September 29, 2025 • 19 mins
Rachel Reeves’ big speech on the economy dominates the second day of the Labour Party conference. Ahead of the November budget, the chancellor warns that there will be harder choices and refuses to rule out tax rises. But with growth sluggish, polls tightening and Reform making gains, can Labour really deliver the change it promised?In this episode of The Fourcast, Krishnan Guru-Murphy speaks to the Chief Secretary to the Treasury James Murray to discuss the prospect of tax rises, and how Labour plans to tackle immigration, the cost of living and the UK’s growing debt.
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(00:00):
This time last year the chancellor said this was a one
off, that she wasn't gonna come back to us with another massive
tax raising budget. Are you really saying that in
the last nine months everything has changed?
You're. Sort of encouraging me gently to
get into speculation about the budget and I I realise.
I mean, she she's relatively landed that it's gonna be a
tough. Budget, yeah, but you know, we,
we know as I say, the global situation is difficult.
(00:22):
We have the fastest growing economy in the G7 in the 1st.
But what was the number? And look, we don't what was the?
Number no, no, not look, it's. About 1.21 point, 3% if you're.
Lucky, we know we want to go further.
That's not good. Hello and welcome to the
forecast from Labour Party conference in Liverpool.
(00:42):
Well, yesterday Keir Starmer unleashed his big attack on
reform, accusing their policies but not the people of being
racist. Today it is 2 big themes, the
economy and Home Affairs, which we expect to be a lot to do with
immigration. But with me today, the new Chief
Secretary to the Treasury, JamesMurray.
(01:04):
We've heard a lot today from Rachel Rees about how the world
has changed and and we assume this to be the build up to why
they need to be tax rises in theautumn.
I mean, how? How has the world changed in a
unforeseeable way in the last few months?
Well, I think it's just self evidently the case that the
world is more unpredictable. There's more instability.
(01:26):
There's obviously a lot of stuffgoing on with global trade in
the world that is different thanI think people might have
expected a few years ago. And actually, if you look at,
for instance, what's happening with gilt, gilt yields and the
upward pressure on borrowing costs around the world, what
that underlines for me is how important it is that we have our
fiscal rules in the UK, that we have stable public finances.
(01:47):
Because actually having that tight grip on public spending
and here in the UK is a key way to bring down inflation and
bring down the cost of borrowingin the UK.
So in a way, the fact that the world has changed, the fact that
it's instability around the world makes it even more
important that we provide that stability and those firm fiscal
rules here in in the UK. But I'm not talking about what
was foreseeable a few years ago.I'm talking about what was
(02:08):
foreseeable this time last year.You know, we knew that Trump was
going to be around, that we're going to be trade wars.
There's been a war in Gaza for along time.
And the war in Ukraine, you know, wasn't all of the
unstability, instability that wesee now entirely predictable?
Well, I think that when you lookback in retrospect, it's much
(02:29):
easier than seeing it from the other side.
And I think that the, the combination of different sources
of instability and insecurity around the world, I think mean
that the world is a less stable place and there is more
instability. And as I said, that has an
impact on Britain. Like we, we, we are subject to
global pressures. And the question is not can we
wish them away? Because obviously we can't.
(02:50):
It's how do we respond as a government?
And that's what Rachel set out, I mean.
It's, it's the old sort of, you know, when, when the facts
change, you know, you know, I, Ichange my mind as well, isn't
it? And I suppose what what that
means is we're looking at a tax raising budget.
Obviously, you know, we're not going to get anything in terms
of detail, you know, from you today in the same way we haven't
(03:10):
from the chancellor. But but this time last year the
Chancellor said this was a one off, you know, that she wasn't
going to come back to us with another massive tax raising
budget. Are you really saying that in
the last nine months everything has changed?
Well, like you're, you're, you're sort of encouraging me
gently to get into speculation about the budget and I, I
(03:32):
realise. I mean, she she's relatively
landed that it's going to be a tough.
Budget, yeah, but you know, we, we know as I say, the global
situation is difficult and we'regoing to have to respond to that
and that's why it's more important than ever that we
stick to our fiscal rules and that we have that stability in
the public finances. But look, a big part of the
budget which which we don't talkabout as much to be to be frank
in in media interviews and you know, I can understand why you
(03:54):
ask questions that you do. But a big part of the budget we
don't talk about is why what we're doing to boost growth and
why the investment that we announced in the budget last
year is they're important to that growth, why the planning
changes that we made are so important to getting Britain
building. Why all?
That we don't talk about growth as much.
I mean, this time last year let's talk about growth.
It was all about growth, about growth and growth is still
around 1% and that's. We had the fastest, we have the
(04:15):
fastest growing. Terms you want.
To talk about it in global terms, we have the fastest
growing economy in the G7 in the1st.
Yeah, but what was the number? And look, we don't what was the
number? No.
No, no, not. Look, we want to.
We want to get, we want to go. Further, fastest growth in G7
sounds good, but what was the? Actual growth, well, we're
similar. Is it by the end of the year?
