Burnham backs off income tax change - so what is he planning next?

[00:00:00]you know for lots of people them thinking well if he did raise the personal allowance that would make quite a big difference to my life he gave the very strong implication it was going to be almost priority number one do something about it and then only today he's saying oh well yeah not sure wait and see blah blah blah I mean that's annoying isn't it and where do you >> okay well so that's so that's the interesting question >> Bham appears to be rowing back on his suggestions about increasing the personal tax allowance we'll come on to the specifics of that in just a few moments I watched that speech on Monday alongside you. There we were standing in Downing Street yet again. I thought it was a great speech. Actually, I thought it was good. I thought we captured the tone. I thought the mood in Downing Street was good. And I probably along with a lot of the rest of the country, I thought, well, okay, let's give this guy a chance. Maybe he's quite good. But he did stand there with a straight face and say he was going to end factionalism.

[00:00:50]All the Star loyalists were butchered.

[00:00:53]The three people who had been most disloyal and most significant in Starmmer's departure John Healey the last person to resign where streeting who arguably was the beginning of the end and Anna Sawa who appears to have got a periage who was the first to call for Star to resign. They've all been given conspicuous promotions and you think okay >> and well and you know actually uh Shabbana Mammud may not have been promoted but home office is pretty big job and she was probably the most significant member of the cabinet to stay in the cabinet under Stalmer who made it absolutely clear she wanted him to go but you know what I mean and then and then you think okay well this fine he's popular with the Labour party let's see with the country and then you get into the announcement like stumbling about yesterday and the removing VAT on energy bills. They said it was costed that it wasn't. You know, today here here we are again with the personal allowance. He gave the strong impression he was going to do something very soon about the personal allowance.

[00:01:52]Now he's saying, "Oh, may maybe not." I mean, have there been any bold ideas he's articulated that he hasn't, you know, potentially started to row back on quite quickly. And I keep thinking I as I came to work this morning, I thought, am I watching McBth, you know, killing a king? It just turns to dust in your hands in McBth's case, doesn't it? I mean, is this any different? What do you think? Anyway, >> Mcki Mandy.

[00:02:18]>> Anyway, uh what do I think? Um >> I've been too harsh.

[00:02:22]>> Look, literally on, you know, day one, I talked about the contradiction between saying that he wanted to unify the party and then the ruthlessness of the purge.

[00:02:38]Um um you know we've already seen from Darren Jones uh you know a very able minister I think most would say under Stara um you know feeling that he was obliged with and with Andy Bernham's first announcement to you know raise some concerns about it. This was um the announcement of the elimination of uh 5% VAT on our electricity bills, which Andy Bernham said was funded. And Darren Jones politely pointed out um he knew a thing about a thing or two about where the money was coming from that the money wasn't there. Um probably uh trying to be helpful. Uh but that's not >> Oh, that's that's a generous interpretation.

[00:03:27]>> Trying to be helpful. Shortly after he tweeted a picture saying, "I'm going to the pub. See you in September." But anyway, >> but but um I don't disagree that in terms of uh bringing calm and a sense of of unity. Um you know, we we haven't really seen that. And equally, there's a bit of a a sort of projection of who's in charge. There's a very cheesy Instagram that Andy Bernham has has put out which shows um a very clear quartet.

