The Intelligence Squared Economic Outlook, with Robert Peston

[00:00:00] Speaker ?: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. [00:28:00] Margarita: Oh, can you hear me now? Thank you so much for joining us this evening. My name is Margarita, I'm a producer at Intelligence Squared, and it is my pleasure to bring you tonight's installment of the Intelligence Squared Economic Outlook in partnership with Guinness Global Investors. If you don't know, Guinness Global Investors applies the same spirit of inquiry as Intelligence Squared to help you achieve your investment success in your portfolio. With funds in the regions and with a driving force in future growth, they help you achieve success in your portfolio with drive and dedication. So please give tonight's host, Johnny Diamond, a very warm round of applause. [00:29:10] Johnny Diamond: Thank you. Thank you. Thank you very much. And thank you for coming out on a hot summer's night when there are one or two other pressing appointments coming towards us this evening. We will keep things to time, I promise. A quick word first of all about why Robert is pacing rather than sitting next to me is because he has a pulling back pain. I'm afraid it's fairly prosaic, but the poor man is suffering and is much more comfortable standing up. We will let you speak in a moment, Robert. Welcome to this Intelligence Squared event. It's part of the Intelligence Squared Economic Outlook, a series that explores the forces shaping global markets, politics and business. I'm Johnny Diamond and it's great to be with you. It is particularly good to be here with Robert. I won't go into a huge introduction. You know who he is. Otherwise, you wouldn't be here. He is, of course, the politics editor for ITN, the presenter of ITV, I should say, the presenter of the politics show Pest and the co-host of the Rest is Money podcast. He was a colleague of mine up until 2015 as economics and business editor. In the 90s, he was all over the place in very senior positions at the Financial Times. His shelves grown with awards, enviable awards, including scoop of the year journalist the rest of the year from the Royal Television Society, and he is also the author of a rather fine crime fiction series, the latest of which is The Kill Switch, which I hope we'll get time to do a little bit of chatting about at the end of this evening. A quick word on format. He and I will talk for about 40 minutes as he paces up and down. We want to get your questions and questions from those who are watching also online. I think considerable numbers have stayed in air-conditioned offices to do exactly that, but your questions online, you can send them in. There's a mechanism you can see to use that and I'll get them in front of me here and we'll plug those in. We'll talk to about 15 minutes. We have an audience poll, which we will do about a third of the way through, but I want to start with politics because this is a hugely important moment. It feels like part of a regular carousel of prime ministers, but it remains very important. Keir Starmer is about to leave number 10. Andy Burnham is about to become prime minister. The questions mount up, of course. Can Labour restore confidence and in a world shaped by war and fragile energy markets and investors, what kind of leadership does Britain now need? Robert, can we discuss the political moment? Keir Starmer, as I know you know very well, is leaving just under two years from a landslide victory. What does the fact, and I suppose to some degree the manner of his leaving, tell us about British politics and the nation? [00:32:05] Robert: Gosh, nice easy one to start. I just want to start though by remarking you all look like sort of normal, very nice people, but you must be bonkers because if I wasn't here to sell my book, I definitely would be sitting in front of a television listening to that inane banter before we get the actual match. That said, we better get on to the matter in hand. I mean, there are so many ways of unpicking, you know, this moment. I mean, I want to keep it relatively simple. I think the big mistake that Keir Starmer made, and it's a very interesting question whether Andy Burnham is about to repeat that mistake, was not to recognise the significant gravity of the challenges that we as a nation face, and therefore not to take a whole series of, you know, very difficult but important decisions early in order to revive in particular the stagnation of the economy. and I fear, you know, one of the reasons, it's only one of the reasons he's gone, is because the British people were hoping for better. One of the things that's really odd, I mean really odd, is how hated Keir Starmer is. I mean, when MPs, his own MPs would tell me, you know, this after they were campaigning, I would, I just wouldn't believe them. And then when I went up to make a field, and spoke to people there, and also we did a focus group, it was just staggering. The dislike and mistrust of him. [00:34:15] Speaker ?: I think it's got a number of causes. [00:34:15] Robert: Everybody says they sort of don't trust him. But I suppose in the sort of biggest respect, and you can break this down in many different ways, but the Labour Party campaigned on a single word, which was "change". And I think most people look around and they say, not that things might be a little bit better or a little bit worse, but they broadly say, where is, you know, that big ambition, that big change that you promised us? And I think that's a perfectly reasonable, I think that's a perfectly reasonable concern to have. [00:34:52] Johnny Diamond: The extraordinary thing is, I suppose, the collapse of support in the parliamentary party. In previous administrations, you might have a very unpopular prime minister. You might have an economy that's frankly looks like it's cratering. Think '79 to '81, first two years of the Thatcher administration, but you wouldn't have that sort of failure of discipline and morale in the parliamentary party that has led to his defenestration. [00:35:21] Robert: So there are circumstantial conditions that are obviously very different, you know, we didn't have social media then, you know, society was significantly less fractured. We were in many ways a much more tolerant place. Yes, there were serious and passionate arguments, but people were broadly respectful to each other in a way that is just not true, I'm afraid, to the extent that it was. And, you know, we might talk about some of that later, but, you know, this is one of the many very significant challenges that we face, but the big difference, you know, is one of leadership. You know, Margaret Thatcher, whether you liked her or loathed her, and people broadly were, very few people were indifferent to her, told the country a story about what she thought was wrong and then how she was going to fix it. Right? And whether or not you think that some of the things she did did enormous damage, and in my view, some of the things she did did cause damage, nonetheless, she showed the virtue which we haven't seen from any prime minister in recent years, which is she had a coherent program, and she was intent on pushing it through, and she explained it to all of us. And even within her own