Because we know that like. About 1.21 point 3% if you're
lucky, but look the. Point is, we know we want to go
(04:35):
further, right? Yeah.
I'm not going to say for a second.
Well. That's not good.
As I'm not going to say for a second that we're happy with
where growth is. We want it to go.
We want growth to be higher, we want it to go further and faster
and that's what drives us. What?
Do you think is a reasonable expectation for growth for a
government that really wants growth?
Well, as high as we can get it. I mean, we want, I'm not going
to say 2%. 3%. I can see what you're tempting
(04:56):
me to do here, but I'm not goingto set a target on that because
we want to go at growth with allpossible avenues and that's why.
So look, number one, we know that investment has been too low
in Britain for the last 14 yearsunder the previous government.
That's why if you look at what happened in the budget last
year, massive increase in investment, £120 billion of
extra investment from the publicsector in in energy and housing
(05:19):
and transport over the course ofthis Parliament.
That then brings in a lot of private sector investment.
Look at the 150 billion announced in the US that they're
going to be investing in Britainas well.
So that investment is a crucial part to getting economic growth
going along with the reform and planning system is the best
example of that. But, but what we know is that
Despite that growth, and this ismodest, you're going to be
(05:40):
looking at another tax raising budget now.
Now, last time around you, you did a budget that gave you £10
billion of fiscal headroom and it turned out that wasn't
enough. If you do the same this year and
create another £10 billion of fiscal headroom, you're going to
have another 12 months of speculation about the next tax
raising budget. So you're going to have to
(06:02):
surely create a lot more headroom this time than last
time. Well, one thing I've learnt in,
you know, a year and a bit of being a government minister in
the Treasury is that it's very hard to dampen speculation about
the budget. And I think as soon as you get
through 1 fiscal event, almost literally the same day people
start speculating about the nextone.
So I think that's. Speculation.
(06:22):
I mean, you know, the, the more,more headroom means you take
away that feeling that it's not big enough, it's too tight.
They're going to be coming back forward.
It, it, it, it, it, it depends where the OBR forecast comes in.
It depends what the analysis that is by the Treasury, depends
what, what measures the chancellor announces on the
Budget day. You know, there's a lot of
factors in play there before we get to the the final
announcements in the Budget thisyear.
(06:44):
But you know, what we need to dois make sure, well, the
chancellor will make sure she does, is stick to the fiscal
rules because you've seen every turn that's been so important
for her and for the economy. Is that, well, that's the other
thing a lot of people question though, isn't it, that you said
the world has changed and that was your perfect opportunity to
say, so we need to change in a big way, not just by raising
taxes, but by looking at the fiscal rules.
And you you missed the. Chance I do that I disagree
(07:07):
because I think the instability in the world that makes our
fiscal rules even more important.
If you've got the instability and insecurity globally and
that's how it has an impact on our economy in the UK, it makes
it even more important that we've got a tight grip on public
spending and still see very hydraulical rules.
So but the fiscal rules say thatday-to-day spending has to be
paid for through tax receipts and and that when you borrow to
(07:30):
invest, debt has to be falling as a proportion of GDP.
And that's and and those fiscal rules are even more important
now. I think you know, it is, it is
worth considering, you know, what's the alternative?
Because if you start tearing up fiscal rules, if you don't meet
the fiscal rules, if you lose control of the economy, you
know, we saw what happened 3 oddyears ago with Liz Trust.
That's not the only option, is it?
(07:50):
Well, no, the the choice isn't Liz trust or or where we.
Are we, we also know that if youlook at the situation that we
inherited with, with debt being around 100% of GDP, that's a lot
higher than it was in say 2010 in, in, in the UK, In the UK, it
was about 65% of GDP went up to around 100% over the course of
the Conservatives being in office.
(08:11):
If you compare us to Germany, Germany is around 65% of GDP
actually. So we've got a lot higher level
of debt to GDP ratio. And if you look at that
situation and then you look at what's happening, as I said with
the global forces on, on borrowing costs, that's what
means that the fiscal rules are even more important than ever to
make clear to the markets, to make clear to, to everyone
(08:32):
looking at the British economy that we have rules about paying
our way, about living within ourmeans, about bringing debt down
and and then we're going to stick by them.
But you you've tied yourselves in is what I suppose what I'm
saying is this very strict sort of straight jackets with your
manifesto pledges on income tax,VAT and National Insurance.
(08:53):
And and what that leaves you with is ways to get rounded.
Now you now last year you got rounded by raising National
Insurance on employers. You're going to have to do other
ways of getting around those pledges in this budget, aren't
you? And, and, and you know, don't
you think a bit of candor with the voters about the situation
(09:14):
we're in and what that might mean would be a good thing?
I mean, it is perfectly possiblethat you will raise more in
income tax by freezing thresholds.
