you put your arms around me And we tumble to the ground And then you say, I think we're alone now. There doesn't seem to be anyone around. Wow. Patrick, I think you need to explain yourself. Look, sometimes at Tory conference you end up in the bar of the conference hotel at the Midland here in Manchester, surrounded by important people. And some nights you end up at Margaret Thatcher's 100th birthday party, taking the temperature of the people who this whole thing is for, Tory members.

2:27and various party luminaries. And that's what I was doing last night, trying to get to the bottom of, you know, what's really going on inside their heads. And I think I really discovered what's going on inside mine. Yeah, and we're also now all living in fear that we're actually going to have to sing for this podcast in future weeks as well. Well, look, I'm a triple threat, Caroline. I don't know about the rest of you. But yeah, I'm happy to volunteer. Welcome to The State of It, the political podcast for The Times and The Sunday Times. and we are coming to you from Manchester and the Conservative Party conference where we have frankly a lot to talk to you about.

3:03It has been an interesting couple of days. The big question on everybody's lips is about Kemi Badenoch and her leadership and the dismal year that the Conservative Party has had and whether their fortunes in the polls mean that she will stay as leader for very much longer. There seems to be lots of plotting and intrigue going on. We're also going to talk to you about the Chinese espionage case, which has been rocking Westminster. The decision, it seems, by the government to not designate China an enemy has led to a briefing war between the Crown Prosecution Service and the government. And real existential questions about whether we see China as a national security threat or a cuddly trading partner.

3:51and lastly that big number the OBR the headroom that Rachel Reeves has for her budget that surely will determine not only her future but potentially the future of the entire government. Right let's kick off here at Tory conference which is full of its usual intrigue and plotting and I can make I think an unusual claim I can say that I have spoken to a fifth of the Tory party now I can only say that by virtue of the fact they've only got 118 members but we have done all of the breakfast the lunches the drinks the dinners the 1am partying with patrick singing we've been there we've seen it it's magnificent um and i think what i have picked up broadly is that there are two things happening at this conference there are some people who are saying that having seven leaders in 10 years would be completely insane and it would look like madness to voters and there are other people saying that this is like a New Orleans funeral, is how someone poetically described it.

4:50It's all colour, it's all light, and it's all joy, but ultimately we are saying goodbye to a corpse. So two camps, and I'm going to postulate right now that both can be right. Yes, Steve, there's a rationality to both cases. That is the fundamental problem here. I mean, let me take you inside one of those camps, i.e. the this is terrible, let's get rid of Kemi as soon as we possibly can. People might have forgotten, I mean, there was no reason to pay attention to any of this last July, that one of the first things the 1922 committee did was it changed the leadership rules that were Theresa May's undoing, that were Boris Johnson's undoing, that every Tory leader has come a cropper of, basically, because the 1922 committee, that all-powerful Politburo of party grandees, have knocked on the door and said either your time's up or the requisite number of letters of no confidence have come in.

5:39the two key numbers here the 3rd of november it's when kemi baynock's year's immunity is over she can be challenged and 36 which is 30 of the parliamentary tory party actually 35.7 but you obviously round up not everyone's asempic has been that successful uh although there's a lot of it on show here in manchester um oh well no no no sorry let me out myself as a proud user of manjaro I'm not ashamed and neither should half the shadow cabinet, that's what I'm saying and they are half the people they once were as am I, but can the people who want to get rid of Cammy Bay not get 36 MPs by the 3rd of November maybe not, but what her detractors on the front bench of the Conservative Party say is we have loads of people ready to put that letter in to Bob Blackman, the chair of that committee, as soon as we possibly can and that is the key test, you also have people in the shadow cabinet and on the shadow front bench you know shadow junior ministers who are discussing the question okay well what if we want to bring this to a head really quickly you know it's not the case that kemi has four more years until 2029 it's may it's may 2026 the key local elections in england and the devolved elections in scotland and wales that could well decimate the conservative party as a truly national party it will kill their activist base, get rid of all their councillors.

