Kwasi Kwarteng Reacts To Labour's Budget!

So, quasi, any shockers for you in the Budget?

So it was a pretty extraordinary and surreal experience for me because obviously I've been there and there was huge market turbulence and we know what happened. And then I was sacked and Liz Truss resigned and all of that. So it was odd seeing it on television because it was the first budget in many years when I haven't been an mp. And actually, to be fair to the government, they pretty much did what labor governments did, generally do.

Doesn't make it right, though.

No, it doesn't. And it, but it wasn't a surprise. So. So what they did was they hiked up taxes by £40 billion, which was in fact more than they. Even. They, they leaked that morning because I read a report in the Times which suggested they. They'd expand, they'd rise, raise taxes by 35 billion. So they did a bit more.

Is that a lot for a budget?

40 billion? It's a huge amount. So I think it's the biggest hike since 1993.

Wow.

And that was at the back of a recession. We were coming out of a recession and there was a deficit and we hiked. Tories actually hiked up taxes. I think it was Norman Lamont.

Right.

Rachel Reeves hiked them up by more in real terms, but sort of more in nominal terms. But in real terms, in terms of the size of the economy, a bit less. But it's, you know, 1993 is now 31 years ago. So if you can imagine what that tax take will do, from my point of view, I think it will be very harmful. So if you look at the measures, it was pretty much clear to me that they couldn't put up national insurance on employees and they couldn't put in.

Because they're working people.

Exactly.

So they, and that was their etiquette.

That was their thing. It was, it was. And that's. And I've written about this. I mean, it was very much couched in class war, socialistic terms. So people, you know, who study politics at university or economics will know that from a Marxist point of view. And he got that from Ricardo. You've got three classes, so you've got landowners who get rent from their, their, their, their tenants. You have capitalists who essentially are employing capital. Capital. And you've got labor. And you learn that in your kind of first year of uni and all of that. And it's, and, and it was obvious to me when they said we're not going to tax working people, they were going to have to tax. And they did that Pretty punitively. Yesterday they were going to have to tax capital. Now in this instance, capital is employers. So the national insurance contributions that employers make went up from 13.8, I think, to 15%. Huge cost. That'll be 25 billion. That's what it's scored at. Wow, 25. So 25 billion of the 40 billion. 60 odd percent.

62% from employers.

It's from employers.

Employers.

That's right.

Employers who give employees jobs.

That's right. So we'll talk about that. So that was the big hike. There were other taxes on capital. So inheritance and the sadness, really.

Capital gains.

Yeah, and capital gains. So you know, from a kind of socialist undergraduate student point of view, they just went after capital because they said they weren't going to tax hard working people in inverted commas.

Yeah.

So that just left them, you know, to essentially, if I may use this metaphor, take the baseball bat to capital and to risk takers, entrepreneurs.

But does that not do the opposite of growing an economy?

I think there are two problems with that, I think. One is that you disincentivize people from becoming entrepreneurs, from becoming people who employ others and set up businesses. And the other thing is that entrepreneurs and business people will have to absorb the cost, but in many instances, if they're selling products, they will pass through some of those costs to consumers. So if you're putting taxes on businesses, you're actually going to increase the price of the services and goods that the businesses offer. So ultimately the consumer will pay a lot of that. And the other thing that will happen is that entrepreneurs won't hire as many people because we used to call it a jobs tax when I was a backbencher conservative. Labour's job tax. You're essentially taxing people for employing other.

People because they put the minimum wage up as well then.

That's right, yeah. So that's a separate measure. And you're also going to mean. It also means that the employers you do have are less likely frankly to get wage increases. So they're going to have lower wages.

So it ends up being the working people that end up paying for it.

Exactly. They'll pay for it as consumers because, you know, the businessmen will pass through the costs of the products.

Do they not know this? Surely they must know this.

I don't think they care, actually. And also what the problem was was that they boxed themselves in because they said they weren't going to put taxes up on working people. I'm sure she'd have liked to put up income tax, certainly at the Higher rate or what have you. They had to, they had to go down this path. Now the fact that it has these bad consequences and it wasn't, it wasn't, it was the OBR neutral. OBR said 60% of the 25 billion that they were going to take from employers would be, would be borne by ultimately by working people in the form of consumers and people earning wages. So. But I don't think they cared about that. What they care about, and I've obviously been there, is getting the money to pay for the welfare state or what other projects, 1 million potholes, all of that, you know, and actually to be fair, you know, you could argue, you know, plausibly that our public services need more money, but the way to do that, the way to fund that is by growing the economy.