It's perfectly possible that youcould take away some of the 0
rating on VAT goods. You would still technically
stick within your pledges, but you would be getting more in
those main taxes. Let's remember why we had that
(09:37):
pledge in our manifesto. And the reason why is because
people were feeling the squeeze of cost of living crisis under
the Conservatives. So we wanted to go into the
election with a really clear promise to people, which yes, it
means that it limits options andwhat you can do in other places,
but a really clear pledge to people that we will take this
really seriously in keeping taxes for working people as low
(09:58):
as we possibly can. And that's.
A guiding principle. Isn't it partly why people find
a big trust problem with the established parties?
That despite your pledge and despite you technically sticking
to your pledge, you take a tax measure that ends up costing
people in real terms? It does end up being paid by
(10:18):
real people and whatever you do in the autumn will also be paid
for by ordinary working people. Well, let's look at one of the
bigger. Taxes.
So what I mean is you can say wewon't tax.
Worker, I can do that. I can approach that question by
looking at one of the key choices we made in the budget
last year around employer National Insurance
contributions. And you know, that was one of
(10:39):
the hardest decisions we took out of the budget.
We knew it would have impact on businesses in terms of them
having to to to pay more tax. You know, we weren't naive about
that. That was why it was such a
difficult decision to take. But the reason why we took that
decision was to increase investment in the NHS.
And actually, you know, what people want, what people voted
for us to do is yes, to bring stability to the economy and the
(10:59):
public finances, but also to getpublic services back on their
feet. And one of the key services that
we need to make sure is working is the NHS, not just for
individuals and their families, but also for the economy,
because when you have record numbers of people who are
economically inactive because ofill health, that's bad for
economic growth as well. The trouble is you're now
swimming in an environment in which the detail and a lot of
(11:22):
the metrics, they, they don't seem to have an impact on
political decisions. You know, the, the polls right
now are terrible for Labour because you've had this collapse
in the Conservative vote. It's all gone to reform.
And if there was an election tomorrow, it would be a disaster
for your, for your. Party, we're just getting
started on our on our plan. We're just getting started with
all the investments that we've agreed to and we've made
(11:44):
possible through our fiscal rules and people will start to
see the benefit of that, whetherthat's in new homes, in new
transport and the energy infrastructure, of course the
importance of defence as well, People will start to see the
benefits of that and actually the biggest antidote it's
looking like. It's too big though.
The biggest well, we're about what just over a year into a
into what could be up to A5 yearparliament, you know, and I
think the right thing to do is to take the right long term
(12:06):
decisions and say, look, this isa plan that will take over this
parliament, you know, probably longer than a parliament to
deliver because it's a real. But do you, do you still think
we live in a world in which if you, if you do improve certain
metrics, the electorate will come round or we passed that we
were this sort of new world where reform can pretty much say
(12:26):
anything and they're getting support.
I think I don't really agree with you, just call them certain
metrics. I think when you're talking
about how much money people havein their pockets, how much do
it's a lot. For people to feel this when you
talk about. How people struggle to make ends
meet. When you talk about people
seeing the cost of energy bills,when you talk about people not
(12:46):
being able to get a doctor's appointment, that's not just a
metric, that's people's lives. That's People's Daily lives and
actually what they want, the government.
To do but even if you bring £300off the gas bill.
Incredible long term solutions to make people better off and to
make life easier for. People, that's my point, that
even if you do get energy bills down by £300 is, you know, do
you really think that is enough to change the dial in a world in
(13:09):
which British politics seems to be on its head?
Well, I think people, people are, the British people are
fundamentally, you know, they, they, they want the government
to do what they say they're going to do and then they will
judge them at the end of the Parliament, right.
Are you sure that that's still the way that politics works?
That's that's what I'm saying. Well, I think if people can feel
the difference in their lives orthey can see we're heading in a
better direction. You know, I don't think people
expect us to solve every single problem the country faces in its
(13:31):
entirety by the end of five years.
I think people expect us to havemade progress and they can see
the change in their lives. You know, we may well go into
the next election, say, look, westarted let's we want to carry
on. This is what we want to carry on
by doing. I think people want to see, you
know, change they can feel and that we're moving in the right
directions. And, you know, I wouldn't I, I
think, you know, when I knock ondoors, you know, my local area
(13:52):
or when I go to other constituencies and, and help out
there, you know, people talk very much about their daily
lives, about what impact politics has.
And actually, let me just add one thing to this, which is I
don't know if you've seen, we'verecently launched the Pride in
Place program, which is £5 billion / 10 years being
invested into local areas. One of those projects, well,
(14:13):
it's, it's a, one of the adjacent projects is Southport
Pier and about restoring that toits former glory.
Now, when I've been speaking to people here in Liverpool about
that, people are saying this is so good, this is brilliant.
This is actually restoring some pride.
This is not just talking about, you know, big numbers around,
you know, the, the debt or, you know, GDP growth or whatever.
It is sort of figures which people, you know, may struggle
(14:35):
to connect to their experience in day-to-day life.
And they're seeing the impact ofthis investment.
