John Healey appointed chancellor as Prime Minister Andy Burnham builds his cabinet

0:00This BBC podcast is supported by ads outside the UK. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise. That's schwab.com slash Washington Wise. How did a boycott Jimmy become a billionaire from posting videos? On Good Bad Billionaire, we're going to find out how the world's most popular YouTuber, Mr Beast, made his fortune.

0:43He's buried himself in a coffin for days. Counted to 100 ,000 on camera. And even recreated Squid Games, all in an attempt to go viral on the internet. But it all started when he gave a homeless man$10 ,000. So is he a philanthropist reshaping capitalism? Or is he just the king of the attention economy? Find out on Good Bad Billionaire. Listen on BBC.com or wherever you get your podcasts. Hello, I'm James Kamarasamy. Thank you for downloading the BBC's World Tonight podcast for Monday the 20th of July. John Healy is named as Chancellor, Ed Miliband as Foreign Secretary, hours after Andy Burnham accepts the king's invitation to form the next government.

1:21His cabinet is taking shape. We get the latest from Downing Street and consider what that key appointment to the Treasury tells us about the economic direction of travel and how Mr Burnham intends to give hard-pressed families what he calls more breathing room. And after the new Prime Minister says he'll put the care of the people at the heart of everything he does, what is the role of empathy in policymaking? Also on the programme, one of Kevin Keegan's Liverpool teammates and roommates, David Fairclough, remembers the England footballing legend who's died. This evening, as the Burnham era in British politics officially began, the Burnham team has been taking shape in front of our eyes.

2:02A series of smiling but silent Labour MPs has been making the walk to the front door of No. 10 Downing Street to be greeted by its new inhabitant and to hear about the new jobs in government that they are being offered. There were a few notable absentees from the line-up. A football team's worth of members of Sakir Starmer's cabinet failed to make the Burnham squad, or in the case of former Chancellor Rachel Reeves, decided they didn't like what was on the table. One happy team member, though, is John Healy, confirmed this evening as Chancellor of the Exchequer. A month after resigning as Defence Secretary over defence funding, he now holds the purse strings.

2:39We'll have more on that key appointment in a few minutes. Of the earlier favourites to head the Treasury, Shabana Mahmood stays on at the Home Office, while the former Energy Secretary, Ed Miliband, becomes Foreign Secretary. It's the honour of my life to have been asked by the Prime Minister to be the Foreign Secretary of our country. My parents came here as Jewish refugees fleeing from the Nazis, and for them Britain provided sanctuary and a beacon of hope in the fight against fascism. At a time when values of democracy, the rule of law and freedom are under threat as never before, I will carry that spirit, their spirit, into my work as Foreign Secretary, and now I'm going to go and get on with the task.

3:23Thank you so much. Well, this morning there was a different Downing Street walk in the opposite direction by Sir Keir Starmer, a departing Prime Minister determined to leave with his head held high. For all the focus on individuals, politics will always be a team sport and the changes we've delivered for our country and our party belong to everyone who has fought for them. I thank them again today and I thank the British people for the opportunity to serve. I go with good grace, I go with a smile and I go proud of everything that we have achieved. Thank you very much. And then it was off to the palace for the formal resignation before the changing of the guard the tourists didn't see today, at least not until the still photos were released.

4:15And having accepted the King's invitation to form a government, Andy Burnham gave the now traditional speech in Downing Street, although with no lectern or notes. And despite no leadership campaign to judge him on, the new Prime Minister was keen to emphasise from the start that his arrival marked a change of approach. I am acutely conscious that I am the sixth person in the last 10 years to walk up this street, the seventh prime minister since 2016, making this a moment for reflection and new resolution. It requires my generation of politicians to raise our game and rise to the new challenge.

5:06Britain needs to show the world that we can regain our stability once again. And that is our challenge, to make politics work, to make it work better. I know people at home are fed up with politics. I hear you and I want to be honest with you. We have not been good enough and we need to be better. We will be. We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years. a new political model and a new economic model. Well, some things don't change. Newsnight's Nick Watt is in Downing Street for us, watching all the comings and goings. Nick, bring us up to date.