7:04So the live question is, do some people at the top of the Tory party, shadow cabinet ministers, shadow ministers, resign and try and bring that issue to a head and say, we want rid of Kemi now? Now, I suspect those people having that conversation know, frankly, the number of people who could resign from the shadow cabinet and get a line in the times on a good day is actually quite small these days. But it shows you there's a level of impatience here and I think you'll think about two conferences absolutely right Steve there's this overwhelming mood of not even despair sort of inertia and apathy there's a sense that this party isn't really going anywhere and it's divided between people who basically want to wait and see and those who think no we've got to grab this by the scruff of the neck and do something now otherwise the stakes are existential I think you're absolutely right Patrick and those conversations are absolutely definitely going on but I think Henry Baden-Docq's team are actually quite aware of it too.

8:00My understanding is that they have, they've come to find out about a WhatsApp group that contains 14 MPs who are basically agitating for her to move out of the way. And my understanding is that there is now a charm offensive underway to try and persuade them that actually sticking with Kemi is the best thing for the party. They don't want to see another new leader to spend another year coming up with new policies, to have another year bedding in, that they think that it's time to actually wait and give Kemi a little bit more time. But they're aware that there are at least 14 people that want to push this over.

8:38And I think some of those people actually, from what I understand, are also on the defection list as well. So they're worried about them going to reform. And I think that there's been some conversations behind the scenes about the kind of things that they might be prepared to offer them in future to stop them to defecting from reform as well. what a knighthood here a peerage there that sort of thing potentially i mean we all know that goes on you know i think there's kind of a curious symmetry between last week's conference and this you've got two leaders whose parties are possessed of clarity about their personal weaknesses but who are to use the word that patrick referred to gripped by this inertia i spoke to an mp earlier who was insistent that they'd overheard one of Kemi's staffers partaking in a job interview in the vestibule of a train on the way up on the phone.

9:30And everybody knows what Kemi's weaknesses are. And yet, as Caroline was saying, there is this, there is somebody of opinion in support of the, let's give her a few more months. I suppose one of the kind of strategy questions that interests me is what do you do with that time? And, you know, Kemi's big flagship announcement over this conference has been that they'll leave the ECHR. Danny Finkelstein has a great column today, which he makes the case that rather than trying to outbid reform and migration, which is never going to happen, is there something to be said with the budget coming up that Kemi attempts again to kind of wear the clothes of fiscal responsibility?

10:11There are a lot of people here that say, well, that can never be recaptured because of the Liz Truss misadventure. But Danny quotes this amazing polling. He spoke to various pollsters who say that people, a lot of people don't even remember who Liz Truss is. And I actually got in touch with Luke Trill from More Uncommonist polling agency. And he sent me a questionnaire, which was, should Kemi kick Truss out of the party? And by far the biggest group of respondents was don't know. which I think we can infer is because lots of people don't actually know who she is and have a vague recollection of the mini budget but don't instinctively know what that refers to so you know I can see a case being made that you know give Kemi time to react to the budget give her until the locals but obviously the kind of meta picture is as noxious for her as it was last week.

10:58That's a great point Gabriel I completely agree one of the problems for her is what she won't say. So we did an interview with her on Thursday in which we asked the obvious question that is being asked of her at the moment, which is, if it goes badly in May, will you rule out resigning? And do you know what? She wouldn't. She wouldn't go there again and again. And I have spoken to several shadow cabinet ministers who are absolutely bewildered by that. They say the obvious response is, absolutely not. I am going to stay the course. I am Iron, I am Thatcher's heir, and I'm going to fight. And you project the confidence.

11:28But talking to some people who are really close to her, they say that the reason that she won't rule it out is because she was giving an honest answer to an honest question and that if push comes to shove and it's gone very badly then she will go and that is also we should say what Robert Jenrick very clearly wants the hope of Robert Jenrick and his allies is that they get a kind of bloodless coup that they get a coronation and you don't have the usual spectacle of brutal letters infighting they don't want that they think that will be a kind of absolute disaster so you've got a party which like as you said Patrick is kind of it's almost at a crossroads here and I think there is a world in which we do get all the way to May and then after that it all hell breaks loose but certainly there's lots of people who could go over the line and defect reform before that who could put in confidence it's very unpredictable territory and the question is you know if a tree falls in a woods does anyone hear it will it actually get the coverage because getting good coverage for the Tories is really difficult nowadays because they are the third party.