And they say, right, Southport here, the council's going to
start repairing it next year. It'll be reopened.
That'll be jobs, that'll be tourism, A sense of pride in
their place, you know. So I think that's really
important for people to feel that tangible difference, I
mean. I mean, it's interesting you
still seem to have faith in the project as as was.
(14:56):
There are people even at conference here who are losing
it, aren't they? I mean, you know, Andy Burnham's
out there today speaking at various fringe events, talking
about the need to tell a better story, the need to connect with
people, the need to take on reform, you know, kind of in
their own terms. So I think a good example about
you say take on reform. So and we've just discussed the
importance of cost of living andabout getting bills down for
(15:18):
people. I think alongside that there are
other issues which matter to people, immigration being a key
1. And I think what people want to
see on immigration is they want to see the number, the numbers
of people coming into the country going down and obviously
the asylum hotels closing and the small boats coming down as
well. Now what people want, and I
think, you know, I really believe that strongly in that
(15:39):
British people have a sense of, of fairness, of, of balance and
of, you know, they can, they cansee what's an effective policy
and they can see one that isn't going to work.
And I think when they look at our policy around indefinitely
germane, where we're saying we're going to extend the length
of time you have to be here to apply for indefinitely germane.
And in order to reply for it, you have to have, you know, high
quality of spoken English. You have to have not claimed
(16:00):
benefits. You have to have contributed
taxes to the economy. You have a clean criminal
record, you know, all of those conditions.
I think people understand that it's a fair sense of
contribution. And fair to ask immigrants to be
better citizens than citizens. I mean, you're, you're asking
immigrants now to do things thatmost Britons don't do, like
volunteering in their community.I.
Think this is about indefinitelygermane rather than citizenship,
(16:23):
but I think I think being in this country, you know, is a is
is a privilege and it's something which should be taken
really seriously and people should make a contribution if.
British. My dad came here in 1962.
He's a doctor, still works in the NHS now.
I think. I think when he was a junior
doctor, working 60 or 70 hours aweek, staying up all night,
treating drunken, you know, injuries, if you told him, oh,
(16:49):
you know what, if you want to stay in this country, you've got
to go and volunteer as well. He might have been a bit
insulted, but. No, no, no.
What the the consultation at themoment is about different forms
of contribution. So I don't want to delve into
your into your family's face in too much detail.
But if someone were working, youknow, so many hours in public
service and doing a great job orcontributing to our economy, you
(17:09):
know, that is the kind of contribution we're talking
about. South contribution can take
different forms and the consultation will set out the
details of what we mean by that contribution.
But the principle here is in order to apply from definitely
to remain, you should make a contribution.
Now policy reform came out with a few weeks ago is something
which, you know, not only did itfall apart within a few minutes
(17:30):
when people started asking questions about the detail of
then it was based on dodgy numbers and all that kind.
Of thing you're branding it racist clearly.
But but but also, but also that,you know, think about what it
means. It means that people who are
living in Britain, who maybe have family here, who have
contributed to society, work in a business, maybe started a
business, they would be wrenchedout of of Britain like that is a
totally different thing. And that is way over the line
(17:51):
into policy, which is immoral and unworkable and we and we
can't support. I mean, what one of the problems
you've got, though, on that front is you do now have a lot
of reform supporters who are saying and are being told by
their leadership, if you're worried about immigration,
they're going to call you a racist.
Well, I think the, the, the policy is what we were talking
about, you know, in terms of people generally in Britain and
(18:12):
their concerns about immigration, it's perfectly
legitimate if people have concerns about immigration, a
lot of people do. And it's absolutely right for
the government to do something about that.
But we want, we want practical, fair, firm and tough solutions,
but ones that work and ones thatare balanced.
And I think people, you know, people in Britain have an innate
sense of fairness and people canfeel when a policy is landing in
the right place, which is where ours is going, or when it's
(18:34):
going too far and it's becoming unworkable and and the wrong
direction. It's a, it's a bit of a bubble
of conference, isn't it? I mean you're, you're preaching
literally to the to the converted I.
Mean, I don't think they're all journalists there.
No, obviously. But I mean, when you leave here
and you're still facing those polls showing how far behind you
(18:55):
are, how confident are you really going to feel?
You know, what I've really felt at this conference is an amazing
spring in people's step. And it's quite interesting in
that a lot of journalists, I think in the run up to
conference where, you know, say,oh, I bet this is going to be a
hard conference and how are people going to feel?
Well, that's why it's a bubble. I can put I no, but I can put my
hand. And you know, not every
conference I've been to in my life has has been a people who
(19:16):
have had a spring in their step.Far from it.
You know, there've been some conferences a few years ago
which are really very difficult for the party.
But I think at this conference, people understand that being
government's difficult, they understand that we're not going
to be popular every day of the week and we're going to do
things that not everyone likes. And but people can take a step
back and say, OK, take a step back from the day-to-day news
cycle and look at what we've done in the first year or so in
(19:37):
office. Look at what we're going to do
over the rest of this Parliamentand feel confident about it.