Yeah.

And that's my problem fundamentally with this budget was that I didn't see any growth plans whatsoever.

And I kept saying this, we're about growth, investment, entrepreneurship. We're about growth, investment, entrepreneurship.

They did and then they taxed the various, the very people that are going to drive growth because.

So is this just a marketing exercise?

Yeah, a bit of. And also I think that they, I mean they're not very transparent about what they actually believe. I don't think they genuinely think, many people on the left that entrepreneurs, business owners drive growth. They essentially think that that's a function of the state and state intervention.

They think the state drives the growth. Yeah, they think by taking the money off the entrepreneur.

Yeah. And investing in, you know, you could invest in, you know, where would they.

Get the money from if it wasn't for the entrepreneurs?

That's a very good, that's a very good question. That's a very good question. But I suppose they think, and I remember many of your viewers or audience will remember Tony Benn and he died many years ago now, I think about 11 years ago. But his view was essentially, and I remember having a discussion with him about this, you know, he lived through the war and he said, well what you don't understand is that we planned to win the war. So the state basically took control of everything and we won the war. That's his argument. So why can't we do that for in peacetime? Why can't we have a state led economy that can plan and invest in a verticomosite's way to growth? And it's bonkers. But that's very much his mindset and I think a lot of the left now still privately believe that. Now they know that if they do.

They believe that or do they just dislike entrepreneurs? I think it's a bit of self made who earn well.

Yeah, I think it's a bit of both. I think there's that envy and I think there's an. So there's a natural bias on the left to state, you know, state apparatus, civil service jobs, civil service type pensions, you know, highly unionized labor. And they're not particularly interested, I would suggest, in, in entrepreneurs and business people, in entrepreneurship generally. But of course they, they don't say that, that, you know, no labor politician is going to say, actually, I don't believe in. Because they would lose a lot of votes. You know, there are lots of small business owners in this country and I think one of the strengths of Britain traditionally is that we've got individuals who've got the nous and the capacity to go out and set up businesses. That's very much part of how Britain evolved. And so they can't overtly say that we don't believe that we believe in a socialist state, but they will secretly, in my view, try and work towards that.

So do you think they've gone more left?

Oh, definitely. I mean, I speak to MPs, colleagues of mine who were Labour MPs and they were Labour MPs under Tony Blair and they'll tell you that this Labour government is significantly to the left of new labour in 97. I think that Blair, for all his faults, was very keen to listen to Middle England, Middle Britain. I think that this government is really setting itself against middle Britain, you know, taxing schools on private schools, taxing fees on private schools with vat, that's a tax on aspiration, putting up employers, national insurance contributions, which is a tax on small business. Essentially anyone employing more than four or five people will be, will be adversely affected by it.

And let me just put this into context because I don't think people understand this. I saw a lot of people saying, oh, it wasn't that bad. A 1.2% increase on 13.8% is actually a 9% increase, not a 1.2% increase, which is important. And as they reduced the threshold, they stealth taxed you at the bottom under the radar because you've got less relief before your national insurance kicks in. So it actually works out for us. It works out at about 15% increase in national insurance from what it was, which is over £80,000. It's going to cost my business with.

100 staff locally I think a lot of. And actually you can see if it's Going to cost you 80,000. Your ability to employ more people, your ability to increase people's wages, your ability to keep your costs down for the end consumer, consumer of your products, all of those things will be made worse. Considerably, considerably worse. And so I think with respect to their plan, I don't think they really believe in entrepreneurship. I think they think that state control is better. Certainly the far left do, I mean they would be open about that.

But do they not look at other state controlled countries which are communist states? Do they not see what happens?

