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BM Talks
BM Talks
BM Talks: Ben Ashby speaks Q3
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We are joined in our latest edition of BM Talks for a Q3 update from our regular guest Ben Ashby, CIO of Henderson Rowe.
We asked:
- Are energy prices going back up?
- How long will the AI boom last?
- Does Brexit matter?
- Will there be a UK snap election?
- Should the UK Treasury be divided up?
- What will Andy Burnham do?
Hello and welcome to BM Talks with me, Helen Thomas, CEO and founder of Blonde Money, and our returning guest back for the new quarter is Ben Ashby, CIO of Henderson Row. Welcome, Ben. Good to have you back.
SPEAKER_01Hi, Helen. Thank you for having me back.
SPEAKER_00I am delighted to be talking to you. I'm I'm I'm giving I've got several cameras and several microphones in front of me. This is just a bit of a departure for us this time, Ben. A new venue.
SPEAKER_01This is very impressive. Uh-uh, and and for us, what has brought this about?
SPEAKER_00Well, you know us, always professional. Uh we have decided uh on a very hot day that being in an air-conditioned studio is the place for us. We've used it before, the wonderful Nick at Evolution Studios. We are here, and may I just say, may I just say that this is where a member of Radiohead comes to to do some recordings. So, you know, we're right at the the top of the uh recording studio ladder here, if you will.
SPEAKER_01That explains the keyboard in the background, I can see them. So we're gonna get all uh progressive and distortive, are we, on this podcast?
SPEAKER_00We might get gloomy and grungy. I don't know. Let's try and keep it upbeat. But we could always do a musical interlude, you know. Uh if it if it la if it flags, it won't flag. It won't.
SPEAKER_01So um where do we start? Should we just kind of since we last spoke? I was obviously pretty bearish about the energy price. And that has consistently come down. So it looks like at the moment I've got that wrong, but it also looks to me that there's a good chance there'll be a bit of a breakdown. I mean, obviously, I don't see what Iran's motivations are to play fair into the run into the US um midterm elections, but maybe that's just me.
SPEAKER_00Well, no, I think yeah, I think I want to pick up on that because I think you're absolutely right to flag up that you know, ceasefire or end of war doesn't mean uh end of hostilities, does not mean end of risk, uh, does not mean that the Strait of Hormos goes, quote, back to normal.
SPEAKER_01Yeah, I I um I mean look, it's not impossible, uh, but I I can't see how oil will not be between at least $90 to $100 by the end of the year unless there's something really radically that changes. The other thing as well is the flip side to the argument is as China particularly has drawn down on its petroleum reserve, and nobody knows how big that is, but they've cut the feedstock to refiners. So you've still got that distortion going through in the wider economy with diesel fuel, uh, jet fuel, various other sort of distillate type products. And again, I don't see how that doesn't get distorted by the end of the year, because either more feedstock has to be made available, in which case that should drive up the oil price, or China perhaps wants to accelerate its reserve drain even quicker, which is not impossible. Um, or we are going to be eating prices that are higher, particularly probably October, November, because that's when the sort of winter fuel season starts. So I don't know. We'll we'll see.
SPEAKER_00Well that the knock-on effect of this has many quarters, if not years, left to run. Because as you've just said, there's been a substitution of if you if you want to keep the refineries going, then then you want to keep the yield high, then you you you sacrifice something else. Um you you may even sacrifice the use of something. So, you know, sugar for ethanol rather than for sugar. So there's all this knock-on, there's going to be this really lumpy supply and demand. If those of you who love economics, and uh I'm lucky enough some of our lovely interns are with us today who are studying economics who who are joining us to for to listen to this, but but it is back to economics 101, supply supply line, demand line, you meet new equilibria with new prices all the time. You you can't just the one thing that isn't going to happen is that we return to where we were on February the 27th before Ayatollah Khamenei was assassinated. You know, with dominoes have been set in motion now. Um there will end up being oversupply in some areas and over demand in others. Um so I think that's I think well the good news for us with our quarterly podcast is we're gonna have we're gonna keep returning to this. But but but I guess at this quarter, interestingly, this sort of this July, August, September quarter. We're in that slight hiatus where, as we say, the the absolute tail risk is off the table for now. There is a sense of relief, there is the normal summertime lull, there's the world cup, all these other things going on, where the market might feel just quite happy to deal with those later on, uh and not and not try and and not try and deal with those risks right now.