party, you know, although there were, you know, obviously people who hated much of what they did, there were very few who didn't respect her. Because, you know, what she had to say, as I say, you know, frankly, if I were to, you know, rerun the 80s, some of what she did, you know, I would regard as being, you know, the right thing to do, and some of what she did was absolutely the wrong thing to do. And there's actually, you know, there's one particular bit which, you know, I'm particularly concerned about at the moment, because we may be about to repeat this as a result of this, you know, artificial intelligence, you know, economic and social revolution we're going through. You know, she allowed a number of communities to effectively die when, you know, businesses of all sorts collapsed. You know, you know, all sorts of people of working age never got another job. And those communities, you know, some would say never properly recovered. And we just can't afford to repeat that kind of mistake. But there were other things that she did in terms of reforming the tax system, making entrepreneurialism respectable, again, in a country that had become incredibly squeamish about, you know, essentially the private sector creating jobs. There was an enormous amount of stuff that she did, which was enormously beneficial. [00:38:15] Johnny Diamond: Let's talk, if we could, about, well, about today. Prime Minister's questions today, Keir Starmer said, and I paraphrase, that he leaves Britain in a better place than when he came to office, but just under a couple of years ago, can you think of, of a metric that you would use to justify that? And I'm not, I'm not criticising the Prime Minister or what he's chosen. I'm just interested in what you think of the last two years in terms of growth, development, competence, that kind of thing. [00:38:49] Robert: Look, undoubtedly, I wouldn't remotely say that this is a government that hasn't done a number of, you know, good things, right? Whether it's the Hillsborough law, and which, you know, I think it's about time that, you know, powerful people who mislead us about the bad they've done are properly held to account. So, you know, that's a tremendous piece of legislation, and there is something, I think, sort of slightly, sort of, it's, there is a, it's rather appropriate that that is being passed into law as we've got the handover from, from Starmer, uh, to Burnham, partly because Burnham obviously has been a tremendous campaigner for the victims of, of Hillsborough. Um, but, uh, and then, you know, whether it's, obviously breakfast clubs are a good thing. Um, what they've done in childcare, it's a good thing that there's a whole bunch of stuff that, um, they've done, uh, the, the, the, one can argue have positively affected the lives of lots of people. But the biggest problem is millions and millions and millions of people on low income still don't have enough, well, any hope that their and their children's lives are going to get better. That is the, you know, when I was a kid, when you were a kid, right, most of us, uh, assumed quite apart from what was going to happen to our own lives, that in general our generation was going to be a bit richer than the previous generation and because that had been true, uh, of, of, you know, our history for decades. Um, that is sadly no longer true and hasn't really been true since the global financial crisis. Um, and the big challenge that any government coming in over the last few years faced was to restore that hope. A succession of Tory governments failed to do that. And it was not unreasonable to assume that a Labour government with the size of parliamentary majority that it had would take the bolder steps, uh, to essentially, uh, re-energize the economy. But quite a lot of what you've got to do to re-energize the economy is not necessarily popular with your core support. And so among the things, uh, that they did, uh, you know, as it happens, I would say there was a perfectly good case. If you look at the way that we've got a low wage economy, there was a perfectly good case for saying that you want to reform employment law. But you don't do it at the start of a parliament when growth is in the doldrums. What you say to the British people is this is something we will do, but we will do it as a second step rather than introducing it in a way that makes it a drag on the very, on the most important thing that you've got to achieve, which is to encourage much more investment. We, you know, as a private sector and public sector, chronically under-invested compared to pretty much all our investors, uh, competitors over many, many, uh, years. I mean, there are only a limited number of levers a government can pull. One of them is investment. Another one is encouraging innovation. Another one is, is, is, uh, uh, investing in the right kind of infrastructure. Again, you know, they had this big infrastructure program funded by a change in the fiscal rules, but they were not hard headed enough in terms of basically concentrating what will always be limited sums on those projects which are, um, you know, uh, much more likely to produce growth and productivity enhancement. So for example, transport projects are much more associated with productivity enhancements than pretty much any other kind of government investment you can think of. But actually, weirdly, when the push came to shove, many of those have been, um, either cancelled or not funded properly. So, it was, there was just a lack of, of focus and ruthlessness when it came to the growth agenda, coupled with something else that, um, you know, I don't want it to sound as though I'm sort of, you know, I think he's sort of relentlessly negative about Keir Starmer. If I'm honest with you, my personal experience of him is an extremely decent man, um, and, you know, with, you know, pretty good intentions. My sort of puzzle about him, which one day I will just ask him directly, is why on earth did he want to go into politics? Um, because he's sort of, uh, he's sort of contemptuous of what politics has to be about. So the, the thing you expect, and I've got to go back to Thatcher, you know, great leaders tell us a story about our country and where it's going. He sort of thinks that approach is, is, is for charlatans. You know, but politicians are basically by nature charlatans. That is the job, right? Um, and I don't mean by that crooks, we'd rather we didn't have crooks, right? But you do have to have that ability to inspire and to give people, you know, a sense of where we're all going. And that, that word again, hope. And he actually, I mean, more recently he's tried to do it because he recognized that the more sort of rather tedious managerial opposed approach wasn't cutting through, but he genuinely used to believe that, you know, literally only scoundrels did that stuff. And, you know, on that basis, pretty much every successful prime minister in history has been, has been a scoundrel. [00:44:48] Johnny Diamond: So let us go to our poll, if we could, I want to hear from our audience. It should come up. Here it is. Here's your QR code. Point your phones at that. It's about Andy Burnham and confidence in Britain's economy. You should be able to get