[00:04:04]I think it's a quintet actually of the ministers who matter. Andy Bernham, uh the new chancellor, John Healey, the foreign secretary, Ed Milliband, uh Shabbana Mammud, um and the first secretary, uh uh Lou Hey. Uh and so I mean it was interesting to me that that that he's made a point of saying you know Liu Hag is absolutely one of the the top team and again to just to reinforce this the quintet at the top you know one is the you know the man who ousted Starmer and the other four you could see on one on one interpretation as the four hench people who got who got >> yeah but apart from all that it's unity are us >> so so so there is so I think you know there will be Look, the as a number of friends of Kia Starmmer have pointed out, you know, there never was a Starmmer faction when Starmmer was in charge. Um, but there looks as though there's one being built up by Andy Burnham in the way that he's managing the party, which is, you know, perhaps not that constructive. But for me, he has started with, frankly, some not very ambitious retail offers. I mean, you know, he he's doing in some ways the total opposite of what Star did. Star initially became incredibly unpopular because he allowed Rachel Reeves to take some money away from retired people by abolishing the universal entitlement to the winter fuel payment. And in many and you know actually you know even though it was desperately unpopular in a sort of economically rational point quite a lot of people who got the winter fuel payment didn't uh really need it because they're millionaire pensioners but they were still getting it and it was there there was you know there was some logic towards means testing it turned out to be catastrophically unpopular. What's interesting about Andy Burnham is he's just doing the reverse. he's with his VAT cut um on electricity with his bus fair, you know, uh cut, he's handing quite a lot of money to people who don't need it. Um because, you know, that in fact that VAT cut is is relatively more valuable to rich people with big houses.

[00:06:29]Uh and and hang on, but >> I don't entirely let I understand the politics of it.

[00:06:36]>> Yeah. But it's it's definitely not very labor. Um and um but it's also very unambitious because the my cons criticism you know or cons concern or however you know you you you want to put it is this lab you know Blair Brown come in what do they do? they do something that which was literally a really big bold thing is they gave you know control of interest rates to the Bank of England. That was a big thing, right? Huge.

[00:07:08]>> Um what does Trump I mean and then Trump comes in and does just a whole succession of massive era definfining things from you know closing the border with Mexico through to the tariffs. None of this is to say that what Trump did was good, but my god it was big, right?

[00:07:31]And actually Andy Bernham has come in and he's talked to talk about being the most important prime minister for 40 years, right? But he's not done anything that looks symbolically important. And if you're going to do something big and bold that's symbolically important, if you don't do it in your first few days, I mean, history tells us you're probably never going to do it.

[00:07:54]>> Yeah, I think that's fair. I mean, the only thing I'd say against that is that I think the one thing he's done really well is he's had one consistent message above all, which is I'm going to help people with the cost of living. And he's come in and the first things he has done have been aimed directly at the cost of living. And as we've discussed many times, >> it's small beer and it's very well targeted. I mean, >> I agree. But you know, we often said, you know, StarMA was rubbish at politics, which I think was true, and I'm sure history will relate that. But, you know, this is slightly better politics is all I would say.

[00:08:25]>> Better politics, but it's not very but it's not very ambitious no politics. And it's also and and and you know, the the other thing that I am >> assessing, right?

[00:08:38]um uh and it may turn out that this is more positive than it looks, right? But you know, you will remember that during the 2024 general election when we were talking every night about you know who was winning between Starmmer and Sunnak in the contest uh to be elected. It was pretty obvious that that Starmmer, not because the campaign was brilliant, but just the tries were in such a mess that Stalmer, you know, was going to win that election.

[00:09:13]At the end, pretty much at the end of every conversation I had with you, I I would say something that I'm sure our viewers thought was nuts because I would literally say at the end almost every night, >> never think you're nuts, Robert.

[00:09:24]>> Well, pretty much every night I would say the thing that is really upsetting me is the big thing that is changing all our lives is artificial intelligence.

[00:09:31]It's changing the economy. is changing society. There is no discussion of it at all in this general election. That is really worrying right now.

[00:09:40]>> And it then took an age for Labor to actually begin to understand the potential both the costs and the massive uh both the sort of potentially big costs and the and the potentially big benefits of of of AI. Um and uh they and they inherited this science um uh you know and and innovation and technology department um and and they made a big thing with in within that department of various AI action plans. If I'm honest with you, I still don't think they were ambitious enough. I don't think that you know as as a nation we're still having the right kind of debate on artificial intelligence. But nonetheless, you know, they were getting, you know, this was a government that was getting there.