6:05There's still appointments being made, aren't there? How close are we to a full cabinet? Well, Jamie, in the last minute or so, Lisa Nandy has just walked out. What happens is you walk up, you go into Downing Street. They're spending quite a long time in there. and then you walk out of the door, past the cameras, and then you walk through into the Foreign Office, and Lisa Nandy has just done that. My instinct, though I don't know, is that Lisa Nandy will probably remain as Cultural Secretary, but obviously we'll have to see as these announcements come through. I do have to say this is all happening pretty late for a new Prime Minister who is going in there around about the sort of 20 to 1 sort of mark, was it?

6:43It is taking an awfully long time to form this Cabinet, talking to some ministers. They said to me, what on earth is going on? Are people walking in and saying, I don't want to do that job? I think what Downing Street is saying is that the new prime minister has had a lot of calls with foreign leaders. He's spoken to President Trump. He's spoken to Emmanuel Macron. He's spoken to the Secretary General of NATO. He's spoken to the Chancellor of Germany. All those calls, they take time. You've got to be brief before them. And that appears to be knocking back. And that's why we're still talking about cabinet ministers walking around Downing Street at what are we now called to pass?

7:1710 at night. Well let's talk about that key appointment of John Healy as Chancellor and not a lot of people seem to see that one coming. No that's right I mean there was a lot of focus about how it would be a Shabana McMood I should just say as we talk now Stephen Kinnock is walking in son of Neil Kinnock he's obviously been a health minister he's waving let's see what post he gets but Stephen Kinnock walking in at 13 minutes past 10 o 'clock but you were asking me about John Healy Yes, people, there's a lot of speculation it would be Shabana Mahmood. I'd always been very boring on your show and others and said, well, let's actually talk about appointments when they actually happen.

7:52So John Healy was a Treasury Minister in the last Labour government. He's got a pretty serious record as a minister in different departments. But what is interesting is John Healy, of course, resigned as Defence Secretary, saying he was very unhappy that the plan drawn up by Keir Starmer was nowhere near to getting defence spending to what Keir Starmer said it would be a year ago, 3.5 % of GDP on core defence spending by 2035. Will he deliver that as Chancellor? Or once he's in the Treasury, he'll say, oh, it's all a bit complicated and I have lots of other commitments to think about. And what about the work?

8:30It starts tomorrow. And the one thing, of course, Andy Burnham talked about today was this announcement on Ruff sleeping, instructing his people now to put an end to it anything else that we are getting a whiff of on policy terms well so Andy Burnham knows that he's got to deliver and it was interesting in that speech you were playing earlier on he was talking about how he's very conscious that we've gone through a lot of prime ministers he has to deliver and it will be a big focus on the cost of living he's going to be opening cabinet tomorrow with some words on this issue and talking about these core commitments, talking about helping young people.

9:09I should just say that Douglas Alexander, the Scotland secretary, he's just walked in. Let's see what job he gets. But anyway, back to cost of living. The Prime Minister was saying we've got to help young people into work. We've got to build more council houses. We've got to build a more preventative state so that people, you're sort of changing people's lifestyles to prevent chronic sicknesses and, as you say, deal with rough sleeping. I'm told he's going to deal with one of those issues. when Andy Burnham opens his first cabinet tomorrow. Nick, many thanks for all those updates. Newsnight's political editor, Nick Watt there, with the latest on the arrivals at Downing Street.

9:45Well, let's get a bit more on that new and surprise choice for Chancellor, because shortly before we came on, the BBC's economics editor, Faisal Islam, had a brief chat with the man himself, John Healy. Chancellor, congratulations. What are your plans? Thank you. Quite simply, tonight it's just great to be back in the Treasury after nearly 20 years and just a huge honour to be here as Chancellor. I want to first thank my predecessor, our previous Chancellor, Rachel Reeves, for all the service she's given this country. She brought financial discipline, enabled growth and she will always be remembered as the first woman Chancellor in 700 years.

10:28For me, the Prime Minister and I have talked about how we will work in lockstep to meet the fiscal rules with a buffer against uncertainty and how we'll make life more affordable for working people right across the UK. And I join you just having come off a call with the Governor of the Bank of England. I've conveyed this also to him. Clearly, a month ago you resigned as Defence Secretary with a very specific ask from that job of reaching 3 % of GDP by 2030. How would you fund that, given all the other pressures, all the other claims made by the Prime Minister? Would it require higher taxes? Would it require cuts in welfare?