And that's why, you know, I'm handle on heart.
There is a screen on step amongst people who I'm meeting
here at conference. OK.
Cheers. Why, thank you very much indeed.
Thanks for joining us. That's the forecast for now.
Until next time, bye. Bye.
This time last year the chancellor said this was a one
off, that she wasn't gonna come back to us with another massive
tax raising budget. Are you really saying that in
the last nine months everything has changed?
You're. Sort of encouraging me gently to
get into speculation about the budget and I I realise.
I mean, she she's relatively landed that it's gonna be a
tough. Budget, yeah, but you know, we,
we know as I say, the global situation is difficult.
(00:22):
We have the fastest growing economy in the G7 in the 1st.
But what was the number? And look, we don't what was the?
Number no, no, not look, it's. About 1.21 point, 3% if you're.
Lucky, we know we want to go further.
That's not good. Hello and welcome to the
forecast from Labour Party conference in Liverpool.
(00:42):
Well, yesterday Keir Starmer unleashed his big attack on
reform, accusing their policies but not the people of being
racist. Today it is 2 big themes, the
economy and Home Affairs, which we expect to be a lot to do with
immigration. But with me today, the new Chief
Secretary to the Treasury, JamesMurray.
(01:04):
We've heard a lot today from Rachel Rees about how the world
has changed and and we assume this to be the build up to why
they need to be tax rises in theautumn.
I mean, how? How has the world changed in a
unforeseeable way in the last few months?
Well, I think it's just self evidently the case that the
world is more unpredictable. There's more instability.
(01:26):
There's obviously a lot of stuffgoing on with global trade in
the world that is different thanI think people might have
expected a few years ago. And actually, if you look at,
for instance, what's happening with gilt, gilt yields and the
upward pressure on borrowing costs around the world, what
that underlines for me is how important it is that we have our
fiscal rules in the UK, that we have stable public finances.
(01:47):
Because actually having that tight grip on public spending
and here in the UK is a key way to bring down inflation and
bring down the cost of borrowingin the UK.
So in a way, the fact that the world has changed, the fact that
it's instability around the world makes it even more
important that we provide that stability and those firm fiscal
rules here in in the UK. But I'm not talking about what
was foreseeable a few years ago.I'm talking about what was
(02:08):
foreseeable this time last year.You know, we knew that Trump was
going to be around, that we're going to be trade wars.
There's been a war in Gaza for along time.
And the war in Ukraine, you know, wasn't all of the
unstability, instability that wesee now entirely predictable?
Well, I think that when you lookback in retrospect, it's much
(02:29):
easier than seeing it from the other side.
And I think that the, the combination of different sources
of instability and insecurity around the world, I think mean
that the world is a less stable place and there is more
instability. And as I said, that has an
impact on Britain. Like we, we, we are subject to
global pressures. And the question is not can we
wish them away? Because obviously we can't.
(02:50):
It's how do we respond as a government?
And that's what Rachel set out, I mean.
It's, it's the old sort of, you know, when, when the facts
change, you know, you know, I, Ichange my mind as well, isn't
it? And I suppose what what that
means is we're looking at a tax raising budget.
Obviously, you know, we're not going to get anything in terms
of detail, you know, from you today in the same way we haven't
(03:10):
from the chancellor. But but this time last year the
Chancellor said this was a one off, you know, that she wasn't
going to come back to us with another massive tax raising
budget. Are you really saying that in
the last nine months everything has changed?
Well, like you're, you're, you're sort of encouraging me
gently to get into speculation about the budget and I, I
(03:32):
realise. I mean, she she's relatively
landed that it's going to be a tough.
Budget, yeah, but you know, we, we know as I say, the global
situation is difficult and we'regoing to have to respond to that
and that's why it's more important than ever that we
stick to our fiscal rules and that we have that stability in
the public finances. But look, a big part of the
budget which which we don't talkabout as much to be to be frank
in in media interviews and you know, I can understand why you
(03:54):
ask questions that you do. But a big part of the budget we
don't talk about is why what we're doing to boost growth and
why the investment that we announced in the budget last
year is they're important to that growth, why the planning
changes that we made are so important to getting Britain
building. Why all?
That we don't talk about growth as much.
I mean, this time last year let's talk about growth.
It was all about growth, about growth and growth is still
around 1% and that's. We had the fastest, we have the
(04:15):
fastest growing. Terms you want.
To talk about it in global terms, we have the fastest
growing economy in the G7 in the1st.
Yeah, but what was the number? And look, we don't what was the
number? No.
No, no, not. Look, we want to.
We want to get, we want to go. Further, fastest growth in G7
sounds good, but what was the? Actual growth, well, we're
similar. Is it by the end of the year?
Because we know that like. About 1.21 point 3% if you're
lucky, but look the. Point is, we know we want to go
(04:35):
further, right? Yeah.
I'm not going to say for a second.
Well. That's not good.
As I'm not going to say for a second that we're happy with
where growth is. We want it to go.