Yeah, and I think that, yeah, I just, I find it extraordinary, I mean to try and get into the mindset. They, they, they obviously think it's Marx. It goes back to Marx. So the whole notion that Marx suggested, and before Marx there was a guy called Ricardo. So we talked about the three classes. We talked about, you know, landowners who charge rent. We talk about capitalists who get profits and we talked about workers who get wages. Those are the, in that, in that model. And the whole point about Marx was that he basically said the capitalists are exploiting the workers. So, so what the workers produce is taken too much of it. The capitalist gets more than his or her fair share of the product of the labor's work. And so that's unfair. So what you end up doing in socialism is essentially getting rid of the capitalist class. That's the kind of pure model.

But then how do you get labor growth if you get rid of the capitalist class?

Well then the state employs everybody. I mean we had that in the Soviet Union. I mean you're old enough to remember that that was basically what they had.

And how does that end?

It's very bad.

It never ends well.

But in terms of the mindset of. Because they realize, I think unless they're totally crazy, they're not going to get a fully socialist state in Britain in one generation. It'll take time. But what a lot of them do is say, well, you know, being a. And you hear it all the time. It's like it's unfair. Businesses are making too much money. Business, you know, workers rights, all of these, these things. And it's coming from a socialist mindset which basically thinks that entrepreneurs, capitalists and inverted commas are bad and the workers are good. Now what I can't stand about it is that the way in which, you know, and you love your history, the way in which Marx and Ricardo, all these people, these thinkers set it up, is that the interests of these classes are against each other. So if you're a capitalist, that means you're anti worker, but in reality you need each other. Of course they do.

And I actually want, I actually want all my staff to make loads of money.

Of course they.

Because then I do.

Of course you do. But that was where Marx got it completely wrong. He set these classes up against each other. And I think all of socialism is based on this notion that the interests of one class are completely different to the interests of another class. And that's why, you know, I wrote a piece about this is essentially class war. You know, if we kick the middle class and the aspirational people, the strivers, and give it all to the workers, that's nirvana, that's what we should do. And I said, this is complete nonsense because the interests of middle class people and people who, you know, are in their first job are the same. Everyone wants to do well. As you said, you know, you run a business, but you want your, the people who work in the business to do well. And they probably want you to do well because otherwise they won't get bonuses and they won't get, you know, pay increases. So the interests of these people are of these different classes. If you, I wouldn't even think of them in that category. Are much more aligned than the Marxist doctrine. And that's why I needed, I wanted, because I'm interested in history of ideas and that sort of thing. And I wanted to talk about that because that's where the socialist mindset is coming from. And we'll see this and we can discuss this, I'm sure, later in the election in the United States next week where essentially, I think you've got two different visions of how an economy works. And the Democrats, certainly under this candidate, are actually pretty left and they think.

A lot of, well, things like taxing unrealized gains.

Yes.

I mean, I don't know what could be more socialist.

No, it's crazy.

Potential profits.

And I remember, I mean, you know, I remember, I mean, he was a very skilled politician. But I remember Obama let the cat out of the back because he was asked about, you know, somebody said, look, I've done a business, you know, I'm growing the business. And he said, you didn't grow that business. It was the state that grow the business. The state provided roads, the state provided infrastructure. The state, you know, and it's like.

Who provided the money to the state?

Yeah, yeah, yeah. This is, this is completely socialistic vision.

Yeah, because people say, sorry to jump in. No, no, I see this all the time, people, you see government funded. There is no government funded.

That's right. That's right. That's exactly right.

It's. We've taxpayer funded. There is no government funding.

Exactly. Well, if you always have that in the back of your mind, you see a lot of how nonsensical a lot of this thinking is. But the reason I was talking about, you know, the Marxist mindset and all of this stuff is that that. That is very much the starting point of a lot of this.

And you think America's similar to the uk, they're going very left.

Yeah. I mean, the cause. I came out of Parliament this summer and I saw the campaign and you get a much broader sense when you're not actually a candidate. When you're a candidate, you're knocking on doors and you're in your constituency and you're looking rightly on very micro things. But when you step out, you can see the broad sort of outline of the campaign. And what was extraordinary to me was they just refused. Labor and the media, I'm afraid, allowed them to do this. They refused to engage with any of the issues. And this was what in 1997 was termed the Ming vase strategy. And I'll just explain that. This is like someone likened the labor campaign in then, in 1997 to a person carrying a very valuable Ming vase across a very polished floor. So you've got to be very, very careful. You don't want to slip up. You've got to be very, very cautious, and you've got to get this Ming vase to the other side of the room. And it was quite a good description because it meant that it described how cautious they were, how reluctant they were to get into any kind of debate, how reluctant they were to. To say anything, actually about what their plans were.