some options up on your phone, asking you whether Andy has what it takes. Andy Burnham has what it takes to restore confidence and a various range of options. I won't read them out to you because you can read them yourselves. While we wait for the votes to come in, can we talk about the, the, the sort of defining political clash or one that we thought was going to be the defining clash, which is Burnham versus Farage. Do you believe that Andy Burnham leaving Makerfield and the by-election to one side has what it takes to take on Reform UK? [00:45:37] Robert: Andy Burnham: Well, actually, I now think the defining battle will be Farage versus Binface. I do think that is broadly for us of this moment, the most sort of interesting immediate contest. And actually, to that extent, I do feel slightly sorry for Keir Starmer, because I think there is a fair amount of evidence that Reformer are just intrinsically in some trouble. And again, just talking to, you know, going up to Makerfield and, you know, you know, talking to voters and then just looking at opinion polls. There is no question that there is a growing sense among Reform supporters that Nigel Farage may be just as bad as all, you know, all the other politicians that they loathe. I mean, you have to, I'm sure you do understand that the big appeal of Reform and Farage was the idea that they would smash what people think of as being the Westminster establishment, right? And the reason they wanted it smashed is partly because they felt that people in this neck of the woods simply weren't interested in, you know, their lives and their prospects and ignored them and didn't care that they were getting, you know, poor a year after year. It's one of the things that obviously drove the vote to lead the European Union. And it has been driving their success of Reform. But when the leader of Reform, you know, receives a five million pound gift and then is sort of seems to sort of change his mind about what the money was for and is not very forthcoming about it and, you know, is being investigated by the parliamentary authorities about whether he should have told Parliament about it. And then there's a whole sort of bunch of other sort of stuff around all of that. Or I think, you know, what's happened in many voters' minds is, well, Farage is just like all those other politicians who we don't like, who we don't think are in it for the right reasons. And so, you know, it does feel, well, he may turn out to be as resilient as Trump. It's possible. But, you know, I'm not sure, to be perfectly honest, because we are, as of this moment, still not quite as divided a nation as America. And the sort of hate within the population for people who don't have our views is not yet. There's too much hate. That's one of the things I was talking about earlier. But it's not as intense as we've got in America. So, and also the other thing is, to be honest, I think most people look at this by-election and they look at the fact that it's Farage against, you know, a man with a dustbin on his head. And I think, and I think they just think Farage looks a bit of a fool. Why, you know, why on earth would you do this to yourself? It doesn't look like brilliant judgment. So we'll see. But it's possible that the one thing that Burnham has got going for him is that he, you know, is one of those rare but important politicians, a really lucky politician. A bit of luck and some great timing. Do you have any idea, [00:49:16] Johnny Diamond: any sense yet of the kind of Prime Minister Andy Burnham would be? We've discussed Margaret Thatcher, Keir Starmer. I'm not saying that's a spectrum between the two and asking you to place. But do you have any sense of the man and his leadership skills in particular, I suppose? Well, look, [00:49:35] Robert: he hasn't been properly tested and we will know much more about this when we see his cabinet on Monday. Because that is always a moment where you get a sense of whether a Prime Minister has a real, let's go back to this point I was making earlier, plan, thought through, coherent destination, or whether in the end he's making appointments because he's got to keep his party happy. And he doesn't want too many, you know, annoying people on the back benches who resent the fact they weren't given proper jobs. And so, as I say, that will be the first really big test. They are sort of understandably anxious. I think they were hoping to do, to come in and do some quite bold economic things. The fact that Trump's Iran war has flared up again and government bond markets are a bit jittery again. And as I'm sure most of you here will know, one of the biggest weaknesses of the UK is whenever you get the kind of uncertainty generated by something like a Trump war in Iran and the oil price rises and people think inflation is going to rise and therefore interest rates rise, the cost that the government, this government pays to borrow always rises, you know, somewhat more than our competitors. And that is a huge constraint on any British government at the moment because we shell out so bloody much on interest. The least, you know, the last thing we need is for that interest bill to rise even more and, you know, and even worse than that, you've obviously got to avoid the kind of, you know, quasi quiet English trust fiscal shock, which, you know, was genuinely one of the most terrifying financial moments I've reported on because there was, there was a possible risk of lenders to the UK going on strike. So they are nervous because we'd had a little bit of stability and then the hostilities between Iran and America flared up again. And we look very vulnerable in a fiscal sense again. So I suspect initially at least in an economic sense, they will probably be quite cautious. [00:52:24] Johnny Diamond: I mean, there is, and this is something we've discussed in a fair number of economic outlooks here. There is very little wiggle room. I mean, there's very little wiggle room on current financial plans if you stick to all the fiscal rules and the fiscal promises. And if you're not, as he is not, going to raise any of the big three taxes, there's very little extra money to be squeezed out of voters. [00:52:49] Robert: I mean, this is my problem with all recent governments, right, which is recent governments have all been obsessed, you know, debt, right, is measured as, you know, the absolute number of government indebtedness against the size of the economy, right? There's a numerator and there's a denominator, right? And successive governments have been utterly obsessed with the numerator and done far too little about the denominator. And what I mean by that is, if you had a credible growth plan, and if investors believed that the British economy was going to grow even a half percentage point a year faster than it's currently growing, right, that gives you so much more scope when it comes to borrowing, because investors at that point have way more confidence in your prospects, right? And therefore, again, the thing that they just got wrong when they got into office was to focus, I'm afraid to say on the numerator, putting up, you know, employers national insurance in the way that they did, you know, without having anything that looked like a