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Chapter 1: Is the UK stuck in a debt and tax doom loop?
You were in government for 14 blooming years. You look at that 14 years, growth remained anemic.
That feels a bit unfair on the electorate that you only realise this as you come out.
A doctor earning 100 grand, the state was borrowing 25 grand to be paid by future generations to pay that doctor's salary. Normally you'll get a kind of gimmicky announcement at a budget...
So you admit you do gimmicks at the start?
There's too much gimmicks on all sides in politics. Empowering regional mayors to sort out problems like properly transforming the welfare system so that people have incentives to take jobs and not remain parked on welfare.
You did two national insurance cuts at a cost of 20 billion and actually it was just an electoral bribe. Nonsense.
And let me just explain that because...
This episode is brought to you by Octopus Energy. Greg Jackson, the CEO, is with us now. So, Greg, I've got a question for you. Is it true that by 2040 in China there will be no petrol stations because everyone will be driving electric cars?
Yeah, crazy as it seems, the Chinese state oil company, the one in charge of its petrol stations, is planning on having none by 2040. If you visit China today, what's really striking is the roads... They're quiet. I mean, all of the two-wheeled vehicles that used to pump out pollution and noise are now electric.
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Chapter 2: How can we cut welfare spending effectively?
Now today we've got Jeremy Hunt with us, former Chancellor, of course, Tory Chancellor. He's held other big roles in Cabinet as well. And of course, he was the person Liz Truss turned to.
She did. I mean, literally days before she was forced out herself. She brought him in to replace Kwate Kwate after the disastrous mini budget when we saw bonds plummeting, real risk that the government wasn't going to be able to borrow. And actually, if you haven't yet listened to our three part series on the Truss debacle, it's still there. It's still relevant.
Who killed Liz Truss is what that series is called. It's worth a listen.
Today, what we want to focus on is how to revive the economy. I mean, Jeremy Hunt is somebody who was health secretary, he was foreign secretary, he was culture secretary, and then he was chancellor. And so there are very few people, actually, who understand more about why governments find it so difficult to to actually take the difficult decisions that are necessary to revive the economy.
Here's our interview with Jeremy Hunt. Jeremy, it's lovely to have you on the show. I think last time we spoke to you was in number 11 when you were Chancellor.
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Chapter 3: What role do regional mayors play in tax and spending decisions?
In the Oak Panel dining room, if I remember rightly.
It was indeed. Since then, I need to start by saying thanks to you because you helped me win £125,000 on Who Wants to Be a Millionaire? How did I do that? Because you were the answer to one of the questions. What was the question? The question was, which Chancellor has also held other Cabinet roles? And then the list was, God, I can't remember who was on the list.
Oh, I see.
Yeah. So you had a choice of... Chancellors. So it was obviously Rachel Reeves and you. And yeah, I can't remember the other two. And I knew you were the answer.
And you didn't need to phone a friend?
I didn't. I just knew straight away. Yeah.
Well, I would have been very shocked if you hadn't had the answer.
I know, well, yeah. It might have been the end of our beautiful relationship. But I just want to say that money has gone directly into helping a charity in Middlesbrough and they've managed to get property with the money. So that is a direct investment you have made into the Middlesbrough area.
I'm going to take all the credit I can because we don't get very much involved.
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Chapter 4: What lessons can the UK learn from Mississippi's economic strategies?
No, no, no, exactly. Anyway, thank you for coming in again. Robert, you're going to kick things off, aren't you, with the serious stuff?
Well, how serious we're ever going to be. But yeah, we try. Now, I've read most of your book. And as usual, it's extremely clear, very well set out. But I'm going to start by quibbling actually with the title, because I just think Can We Be Rich Again is just totally the wrong title. And it's really not what your book is about either. Harsh. Well,
Your book is broadly about how we get the economy growing again so that we have an economy that works for people, particularly people who are lower paid. Truthfully, we are a rich economy. The issue is not can we be rich again? It's how do we have an economy that works properly, particularly for the very many millions of people who think that actually people like you, Westminster, let them down.
I don't think that's a better title, though, Robert, to be fair.