[00:10:25]They've they're closing that department down. Bits of it are going to Downing Street. Bits of it are going to the Department of of of Business. I think I think even bits of it are going to DCMS.

[00:10:35]Now, it may be that Andy Burnham gets the AI challenge and that, you know, this is all about Downing Street seizing more control of it. It is true that the AI minister, a very bright young minister, Konishka Naran, who I literally have a lot of time for, is now going to attend cabinet, but he's attending cabinet as a a bit of a nomad.

[00:11:02]I mean, you know, essentially floating between different departments. And I mean, personally, I I think that may be a terrible mistake. I mean the other thing about any kind of reorganization is it actually distracts from doing things. So, as I say, there may be logic to to completely dismantling and destroying this department and putting the bits elsewhere, but there's no doubt in my mind that the process of doing that will take months. And in the meantime, the really important policy questions about, you know, how you redesign schools for an AI world, how you rede design the welfare system so that when people lose their jobs there, you know, from from AI taking their jobs, you know, people get the benefits and the support they need as they retrain. Which takes me on to where are the institutions that are going to retrain these people who lose their uh jobs and where's the tax revenue going to come from when people lose their jobs. I you know there are so many issues here that are not being properly debated you know you know let alone some of the more extreme risks from from from from AI. So you know there was a focus a whole department that was more or less focused on that you know more or less more than anything else and it's going >> I tell you one thing that I think is quite damaging that they're doing we discussed adnauseium on this podcast on news at 10 on all our special programs the absence of a growth story when it came to the star government but the one thing I would give them a bit of credit for is injecting I think Rachel Reeves and Star did inject a bit of stab ability into the government and into the management of our economy and I think this lot are sort of destabilizing that a bit and the reason I say that is they keep now it's not all burnham quite a lot of it is people around him people quote supposedly close to him uh people who potentially influence him or potentially don't keep floating ideas and and then they get you know backtracked and I think that's very difficult for people trying to make investment decisions and all the rest of it so you know you talk about land tax.

[00:13:06]Oh, that's very complicated. Maybe we're not going to do that. Talk about wealth taxes. Are they really going to do wealth taxes? Is it going to be a one-off? Talk about raising the top rate of tax back up to 50p. Then he says, "Oh, yes. I don't want to be factional."

[00:13:17]Uh, didn't use those words, but that kind of thing again. And so on and so on and so forth. Now, for people who are trying to get by, they they see Andy Bernham come in, they see him do these uh, you know, measures like VAT on energy bills and bus fairs. Great. But very very small beer. You know, everyone we had on News at 10 talking about it last night. You know, people trying to get by was saying that, you know, yeah, good first step, but doesn't it's not really really going to make much difference. He has talked about the personal allowance. I know you're not a big fan of that in tax and economic efficiency terms, but it >> Well, just so the only thing about the personal allowance is if you, you know, raise the taxfree personal allowance, um, it costs quite a lot of money. Again, it's it's a bit like what I was saying about, you know, why if you really want to help people who are struggling, you wouldn't simply um abolish VAT on electricity for everybody. Um because as I say, that does tend to benefit the better off more than those on low incomes. And similarly, um if you raise the taxfree thresh threshold, I think, you know, in a in you know, if you did it for a full year now, it would cost about four billion.

[00:14:30]in four or five years time it costs quite close to 10 billion a year. That's a lot of money, right? And you know, if you're going to devote 10 billion pounds to helping people on low incomes, there are better ways of I mean, you know, there are ways of making those people much better off um and much more efficient ways of doing that. That that would be my only point. There's a question I think people want answered.

[00:14:49]That's all. you know, for lots of people who don't know much about Andy Burnham, who probably weren't that interested in the uh his rise to power and all the rest of it, them thinking, well, if he did raise the personal allowance, that would make quite a big difference to my life. And I listened to what he said variously about it, you know, people raised it on the campaign trail. I think it's a really serious thing. He gave the very strong implication it was going to be almost priority number one. Do something about it. And then only today he's saying, "Oh, well, yeah, not sure.