credible plan to revive growth. And poor old Andy Burnham is inheriting that. And at the moment, I haven't got a clue whether he's got a slightly more credible growth plan. That was the next question. We're just going to have to wait and see. He's got some perfectly good people advising him. People who come on my show a lot like Andy Haldane and Jim O'Neill. These are perfectly sensible, brainy economists with perfectly good ideas. Now, you know, in the end, whether they're all going to get together and cook up something we regard as beneficial. One of the things he has said, which I really approve of, is devolving a lot of economic power to mayors and to regions and to combined authorities. Because I do think when it comes to things like planning and what skills you need and all sorts of infrastructure investments, these decisions are far better taken at a sort of more local level than they are by the centre. So that's a good thing, but it's not enough. There was something else I was going to say about all of this. Oh, yeah. But the other thing he's inherited is people focus a lot about the tightness of the fiscal rules. And that is, that is a problem. Actually, in some ways, a slightly bigger problem for him is that those meeting those fiscal targets are conditioned by spending plans, which where basically quite a lot of cuts are baked into the figures for about two years time, right, when we're running into a general election. And unless he can get the growth rate up, he will find himself having to do something that looks a lot like George Osborne's austerity just before the last possible date of a general election. So, you know, he's not, it's not a, let's be clear, it's not a golden economic inheritance. [00:56:23] Johnny Diamond: You talk about devolution, you talk about it with some enthusiasm. The bit you don't mention when you talk about devolution is what you might call economic devolution. The reason that the key metric to use that phrase again, that people point to when they talk about centralisation is about where the money comes from in this country. Do you think there is any real chance of economic devolution of allowing regional disparities to be maintained? Um, because that's what it would mean. And then Sorry, sorry again. So what do you mean? Well, if you're not really, if you're not smoothing out the numbers through redistribution via the treasury, then you have poorer regions that have to be, um, uh, that will struggle and have to come up with innovative solutions is the theory, isn't it? If it's, if it's real devolution, it's about taxes and spending at a region or a local level, but we don't have that because nearly all of it comes via the treasury. [00:57:21] Robert: Well, obviously there is, you know, there, you know, there is this catch 22, which is on the one hand, the wealth and income gaps between London, the Southeast and the rest of the country are wider than in pretty much any other European country. And, you know, our big cities, the gap between the wealth and income of the big cities and London is just off the charts wide compared to almost any place you look at. Um, and that means, of course, that if you are going to, if, if you are going to, uh, make sure that public services in those parts of the world, uh, are, you know, adequate and okay, of course, there's got to be massive subsidies from the center to these places. But on the other hand, it is also absolutely clear, if you look at these other, other countries where economic performance is, uh, less unequal between different regions, it is because those different places have control, more control over tax raising, they have more control over things like planning. So, you know, one of the things that happens in France, which ought to happen, uh, in the UK, is that in, in France, when a development is approved, a huge amount of the, of the gain flows to the local authority that doesn't ever get back to the center of government. And it gives, it gives local areas a massive incentive to engage in the kind of development that the moment gets shut down by, you know, NIMBYs and, and, and, and opponents of, of, uh, those sorts of, uh, developments. So my broad view would be, you can't just eliminate subsidies overnight, but if you don't, you know, if not now, when is, is the answer, if you're going to do devolution. So you have to combine it. You have to basically say, for example, you will have total control over, well, you, you're going to have much more control over things like business rates, uh, than you've currently got as a local area. Now, obviously, you know, in a, in a place like London, the flow of money from those sorts of rates will be higher than it is from the Northeast. So there will have to be top ups, but nonetheless, it would definitely, you know, it would definitely be a good thing if that kind of devolution of actual tax raising took place. I've got a very large letters on the screen in front of [00:59:53] Johnny Diamond: me. Let's move to the vote results next, which I slipped away. We can see the results up on the screen. You can see them here. This was, does Andy Burnham have what it takes to restore confidence in Britain's economy, fairly thumping majority for no, uh, just to kick off with a, a, a, a confidence or lack of it. No, the problems are bigger than one leader says, let's say 40% of our audience. Do you [01:00:20] Robert: think our audience are being perfectly sensible there, Robert? Well, look, I'm an optimist. Okay. I mean, you know, uh, Keir Starmer himself said, um, and I thought he was very gracious about this. I mean, he, you know, he said in terms and I was just in, um, uh, Turkey at the NATO conference and he came over and had a chat and he said in terms that, um, he, he felt he'd done what he could as it were for the Labour Party. And you shouldn't underestimate if you, I mean, I remember, uh, the 2019 general election, um, genuinely doesn't feel six years ago, uh, extraordinary. Um, uh, uh, you know, when Boris Johnson came in with that 80 seat majority and I said, um, overnight that the likelihood is that with that sort of majority, the Tories would be in for 10 years. All right. Um, and I, I, you should not, despite the, the incredible self-harm the Tories did to themselves, you shouldn't underestimate the, the work that, um, Starmer did to sanitize the Labour Party for many voters, right? Now it is also true that their new, you know, the actual numbers of votes that they got in the last general election was actually fewer than they got in 2019, but you know, uh, they were more efficiently spread to use that, um, uh, uh, bit of jargon. Um, so it's, but that was an achievement, but he, you know, has said, and he said in this little meeting that we had that, you know, he recognized that this was no longer his moment, that, you know, essentially his colleagues and much of the country had lost confidence in him, in his ability to, you know, fix these problems in the run-up to the election. Therefore, he, he felt it was, you know, perfectly appropriate to go. And I, I genuinely, you know, as I say, I think he is a decent man and I got a lot, I've got a lot of time for him. Um, even if I still wonder why he wanted to be prime minister. Um, uh, so