We want growth to be higher, we want it to go further and faster
and that's what drives us. What?
Do you think is a reasonable expectation for growth for a
government that really wants growth?
Well, as high as we can get it. I mean, we want, I'm not going
to say 2%. 3%. I can see what you're tempting
(04:56):
me to do here, but I'm not goingto set a target on that because
we want to go at growth with allpossible avenues and that's why.
So look, number one, we know that investment has been too low
in Britain for the last 14 yearsunder the previous government.
That's why if you look at what happened in the budget last
year, massive increase in investment, £120 billion of
extra investment from the publicsector in in energy and housing
(05:19):
and transport over the course ofthis Parliament.
That then brings in a lot of private sector investment.
Look at the 150 billion announced in the US that they're
going to be investing in Britainas well.
So that investment is a crucial part to getting economic growth
going along with the reform and planning system is the best
example of that. But, but what we know is that
Despite that growth, and this ismodest, you're going to be
(05:40):
looking at another tax raising budget now.
Now, last time around you, you did a budget that gave you £10
billion of fiscal headroom and it turned out that wasn't
enough. If you do the same this year and
create another £10 billion of fiscal headroom, you're going to
have another 12 months of speculation about the next tax
raising budget. So you're going to have to
(06:02):
surely create a lot more headroom this time than last
time. Well, one thing I've learnt in,
you know, a year and a bit of being a government minister in
the Treasury is that it's very hard to dampen speculation about
the budget. And I think as soon as you get
through 1 fiscal event, almost literally the same day people
start speculating about the nextone.
So I think that's. Speculation.
(06:22):
I mean, you know, the, the more,more headroom means you take
away that feeling that it's not big enough, it's too tight.
They're going to be coming back forward.
It, it, it, it, it, it depends where the OBR forecast comes in.
It depends what the analysis that is by the Treasury, depends
what, what measures the chancellor announces on the
Budget day. You know, there's a lot of
factors in play there before we get to the the final
announcements in the Budget thisyear.
(06:44):
But you know, what we need to dois make sure, well, the
chancellor will make sure she does, is stick to the fiscal
rules because you've seen every turn that's been so important
for her and for the economy. Is that, well, that's the other
thing a lot of people question though, isn't it, that you said
the world has changed and that was your perfect opportunity to
say, so we need to change in a big way, not just by raising
taxes, but by looking at the fiscal rules.
And you you missed the. Chance I do that I disagree
(07:07):
because I think the instability in the world that makes our
fiscal rules even more important.
If you've got the instability and insecurity globally and
that's how it has an impact on our economy in the UK, it makes
it even more important that we've got a tight grip on public
spending and still see very hydraulical rules.
So but the fiscal rules say thatday-to-day spending has to be
paid for through tax receipts and and that when you borrow to
(07:30):
invest, debt has to be falling as a proportion of GDP.
And that's and and those fiscal rules are even more important
now. I think you know, it is, it is
worth considering, you know, what's the alternative?
Because if you start tearing up fiscal rules, if you don't meet
the fiscal rules, if you lose control of the economy, you
know, we saw what happened 3 oddyears ago with Liz Trust.
That's not the only option, is it?
(07:50):
Well, no, the the choice isn't Liz trust or or where we.
Are we, we also know that if youlook at the situation that we
inherited with, with debt being around 100% of GDP, that's a lot
higher than it was in say 2010 in, in, in the UK, In the UK, it
was about 65% of GDP went up to around 100% over the course of
the Conservatives being in office.
(08:11):
If you compare us to Germany, Germany is around 65% of GDP
actually. So we've got a lot higher level
of debt to GDP ratio. And if you look at that
situation and then you look at what's happening, as I said with
the global forces on, on borrowing costs, that's what
means that the fiscal rules are even more important than ever to
make clear to the markets, to make clear to, to everyone
(08:32):
looking at the British economy that we have rules about paying
our way, about living within ourmeans, about bringing debt down
and and then we're going to stick by them.
But you you've tied yourselves in is what I suppose what I'm
saying is this very strict sort of straight jackets with your
manifesto pledges on income tax,VAT and National Insurance.
(08:53):
And and what that leaves you with is ways to get rounded.
Now you now last year you got rounded by raising National
Insurance on employers. You're going to have to do other
ways of getting around those pledges in this budget, aren't
you? And, and, and you know, don't
you think a bit of candor with the voters about the situation
(09:14):
we're in and what that might mean would be a good thing?
I mean, it is perfectly possiblethat you will raise more in
income tax by freezing thresholds.
It's perfectly possible that youcould take away some of the 0
rating on VAT goods. You would still technically
stick within your pledges, but you would be getting more in
those main taxes. Let's remember why we had that
(09:37):
pledge in our manifesto. And the reason why is because
people were feeling the squeeze of cost of living crisis under
the Conservatives. So we wanted to go into the
election with a really clear promise to people, which yes, it
means that it limits options andwhat you can do in other places,
but a really clear pledge to people that we will take this
really seriously in keeping taxes for working people as low
(09:58):
as we possibly can. And that's.