SPEAKER_01Yeah, I agree. Though uh as as we're chatting today, Saudi Aramco has just announced a huge supply cut, so they're not happy with uh where the price has has got. So more to watch on this. Since you've brought up uh the World Cup, uh which you know I I I I follow closely as a Scottish-born uh rugby fan. Um just wanted to say congratulations on uh uh this morning's victory.
SPEAKER_00Um the other thing was they're gonna they they there was obviously this discussion about um the government taking the US government taking a five percent stake in OpenAI and all the other AI businesses as a kind of uh national security strategic asset upside idea that you know the whole country is then could get a real dividend out of that, assuming it that it does well. But I think once a company starts to want the government to be part of its shareholder structure again, that says to me maybe they are a bit worried about this um appetite for these IPOs, or am I being too cautious?
SPEAKER_01No, you'll never get that far in uh growth investing if you show that kind of caution and cynicism, you're better suited bonds. Um I'm with you. Anybody that wants to sell five percent themselves to the government strikes me as it's a sell, it's a tell that there's bigger problems afoot. And let's be honest, how many how many companies can actually make you know a success for this? One, two, three, maybe. Plus, nobody ever seems to talk about the Chinese constantly release cheaper models which can be downloaded and and potentially for a fraction of the cost. So while I think it's a brilliant piece of technology, I'm just sceptical it's going to deliver the cash flows, though I do think it's gonna have um an enormous influence on the economy in general. I'm I'm just sceptical in the short term. So I uh and it's a lot of equity capital money to be raised over the next few months. The other thing is is since we'll be talking about the UK later on, but uh if why would you want all this US stuff in your infrastructure now? I mean, the Americans have just demonstrated potentially that they're not the most reliable partners when push comes to shove. You've had the delay of the anthropic model, and you're gonna have US government ownership in there. So uh if you have a look at all the arguments that are going on around Palantir in the UK, and I believe the French have just kicked Palantir out of their national security structure for similar reasons, saying that we need to develop it internally. I I just think there's a lot of moving parts in there, and I'm sort of skeptical the cash flow is gonna come through as the equity market seems to think it will.
SPEAKER_00Let's flip to Europe.
SPEAKER_01Oh, yeah, that's actually let's start off because I know you were invited recently for ten years after Brexit, uh, I believe by uh part of one of the European think tanks. And um so what what was the vibe and has Brexit been a success? You know I've got my views, but I do, and I want to hear your views.
SPEAKER_00But first of all, I was invited by yes, a centre-right think tank in Brussels to come and speak and write a paper about what the EU can learn from the UK in terms of economic and political challenges since Brexit. And the subtext to that is those who are gloomy about the UK, uh whether in Britain or elsewhere, who think you know, stagnant growth, severe economic problems, um, that is also a problem in Europe. Um so we can't just say it's down to Brexit. Well, frankly, I never thought it was down to Brexit anyway, but apparently that's uh a view out there. Um so I was asked to write this paper. Now, first of all, can I just say, I mean, I was delighted to do it, but how interesting that Brussels wanted a Brit to talk about Brexit. When I was asked, oh, it's been ten years, I thought, Crikey, has it really been ten years? Oh, it happened ages ago. It'd just fallen out of my brain.
SPEAKER_01I was just gonna say, economically speaking, COVID was a much bigger shock.