Might. Might the mingvas strategy have helped you when you were Chancellor?

Well, no, I think. I think where we went wrong and I look back on it with. Because you sort of.

You sort of ran. Ran across.

It was too much too. Exactly.

Yeah.

You've got to be very cautious. And, you know, I was asked, I think. I think it was this morning actually about. About whether, you know, how. Why did the markets react as much? They trailed everything. It's because they trailed they. Everything they. They were going to do there was a newspaper story about.

Right.

So there was nothing.

There was no shock.

No. Yeah. No, so. So they did all their socialist stuff, but it was kind of already baked in because people knew that that's what they were going to do.

Yeah.

I think in the long term it will be damaging.

Yeah.

But in the immediate, you know, the immediate reaction was, was it wasn't subdued, actually. I mean, the people are selling off British government paper that, you know, people see that the market sees there will be a problem. But because ours was very rushed and kind of rabbit out of the hat type, which was the wrong thing to do. They've, I think Labour have done the opposite. They, they, they've taken what, four months. They got in July, it's now nearly November, it's now November. And they, they essentially have, have, have decided to, to try everything out so that, so everyone knew exactly where, roughly where they were going with this. And that's why. And we should have done more of that.

So I want to come back to America in a moment. Yeah, interesting time for America. But ultimately, what do you think is the state of the UK right now? And after this budget, where's it going?

Look, I'm, I'm quite pessimistic because I think. And it's not just a UK problem. I know, you know, we live in an island, in an island state and we're very much focused on our problems, but actually the problems of the UK faces, are faced by nearly every country in Europe. Certainly the big major economies in Europe, like France, like Germany, like Italy, face similar problems. And fundamentally the problem is, is that we've built up, all these countries have built up very generous welfare states which cost billions and billions a year to maintain a National Health Service. They don't have national, all have National Health Service, but the health provision, pensions, welfare benefits, all the things that a modern state provides. But the problem is that they're not growing, their economies aren't growing certainly as fast as the United States, they're not growing as fast as the United States and they're not growing fast enough really to pay for the public services that they, they, that they want, that the people want, because it's very difficult to reduce public spending once it's on a path. So the way to deal with that is to grow the economy so that your tax revenues can cover your expenditure, what you want to spend on. If you don't do that, if your economy is stagnating or isn't growing as fast, you get into the situation that we did yesterday, we saw yesterday, where the state, the government, is trying to increase taxes to get more revenue, but the problem with that is that if you increase taxes, that actually damages your ability to grow the economy. And so you're in what's called, what this trust called, and I think Rachel Reeves also called it when she was in opposition, a doom loop. So, so because you're not growing, you have to raise taxes.

Which hinders growth.

Which hinders growth.

Yeah.

So that's the, that's the do. And I'm afraid, and time will tell, but I'm afraid I think we're on this path where I don't think they're going to get the growth in the next two or three years that they need. And, and the risk for them is that in two years time they come up with more tax rises which will damage the economy more, impair the ability of the economy to grow.

Would you say it's inevitable that there's more tax rises coming?

I'd be surprised if they. Because they've got to grow the economy at what, two and a half, 2% a year really. And the OBR revised down its projection for growth. The OBR isn't the be all and end all, but it was interesting that they did that. And if for whatever reason there's a shock to the global economy, God forbid, like COVID 19, but it doesn't even have to be as severe as that for what, you know, the global economic cycle doesn't turn out well. There's some geopolitical stress somewhere in the world. Oil prices, gas prices go up, energy prices and they slow growth. There are lots of things that can go wrong which is outside the government's control but will affect us here in the UK and if for whatever reason that happens, we're not going to get the growth that we need and in order to pay for all the stuff that we're, that we're, we're paying for will pro. They will probably have to increase taxes because one thing we know about labor is that there's absolutely no appetite for, on their part to reduce public expenditure or even to, to hold it to reduce the growth in public expenditure. You know, they, they are totally committed to spending the money and if they can't get the money through economic growth, they will get it through you and me and businesses and, and, and like they did yesterday.