12:32But that's the case for Robert Jenrick. That's one rational case for Robert Jenrick that he would allow the Tories to test, okay, is this a big structural problem? Is it over? I'll reform the main party of the right or can the Tory party, led energetically by someone who knows to get media attention, even as the shadow justice secretary, right, who cares, ultimately. I speak as someone who followed the work of Siobhan Mamud in opposition very closely, but I accept that wasn't a majority pursuit in the country. He would allow the Tories to prove, does that improve their poll ratings or basically, are they dumb?

13:06And it's interesting Caroline was talking about Kemi schmoozing before, because that's the other thing Robert Jemrick is proving to be very good at. In a very low-key way, you know, I've spoken to several MPs who have said, Robert Jemrick's got in touch with me, asking if I want to catch up. You know, we can all decode the subtext of that. People who, lost jobs or are no longer on the front bench. He's very good at doing the things Kemi can't or won't do. For instance, I was speaking to an MP who relayed the story of one of their colleagues. I won't name them to spare their blushes, but they were the MP for a rural seat in a particular county.

13:41They said, Kemi, can you please come and speak in my constituency? To which the answer came, I'm not actually coming to that part of the world anytime soon. So, no, if MPs have a difficult council by-election, the sort of thing they spend weeks and weeks slogging their guts out, inevitably, to lose their deposit to reform and feel awful about their lives. Robert Jenrick's on the doors with them. So, it's that combination of very effective, raw politics in terms of people politics and the big razzmatazz, the judges' wig we saw him brandishing on the stage. I think there's a feeling that, OK, not everyone might want the sort of quite heady cocktail of sort of diet farragism, if you can have a heady cocktail with a diet drink in it, and, you know, quite aggressive rhetoric that he's selling.

14:25But, you know, at least it's something. Whereas Kemi, as you say, has been a bit of an analysis paralysis for the past year. But, and there's a very big but here, when you refer to polling, again, seems like our favourite pollsters here are more in common, but they do do a lot of polling every day. They did put out a fascinating poll at the weekend which showed that actually if Robert Jennerick stood and was the leader of the Conservative Party it would make no difference to the polls whatsoever. And actually the only man that would make any difference in the polls would be if Boris Johnson returned as leader in which case the party would get between a 6 and 7 percentage bounce which is fascinating because actually the person here that I've heard more carping about than even Kemi herself is Boris Johnson.

15:11And actually one shadow cabinet minister put it to me so strongly as to say that if the Conservative Party becomes extinct, it is Boris Johnson's fault because of that Boris wave, because of that huge influx of legal migration that has wrapped them up in a complete knot now in terms of their position on immigration, that actually he would be the person to blame. So I think it's absolutely fascinating that people are putting all their stock and all their store in a potential generic takeover when actually the polls don't indicate that that would make any difference whatsoever. Remember Peter Manderson had a lovely coinage to describe Starmer's predicament in 2021.

15:48He said it was suffering from Long Corbyn. There's definitely a case to be made that Kemi's suffering from Long Boris. I saw in her announcement on the ECHR, on the European Convention on Human Rights, that she didn't actually name Johnson's or any of the Conservative government's records on migration. She was all attempting to lump the blame on the last 15 months or so of Labour. But I suppose that is a sort of great political challenge she faces. She, notwithstanding whether or not people have heard of Liz Truss and her aborted premiership, can she actually navigate the migration issue without naming Johnson and naming what happened during the government she was part of?

16:27People still love Boris Johnson. And in fact, the Conservative Party still love Boris Johnson. and I'm told he will even be invited back fairly soon to do a fundraiser for the party. So they're again in a bit of a kind of a bind, really, about the fact that the party faithful still love him. But yet those at the top of the party, they're trying to navigate this kind of really difficult migration issue are finding that it's his legacy that they're having to grapple with. It's worth noting how existential this is for people, that beneath all the kind of rash of announcements we've had in all of this, I was having a coffee with a member of the Senate Cabinet earlier and they were literally despairing.