11:13that? First, fiscal control is the first duty of any Chancellor. It is mine. And fiscal credibility is the bedrock for economic stability and for national security. And you heard the Prime Minister this afternoon say, in this more dangerous world, we will meet our commitments on defence to our international allies. The new Chancellor, John Healy, not giving too much away, speaking there to our economics editor, Faisal Islam. Well, Mohamed El-Aryan is an economist and president of Queen's College, Cambridge. He gave me his reaction earlier to John Healy's appointment as chancellor. It was a huge surprise.

11:54I mean, as early as this morning, the betting markets had Shabana Mahmoud at 92%. But he addresses one of the criticism of a potential Shabana Mahmoud appointment when that was brought forward in some of the newspaper, which is he comes with treasury experience. Is that enough? It's a necessary condition. He has three big challenges. One is he's a very strong advocate for defense spending. So he has to figure a way to fit that in within the fiscal rules. Second, there's general agreement that some reform of the treasury is needed. So will his experience at defense play to that? And then finally, the interactions with Number 10.

12:40It seems that Number 10 wants to play a much more aggressive role within the Treasury. So he certainly inherits a difficult situation, but he brings to the role good experience. But he faces the same challenges his predecessor faced, doesn't he? And as you say, if there is going to be more defence spending, we know from his time as Defence Secretary he wants that. There's also a commitment from Andy Burnham to spend more on social care, for example. He's talking about raising income tax personal allowance. I mean, there's a lot more money to be found, isn't there? There are going to be some very difficult decisions, James, to make.

13:18And they're going to be made in a very fluid context. We saw today, for example, external conditions contributing to an increase in the 10-year guilt rate to over 5%. That's an onerous borrowing cost for the government. Having said that, he may first be more open to various ideas that have been put forward to fund defence without undermining the fiscal rules. And we're talking about defence bonds, aren't we? Which he has spoken about himself, John Healy. He has. And there's been other proposals to try and do it in collaboration with Europe. the one very common issue around across Europe is to need to increase defence spending.

14:01So various innovative ways have been put forward. They just have not been explored enough. How are the markets looking at this? So the initial market reaction, and it came late in the day, was favourable. How do I adjust that? By what happened in the currency market and what happened in the bond market. The bond market was particularly instructive because the yield, the borrowing costs, had moved up quite a bit on first, higher oil prices, and second, that comment from the new prime minister about flexibility within the fiscal rules. And then we saw a slight turnaround after the announcement, but the market was pretty illiquid by then.

14:41Just when it comes to this idea of defence bonds, is it just borrowing by a different name or is there something there which is intrinsically different? So it's both. It certainly is borrowing by a different name. But the different name matters, especially if it can be done in collaboration with other European countries. That matters a great deal. There's also the notion that the marketplace understands well that not all borrowing is the same. And that's really important when it comes to infrastructure. So even under Rachel Weaves, there was some allowance made for infrastructure spending. Why?

15:22Because it contributes to growth over the long term, and growth over the long term contributes to fiscal sustainability. Is there a world in which the markets would be happy if the prime minister comes out, or the Chancellor come out and talk about tax rises in some form? A lot will depend on what else. So if there is a comprehensive growth policy approach which can be implemented, the previous government had a growth mission but implementation was poor. And if the Treasury isn't reduced as it has been to a simple, narrow budget arithmetic exercise but rather takes a holistic view of the economy, the answer is yes.

16:06If, however, it's more of the same, which is really an attempt to shrink to prosperity rather than grow to prosperity, then the market will take it badly. And that was The Economist and President of Queen's College, Cambridge, Mohamed El-Erian. Coming up later, we'll go to Florida, where the influencer Andrew Tate and his brother Tristan have begun their fight against extradition to the UK over a slate of new charges that include rape and sex trafficking. We are, of course, objecting to extradition because Andrew and Tristan are innocent. They've never done nothing wrong. They shouldn't be extradited for crimes they did not commit.

16:43We take Brothers Lawyer speaking outside the court shortly before we came on air. We'll be heading live to Miami shortly. There's never been a better time to get outside and experience the benefits of nature. Discover nearby trails and explore the outdoors with AllTrails. Download the free app today and find your outside.

17:11But let's stick now to the new government, the new Burnham government, because we expect tomorrow an announcement on the cost of living and how this new government might, to use the new Prime Minister's phrase, give people more breathing room. John Healy was asked about that by Faisal Islam, but as we heard, he declined to be drawn on any details. So what are the government's possible options? Well, as our guide, we can speak now to James Smith, chief economist at the Resolution Foundation, an independent think tank dedicated to lifting living standards in the UK. Good evening, James. Good evening.