it probably was the case that, um, it probably was the case that in order to get the kind of revival we all think hopeful, you needed a new leader. We talked a bit about the importance of the cabinet and I'm not going to get into who the best chancellor would be, but it is, if you look back at the history, certainly the post-war history, right, this is not the moment where you want another sort of technocrat who's going to listen to treasury worries about, you know, fiddling around with the fiscal rules on the margin to keep the markets happy. You know, the most important job of this company, of this government is to present a credible, I keep saying this, growth path, right? And you need somebody in the treasury who has a view about how the economy works. Um, uh, uh, uh, and uh, you know, uh, I mean, actually it's as simple as that. Okay. And we haven't, you know, you may, you know, opinions will be divided on Jeffrey Howe, Nigel Lawson, Gordon Brown, George Osborne, very different chancellors, all really important chancellors because they had a coherent view about what you needed to do to fix the economy, right? Not everything they did was good, but they, they had a coherent and consistent set of policies and we haven't seen anything like that, you know, since 2000 and well, since, since Brexit, in fact, um, you know, we've had a whole succession of effectively technocratic, uh, chancellors, uh, who were more or less captured by treasury officials who, um, if they're not being led broadly just focus on all sorts of tinkering things to do with the public finances, you need leadership in that. If you, if you're going to fix this country, you need leadership. And now I'm not going to tell you who among Burnham's colleagues can provide that kind of leadership, but if you can't find somebody to [01:05:05] Johnny Diamond: provide that leadership, we are in trouble. Um, when we were downstairs before, um, uh, this happened, before we started, uh, you were talking about what was not being talked about with some vigor and that was AI artificial intelligence about which you, you, you appear to think that almost no politician seems to have any ideas about, and you were quite excised about it. You've heard nothing [01:05:30] Robert: from Andy Burnham. Yeah. So I'm, I'm now going to do the plug for the book because the book, uh, the, the, the, the, the, the, the, the sort of tension and jeopardy in the book is all about artificial intelligence and it's all about whether, you know, say, you know, it's, it's, it's this whole issue of, of, of, of how malevolent, uh, AI can be. Now, broadly, my view about AI is it can be, is simultaneously a force for tremendous good and they potentially a force for absolutely extreme harm. Right. And, you know, there are various different versions of this. One of them is the most basic, the most unbelievably ordinary of all of this is AI is now replacing jobs now. And, uh, you know, will, you know, replace more and more jobs, not just, you know, in law and accountancy and those services. But if you've looked at the latest state of AI fueled robotics, you know, you know, and there are so many robots now in Chinese factories, um, uh, you know, just on the economic front. I mean, one of the, you know, if we're going to, you know, one of the, people thought I was absolutely crazy during the 2024 general election, because every night on news at 10, when I was talking to Tom Bradby, uh, I would round up my assessment of the day by saying, but the big scandal is nobody's talking about how we're going to adapt to artificial intelligence. And more recently, the government, they've now got an AI minister and they've got an AI safety unit, safety unit, and they've got an AI jobs unit. So they are beginning to at least do the work, but it's, they're way behind the curve, particularly compared to countries in Asia and the Middle East. But there are, the big questions are, if people lose their jobs, what is the welfare system that's going to be in place to protect people's living standards as they retrain? How are we going to adapt, how are we going to adapt our schools? Again, you know, people are, you know, schools are so, well, I do think the Department of Education totally blinkered about the challenge this faith, this is going to pose for the way that kids, uh, learn for this new, uh, world. If all these jobs, uh, are eliminated, where are tax revenues going to come from? They're going to pay for our public services, right? Um, uh, you know, this is really big stuff, given the scale of fortunes that are accruing to the owners and investors of these services. I mean, you know, almost a trillionaire. I mean, most of us can't get our head around quite how much wealth that is, right? You know, again, you know, basically, if all the added value is being sucked off by a tiny number of people, you know, this is a challenge to democracy. It's a challenge to, as I say, where we get the revenues to, you know, fund our states, right? This is massive stuff. And I'm not, and I haven't even begun to talk, you know, about the existential risk of, you know, self-improving artificial general super intelligence, where when you, you know, when you talk to people like, you know, Dario Amadei and, you know, uh, uh, Genesis Arbus, and these are bona fide, they're not any financial geniuses. These are, you know, super, these super brains as human beings, right? And they talk about the meaningful potential for these, this godlike AI to escape from the guardrails that these companies put in place to keep them benign. Because when you are a self-improving, writing your own code, um, AI, of course, you can undo anything that humans have put in place to protect humanity. So there is genuinely a part of this AI, uh, revolution. It is a revolution, changing what, you know, what we think of as life, changing, uh, you know, culture, everything. But there's also a part of it, which is like nuclear weapons, right? You know, there is a, you know, when you talk to these people, they say, Demisus Arbus, Dario Amadeus, there's a meaningful risk that AI will wipe out humanity. They don't say it's, they don't say it's nil, they say it's real. And yet, we don't talk about any of this stuff, right? Um, which is sort of astonishing, um, and rather, you know, rather worrying, um, which is what the book's about. And I should say, uh, there will be a [01:10:00] Johnny Diamond: a signing session for them as once it, um, uh, briefly, I think after we finished briefly, only because there is a football match looming. Um, I want to get questions from you, if we could, um, both from those, uh, watching on the live stream, do send your questions in, um, and from people who are busy fanning themselves in the audience here. So we've got people with roving microphones, um, very roving. Um, and I'll take questions in groups of three, if I may, just to keep things cracking through. I see a gentleman there, a gentleman in the front row here. I'm very keen to have some sense of gender balance. And the lady there. [01:10:43] Speaker 4: Sir, shall I go first? Yes, please. Uh, yeah. So, um, the government has set a lot of store by, uh, what can be achieved through changes to the planning system to get house