17:03They said, I have lost all my councillors. The grassroots is going. We are dying. This is existential. And that is why we are having this extraordinary conversation about the seventh leader in 10 years because they are being freaked out by what is happening. And it's all very well saying, hold your nerve, kind of keep calm. But if you're not careful, it may be too late to do anything about it. And you can tell that from just the sheer emptiness of what's around us. Yes, it's been reasonably busy, but it's a much smaller auditorium than they usually use for Tory conferences. There are vast expanses of blue carpet in the main exhibition hall.

17:38Yeah, it's understandable that very few big corporate companies are coming here to press the flesh, but the most telling thing about this is at the Midland Bar, so the posh hotel where everybody stays, well, not us, by the way, the Times is nice and frugal, that's not a complaint. With a newspaper of fiscal responsibility. Just to be clear, I am having a great time in our hotel. I'm even more worried now. I would never, never complain about anything the Times does. Just stop digging. Yeah, I'm going to stop digging. Right. People with more money than sense and people with security details stay in the Midland Hotel.

18:18Posh Hotel in the middle of Manchester. Usually, if you want to go and get a pint in there, it takes you at least 10 minutes to get served. Every time I've been in there to get a drink, within a minute I have a flat pint of lager in my hand. And that is really unusual. It tells you something about the footfall. It tells you that your shadow cabinet minister is right. The foot soldiers, and they are the lifeblood of a party, they're the people who knock on doors, deliver leaflets, they stand to be councillors, some of them become MPs. Once you cut off that sort of lifeblood, it's really, really tricky for a party.

18:50As an organisation, as a living, breathing organisation, someone put it to me, The other day, someone very well plugged in, you know, this party basically now survives on the sort of charity and philanthropy of five donors who quite like it. And compared to reform, you know, growing membership could well overtake the Labour Party in this parliament for mass membership. And it's just really, really tricky for the Conservatives. I mean, to all of that, by the way, a senior, a slightly tiddly senior Tory official told me last night, you know, if you compare the numbers in terms of members, it's the same as 2021, 2022.

19:232022. I mean, we were just coming out of a pandemic. So that's the sort of benchmark. It's not a sign of a healthy party, I don't think. And you look at it, one of the issues is what they're calling the lost year, that basically they did so little over the past year in terms of announcement. There was this plan, as you said in your clip, to do a lot of the policy announcements later. The reformers got there first. And we've got these very considered policies now, which have had a lot of work put into them. But I'll tell you what, the headlines are all the same. We're going to deport X number of people.

19:50We're going to leave the ATCHR. We're going to scrap the Climate Change Act and that is one of the big issues here that it is reformers got there first and they've had the Tories lunch. Yeah I was scrolling through my phone as we were chatting earlier just in an attempt to find anybody in or around Downing Street who had noticed this conference was on and I alighted on the reaction of somebody in number 10 to Robert Jemmerick's speech and it was why do people think that he is the salvation of the Tory party this is the Labour perspective maybe it's premature but their view is he's basically just offering what Nigel Farage is offering you know it was the phrase was you know quite uh not suitable for a family podcast but it's it was basically here's a fraudulent version of the thing you like from a party you hate six months after the party you do like has said it's going to do all that stuff and that's the really really tricky thing I mean it reminds me of the former Irish Taoiseach Gareth Fitzgerald was a very, very cerebral man, and he once told a cabinet meeting of his, oh, that's all very good in practice, but how did it work in theory?

20:55And that's basically this conference, right? You can see how they're doing it, but what's the theory? That sort of voters will, you know, switch to reform because they like the Tories or they trust the Tories more? And you can see sort of a glimpse of that with the fiscal responsibility stuff. I mean, I don't know. It's all very, very tricky. Right, let's move on after the break to the issue of China and the collapse of the China spy case, which has extraordinary ramifications for both Keir Starmer, he's currently being questioned as we speak on a plane on the way to India about it, but also more broadly our relations with China and Caroline and Gabriel have pretty much led the way on that this week.