[00:15:14]Wait and see, blah blah blah blah." And I mean, that's annoying, isn't it? And where do you think >> Okay. So that's right. So that's the interesting question. All right. Um which is what I wanted to to really talk about.

[00:15:25]>> Um Andy Burnham forever, right? Um has a habit of saying something and then rang back on it. All right. Now, in a way, um I quite like that. Okay. And I you know I know you're I know you're find I know you're finding it quite confusing and I suspect right now you know if you're a business or you know even somebody who's a cons an individual thinking about making some kind of bigish decision you know buy a house or buy a car or something >> capital gains is he gonna that that's a big one for people making investment decisions. Right. But to be so, but the thing that has uh driven me totally nuts in recent years, you know, as a you know, and I assume drives you nuts as well as somebody who interviews politicians is the, you know, how unbelievably careful and closed down and sticking to scripts scripts people are, right? And you know I think there is a sense in which um it would be good okay if Andy Bernham felt and indeed his entire team felt better able to have a p you know have a public debate about these things right but let me finish let me finish let me finish right let me finish okay and and and you know and actually in lots of ways they are already behaving behaving very differently from uh you know the way governments have behaved and and this at the moment is not something that I you know I feel critical of because actually you know I want all of us to be more grown up particularly in the media right I mean the the instinct of the media is uh when somebody doesn't rule something out that is slightly controversial is to make some gigantic headline out of it. So, you know, Andy Bernham doesn't rule out putting up the top rate of tax to 50 p in the pound becomes this huge shock, you know, uh headline. Uh and you know I I think good on Andy Bernham in a way that he's not frightened of that he's not frightened of that because actually it would and if you look at Trump right now obviously Trump's poll ratings have collapsed recently but that is not because he basically says sometimes in what looks like a uh you know a completely crazy way. He just says whatever is on his mind. And actually that bit of Trump, I think he does it in an extreme way, but actually I'd personally would like to see our leaders a bit more, you know, you get more of a sense of where he's going if you allow him to do that.

[00:18:32]>> I think people have turned on Trump for lots of reasons and one of them is that he lies a lot and people are getting annoyed.

[00:18:36]>> I'm not asking but I'm not asking. I think you make a really really good point and a really fair point and I'm completely going to you know back off and agree with you on it which is that it it's made political discourse pathetic >> abject and an absolute switch off for people that no one says what they really think.

[00:18:55]>> Can I can I can I just say one other thing which I thought was a good which I thought was a sort of good thing in a way but >> you know I think lots of people will have thought was a terrible thing.

[00:19:05]Right. Um there was conditioning from you know the Burnham camp that it was going to be Ed Milliband as chancellor and then that for various political reasons looked too difficult and then it was going to be Shabbana Mammood and you know that was you know the splash in you know quite influential newspapers and what was quite interesting to me and this shows you how they are doing things differently. It was it was really interesting to me that they didn't then pre-brief Healey that they kept it secret despite the fact they will know that the media organizations that went huge on Mimmude will be feeling quite sore and quite bitter about it but they just took the view which I think is a good thing right that they can just do things without being constantly neurotic the whole time about what the media think and I and so that was another example to me of and and I I would you know I think long may that continued.

[00:20:03]>> No, I I I just want to pick on I mean I'm a bit more of a conspiracy theorist than you are. I think it's perfectly plausible that Healey stitched up a deal when he resigned, but you know, anyway, that's a different story. I agree with you that it was quite clever of them to just have it as a bolt from the blue and to catch everyone by surprise. And that's not that's not a trick. It's just a way of controlling the agenda and how things are discussed and all the rest of it. And I thought I thought >> also but also it just shows in a way that they're not that they're not as neurotic.