But then since lockdown every year, the amount of millionaires leaving this country has pretty much doubled.

Yes.

And every entrepreneur I speak to, bar none, and I know loads, they're either saying I can't go because I'm stuck here, but I would, or I'm planning it or I'm already gone.

Yeah, that's the other risk is that if there's a perception that you can't really grow an economy or grow a business more particularly in the uk, if there's a perception that you're paying way too much tax. People can vote with their fee by leaving the country.

Dubai, They've just pledged 230 billion to grow that economy.

Yeah. And it's not even as far as Dubai. I mean you look at places like Italy or Portugal, they have deals where essentially I think in Italy you pay 200,000 a year. And that's it. I mean that's, it's a huge amount of money. But for people with mega. Exactly. For people with mega bucks, they can afford that. And they, they, it's transparent. They know that that's what they pay.

Lisbon, Portugal. Start talking about not taxing under 35.

Yep. To attract talent.

Sounds smart to me.

And it is clever. And, and, and that's the danger we're in because actually even more than, you know, when we were in our 20s, people are looking, they can go anywhere. And also people can work from home, they can work from anywhere. So people are asking themselves, well, why do I have to be in London? Why can't I go to Portugal where the cost of living is much less than the, the weather's better and the Portuguese government are actually attracting me by giving me tax breaks. So it's a much more, you know, it's a much more mobile workforce in many ways than it was 30 years ago. 20 years ago. And that's the world that we're in.

Wow. So is this the start of the end of the UK?

No, I mean, look, the UK has been around for what, 220 years?

Yeah. We used to have the reserve currency. We don't anymore. Nowhere near that. We used to have an empire. We don't anymore. We're dropping down the rankings on every major metric.

I am long term. And this is why I'm very disappointed about what happened to me in politics was that actually I think that fundamentally, if you look at Britain's history and the way people are very individualistic, you know, people outside, as foreigners will think British people are quite eccentric. Sense of humor, all those sort of stereotypes. But underlying that is a real risk taking appetite is a real innovation. Originality. You know, if you think of all the inventions that were here in the, have been developed here in the uk, it's amazing. And we, our universities second to none. But I think the state over decades now and both parties have been largely responsible for this, have really undermined, stifled it. Yeah, that's a good word to use. They've stifled the creative energies and innovative, you know, spirit of the people. And I think we can get back to that. But I think in order to get back to that, we need to do what I tried to do, but we botched it, I have to say. But we've got to have a credible strategy to try and reduce tax burdens, to incentivize the kind of entrepreneurial activity that we've been talking about.

So would you try and lure back then some of these great entrepreneurs?

Definitely.

People like Dyson, who used to live here and has gone.

Definitely.

And all these billionaires. So they've gone.

Definitely. So we've got to have a plan to attract the most talented people, the inventive people, and to keep the ones we've got.

Yes.

That's even more important because there are people here in this country that can do all these great things, but they leave. So we've got to have a plan to do that. It's not something that could be done overnight. I think that was the mistake I made and Liz Truss made. It's not something that could be done just in one fell swoop. It's gotta be a strategic plan to try it. And we did this. I mean, I think in many instances, if you look at what Margaret Thatcher did in the 80s, she. She did. I mean, there were. There were, you know, there were bad things. I suppose there was some social unrest, but the broad direction of what she was trying to do was 100% right. And we need to do some sort of version of that where we incentivize people and we encourage them and we reward them for success as opposed to penalizing them when they. When they do well.

So let's talk about America then, because obviously we're very close to a huge event in America. And, um, Nigel's convinced Trump will win. Trump's told Nigel Trump will win.

I think, of course he's gonna say that. He's never gonna say Donald Trump is never, ever gonna tell anybody, oh, I think I'm gonna lose or. True. Yeah. That's just not his style.

True. So do you think Trump will win and do you think that's good?