SPEAKER_00Why weren't we doing five years since we were all locked up? I mean, that is a much more significant economic, social, and political event than reorganising your trading relations with your neighbour. Um, I know it's a bit more than that, but it and actually, I remember one of my first podcasts I did, because I started my doing my podcast in um in Covid, because hey, what else was there to do when you were at home? I couldn't come to the recording studio. Uh, and one of the first guests was Mohamed El Erian, and and he said, um, actually, Britain should be in a better position in going into Covid because we'd already had a shock, we'd already had to reconsider our supply chains, uh, we'd already run through some real disaster scenarios. In I mean, in many ways, and that led me to think that Covid was like a global no-deal Brexit. Because you remember, we were told the planes won't fly, the shelves won't be stocked, we won't be able to get hold of certain things. Uh, you know, it's so we sort of did the world did the worst parts of um of of allegedly of Brexit, you know, in Covid. But COVID is a much, much more wide-ranging shock. And then on top of that, highest rate of inflation in four decades, land war in Europe. You know, there's a lot there's a lot more going on, isn't there? Um let's not talk about it. Well, no, I d I think we should talk about it. Part of my report was about the economic challenges, but it was about the common political challenges too. And about um particularly on this right side of the political spectrum, how do you ha with many of those parties, obviously in the UK, the Conservatives failed badly and got kicked out of office. Um, but it's the same sort of story is happening to many other right-wing parties in in Europe. Um and and when I started looking at this report, you know, I was very when I started writing it, I was struck by the uh similarities. And may I just add at this point, because we're going to move into talking about the UK.
SPEAKER_01Yeah.
SPEAKER_00There's a lot of constant gloom and doom about what is it, seven Prime Ministers in ten years or eight. Right, like as if that makes me more unusual. There's been seven different prime ministers in Paris in six years in France, under Emmanuel Macron, one of whom resigned and then had to go back again because it was such a chaotic disaster that they, you know, they had to get the guy who resigned back to be prime minister. Um, I note um today that uh Peru have had their uh, I think something again like the sixth or seventh president in ten years. There's a lot of this going on. I mean, look at President Trump in the US, only the second ever president to win non-consecutive terms. That is should be earth-shattering. I mean, there's all this focus on Trump and he gets people very enraged, but goodness be, by the time his term ends, that'll be 12 years of sitting astride the US political system. So, I mean, one of the things actually that came up on that Brussels trip was, of course, about rejoining and the chances of that happening or any political party in the UK moving in that direction. Um, I did say there's a place in the political spectrum of the UK for a party to make that argument. I didn't think it would be successful with the public, but that if as we're going into more of a fractured five or six party system, there could be a centre-left slash green slash rejoin EU party that would probably take 20, 25% of the vote ultimately. But I said to I said then it's very simple. If there ever is another referendum, it the the uh campaign against it let's say it says rejoin. The campaign is so simple, it's three words, tell them again. And that because what's not what it seems to be missed about this, and this is why Brexit is a symptom, not a cause, it's why it's important not to dwell on purely on Brexit. It this all came out of the financial crisis, the failure of the establishment, the system not working, the uh the uh unequal and unfair redistribution of the proceeds of growth, the uh the the aging demographics of Western societies, all of this. Um and people are angry and they want change. And Brexit was a spasm of that, and in many ways, so was Trump. In fact, many ways Emmanuel Macron was in France. He ran as an insurgent with a whole new party, and even he is now about to be eclipsed by you know the supposedly, you know, verboten, if I mix my languages, far right in uh in France. So what what I found interesting was, you know, we're we're all going in the same direction. If you if that makes you feel worried or sad or stressed, I write in my report for that think tank, look at Greece, which actually is kind of ahead of everybody in this because it has a much more flexible, fluid political and electoral system that you can start on new parties very easily. You know, they voted in a populist with Zippras. Um the legacy old centre-right, centre-left parties were were almost dead and buried at that point. But within five, six years of that, um Mitzatis came back for the um I think it's the new democracy, the the the centre right party in Greece. And look at Greece, you know, they took a I'm not saying it was pleasant, they took a heck of a beating on austerity measures, but now their debt is investment grade. Uh, they've got a primary budget surplus. Um they are your money is coming in. I mean, I I don't know about you, you keep running into Greeks on holiday over here um because they're saying it's too expensive to go on holiday in Greece. Um there are there are there are ways forward. There are, you know, out of tumultuous times comes uh, you know, after the revolution comes the rebuild. Um I'm not saying I think that is the you know, the Greeks is definitely how any other country will go, but I'm just saying they are uh an example of how you go to a very fragmented system of people going to extremes, rise of populists, rise of uh anger, um, and you can then ultimately still come back to uh a kind of a new settlement once the old parties have heard that message, you know, tell them again. But but you have to listen to people first, because the more you won't listen to them, the more they'll go to the extremes.