LAUGHTER
It's not a better title. But as I was just saying, I just don't think, you know, I think the title, if I'm going to be critical, I'd say you're doing what you accuse journalists of doing, of sensationalising something to get a few readers. But that's not what the book's about. Well, it is. It really is because, you know... We're not poor, Jeremy.
By any international standards, we are not a poor country.
And you sound exactly like I sounded when I was Chancellor. I would go around saying, you know, we're doing so well in Britain. We've grown faster than France, Italy, Germany, Japan. And, you know, we are doing well by international standards. But the truth is, yes, of course, compared to lots of countries in the world, we are wealthy. But do people feel wealthy? But I'm agreeing with you.
And the truth is they don't. And so when I say, can we be rich again? Yes, it's a kind of snappy way of encapsulating that sense people have that our wealth is going down.
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Chapter 5: Why is economic growth important for future generations?
And what is the big reason for that? Here's an interesting thing, right? As you well know, since 2008, the financial crisis, we've been growing at about 1% a year. Prior to that, about 2.5% a year. If you go into ChatGBT and you say, if you grow at 2.5% a year using the power of compounding, how long does it take for our GDP to double? Answer, 28 years.
So the world that the three of us grew up in, the country was doubling in wealth every 28 years, basically every generation. Doubling in income, I'm going to... Doubling in income, fair point. But, you know, the truth is that...
However difficult things felt on the ground in the 1980s and 1990s and early 2000s, people had optimism and confidence that they were going to be wealthier than their parents and a lot wealthier than their grandparents. Now growth is 1%. And that means it's taking 70 years. It's so slow, you don't even notice it. And that's why people are losing hope.
And what this book is trying to do, as you know, my books are positive books that are trying to present solutions. And I'm trying to say this is a totally solvable problem. Not easy, but it is solvable. And this is how we give people hope.
And look, Stefan, I would completely agree. that it's the right challenge. Of course it is. I guess the first question I want to ask you is, why is this only dawned on you now? You were in government for 14 blooming years. Why did you and your colleagues so singularly fail to grasp what needed to be done?
Well, it hasn't only dawned on me now. And I think that the book shows that there are lots of things that I tried to do.
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Chapter 6: How does the UK's economic situation compare to other countries?
But I've also tried to be honest and talk about the things that I didn't do that with the benefit of hindsight I wish I had. But let's deal with that issue because I think – by the way – You know, previous books I've written about how to fix the NHS. I had exactly the same question. You were the longest serving health secretary. Why didn't you do this stuff?
Truth is, you do learn things in office. You know, when you finish a big job, there are things that you discover or uncover or learn that you didn't know when you started.
But in this case... But that feels a bit unfair on the electorate that you only realise this as you come out and then you publish a book about it and don't do it when you're there.
That's democracy, isn't it? That's democracy. I mean, you know, Rachel Reeves had not been chancellor until 2024. And I'm sure that she would say that she's learned a hell of a lot of things about the economy and the way that job works in the last couple of years. And, you know, democracy, we choose ordinary people to do these big jobs. And actually, you want them to learn on the job.
And I would say you actually want them to try and reflect honestly on what they got right and wrong. But I want to answer the big question, Robert, you said, because if you look at that 14 years, It is absolutely true that growth remained anemic about that 1% a year. So that's not wrong. But you have to understand the context, a global financial crisis, which left us a deficit of 10% of GDP.
So the government when... we came to office was borrowing nearly one pound in every four that we spent. Like a doctor earning 100 grand, the state was borrowing 25 grand to be paid by future generations to pay that doctor's salary. That was tough to deal with. Then we had a pandemic, which meant we had to borrow 350 billion pounds to do the furlough scheme. Then we had a
The Ukraine energy shock, which was kind of like the 1970s energy shock.
We also had the south arm of Brexit, which, you know, the economy was significantly recovering before Brexit.
But that was decided by a vote. I'm just talking about global shocks for a moment. We can talk about Brexit, of course. But my point is, how do we do in that period? Actually, we did grow faster than comparable large economies like Japan, Germany or Italy. But it was not as fast as we were used to. And that's why people didn't feel rich.
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Chapter 7: What are the proposed reforms to the welfare system?