21:30So next we turn to a tale of two Chrises, Chris Cash and Christopher Berry, who last month were due to stand trial for spying for China and on the eve of prosecution, the the Crown Prosecution Service dropped the case, said they could not proceed. And it's one of those kind of fascinating stories from a journalist's perspective. It's very hard to report on the absence of something. And Carol and I can certainly tell you, for the last month, we've all known there was some big reason why this was dropped, but nobody was willing to say what it was. And it's kind of been an amazing constitutional process to witness, It's been a bit of a bare-knuckle fight between the government on one side and prosecutors on the other.

22:20And what we've learned over the last 24 hours has sort of upended and deepened our understanding. So on the weekend, we reported that the real reason for the trial being pulled was that the government was not prepared to designate China an enemy. and the Official Secrets Act demands that one spies for an enemy or does something which could be useful to an enemy in order for a prosecution to be brought. And there's been a lot of kind of Whitehall sophistry and vocabulary that's been quite difficult to parse. But I think today we've had a bit of a breakthrough in the form of a letter from the Director of Public Prosecutions, which is full of implications for the government.

23:11So, yeah, the blame game is in full flow, and the Director of Public Prosecutions issued a clarification, and they have said, look, the issue here was ultimately that the government would not say that China was a threat to Britain's national security. Now, the government says, well, that's always been our position. We define it as a challenge, a competitor, an epoch-defining challenge is some of the insane semantics they use around China. And that is because this is about two issues. It's about security and it's about money. You have a Chancellor who is desperate for economic growth. You have a Prime Minister who is due to go to Beijing next year in a kind of big moment to galvanise more trade.

23:50And you equally have a nation that the spooks would probably say very clearly poses a threat to Britain's national security. And that is at the heart of this story, Caroline. That's absolutely right. So, for example, the Home Office sees China as much more of a threat because that's where the intelligence agencies sit, for example, than perhaps, say, the Foreign and Commonwealth Office, which obviously look at it much more as a trading partner, looking out into the world, etc., etc. But there is a really big, furious row going on within the government about this designation because, and I spoke to somebody very integral to the Intelligence and Security Committee, even today, who said it is unequivocal in the reports that have been produced by that committee that China was an enemy and represents a state threat.

24:40So there is a massive dispute going on about this and different wings of the government are really furious that it's ended up in a situation where a decision, and let's be clear, it is a decision that has been made within the heart of government, has collapsed this trial. And I think, again, at the heart of it is the fact that when these two individuals were arrested, and the Director of Public Prosecutions has said this openly, there was sufficient evidence to prosecute. And yet when it came to trial, several months later, or over a year later, there wasn't any longer. So during that time, despite the government's claims that nothing materially had changed, it clearly had.

25:23And that is what is enraging people right now and when I say enraging I mean enraging there have been people talking to me about trying to bring Jonathan Powell who is the government's national security advisor to the floor of the House of Commons to ask questions because at the moment he will only answer questions in private because they believe that this issue runs absolutely centrally to the heart of the question about what government is for. I think what's added a kind of layer of toxicity to this has been just a bit of a whiff that there's some very senior ministers in cabinet who are less than happy with what has happened and that at times officialdom in tandem with Jonathan Powell and possibly Keir Starmer have held the whip hand in terms of the direction of travel i had a readout of a very sensitive meeting which powell attended and which caroline reported on the weekend in which it said that ollie robbins formerly the brexit negotiator now he runs a foreign office he was sort of laying it on thick about the potential implications of a conviction and conveying you know far be it from me as a mandarin to say we shouldn't be doing anything you know this will pose complexities for us as we're courting trade and investment from the People's Republic of China.

26:43And there's certainly a sense from a lot of ministers that, you know, the sort of the spooks, people that sit in these sort of grey zones in Whitehall may have sort of set the guardrails of this conversation. And I suppose, you know, if there's any wider political story, for the last decade, the government has been in a pickle on this question of China, they can never quite make their mind up as to what their position is. I think really at the heart of this is this question about why this decision was taken. Was this decision taken because it was a really complex legal process about what evidence could be and couldn't be presented?