SPEAKER_01I I kind of agree with you on that. The only thing I would point out with Greece, though, is the economy is only broadly from memory about 80% of the size it was before the crisis. I mean, it it has been a big, long recession for them. Just uh before we move on, we um so we could talk about the UK, but uh I went to a uh hedge fund conference in May uh 2016, and they had a guy on stage called Neil Howe, and he's an American financial historian. He and another guy called Strauss wrote a book in 91, I think it was published in 92, 93, something like that. And it's called The Fourth Turning. It's very popular in finance circles to kind of quote the thing. I'm a little bit skeptical about deterministic history, though we've all got friends who we know believe in this thing a lot more. I think it's a bit more probabilistic. But how was asked in um well, first of all, he before he even talks, the predictions made in the book, huge financial crisis circa 2005, uh in the US, probably related to personal finances that we got, um obviously give it take a couple of years, which he does say in the book, give or take a couple of years. Um, then 10 years of broad stagnation, huge transfer of wealth between uh rich and poor, rise in segmentation, uh populism, and everything else. So that was their broad remit, and they explain in the book how you get to that point. Anyway, he was asked uh at this conference in London uh three questions, and it was uh Brexit, Trump, and Macron, and because the French election was beginning of uh 2017, and his answers were Brexit will almost certainly happen. Uh, he thinks it's a big change, exactly as you say, it was a symptom, um, not the cause. People want the change in status quo. This is now running a line. He said it'll be a messy 10, maybe 20 years as the political elite doesn't want to change, but actually has is being forced to change, and actually that fits that timeline. Trump he's he was even more adamant about. He said Trump's gonna come in, Trump will be a mess. Uh, he's literally the worst thing you can get. Um in the book, they talk about a baby boomer US president uh with simple solutions to complex problems, and he talks about America being uh more engaged in the world, but now completely out for itself and not interested in any of the structures. So you've got that. It's almost as if Trump read the book. Now the the final one they said Macron. He said, Oh, that's an easy one as well. He said it will be Macron. And he goes, Because he's the French are always eight to ten years behind everybody else. That was his answer. And he said it's it's the establishment's answer uh to try and keep things the same, but they won't be able to. So he said uh Macron will probably survive both terms, and then you're almost certainly going to end up with Le Pen or or successor. He said, Whatever it is, you're gonna have a kind of more extreme outcome. And and his bigger worldview is there's a second crisis coming, he calls it the fourth turning. I think he's actually physically said that now uh on recent interviews, and he thinks we're now in the beginning of that. So you have got that. Now, talking about all that, let's let's kind of you know, UK and it's uh various talk of impending crisis means we take a look at the city. Talking of impending crisis or or coming messiahs, uh who uh who's king over the water.
SPEAKER_00See how this World Cup pans out. Because he Burnham will take office the day after the World Cup final. And if he's a vibes man and uh England do well, then I might sound that one of my more outrageous predictions, but it's it's not zero that we have an England World Cup victory or or or or at least a good showing in the final and a snap general election. Um but broadly speaking, um I I think the general election will come in about 18 months' time. Uh uh it will it will be it will all fall apart into a general election. We already, you know, that's something we've talked about, I think, on our this podcast that we do regularly. Um that hasn't changed. So it, you know, what is success for Burnham? Keep it going until the election, uh, trying to get to a point of Labour getting to sort of 25-26% in the polls, which they are potentially on track to do. They've had a poor old Keir Starmer is they've had a they haven't had a Burnham bounce. They've had a Starmer's resigned, thank God, bounce, which which has narrowed this uh gap with reform. And reform have got their own problems as well, I should say. I mean, sorry, I know I'm witchering on, but let me just say about the situation.