Just the final sort of big question before we drill down into individual policies. There's a lot of talk at the moment that the country is ungovernable, right? It's become a big debate given the crisis that this government is going through, essentially whether the prime minister can survive. Is there just a fundamental problem that any genuine restructuring that has to be done –
It has two qualities. One is it's going to divide MPs and possibly to such an extent that you're not going to get it through Parliament. And second, that almost everything you need to do, you can't do within one Parliament. And therefore the electoral cycle just makes it almost impossible to fix the country in the way that you would want. And I'm reminded, I guess...
Perhaps the biggest thing that you did, which is you did two National Insurance Cuts at a cost of 20 billion.
I would argue that if you had done those as a way of basically reorienting the costs of employing people, cutting those costs, but then raising money elsewhere, possibly through a change in asset taxation of some sort, that would have been a really radical reform for a chancellor to make. But actually, it was just an electoral bribe.
And, you know, you talk a lot about getting debt under control. And it's obviously important to get under control. But those two cuts did the opposite of that.
Nonsense. And let me just explain that, because I think, first of all, I don't buy this story that the country is ungovernable. I was in the cabinet for 11 of the 14 years the Conservatives were in office, and I never had any problem making really important long-term changes, often changes that would take beyond the electoral cycle to feed through.
As long as you're absolutely clear with your civil servants about what you want to do, It is perfectly possible determined leaders can make changes. But one of the things that has become clear to me is that your political capital, either as a minister or as a government, is at its highest when you arrive in office. So if you're like chief executive of British Airways...
You can arrive in the job, you can get your feet under the table, work out how everything works and maybe two years in say, here's my plan to make BA the best airline in the world. You can't do that as a politician because your political capital is draining away from the moment you arrive and therefore you have to do the big things early.
So I think the reason, irrespective of the rights and wrongs of their policy decisions, the reason that... Keir Starmer and Rachel Reeves have got into trouble is that they didn't do the big... They did do big stuff, though.
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Chapter 8: How can we make the economy work for everyone in the UK?
No, it's not because look what the OBR said about those tax cuts. They said that they increased GDP by 0.6%. Now, that sounds a small amount, but it is significant. They take 200,000 people off welfare into work. That was my growth strategy. And I could have chosen tax cuts that were much more salient with the electorate, that people understood.
No one was asking for cuts in employees' national insurance. People wanted cuts in inheritance tax at the time, in stamp duty, in income tax. Employees National Insurance was not on the list, but that was the tax cut. If you talk to people like Paul Johnson, that was the tax cut.
Paul would agree that the second one was totally unaffordable. I've asked him about it.
Paul said that these are... I have asked him about it. You're not letting me answer the question, Robert. Those tax cuts were the ones that had the biggest impact. Now, if you don't want to do those tax cuts... then you have to answer the question, what is your plan for economic growth? Now, in that chapter, I have a whole chapter in that book, in the book, I have a whole chapter on tax.
And I think I prove in that that actually reducing the burden of tax is one of the ways that you grow the economy. Because if you look around the world, the countries with lower taxes... are the ones that are growing faster. And I think we need to go on that difficult journey. And the only way you can do that is to show restraint in public spending, which is what I also did in that final budget.
On the point which Robert makes around the decisions feeling short-termist, it feels like we're seeing a lot of tactics rather than principled decisions. And on your point about cutting taxes, when Liz Truss came in and suggested this, All hell broke loose on the bond markets. If you can't prove you've got the money coming in, then you get hammered on borrowing costs.
That was right. And her mistake, and actually the reason I became Chancellor, and the reason I, by the way, ended up on holiday in Brussels and getting a text message from Liz Truss, which I thought was a hoax. What are you doing next week? So I ignored it, asking me to come back to London and be Chancellor. That happened because...
The tax cuts that Kwasi Kwarteng introduced in the mini-budget were funded by borrowing. And that's not a real tax cut. That's actually stacking up debt on future generations. And the markets, quite understandably, didn't like that. And so, you know, if you're going to reduce the burden of taxation, this is not something you can do overnight. It is a long, hard slog.
But the evidence, I think, is very clear in the book that the countries that have done that – I mean, you know, the example I give in the book is the state of Mississippi.
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