A guiding principle. Isn't it partly why people find
a big trust problem with the established parties?
That despite your pledge and despite you technically sticking
to your pledge, you take a tax measure that ends up costing
people in real terms? It does end up being paid by
(10:18):
real people and whatever you do in the autumn will also be paid
for by ordinary working people. Well, let's look at one of the
bigger. Taxes.
So what I mean is you can say wewon't tax.
Worker, I can do that. I can approach that question by
looking at one of the key choices we made in the budget
last year around employer National Insurance
contributions. And you know, that was one of
(10:39):
the hardest decisions we took out of the budget.
We knew it would have impact on businesses in terms of them
having to to to pay more tax. You know, we weren't naive about
that. That was why it was such a
difficult decision to take. But the reason why we took that
decision was to increase investment in the NHS.
And actually, you know, what people want, what people voted
for us to do is yes, to bring stability to the economy and the
(10:59):
public finances, but also to getpublic services back on their
feet. And one of the key services that
we need to make sure is working is the NHS, not just for
individuals and their families, but also for the economy,
because when you have record numbers of people who are
economically inactive because ofill health, that's bad for
economic growth as well. The trouble is you're now
swimming in an environment in which the detail and a lot of
(11:22):
the metrics, they, they don't seem to have an impact on
political decisions. You know, the, the polls right
now are terrible for Labour because you've had this collapse
in the Conservative vote. It's all gone to reform.
And if there was an election tomorrow, it would be a disaster
for your, for your. Party, we're just getting
started on our on our plan. We're just getting started with
all the investments that we've agreed to and we've made
(11:44):
possible through our fiscal rules and people will start to
see the benefit of that, whetherthat's in new homes, in new
transport and the energy infrastructure, of course the
importance of defence as well, People will start to see the
benefits of that and actually the biggest antidote it's
looking like. It's too big though.
The biggest well, we're about what just over a year into a
into what could be up to A5 yearparliament, you know, and I
think the right thing to do is to take the right long term
(12:06):
decisions and say, look, this isa plan that will take over this
parliament, you know, probably longer than a parliament to
deliver because it's a real. But do you, do you still think
we live in a world in which if you, if you do improve certain
metrics, the electorate will come round or we passed that we
were this sort of new world where reform can pretty much say
(12:26):
anything and they're getting support.
I think I don't really agree with you, just call them certain
metrics. I think when you're talking
about how much money people havein their pockets, how much do
it's a lot. For people to feel this when you
talk about. How people struggle to make ends
meet. When you talk about people
seeing the cost of energy bills,when you talk about people not
(12:46):
being able to get a doctor's appointment, that's not just a
metric, that's people's lives. That's People's Daily lives and
actually what they want, the government.
To do but even if you bring £300off the gas bill.
Incredible long term solutions to make people better off and to
make life easier for. People, that's my point, that
even if you do get energy bills down by £300 is, you know, do
you really think that is enough to change the dial in a world in
(13:09):
which British politics seems to be on its head?
Well, I think people, people are, the British people are
fundamentally, you know, they, they, they want the government
to do what they say they're going to do and then they will
judge them at the end of the Parliament, right.
Are you sure that that's still the way that politics works?
That's that's what I'm saying. Well, I think if people can feel
the difference in their lives orthey can see we're heading in a
better direction. You know, I don't think people
expect us to solve every single problem the country faces in its
(13:31):
entirety by the end of five years.
I think people expect us to havemade progress and they can see
the change in their lives. You know, we may well go into
the next election, say, look, westarted let's we want to carry
on. This is what we want to carry on
by doing. I think people want to see, you
know, change they can feel and that we're moving in the right
directions. And, you know, I wouldn't I, I
think, you know, when I knock ondoors, you know, my local area
(13:52):
or when I go to other constituencies and, and help out
there, you know, people talk very much about their daily
lives, about what impact politics has.
And actually, let me just add one thing to this, which is I
don't know if you've seen, we'verecently launched the Pride in
Place program, which is £5 billion / 10 years being
invested into local areas. One of those projects, well,
(14:13):
it's, it's a, one of the adjacent projects is Southport
Pier and about restoring that toits former glory.
Now, when I've been speaking to people here in Liverpool about
that, people are saying this is so good, this is brilliant.
This is actually restoring some pride.
This is not just talking about, you know, big numbers around,
you know, the, the debt or, you know, GDP growth or whatever.
It is sort of figures which people, you know, may struggle
(14:35):
to connect to their experience in day-to-day life.
And they're seeing the impact ofthis investment.
And they say, right, Southport here, the council's going to
start repairing it next year. It'll be reopened.
That'll be jobs, that'll be tourism, A sense of pride in
their place, you know. So I think that's really
important for people to feel that tangible difference, I
mean. I mean, it's interesting you
still seem to have faith in the project as as was.