SPEAKER_01No, no, no, no, this is this is really interesting.
SPEAKER_00Well, the snap election element as well is that you could catch reform and the Greens on the hop. Um, because they simply don't have the national um set up logistically. How are they going to find 650 candidates each? Uh, how are they gonna get good candidates? I think reform have shown they've found candidates recently, but they've not been the best. The leader, obviously Farage, is now in a trouble over questions of his what he's declared as a potential conflict of interest. He may well be facing, I think it's becoming quite likely he'll face a recall uh petition whereby he will have to uh there'll be a by-election in Clacton itself. Um there were you know that there's there's there's a lot of issues going on there. And then of course the Conservative Party, while they do have the slightly more energized global uh local networks are starting to sort of pick back up from from basically being dead to not to being slightly more alive, um they are still only on what is it, 120 seats. So it's you know, even if they do pretty well, it might be quite hard for them to to to you know make any serious inroads. So there is an argument. There is an argument to snap election, but a lot is gonna land on I think this first budget. Um and I think did we talk last time? I think we talked about Ed Miliband as Chancellor last time, did we not?
SPEAKER_01I think you might have been. I can't remember if we've done it online, but we've certainly chatted about it offline. I mean, I mean I think he would be dreadful. I think he's just dreadful. I think one of the best the one of the only good things about getting rid of Stammer is Reeves will go as well, but I'm not sure Miliband will be.
SPEAKER_00Well, be careful what you wish for. Be careful.
SPEAKER_01I know, I know. Uh but you've seen a lot of the unions come out against him. You've seen some of the financial backers come out. I've been at city events, as I've told you, where there's a couple of the unions who've now publicly broken cover, have got off stages and launched into absolute tirades about Miliband and how he's wrecking their um uh their members' prospects. So I I I I just I I literally I totally understand he's supported by the Labour Party itself and the activists, but I can't think of anything he hasn't failed at other than stabbing his brother up.
SPEAKER_00Wow. Punchy. Okay, well, let me go back and say, you know, he was uh an advisor under Gordon Brown. He has got a long history of uh of working in government, he has got a big economic brain, even if you think it comes out with. Totally the wrong economic ideas. Um and also I okay, let's get to the nub of this. The real focus for a lot of the unions and for a lot of city discontent and a lot of people's discontent with Ed Miliban is oil and gas. And it is energy policy, and it is the fact that Britain has the highest uh electricity prices in the world, or whatever it is, you know, this this it isn't just Ed Miliban's fault. I mean, that's been a a problem of conspired multiple administrations.
SPEAKER_01While we're on the subject, Ed Miliban kicked all of this off in the late uh um late stage of the Brown administration. People forget that.
SPEAKER_00Oh, go yeah, go on. Yeah.
SPEAKER_01Yeah, he was the NS energy minister there. So a lot of this stupidity was started under him, and then you had the problem of the coalition, which everybody forgets because the Liberal Democrats have a strong green wing, so they didn't want to do the uh nuclear power stations. If you remember Nick Clegg getting uh interviewed in 2010, what's the point of doing all this? Because it'll only be 2020 before you see the impact of these new power stations. Well, that would have been really helpful. Thanks for that one, Nick.
SPEAKER_00So I don't agree with Nick. Do you remember that debate they did? Their first debate they did. Oh, I agree with Nick. Yeah, don't agree with Nick.
SPEAKER_01So, in fairness, um you know, you could argue that uh you could blame the Tories from 2015 onwards, but they were preoccupied with other things. But the the starting point of this big green shift and a lot of the subsidies and the non-investment into the North Sea, which is is worth a discussion in its own right, because I see so much nonsense being written saying they're all tapped out. Well, actually, I can buy shares in companies and Norwegian firms that weirdly seem to have found stuff just on the other side of the dividing line that apparently the British can't. So there we go. Um, and it should be up to professional investors to do that. And why don't you normalize the tax rates and then we'll see how much of this gets done? It doesn't need any government investment, it just needs the government getting out of its people's way to actually get this. Even just mirror the Norwegian system, which isn't exactly uh shareholder-friendly, would be a massive improvement. But I do not want the fact that he kicked off a lot of this nonsense back in sort of 2008-2009 to go unrecorded. He he is he is very, very much responsible for this problem, and I absolutely don't understand why he's viewed he wasn't a good Labour Party leader, he wasn't any good in government last time, he hasn't been any good in government this time. I I I just cannot see why.