17:45So what are the government's options? Well, it's definitely a tricky situation. So we're seeing now what the, after weeks of speculation, what the government might be talking about on the substance. And the first things we've heard from Andy Burnham is encouraging. He says he's going to focus on the cost of living. That's definitely needed given double digit inflation and a huge rise in the cost of essentials, particularly energy and food, which hits lower incomes, lower income families hardest. But the problem here is that not all elements of the cost of living are in the gift of the Prime Minister.

18:21And on top of that, as we've just been hearing, there's a tricky fiscal outlook here. So we estimate that the rise in energy prices will hit the public finances to the tune of something like 14 billion. So it's a difficult outlook here. So we need to hear something that is funded, is clear about where the support is going. I think it's really going to come in two phases. So we'll get some smaller announcements by the sounds of it tomorrow. Don't be surprised if you hear about something on transport, particularly bus passes, for example. Reducing the bus fare cap to£2 would cost about£300 million.

19:04But I think the initial announcements will be smaller. And the big question will be, what can the new Chancellor announce at the budget? He is emphasising tonight, sticking within the fiscal rules. What kind of breathing room does he have in that context? Well, as I say, that's a tricky situation in the sense that higher energy costs basically push up inflation, hit growth, make the public finance equation more difficult. On top of that, as we were just talking about, higher borrowing costs for the government. So all of that makes life harder. I think the answer will have to be very targeted support and that should be focused on the key areas of the cost of living.

19:51So, for example, he could focus on housing costs by relinking local housing allowance to the level of local rents. And second, there should be a real focus on energy. So the way to do that is targeted energy discounts. So what some people call a social tariff that really focuses support on those with low incomes and high energy need. And there you could knock around£175 off bills for a£2 billion scheme that focuses on those hardest hit families. The other thing that's being floated is this idea of unfreezing the income tax threshold. I mean, depending on inflation, that could cost, what, at least£4 billion.

20:40Briefly, how realistic is that? I think that's very difficult. So as you say,£4 billion, close to£4 billion to unfreeze those thresholds, that lower threshold, all thresholds would cost about£14 billion. So I think that's unrealistic given the envelope and that's something that the government should rule out. That doesn't focus support on those hit hardest by the cost of living crisis. James, many thanks. James Smith, Chief Economist at the Resolution Foundation. Now, there were plenty of great England footballers in the 1970s, but few reached the superstar status of Kevin Keegan.

21:32That was Kevin Keegan's second goal in Liverpool's 3-0 win over Newcastle in the 1974 FA Cup final I remember it well Well, today it was announced that the former England captain and manager has died at the age of 75 He was known for his feats on the pitch initially, as we've heard, for Liverpool in the Bill Shankly heyday and later for Newcastle, where he went on to become a much-loved manager. Oh, and he did manage to win the Ballon d 'Or, the highest individual prize in world football, not once but twice during a stint in Germany with FC Hamburg. And when he returned to England after that to play for Southampton, he recalled his German experience on Blue Peter.

22:11I enjoyed my three years in Germany very much. My wife spoke the language. She learnt it in school at O and A level. So that was a great bonus when we got out there at least one of us knew what people were saying I didn't have a clue and the people were very good to us The football suited my style of play, but I found the commitment just a little bit too much for me You know I could stand it for two years possibly three, but we trained just about seven days a week and I found very little time for my family and of course I got Laura Jane now was two and a half And I want to enjoy a little bit, you know I mean all work and no play it doesn't work But I think you've got to find a balance.

22:45And in England, we've got the right balance. Well, he went on to manage several teams, including for a short period England, but a disappointing performance at the Euros in 2000. In short, that was indeed a short-lived job. I've been speaking to one of Kevin Keegan's teammates from his glory days at Liverpool, David Fairclough, who was known as Super Sub because of his match-winning goals when he came on at Substitute. He first saw Kevin Keegan play when he was in the Kop as a Liverpool fan in the early 70s. It was a really exciting time, and Kevin became a huge part of that. I mean, his arrival in 71, he became a superstar after his debut at Kings Nottingham Forest, which I was at.