(14:56):
There are people even at conference here who are losing
it, aren't they? I mean, you know, Andy Burnham's
out there today speaking at various fringe events, talking
about the need to tell a better story, the need to connect with
people, the need to take on reform, you know, kind of in
their own terms. So I think a good example about
you say take on reform. So and we've just discussed the
importance of cost of living andabout getting bills down for
(15:18):
people. I think alongside that there are
other issues which matter to people, immigration being a key
1. And I think what people want to
see on immigration is they want to see the number, the numbers
of people coming into the country going down and obviously
the asylum hotels closing and the small boats coming down as
well. Now what people want, and I
think, you know, I really believe that strongly in that
(15:39):
British people have a sense of, of fairness, of, of balance and
of, you know, they can, they cansee what's an effective policy
and they can see one that isn't going to work.
And I think when they look at our policy around indefinitely
germane, where we're saying we're going to extend the length
of time you have to be here to apply for indefinitely germane.
And in order to reply for it, you have to have, you know, high
quality of spoken English. You have to have not claimed
(16:00):
benefits. You have to have contributed
taxes to the economy. You have a clean criminal
record, you know, all of those conditions.
I think people understand that it's a fair sense of
contribution. And fair to ask immigrants to be
better citizens than citizens. I mean, you're, you're asking
immigrants now to do things thatmost Britons don't do, like
volunteering in their community.I.
Think this is about indefinitelygermane rather than citizenship,
(16:23):
but I think I think being in this country, you know, is a is
is a privilege and it's something which should be taken
really seriously and people should make a contribution if.
British. My dad came here in 1962.
He's a doctor, still works in the NHS now.
I think. I think when he was a junior
doctor, working 60 or 70 hours aweek, staying up all night,
treating drunken, you know, injuries, if you told him, oh,
(16:49):
you know what, if you want to stay in this country, you've got
to go and volunteer as well. He might have been a bit
insulted, but. No, no, no.
What the the consultation at themoment is about different forms
of contribution. So I don't want to delve into
your into your family's face in too much detail.
But if someone were working, youknow, so many hours in public
service and doing a great job orcontributing to our economy, you
(17:09):
know, that is the kind of contribution we're talking
about. South contribution can take
different forms and the consultation will set out the
details of what we mean by that contribution.
But the principle here is in order to apply from definitely
to remain, you should make a contribution.
Now policy reform came out with a few weeks ago is something
which, you know, not only did itfall apart within a few minutes
(17:30):
when people started asking questions about the detail of
then it was based on dodgy numbers and all that kind.
Of thing you're branding it racist clearly.
But but but also, but also that,you know, think about what it
means. It means that people who are
living in Britain, who maybe have family here, who have
contributed to society, work in a business, maybe started a
business, they would be wrenchedout of of Britain like that is a
totally different thing. And that is way over the line
(17:51):
into policy, which is immoral and unworkable and we and we
can't support. I mean, what one of the problems
you've got, though, on that front is you do now have a lot
of reform supporters who are saying and are being told by
their leadership, if you're worried about immigration,
they're going to call you a racist.
Well, I think the, the, the policy is what we were talking
about, you know, in terms of people generally in Britain and
(18:12):
their concerns about immigration, it's perfectly
legitimate if people have concerns about immigration, a
lot of people do. And it's absolutely right for
the government to do something about that.
But we want, we want practical, fair, firm and tough solutions,
but ones that work and ones thatare balanced.
And I think people, you know, people in Britain have an innate
sense of fairness and people canfeel when a policy is landing in
the right place, which is where ours is going, or when it's
(18:34):
going too far and it's becoming unworkable and and the wrong
direction. It's a, it's a bit of a bubble
of conference, isn't it? I mean you're, you're preaching
literally to the to the converted I.
Mean, I don't think they're all journalists there.
No, obviously. But I mean, when you leave here
and you're still facing those polls showing how far behind you
(18:55):
are, how confident are you really going to feel?
You know, what I've really felt at this conference is an amazing
spring in people's step. And it's quite interesting in
that a lot of journalists, I think in the run up to
conference where, you know, say,oh, I bet this is going to be a
hard conference and how are people going to feel?
Well, that's why it's a bubble. I can put I no, but I can put my
hand. And you know, not every
conference I've been to in my life has has been a people who
(19:16):
have had a spring in their step.Far from it.
You know, there've been some conferences a few years ago
which are really very difficult for the party.
But I think at this conference, people understand that being
government's difficult, they understand that we're not going
to be popular every day of the week and we're going to do
things that not everyone likes. And but people can take a step
back and say, OK, take a step back from the day-to-day news
cycle and look at what we've done in the first year or so in
(19:37):
office. Look at what we're going to do
over the rest of this Parliamentand feel confident about it.
And that's why, you know, I'm handle on heart.
There is a screen on step amongst people who I'm meeting
here at conference. OK.
Cheers. Why, thank you very much indeed.
Thanks for joining us. That's the forecast for now.
Until next time, bye. Bye.
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