SPEAKER_00Well you say that, you say that, Ben. I mean, the he is considered a very effective minister, and he is an effective, has been an effective minister in the Department of Energy and Net Zero, he has done what he set out to do. It may not be things that you or many others like, um, but he is considered within the party to be effective. And in a in a party that has felt deeply frustrated that it can't get things done, that is why he and Shabana Mahmood, who has also got things done in in home, the home office, are considered the ones that you know are the candidates for that Chancellor job. Um one thing we should mention about number 10 north, because that is relevant as as regards the role of the Chancellor. So um it's not just a gimmick. It is a gimmick, but it's not just a gimmick. I mean, it is a a rebrand and a vibes and a we care about place and we like devolution and put power back into the hands of local people. Um but number 10 North as it's if, when, how it exists, could well be an alternative power centre to Westminster and to Whitehall and specifically to the Treasury. Now Louise Haig, who is definitely someone everyone should watch, she's absolutely key to the Andy Burnham administration. She people may remember she was the um transport minister who had to resign over some kerfuffle over not declaring the fact that she'd claimed a phone was stolen and it wasn't when she worked at uh Aviva many years ago. Um in any case, whatever. The the the people can go down that uh rabbit hole. But the key point is that Louise Haig is influential. And she's written a piece of uh called A New Fiscal Framework for Britain for the Tribune uh group uh that she heads, and many, many interesting suggestions in there that are very much more on the left of left-wing agenda, uh some of which, by the way, include putting uh growth into the Bank of England's mandate so it's not just focused on inflation, which would be very interesting and would certainly have a market impact. But also uh she talks about an you know very overly powerful treasury and how can a prime minister ever get anything done when the treasury clips their wings constantly, and so it's it's it's clearly part of her agenda to have this shift. Now, I think Ben, maybe you have some thoughts on the wisdom of this suggestion. Um whether this variant of it will work, which is saying, hey, I'm Andy Byrne and the Chancellor and I are gonna spend half our week in Manchester, whether that actually creates a different power centre is one thing. But what do you think about the idea in uh in theory of of you know reducing the power of the of the treasury?
SPEAKER_01I agree with a lot of the stuff that she said, actually. I uh where do we start? Um yeah, the the UK Treasury is almost unique because we're about the only Western country in the world that has the Treasury that basically counts the beans, raises the taxes, and has allegedly does long-term growth. It's long been observed that it's been a problem because the bean counters win out and most of the technical skills are there. Also, if you look at the history of the UK, a number of other governments have attempted to do this. Most famously, Wilson tried to clip the wings of the Treasury with the National Economic Development Council, NEDI or whatever it was, how it translated. But um, the Treasury killed that off because they controlled the money supply. So um it was never really given any power. You look at the United States and they've got commerce and treasury, and they do two separate things. So the first thing is I agree with I think the UK Treasury is too big and it isn't necessarily a positive, and uh it that is a very long discussion in its own right of the repeated failures of it. The thing you're gonna have to do is you're gonna have to create a new department, like a department of commerce with long-term objections, uh long-term objective. I think that is a positive thing, and again, I would kind of agree with that. Where I would differ with her is getting the Bank of England involved, but we can come back to that point. So I I think that's a sensible idea. The key thing is if you're going to run that structure, you're gonna have to give a lot more power to the Prime Minister because to make those decisions, because there's going to be trade-offs. You know, do I listen to the Treasury on this occasion? Do I listen to uh the Department of Commerce on this uh occasion? So a good example of that is the Treasury killed off uh the new London airport in the 1970s. Um even then they knew it wasn't a good idea. They actually started the groundworks, uh, I think it was at Cliff from memory, and we had the economic shock and the whole thing was scrapped uh on the Treasury say so. So again, you you know they have destroyed things in the past where perhaps we'd got the financing in place if it wasn't raised off guilts. You know, there are lots of other ways you can raise money for this. It doesn't always have to be um, you know, directly financed through the government and potentially getting somebody else involved that's a bit more commercial rather than the Treasury. So I think that's a good idea, breaking it up. Um, regardless of where you want to put the new office, and perhaps putting it away from Westminster isn't necessarily a bad thing. Um, yeah, it's going to need to be more empowered, it's going to have to make those decisions, so I agree with that. I also think having some level of devolution is a good idea. I think it would be very good in Scotland if you adjusted it so the taxes were raised a lot more locally, but there needs to be a serious adjustment. And this all comes from the big that's big, right?