23:25So, right, you were there his very first game, and then just a few years later you were taken on as an apprentice, I think, what, in the cup-winning year? Yeah, I signed as an apprentice in 74, and obviously in those times when you come in as an apprentice, I mean, you're overawed roared by sort of sharing a space with the likes of Emily Hughes, Kevin Keegan, Tommy Smith, nine huge characters. And it was incredible to sort of hear their conversation, hear the things they were talking about, were laughing about, all those type of things. And you'd go back and repeat some of the stuff to mates, you know, and sort of say how exciting it was.

24:01Kevin Keegan spoke to me. Emily Hughes asked me to go and do this or that. From being a fan, now you're in amongst it. and you could only dream about ultimately sort of playing alongside them. Well, you did get into the first team. You did play alongside him. What was that experience like? What are your memories of playing with him? Yeah, it was great. I mean, earlier on I was saying to somebody how in my debut game, Tommy Smith over hit a long pass and sort of shout, you know, get after that kind of thing. I remember Kevin turning around saying to Smithy, saying, you've given the lad a chance, you know, don't ask the impossible.

24:35Thankfully, the debut game went well and I remained in the group. And then for the sort of games that followed, I was fortunate enough to be Kevin's roommate for a few games. He's making me tea, running a bath. I remember him running a bath for me at Sheffield United. What was that like? You talk about pinch me moments. Playing alongside someone you'd grown up as a fan and you're actually in a room with him and he's running you a bath. Yeah, and making you tea, but then telling the boys when you go down and say, oh yeah he's a right prima donna he made me make the tea he made me run his bath and all this you think these are these little secrets that you're going to share between each other and he's now telling the group they're going to give me stick and make me out to be a big time Charlie kind of thing and that's sort of part of your initiation of getting into the group and being accepted as part of the first team squad kind of thing I remember some games later we were down in London, we were talking about sort of being well known and being a personality and he said oh you you know you've made it when people in london recognize you you're walking through the streets kind of thing because he was such a big name a big star i mean we're used to footballers being big stars now but in a way he was so big wasn't he people were interested in his style the way he dressed everything like that very much so the way he walked in you know with the platform shoes and flared trousers and all the fashion of the 70s and Kevin was a superstar yeah what was it like then when when he left was that a big moment yeah it was I mean I thought I personally thought uh this is a good thing Kevin's leaving you know less opposition for me I might find a more regular place in the team you know no more Keegan and Toshak and um I was hoping to get a space only to find that as Kevin left Liverpool went inside Kenny Dalglish in the summer so life didn't become that much easier Of course, he then went on to his managerial career, notably with Newcastle.

26:32He had a, not a great, I think most people would say, time as England manager. What did you make of his managerial career? Did you follow it closely? Yeah, obviously, Kevin attacked life the way that he'd lived it right from the start, from the moments we knew him with huge enthusiasm. So straightforward, didn't hide behind excuses. and his England career, perhaps. Maybe he didn't achieve what he really wanted to achieve with England, but he made that brave decision and so said, well, enough's enough. And if I can't do this and, you know, I can't achieve what I want to achieve, then this isn't the place for me.

27:07And I thought, hugely a brave decision. Super sub on a superstar, David Fairclough, remembering his former Liverpool teammate, former England captain and manager Kevin Keegan, who has died at the age of 75. now the online influencers Andrew and Tristan Tate have appeared in a court in Miami as the Crown Prosecution Service seeks their extradition over an investigation into alleged sexual offences the brothers who deny any wrongdoing were arrested by US Marshals in Florida on Saturday we can cross live to Miami now and our correspondent Tom Bateman who is there Tom, what happened in court today?

27:49well it was a very short hearing It lasted just about 10 minutes. As those of us in the media were brought into the courtroom, the two men were already seated to the left of the judge. And then as we stood, they were brought to stand in front of her. I could see that both men were handcuffed. They were shackled with chains at the waist and at the ankles. And the only time they spoke was when the judge asked them if they understood their rights. And they said, yes, Your Honour. And it was then really a discussion about scheduling a further hearing, at which the defence attorneys for the men said that they would be seeking to reject the extradition request by the Crown Prosecution Service in England, which was laid out on Saturday as the police in Bedfordshire had added a series of additional charges against the Tate brothers, including alleged offences of rape and alleged offences relating to sex trafficking, which now brings to more than 50 the charges against these men in the UK.