[00:20:30]>> No, I agree. as predecessors about what this or that newspaper says and that is a good >> we've got to try and be consistent as we demand from politicians and we have both said repeatedly over the last year two three that we think one of the most toxic things for political discourse anywhere in the world is politicians who just never say what they think just come out and say what you think we've said it a million times and I do agree that Andy Bernham is showing signs of do that and all power to his elbow and you know that's not that's nothing to do with us I think that's just to do what we get feedback from you know people who are not that interested don't cover they're just like oh they never say what they mean and so I think that will do something to restore faith in politics the thing that >> if he doesn't run run because there's always a risk that he does get some bad headlines out of apparently changing his mind and then he'll become I hope that he that he just in a sense recognizes that this or that headline is genuine to use the phrase um that you know I was always used uh about newspapers when I was first a journalist which is you know today's splash is tomorrow's fish and shipwrapping and that's how he needs to see almost anything you know >> yeah that's true but I don't think I don't think it's helpful >> so I hope he doesn't back off is for being a bit more open and straightforward >> no I agree and I think if he keeps doing it and he leans into it I think that will land with the public and they'll they will respect him for telling things how it are less helpful however I would still say is allowing too many things to be out there to be speculated on. That's not a grown-up chat. That's just destabilizing people. So, I think the thing that I have found odd and a bit confusing is the amount of hairs they've set running that they've then had to draw back. I don't think that's doing them any good. But, let's focus for a bit on the personal because a lot of people watching this will really care about that.

[00:22:22]you know, he he seemed to indicate very strongly it was his kind of number one priority o over the last week or two and today he's a bit more let's see I want to have an adult conversation about it.

[00:22:33]I mean we're not that far from the budget. There's so many huge decisions that have got to be under consideration in the budget increasing money on defense you know all the other stuff we've talked about. Where do you think we are on the personal hours? If people are thinking, "God, I really hope it goes up." Are they likely to be rewarded or is it just going to be too tight? Do you reckon?

[00:22:57]uh you know, if he were to do a budget that were to pave the way for, you know, in in you know, genuinely real terms for um the defense budget to increase from current 2.6 2.7% of national income to 3% by 2030. if he were to do a budget that would have paved the way for a, you know, universal free um national care for the elderly scheme. Um I mean that's sort of mind-bogglingly uh expensive. Um uh then you know a 10 billion pound uh you know you know within three or four years increase in the um you know the personal allowance um means that either there would have to be absolutely savage cuts elsewhere welfare >> you know pensions um uh or um massive massive massive tax increases. Now um I just can't I haven't got a feel for now um about how advanced they really are on you know welfare reform. I suspect that they given that their approach is not to you know cut first and create jobs later. their approach is to in a sense create the jobs which would then be the backdrop to reforming the welfare system. You know you can't you know you can't essentially create uh you know a condition which is also quite expensive um for getting more people into work in you know in in in in a sort of credible way. I mean let's say the budget is November um in that kind of time scale.

[00:25:02]So truthfully, even if we think they are intent on making reforms that get more people into work and more people off off welfare, I don't think they'll be able to bank some huge sum of money uh from that to pay, for example, for a significant increase in the taxfree personal um allowance. And so, you know, he's probably going to have to start having a debate quite soon about what taxes may well go up if you want to um give tax breaks to people um uh at the bottom and if you want to pave the way for more defense spending and more social care spending. So, so it's gonna this is going to be this be under you know this is going to be an absolutely massive budget. And another thing however where I will be judging him is uh at what point he starts to have a national conversation about the priorities for that budget because as I said to you I don't really now yet have a sense of what the pillars of that budget are and if it's not going to be you know the kind of you say the first budget um that Rachel Reeves had was catastrophically bad because their entire story to the country up until the budget was, you know, we're bust and therefore taxes are going up massively and then there was a lot of speculation about which taxes and how.

[00:26:35]Basically, businesses and consumers both thought, well, I'm not going to spend or invest now because, you know, obviously I'm going to get this whacking bill from, you know, the chancellor anytime now. Um and it all it all feels too gloomy because they're telling me everything's terrible. So some so you know if he's going to avoid that trap you know he's really got to have a you know start having a national debate about what the point of this budget is.