SPEAKER_00That's a really big these are all really big things to actually enact. Yeah.
SPEAKER_01And you look at Switzerland, that's kind of what they do. And when one area doesn't sort of do very well, then you know, people move, businesses move. So there is a strong commercial imperative to getting this stuff done. And a lot of the the country was sort of centralized um after the Second World War. And and the problem that you've kind of periodically had, most famously going back, this is me speaking with a sort of financial historian head on, but you looked at things like the GLC in the 80s or uh Liverpool City Council, where they deliberately set it on a collision course and basically bankrupted themselves. And again, some of the devolution that they were given at the time was was taken back again. So I think with a better structure, you could do this. But so again, I have broad sympathy with all of those things, apart from getting the Bank of England involved. I don't think that's the purpose of a central bank. I think um I think certainly moving the central bank to a more medium-term view of what rates should be, perhaps looking a little bit through the cycle is definitely a positive thing. But let's be honest, um, they've been rubbish at their core mandate along with a lot of other central banks for the last decade plus. It nearly always consistently overshoots, it's nearly always in the creditors' favour, not in the people that have lent the uh uh the money. And once again, we're getting talk about um transitory. Well, come on, when you've missed your target that many times, it's not transitory, you've got a lot of stuff fundamentally wrong. So maybe you need to think perhaps a bit more medium term, but you've got your own structural failures, and I don't think rewarding them with any more power at this point is a good thing. I also think now we've left the European Union folding the DMO back into the Bank of England is not necessarily a bad thing because that was one of the few things that we had to do uh to meet the EU criteria laying the ground vote for joining the euro. Well, we haven't, and now we've got this department which has also not done a great job of things. So perhaps gluing it together with actually how you operate financial markets a little bit more closely, that's a positive thing. Now we get to the point. I don't think they have the mindset or they know how to execute any of this. I think they might attempt that radical policy, but we can argue I don't think the Treasury will go down without a fight. I think realistically they will just wait things out, and I think crudely not much is going to change apart from maybe we have an office um in Manchester which probably achieves just as much as the Treasury's Richmond office in Yorkshire has so far, which is not a lot. Where do you think he sits politically? Because he was as the old joke goes, you know, a brownite, a blairite and a Corbynite walk into the bar, and the barman goes, What will you have, Mr. Burnham? So that nails it.
SPEAKER_00That nails it.
SPEAKER_01My perception of him is that is him. But I thought he always I got the impression with him he sat kind of on the left part of the Blairite wing, a right sort of the brownite.
SPEAKER_00Yeah, I think that's a good way of putting it, absolutely. Yeah, he's yeah, he's just in between Blairites and Brownites. But the problem for the Labour Party, those 404 MPs, is there's a good well, what is it? 81 of them would uh both remove the majority and could uh plump for an alternative challenger as leader. It's that 20% on the you know, there are at least 60 who are to the left of where Andy Burnham is. And that's that's the problem.
SPEAKER_01That's why I think he has to make all those noises, because he wants to to the point you were making early on, he's still got to get elected himself and he needs a bit of a mandate so he's gonna say some of these things. So it almost looks like uh a US Democrat thing where you have to kind of appeal to the base by being very left-wing and then track very rapidly to the right.