27:19Or was it simply that people within the government, and we've referred to this particularly sensitive meeting, was there a decision taken that actually they just wanted this case to go away? It was politically inconvenient because we've had Jonathan Powell going to Beijing to talk to them about a future visit of the prime minister, which we're expecting in the new year. We've had Rachel Reeves over there already. They've reopened a trading relationship with China, which hadn't been present since 2018, when a group of MPs and peers were sanctioned by China. So there's been a lot of evidence that our relationship has been warming up.

27:55And I think that was always going to make it really difficult for the government's deputy national security adviser, who was going to give evidence in this case, to not be cross-examined and asked those very difficult questions. Is China really an enemy? And just as a very brief aside on one of the personalities we've been speaking about at length here, it's a reminder, however this case shakes out, of the extraordinary power Jonathan Powell holds in this government. And as you said before, Caroline, we never hear from him in public. You know, during Brexit, he was ever-present on the airwaves as one of Tony Blair's closest former advisers, speaking out against Brexit, even started, tried to start, rather, a new political party from the centre, which Morgan McSweeney spent a lot of time killing before he became Keir Starmer's chief of staff, as he tried to encourage the same donors to give their money to his projects instead.

28:47but he was such a key figure in the Blair government. Jonathan Powell, as Tony Blair's chief of staff, has spent 25 years jetting around the world from DC to the Middle East trying to solve conflicts. He's been so integral, like Peter Mandelson was, to the US relationship. And now we're seeing in this story a really interesting glimpse of what it is this guy does. And the answer is basically almost everything. And it's really rare, and you guys did it at the weekend, to have such a harsh light shone on him because that's not the way he usually operates. You usually don't see him because he's an effective operator, but this seems to be a case that hasn't gone his way forward.

29:26If he has to go, if we have yet another resignation, people can smell blood. They can certainly smell it here at the Tory conference. The China Group MPs are absolutely furious about it. The Speaker of the Commons is furious about it. I'm not breaking any confidences there. These people are furious on the record. And that is a problem for Keir Starmer because it all ends up on his doorstep. And this is a guy whose reset is already pretty covered in turmoil. What phase are we at now? Not sure. Two and a half. Eleven. And let's be clear, it's not going to go away. Parliament hasn't been sitting, which is where a lot of these rows tend to break out into the open.

30:01So they've been happening here at a conference. They've been happening on our WhatsApp groups. They've been happening with us in phone calls. But when Parliament gets back on Monday, I would expect this to explode out into the open. We're coming to the end of conference season now and MPs are about to make their way back to the Commons and to Parliament. And there is one other massive event on the horizon. That is the budget. On Friday, this tiny organisation we spoke about last week, the Office for Budget Responsibility, that is the body that comes up with what are known as the official forecast.

30:31And in layman's terms, they determine how much your taxes are going to have to go up by. The figures came in on Friday and from what we are told, they are bad. Taxes are going to have to rise by a lot. the Treasury is very worried and they are going to be spending the next few weeks attempting to write an incredibly difficult narrative of how you blame something called a productivity review downgrade due to supply side issues for the fact that you and I are going to be paying more tax and that is the challenge for Rachel Reeves in coming weeks. Yeah and this productivity review as you say, to try and express it in plain English, will basically say, for a long time, the Office of Budget Responsibility, the official fiscal watchdogs thought we were all more productive than we are.

31:19I mean, obviously, we're incredibly productive. We're doing our bit. As reporters and podcasters, yeah, we're trying to get those numbers up. The OBR just won't listen. And so, Rachel Reeves privately thinks, this is really unfair. I'm paying the price for the OBR basically overestimating how good Tory governments were, and now Labour are having to cash that cheque. So I'll put you in the Chancellor's chair. On Friday, it was around midday, the OBR forecast came in and they feed the numbers into a giant spreadsheet, which is called the scorecard. That is all of the government's tax and spending plans.