builders, building and development going. And, uh, my question to you, Robert is, has the, is the government or the current government placing too much faith in what development can [01:11:04] Johnny Diamond: achieve for the economy? Thank you, sir. And we'll get the microphone to the lady, uh, almost at the back there with her hand up, and then we'll bring it forward to the gentleman here as well. [01:11:17] Speaker 5: Thank you. Hello. Um, I am actually not based in London. I'm based in New York and I'm kind of curious, who is the public sector for? And I see that some companies in the private sector seem to be helping [01:11:31] Johnny Diamond: more people than the public sector. Okay. Thank you. Um, just bring a microphone here. Gentleman here. Sir. Not quite right. That was in case you didn't catch it. That was, if you were in charge, what three things would you do? And how do we get better politicians, which suggests we don't have good ones at the moment. So I'm not going down that path. Right. First of all, planning too much emphasis [01:12:08] Robert: on it, too much weight on it. Uh, look, I, uh, obviously house building is not the only answer, but you know, uh, we need a lot more housing in this country, particularly, you know, housing that young people can afford. I mean, and, and, and, you know, the rate of, the rate of development, despite the fact there have been some planning changes is, is still pathetically low. Um, and we'll wait and see whether, um, Andy Burnham could do better. Uh, there's, there's one, there's only one thing I would actually do if I'm honest with you. Um, uh, and it sounds tedious, but it's a, it's a process thing, right? I would have a rule policed by, um, I mean, ultimately by the prime minister himself, right? But with, I don't know, we've got this new job of, what is it? Chief secretary, the prime minister, which is the Darren Jones job. But anyway, you, you would, you basically would have a rule that almost no significant announcement or policy could be made, announced, without assessing whether it was going to make basically people richer or poorer, what it was going to do to the growth rate of the economy. Um, and it, uh, uh, and, and then there would be a judgment made in Downing Street by the prime minister about whether the other benefits of, you know, whatever it was outweighed if it was a, so for example, it's got a lot this government done that has been negative for growth. Like for example, the rise in employers, national insurance, right? And I think if we'd had that kind of rule, that just would not have happened, right? Um, they would have to have found, you know, they might even have ended up breaking the manifesto, which possibly might not have been such a bad thing, right? But what you, you know, what you need is this sort of ruthless focus at the center, because it just, it just, you know, if basically you're, you say to ministers, if it's bad for growth, you can't do it. I mean, and this is true, this should be true of every department, right? If it's bad for growth, you know, I'm not saying you do it permanently, but you do it certainly for the first few years of a government. And it, that, you know, given that actually the, you know, the, the, the, the, there is a, there is a natural momentum in the economy and given that there are enormous things that are amazing about our economy. I mean, we are getting really significant spin outs of amazing businesses out of universities at the moment. We have a huge problem in terms of scale up finance. And another thing that I would do tagged onto what you're saying is I would just make sure that the provision of finance for companies, uh, particularly with great growth prospects, um, allowed them to stay in the UK, keep the jobs in the UK, keep the tax revenues in the UK. Um, um, uh, but that's a sort of second order thing as far as I'm concerned. I mean, there's a ton of stuff that you could do. I mean, you know, one of the things that is an absolute, uh, uh, you know, genuine, the cost of capital of British companies is very high because nobody wants to list on the London stock exchange for a whole variety of different reasons. Again, there's all whole load of sort of technical little things that basically ministers think are deeply boring, but are absolutely, you know, and if you had this ruthless focus that basically says if it's not good for growth, don't do it, I actually think it would have an enormous, uh, it would have a genuinely significant impact. Um, and then, um, I, I think, and I think yours felt like a very philosophical question, which is basically, are you basically saying we don't need, um, a public sector? Because I wasn't quite clear what you were saying. I think you were saying quite a lot of what gets done that's good for people is by the private sector. And, um, and I think you were asking me, what is the point of the public sector? I guess I'm kind of just curious, [01:16:09] Speaker 5: like, what is, what is the short-term point versus the long-term point? And we have this whole crisis with immigration as well, but human beings, we like naturally also want novelty or we want to travel [01:16:22] Robert: and your, who? No, I mean, I, I broadly take the view that, you know, we need thriving state schools, thriving health service, uh, you know, thriving transport, public transport. I, I don't think these things are optional. I think the issue for any government at the moment is, are they efficient, uh, enough? Um, one of the things that is a worry to me is not only the low productivity of many of these services, but also the collapse of confidence in really vital public services, like the collapse of confidence in the police that we, we, we've been going through. I mean, one of the, you know, I sound like a, uh, you know, a one theme person, but I mean, you know, one of the things that, for example, artificial intelligence can help with undoubtedly is improving productivity is a terrible word. I don't just mean in a financial sense outputs. I just mean the performance of, um, so many of our public services. I mean, for example, one of the things that is quite worrying about, um, you know, crime detection and the police in this country is that we have, I don't know how many, you know, basically silos of information on bad people, but it's incredibly difficult for anybody trying to access, you know, information on a single individual across all these different silos. And the artificial intelligence is something that can absolutely revolutionize that so long as you can get over the, obviously the privacy concerns around that. But the, you know, the potential in so many public services, uh, for improvement is really vast. [01:18:00] Johnny Diamond: Um, I'm going to take a live stream question, bearing in mind, you said you didn't want to speculate about who was going to get what in the cabinet. You're like, I'll have to look at the questions too. Um, get me out of a job. First question came from Steven. Do you think Miliband, Ed, presumably not David, uh, will be chancellor? If not, who will be? I mean, I don't, I mean, the honest answer is, [01:18:21] Robert: I don't know, there's an enormous amount of speculation, uh, uh, that he is not now