Look, I think Donald Trump will probably win. And I think broadly in terms of the economy, their economy, in terms of, you know, the WOKE agenda, you know, pushing back against that. I think that's a better outcome, frankly, than. Than the Democrats. And also the other thing about the Democrats is that, you know, I get the whole kind of identity politics thing. She's a black, half black, half Indian lady and all of that, but it's very unclear to me what they are actually going to do. I strongly suspect that if she were to win next week, they would do a version of what Labour have done, what labor did yesterday. I think they would hike up business taxes. I think they would introduce measures that will disincentivize entrepreneurship. And I think for the American economy as a whole, that would be a bad thing. And also they've been a disaster. I mean, this is sort of pressing McDonald's points, but it's true they've been very poor on the border and all of that sort of thing. So I think the Democratic agenda would be bad.

So do you think one of the reasons that the economy did largely well with Trump is because he's actually run businesses?

Yeah, he's right.

And he understands real business. He's not a blackboard economic economist, he runs businesses.

He's not a theorist or an academic, but that's why he's successful. And I think a lot of his measures, I mean, the thing I loved and I wish I could have done this, is when he reduced corporation taxes, I think, from 39% to 21%.

That's a massive trial.

It was, it was a massive. It almost halved it. But actually, guess what? There was huge amounts of growth on the back of that. Now, all the models of the OBR and all that sort of thing would say, okay, if you halve the rate, you're going to drastically reduce the amount of corporation tax that you get into the kitty. But actually, he said, no, you're incentivizing business, you're incentivizing growth and you'll actually get more money.

Well, I agree with that. As an entrepreneur, when taxes are high, I hold as much money as I can. When taxes are low, I spend as much money as I can. It's basic.

It's very basic.

So at the moment, my companies, and personally, I'm holding a lot of money, not wanting that major tax event.

Exactly.

If we were flat 20% tax across the board and everything, it'll come out, I'd be drawing it all just in case they change it again and that's all going to be thrown out into the economy.

So I think. And the other area where I think Donald Trump is very different and we haven't even talked about this, is his energy policy. So I think the Democrats, you know, obviously they're big into renewables, they're big into the fight against climate change. And that's all very well, but the problem with that is that it just requires government subsidy. And guess what? What does government subsidy mean? That's more tax. And actually it's higher costs of energy. And one of the things we've seen actually in Europe, in Germany in particular, the reason why that country is almost flirting with a recession and is growing very slowly is their energy costs have gone through the roof, largely because most of the gas they were getting was from Russia and now they've embargoed Russia and they've had to get other sources and that's a price they're paying. And I think Donald Trump will do two things. One, he'll reduce taxes. He will also encourage energy production. And of course a lot of companies rely on cheap energy. So if you're a company which needs a lot of energy and he's going to cut your taxes, your corporation taxes, and also he's going to make the energy cheaper, that's a good thing. And that could boost growth. I think it will. And I think that the way in which a lot of that debate is couched in the UK and in Europe again is, is very much more. Oh well, we need to, we have wind farms, we need to have lots of renewables. And I was, I was responsible for a lot of that because I was the Energy Secretary as a business secretary. But I think there's a limit to how much people are prepared to pay in terms of energy costs to make the planet green. I think there's a realism, it's a balance that you need to strike. And I think Donald Trump, in terms of, you know, basically all the businessmen I know secretly want Trump to win because they can see that that's, that's going to be a good thing for business in the American economy, they can't say it publicly in many instances because a lot of their workforce, Gen Z types who, you know, have, don't share that political view.

Okay, so one more question and then we'll move on to talking about the wider subject of money, which we're both passionate about. So my final question is, if you don't believe at the start of the end of the uk, what's the solution to make Great Britain great again?

So this is what I've said. I mean, I think we need to essentially get what we tried to do in September, October 2022, we need to stage it. So maybe you'd start off with trying to reduce burdens on business. We haven't even talked about some of the legislation that Labour are thinking about introducing in terms of so called workers.

Rights, which is just another message me after 5 o' clock and on the weekend stuff.

And I've got a right to work from Home every day.

And from day one, you can't fire.

Me and I've got maternity leave. Right.

This is definitely socialism, isn't it?

Day one. I mean, it's a huge cost on business. And actually it'll have a. It'll. It'll. It'll. It'll have a sort of reverse effect in that businesses will be reluctant to.

Hire people again and workers will become more entitled and.

That's Right.

Less productive.