SPEAKER_00Yeah, but I do I do think the the public is moving that way. It's a bit like Ed Miliban. There was this front cover story on him in the New Statesman a few months ago, and it was saying that many of the Ed of Ed Miliban's policies have become very much what anyone on the left wants to deliver. I actually look back at the Edstone. Do you remember the Edstone? Which is this laughable at the time granite block that, you know, he he drilled five his five top uh top policies into when he was running in that 2015 election. One of them was control immigration, would you believe? Um so it's interesting how people's politics have shifted. And uh uh, you know, right back to the discussion we had earlier on about common challenges facing all governments in the West, this uh kind of now let me get this right, centrifugal force, or is it centripetal? You're the engineer. Centripetal, I think. Flinging out to the extremes that's happening with electorates. Normally everyone thinks there'll be this force back into the middle, or we'll all come back to the middle. No, we're not gonna come back to the middle because being in the middle hasn't solved any problems for anybody. So we're going out to the extremes. So uh where Andy Burnham's personal politics are, I think we'll have gone to the left anyway because he knows because that's how both sides are going on this. Um so look, I do think Andy Burnham is going to be a more left-wing, more radical government than the Starmer Reeves one. But at the first sign of a problem in the guilt market of a real taking fright about that, then the pragmatism will kick in and they'll have to ditch some of it. But in doing that, they will lose the left wing of the party. And that that was this exactly what you know Reeves had to deal with and couldn't, and it will be the same story for Andy Burnham.
SPEAKER_01Yeah. Interesting. So to wrap up, then, you think this will probably be as good as it gets for Burnham. Uh you think they are gonna track to the left. Can you see them doing any of these really radical tax changes? I honestly, even the OBR's telling you don't do any more of this, we've hit basically tax saturation.
SPEAKER_00But um Yes, I can, because they because they because they have to Okay, one of their political strategies has to be to get out their core vote and has to be see off the greens, and you know, has to be what uh, you know, tends to be more what the left of this country wants. And they want, as they see it, richer people to pay more. Now, what does richer people mean? I mean, I see there's already floating around that the mansion tax, which kicks in at two million pounds, you know, should be lowered to one and a half million pounds. Now, they've said they'll stick to manifesto commitments on uh the rates of income tax, but what's to stop them bringing back the top rate of tax? That's something Gordon Brown put in, it's something Andy Burnham has said before he wants to put in, he wants to bring back the 10p rate at the bottom and bring back the 50p rate at the top. Um, um, you know, and I think in a way that might just about meet the manifesto, because it'd be a new tax, not anything on the old taxes. Um capital gains. I mean, Reeves looked at that. A lot of it the other thing is Eddie Miliband in number 11 is going to get exactly the same list of things that Rachel Reeves had got. And actually, she didn't go for some things that perhaps could have been quite easy, which would have been uh bank levy, uh private equity carried interest, or at least more on that. Um what I mean by easy is the man on the street doesn't really know what any of that means. It sounds like rich people getting clobbered. Great, let's do it. So I'm, you know, you're not you're not you're not clobbering me. So I yeah, I think that I sort of think the what's the word, the veil is off. This is the Labour Party. They are socialists, this is what they do, and that's what we're gonna get.
SPEAKER_01And that's it, I think, for this quarter. Great.
SPEAKER_00Well, thank you.
SPEAKER_01And we can be celebrating an England football win.
SPEAKER_00Oh, steady.
SPEAKER_01And I understand the alternative version of the offside rule rather than when I have to referee on Saturdays with the uh the real game with the real shape ball.
SPEAKER_00Don't get me started on rugby. So complicated. Football months.
SPEAKER_01Well, at least the England football team's doing better than the England rugby team.
SPEAKER_00Oh well, yeah, that's we could do a whole other podcast on that. Right, okay.
SPEAKER_01As a Scottish fan, I'd be more than happy to. Anyway, once again, thank you very much, Helen. Thank you for your time.
SPEAKER_00Thank you.