going to be chancellor, but I genuinely, um, I mean, what I do know is, what I'm told is that Andy Burnham has already decided who he wants in certain jobs, that he is appointing on the basis of who he thinks is the right person for the job and it's not favors. It's, you know, there are various ministers who definitely did him a favor by telling Keir Starmer to go. You know, Ed Miliband was one of those. Um, so there were lots of people who thought, well, Ed's bound to be chancellor. Um, I just don't know. I mean, you know, if, if, you know, the, he's, you know, Ed Miliband is what you might call, uh, a person who divides opinion, I was quite struck that, uh, somebody who one wouldn't think of as being a sort of raging lefty, a bloke called Nick McPherson, who was, uh, permanent secretary of the treasury, said that he thought Miliband would be a, quite a good chancellor, because unlike most people in the cabinet, he understands the treasury, he worked there for a lot for many years and would show the kind of leadership that is needed. Um, that was one view. Lots of trade union leaders hate him because they want, uh, the North Sea opened up, Royal and Gas, and, uh, Ed has been blocking obviously the exploitation of Rosebank and Jackdaw. Um, and, um, then obviously there are quite a lot of people in the city who hate him, uh, because they think that he would pay fast and loose for the public finances. So, you know, um, their opinions are divided and it'll be, you know, one of the things I said earlier is that of all the appointments that, uh, Burnham makes, that is the most important, uh, people who've been talked about the, you know, I, you know, I had, I was told weeks ago that it would be Shibana Mahmood, and then I was told it was not going to be Shibana Mahmood, and then if you read all the speculation, uh, today it is again Shibana Mahmood, who knows? I mean, the only thing I would say about Shibana, incredibly impressive politician, right? I have never heard her talk about the economy once. I mean, so it's a slight, it would be a slightly intriguing appointment. It may be that she's been reading up on it for the last 20 years and just kept it all secret, but she's a lawyer by training. We'll see. Um, I want to come to the [01:21:01] Johnny Diamond: audience again in a moment. We have just a few minutes left, but I've got a question here that caught my eye from the live stream. Thank you very much for all your questions that have come online. It's from Ed. "Is it possible that the dominant narrative about Britain being broken is actually wrong? Is this not a comparatively wealthy, decent, energetic, entrepreneurial country, part of which is also quite good at football?" Leave the football out for the moment, if you will. [01:21:26] Robert: I don't think we're broken. I mean, sorry, of course I don't think we're broken, right? I think, you know, we are rich. We have incredible strengths, but we are going, but we have done ourselves quite a lot of harm, right? I mean, it's no secret because I said this night after night, you know, during the Brexit referendum. I said on ITV, if we leave the EU, we will be poorer. We have made ourselves poorer as a result of leaving the EU. Um, uh, you know, the kind of, um, hate that we see in political and social discourse is awful and doing us terrible damage, right? I mean, you know, I feel lots and lots of people will have disagreed with the views held by, um, Whittacombe about big public policy issues, but she was polite, respectful to anybody, whether they were opponent or supporter, and courteous, all right? And she was a sort of, I mean, we need, that's what we need back in our public life, all right? And the fact that she may well have been, the police have raised this possibility, you know, murdered because of her political views, takes us to a, you know, uh, you know, well, obviously we saw the, you know, the murders of David Amos and Joe Cox, but I always had confidence that Britain would avoid the culture of violence that has been endemic in America long before Trump, right? We are a very different political, social culture from America, and I, you know, I'm really fearful that we're heading in that direction. So, no, Britain is not broken, but there's, there's, you know, there is an enormous onus on all of us, A to stand up for decency, but also to say, not to sugarcoat, uh, uh, you know, or pretend that the, the problem, we do have problems. If we cannot give hope to people in poorer parts of the country, that their lives and their children's lives are going to improve, then this fracturing of our society will get worse. So, no, we're not broken, but we have an opportunity to fix things, um, [01:23:55] Johnny Diamond: and we haven't got long. All right, last couple of questions from the audience. We've got a lady right at the front here, and I've got a lady at the back there. Forgive me, sir. I'm going to hang on and then we'll come to you. We'll take a third there. So, lady here, lady there, gentleman here. Thank you very much. We'll do these quick, quick, quick. Thank you. [01:24:11] Speaker 6: Um, so I just wanted some clarity on, uh, something I got a bit mixed up when you were speaking. So, um, you said that you anticipate that, uh, the new government that's going to come in is going to be very cautious, uh, which makes sense because when you look at the mini budget and basically everything that's happened in the past few years, Britain has kind of lost their confidence. But at the same time, you come back time and time again to this grand question of whether Burnham is going to be able to construct a narrative that, um, restores, um, British expectations of the growth plan. And so essentially my question is how do you, where, where do you know? What's the criteria for knowing [01:25:03] Johnny Diamond: what is overreaching? So, so I think, hang on, hang on, hang on, hang on. I'm going to, I'm going to get the questions together. Um, sorry, there was a lady had her hand up there. Yes. You put your hand up just nice and high so that the, I see the nice man with the microphone is giving it to you. Madam. [01:25:19] Speaker 7: Hello. Um, I read your book and it seemed to me you had two issues about AI. One that you mentioned about being able to control it so it didn't run off in its own direction. And the other one seemed to be about the safeguarding of our data. Um, do you think it will be possible to safeguard our data, like NHS data or whatever in the, in the future that it won't at some point be taken into for the greater good, but, um, to be used by AI and therefore may be sold or used by foreign power? Okay. Thank you very [01:26:04] Johnny Diamond: much. We can raise the microphone just around to this gentleman here. Yes, that's right. Thank you very [01:26:09] Speaker 8: much, sir. Hi there. Mine's just a quick opinion, um, from you. Do you think we'll see another prime minister in this labor tenure? Okay. Right. I mean, the answer is, uh, this is not in any sense [01:26:26] Robert: a party political point, but I blooming well hope not because we're, we're an international bloody laughing stock, right? I mean, you know, what is it? Seven prime ministers since 2016. I mean, it's, it's a joke, right? Um, you