Exactly right. So that's the. The danger. And again, as I say, you know, I was struck by. With this when I was in government. It's that old Marxist mindset. The workers are in one camp and the employers are in another camp, and somehow these two, you know, tribes are in a perpetual war.

Tribes.

Yeah, but that's how.

Tribes.

Tribal war. Yeah, that's right. I mean, I try and put it in as vivid a way as possible, but I think that is absolutely at the core of Marxist thinking of Marx. You know, if you read Marx, that's what he's talking about. It's all about class war, class struggle. It's all about workers being exploited by capitalists and their interests being fundamentally opposed to each other. And I think that mindset has infected socialism. I mean, it's what socialism is based on.

Yeah.

And I think it's completely the wrong way to think about society.

Okay. Wow. So let's talk about money.

Yeah.

So fiat currency, the universally agreed exchange of value backed by absolutely nothing.

Yeah.

We came off the gold standard in 1971, and the value of money has been going down hard since, I. E. The spending power of it. What do you think of the fiat currency system? If you go back through history, money changes form over time. So I feel like we're my might be at a crossroads where things like bitcoins coming in. There's maybe some currency disruption. Some people call the fiat monetary system a Ponzi scheme. What are your thoughts on fiat currency?

So this is a very broad question. You'll know I wrote a book called War and Gold, I think that came out 2014, so 10 years ago. And I looked at. And I'm fascinated.

I hope you bought a lot of gold back in 2014, because it's gone up a lot.

It's gone up well, actually. I mean, talking about bringing politics back into it, I think Gordon Brown sold. Yes.

And it went up ever since.

Yeah, it's gone up. That was the historic low. One of the historic lows. I think it was something like $280 an ounce.

And now it's what, 2,800?

Yeah, 2,500.

So it's in that Nigel reckon it was 2008.

Yeah. So it's 10 times.

10 times.

Can you believe that?

Because it's real money.

Can you believe that? So he sold I think half our gold reserve at a tenth of today's value. That's a legacy that which is one of the worst things I think anyone could have done. But anyway that's. So you say that monetary arrangements change over time. Actually what is so extraordinary about the gold standard is that we came off it as an international community in 1971, which is just a few years before you and I were born. We're both children of the 70s but for about 2,000 years before that, 2,500 years, there was always a commodity backed monetary system. So from the time that you know, the ancient Lydians or whoever they were started coining gold and fashioning it into coins, which was about 500 BC till 1971, most currencies in most of the world were backed by precious metals. In most instances gold or in many instances gold. In the UK and other parts of the western world, silver was, was a predominant, predominant sort of metallic currency commodity standard. But either gold or silver through two and a half thousand years were what was described or constituted as money. And even in up to, you know, 1944 when Bretton woods came in, all the currencies were pegged to the dollar which was itself of course pegged to gold at a fixed, at a fixed rate. I think it was $35 an ounce was the up to 44 and I think it went up maybe to $38 at some in the 60s. But that was all that was what was, was going on. And essentially what happened before 1971 was the Americans essentially ran huge deficits. They ran huge deficits. They were effectively printing money. And what people used to do was essentially go to the to wasn't Fort Knox, but go and redeem the dollars they had for gold and they shut the gold window. They came off the gold standard because.

Of huge deficits from two things, funding wars and things.

Yeah. So the Vietnam War blew a huge hole in, in, in the, in the public finances.

Yeah.

And of course what they did, this.

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Well, funnily enough, they did tax you.

Through the back door.

They did that in the Korean War, if you look at the Korea, and I wrote about this in the book, in the Korean War in the early 50s, they hiked up taxes massively to pay for that.

Right. You wouldn't get away with it now.

No, but the problem they had in the 60s was that they weren't only fighting the Vietnam War, they were also paying for huge welfare expansion.

Right.

So, you know, in 1965, Lyndon Johnson, his Great Society, which, you know, was, was a big sort of democratic move and they did things like civil rights and all the rest of it, but allied to that was huge welfare programs and expenditure on, on social projects. And they did that at the same time as the Vietnam War.

Right.

So there was no way your tax base was going to cover all of that.

Yeah.