[00:27:03]which taxes might go up and what the priorities are of a positive sort in that budget that might actually do something for you know our absolutely appalling growth performance over the last 15 years and our appalling performance when it comes to raising living standards which have gone nowhere for 15 years. So you know it's this is what I want to see from him um is a bit of honesty and a bit of leadership. One question I have actually been burning to ask you. Yeah.

[00:27:34]>> What do you make of the idea of war bonds? For people who haven't followed this, the idea is that you can create effectively a separate class of borrowing that is used to invest in Britain to reindustrialize our base and drastically increase defense spending.

[00:27:53]You know, we're told that John Healey has discussed it with Gordon Brown. I don't know if that is even true. Rachel Reeves and many others say it's borrowing by any other name and you can call it whatever you like, but it's still borrowing. What do you think?

[00:28:06]>> All right. So, I've got this um this here here is my uh my my better government debt, right? But I'm I'm I'm writing on it war and uh do you want do you want to buy that from me?

[00:28:20]>> You want to buy do you want to buy that more than you know another slice of government debt?

[00:28:24]>> Not especially.

[00:28:25]>> I mean, but that sort of is the answer, right? I mean look there may be some way of configuring you know the these bombs so that they somehow directly go into some bit of defense manufacturing.

[00:28:45]I mean, you know, I I I personally think that kind of um uh approach is sort of not very uh intelligent, creative accounting at a time when interest rates were way lower. Um uh you know there might have been um some point in just in general you know you you borrowing a lot more for all sorts of useful purposes like infrastructure and um defense but that ship has sailed right interest rates you know have been on a you know you know there was a you know after COVID there's there was a massive reset upwards in interest rates and at that point um uh you know you just had to be way more careful if we were a country like the UK in terms of how much new debt you were going to issue simply because you know the the the the burden of the interest you had to pay was squeezing out is squeezing out um you know your your your resources for day-to-day spending you know with with interest paid by the government well over 100 billion um you know way more than the defense budget for example um you you you know you're sort of nuts to just decide by reclassifying um it's it's you know you may even if you could sell a few more a bit more debt right it's still going to carry a very big rate of interest which you got to be careful about right the thing that I am slightly obsessed with and I don't think there's enough creative thinking going on in the government about this is one of the reasons why this government is so vulnerable to international movements in interest rates whenever Trump does anything unbelievably stupid and interest rates across the world go up ours go up more than anybody else's.

[00:30:35]And that's um partly um because of the absence of a proper growth plan here, but it's also partly because a big chunk of our debt is owned by hedge funds and international investors who basically have no patriotic reason to invest in the UK. And if they think things are getting bad internationally, they're just going to dump our debt. Right?

[00:30:57]What would be a perfectly sensible thing to do would be to think about ways constructively to persuade British people and British institutions to invest more in UK government debt to lend more to the government. I mean, one of the problems we have in the UK at the moment is British people are accumulating savings in a way that they haven't done for 20 odd years, 30 odd years. I mean, actually, more or less my entire lifetime. People are so anxious they're saving more than they've ever saved, right? Be quite good if some of that money could be lent to the government in the way that the Japanese routinely lend their money to the Japanese government. So you could come up I mean there are these ideas for you know creating a category of debt you might call it a war bond and then giving tax break particular tax breaks. So there's this idea that if you know you um someone Bradby lent some money in a war bomb to the government that that chunk would not be vulnerable to inheritance tax when you pop your clogs.

[00:31:57]Now you know that might persuade British people to lend the government a bit more. So there are sort of creative accounting things that you can do that might unlock some money from UK uh people and UK institutions that would otherwise not be unlocked. And over time that might mean that the you know the interest rate that the government pays would come down a bit. But simply saying a category of debt is a war bond. Okay.

[00:32:23]Either in or >> we better stop there. It's goodbye from me.

[00:32:26]>> And it's goodbye from me.