need stable leadership. You need steps. So I hope not. I mean, as it happens, a very senior member of the cabinet said to me, um, uh, during some of the recent mayhem, just, you know, cause I, I, I'm assuming this is what you fear, but a senior member of the cabinet said to me, you know, if Burnham comes in, we will have another leader before the next general election. But I don't know if he's this, this, this bloke is right, but it's interesting that he felt he had to say that to me. Um, on your question, sorry, I probably wasn't clear, precise enough. Um, what I meant was, so we're going to get the, uh, cabinet on Monday and then I'm assuming, not I'm assuming, I sort of know that Tuesday, Wednesday, Thursday, Friday, we will get a series of what you might call retail offerings of various sorts, probably to do with the cost of living and that kind of thing. Um, that doesn't mean, that just means in the short term, I don't think we should expect him to come in and, uh, you know, announce, you know, absolutely sort of sweeping enormous things, but he and his people are promising, you know, genuinely significant changes of some of them, which we not talked about, like electoral reform or, um, different kind of relationship with the EU. I don't, I'm afraid to say, have a grasp on his economic approach. I wish I did, but I don't really, uh, other than some of the things I've already talked to you about to do with things like devolution. I mean, he's got this, he keeps, they, they all, everybody around Burnham keeps talking about how the, um, biggest driver down of living standards has been. And there's some, you know, this, this is certainly, you know, an important contributor to the driving down of living standards has been, you know, significant increase in the cost of housing, whether it's rents or houses becoming unaffordable for young people, you know, the rising cost of energy, rising cost of transport. And the mantra from them is he will somehow take control of all of this and drive down the costs. But that's all the detail we've got. We don't know whether that means state ownership. We don't know whether it means different kinds of regulation. We don't know whether it means a mixture of the two. So, um, uh, so, uh, it's, it's, these are quite ambitious ideas in principle, but they might turn out to be less ambitious in practice. We just don't, uh, know. I think that his ambition is in the course of the next few months to lay out some big changes, whether, you know, might be to, you know, might be things like electoral reform, might be big economic changes of various sorts. Um, one of the things that's in my mind is whether he does, he would be significantly constrained by that very cautious manifesto, um, that, uh, he's inherited from, from, from, from the last election, which he said he will stick to. So there is certainly a world in which, um, you know, he maps out a whole series of more ambitious plans. Uh, it would also be a world if, if things went his way in which the erosion of support for Farage, uh, and reform continues. And, you know, there have been some polls that already show that a Burnham-led labourer is, you know, ahead of reform in the polls. We'll see whether that's sustained. I think there is, I think it is possible that he would lay, we would spend the next few months laying out how we would change Britain. And then we'd have a, I mean, you know, whether you like it or not, another general election, uh, you know, possibly next spring. Um, uh, uh, uh, but you know, that's, that's, that's, that's, that's what I would regard as a sort of reasonable scenario rather than a, a forecast, um, at the moment, but I certainly wouldn't rule it out. There was another question. Last question was about the safeguarding of data. Oh, yeah. Look, I, I mean, you've hit on, when it comes to AI, one of the things about data, you know, we own, I mean, this book actually, you know, early on, one of the issues, the prime minister gets murdered at the beginning of the book. And what, you know, what, you know, what, one of the possible motives is that she was blocking the sale of unbelievably valuable NHS data, uh, to an AI, uh, company. And so there are, and I, we do have unbelievably valuable data. And I mean, I've got sort of a number of views about this. One is we should never, any of us jeopardize our personal data, and we've all got to be aware, you know, one of the things we've all been way too, uh, relaxed about is the way that our data has just been mined by digital companies for the last 15 years, right, for which we've got, you know, we, we, we might think we like the services we get from them, but, you know, we're, we're, you know, we're, you know, we're creating trillionaires out of their exploitation of our data. And so one of the things, if you want to revive the public sector, you've got to be absolutely clear that the data that the public sector owns can't be given away. All right. That's important. The privacy issue, um, is, is, is also important. But the fundamental, the other part, the, but the other thing though, is if like, so I'm talking about this bloke, Demis Asabis, uh, uh, you know, he is again, um, you know, he's a Nobel prize winner. He's British. Um, I mean, one of the things he talks about is how, as a result of, uh, some of the developments that he's doing, he's actually set up a sort of, uh, he works for alphabet Google, but he set up a, a side company, uh, that is, uh, massively involved in essentially, uh, understanding our diseases, our illnesses, and then coming up with, with revolutionary treatments and, and, um, preventions. Um, and he believes, and he says that, you know, if it were anybody else, you, um, laugh, but you know, he has a track record in this space. He says it is theoretically possible that within 10 to something years, pretty much all disease will be eliminated. Now, I suspect he's going some with that statement, but he's right that nonetheless, you know, for all the terrible dangers of AI, there are these amazing benefits, right? Amazing benefits. And, and again, the thing that, you know, I say almost just really infuriates me because both of the amazingly good and the amazingly bad are there. This should be the stuff we, we should, that's what we should be talking about now, right? Um, that is the stuff that, you know, should be exercising all our brains and those of our leaders. [01:33:26] Johnny Diamond: Robert, we are going to have to leave it there. Thank you very much, Robert Peston. Thank you to everyone who's come out here as well and his global investors. It's really kind of you all to come [01:33:34] Robert: out tonight. I'm very, very grateful. And thank you, Johnny. You're brilliant as always. A great pleasure. Enjoy your evening. Thank you very much indeed. And I think, where am I signed? I think I'm, if, if, if I've done any kind of a sales job, I bet I've been absolutely shit at selling this, this book, this book to you. But if you do want a copy, you can, I think I'll buy it and I'll sign it [01:33:51] Johnny Diamond: at the back there. Over there. Just in the corner. Splendid. Lovely. Thank you very much, folks. [01:34:21] Speaker ?: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.