31:53And this is literally how nuts it is. They print out this spreadsheet, which is so enormous, it requires an A3 sheet. And what the Chancellor does, every Chancellor's done it, is they flip this enormous A3 sheet and they go for one number. in the corner. And that is the headroom. That is the amount of money that is left after all of your tax and spending plans are taken into account. And that is in deep negative territory. And that is why people in the Treasury are cursing the OBR. And what I would say about the OBR and this tiny little body is it's immensely unpopular with governments, Tory government, Labour government, successive chancellors.

32:30It's actually really popular with opposition parties. I had lunch with a senior member of the Shadow Cabinet today and they said, this is brilliant. I'm going to print I love OBR T-shirts and distribute them to everyone at this conference because they're going to hold the government to account and keep them honest and force them to make difficult decisions. And it's politically toxic for Labour. But even the even the Chancellor herself loved the OBR at one point. I mean, this was. Well, she enhanced its power legally. Yeah, exactly. And this was absolutely at the cornerstone of what she wanted to do to show that, you know, after 14 years of the Tories, where they had crashed the economy, that was what they were saying post the Liz Truss government in particular, that this was going to be a government that was going to be really fiscally responsible.

33:12And actually, they were so confident in their own abilities in this regard. And now she herself is becoming a victim of this particular organisation, which she held in such high esteem. And I think, you know, there are already briefings about the sorts of things that the government had desperately wanted them to score. So basically to look at the kind of announcement that they've made around, for example, planning and actually equate that with real money and to say, actually, this is worth this. Therefore, we've actually got more headroom than less headroom, therefore more money to spend, less money that we're going to have to find through tax rises or spending cuts.

33:49And actually, they're furious now that this isn't going to happen. And they haven't put a figure yet on what they think it should be. but I think that we're going to see more and more briefing about them sort of saying actually if they'd have been fair and if they'd have listened to us it wouldn't be as bad as it's now going to be so they're now effectively going to blame this organisation for the predicament that they find themselves in Liz Trust tried that It didn't go very well And she's still trying if you go on her Twitter Didn't go very well, did it Gabriel? No one knows what the OVR is, I mean Political strategists may correct me but blaming a tiny body that no one knows what it is just won't work You have to explain yourself as best you can and then to make an honest case for the tax rises that are coming.

34:29You can't blame the ref. It's remarkable how hard won and immediately lost Reeves' authority has been on this topic. I mean, I remember when it was Liz Tross's mini budget occasions, all this turbulence in the bond markets. Reeves was straight down from Labour Conference to London to do a piece for Canberra in front of the Bank of England on Threadneedle Street. She strained every sinew to be the personification of all this fiscal rectitude. And it's just sort of kind of almost surreal to see now that she's launched an officially mandated briefing war against an acronym, which, as you say, your average man on the Clapham omnibus hasn't heard about and won't be very sympathetic with.

35:11Ultimately, it's the economy, stupid. That's not aimed at you. But just to be very, very clear, elections are won and lost on the cost of living. The cost of living for people will probably go up after this budget. And that is a massive political problem for Rachel Reeves and Keir Starmer. Well, and it's the niche for the Tories. What's giving everybody here in Manchester hope is maybe there's an opening to be the party of sound money. To which number 10 strategists say, hmm, not entirely sure that's a majority proposition in the electorate. But if things go as badly as we expect them to go for Rachel Reeves next month, who knows?

35:47Maybe that is the crucial opening for the Tories and their route back to relevance. I'm sceptical. I think that concludes the second episode of The State of It. And look, we'll be back with a bang next week. Westminster is back. The budget is coming. We will get the aftermath of these conferences and we will discover have Keir Starmer or Kemi Baden-Ock actually become any more popular. And how many more aides have left number 10 in the next seven days? thanks of course to producer Ewan Ewan Daughtry for staying up with me until 1am last night listening to me singing that is above and beyond the call of duty that's what Labour's workers rights package is all about cruel and unusual treatment preventing that sort of thing.

36:30That's the productivity we lack Yes indeed that's the productivity we lack Ewan staying up to 1am he's our ace producer so thanks to Ewan and we'll see you next week