And that put a huge pressure on, on the fiscal, on the deficit and that put a huge pressure on the value of the currency. And in the end, I think it was Nixon essentially said, no more, we're coming off the gold standard. And as you, as you quite rightly say, during the 70s, so the value I think was $38 an ounce, or was it 35? It was on one of the two, but that was the order by 1980, the price of the dollar, the price of gold in dollar terms was $800 an ounce. So you've gone from 35, $38 an ounce in 1971 and nine years later, nine years old, a very long time. You're trading gold is trading at $800 an ounce. There's huge inflation.

Yeah. And the 70s happened after lockdown as well. Didn't we had a similar thing.

Yes, yeah, yes. But not as drastic. No, but I think so, I think the 70s and also you had, I mean the 70s, economically, globally were a total disaster.

Yeah.

Because you had this huge inflationary effect I think linked to the, to the, to the monetary arrangements we talked about. I.

Coming off the gold standard. Yes.

And then you also had those oil shocks, those energy shocks.

And coming off the gold standard I suppose just means mass money printing, so.

Yeah, exactly.

Creating mass inflation, creating paper money, all.

Of that sort of stuff. But at the same time you've got your cost of energy going up four or five times, you know, with the, with the Saudi oil, the OPEC oil embargo in 73, beginning of 74. And, and, and it was, it was from an economic point of view a pretty bad decade. And it's no accident actually that as a consequence of that experience, people like Margaret Thatcher in Britain, Ronald Reagan in the US and there were other parts of the world where they said enough is enough, we can't do this. We've got to think of another way of running our economies.

So it's fascinating that we've had a commodity backed, precious metal backed monetary system for over 2000 years. And in less than 50, I don't know what spending power has gone down by, but I imagine it's 1/10 maybe of what it was. There's no way we're going to be in fiat currency for another 1970 years.

No, no.

I mean money's going to go down so much that in the end, paper money in the end will be rel. Worthless.

And it has, it has, it has deteriorated in value considerably.

30% since lockdown.

Yeah, that's, that's extraordinary. Yeah, that's absolutely extraordinary. Yeah. So, so you're right to say it's unsustainable. It's not going to last 2000 years. I mean that's not going to happen. But, but how what you then what the next phase is? I don't know, it might be a kind of mixed commodity standard. That's the sort of thing people were talking about in the 1940s. So you don't just have a gold, you have a basket of commodities which you peg to the dollar. But there was a guy with.

Going back to a gold standard is it would dramatically reduce the expansion of money printing.

Yes. And you'd have a massive contraction. And also it favors, I'm afraid, countries who have huge stockpiles of gold. And in this instance, I suspect it would be China.

It's definitely not us. I have it under good authority the Royal Mint doesn't have much stock at the moment.

No, no. The bank of England doesn't. And I mean a lot of it was sold as we already ment. But I think that the, you know, something like. And I think secretly that must be a fear of the Americans. I mean, the Chinese have got, you know, tons of gold. I mean, metaphorically and really. And they could, they could say, okay now, not saying they will do this, but there's a world in which they could say, right, we're going to back the renminbi with gold. You know, you will get a renminbi for, or quantum of gold for one rem. They, they'd work out what the, what that would be and then essentially at a stroke, you're making that currency the dominant strong currency in the world. And over time, if they stuck to that, that could be a huge benefit to, to China.

Yeah.

And that's effectively, if you look at the history of it. I mean, we, you know, since Bretton woods, we pegged the dollar to gold and the international currencies were pegged to that. But of course, in the 19th century it was sterling. You know, we, that was when we.

Were the reserve currency. That's right.

That was the reserve currency. So with sterling was backed by gold, by a certain quantum of gold. I think it was 3 pounds, 17 shillings and 10p. Someone will correct me, but you could look it up. But to, to announce that was the. It was fixed at that price and, and all the other currencies essentially would be pegged to sterling.

Yeah.

So the Chinese, I don't know what their thinking is, but there is a world where they could decide to back their currency with gold. And I think that would have a dramatic effect on sort of the relative power, economic power.

Ray Dio thinks they'll be the next reserve currency. And it won't be long before America lose. Who think that Ray Dalio thinks that there's a good chance China will be, will have the next reserve.

So I think the way that they do that is by pegging the REM to and it would be a very Sudden thing. Right. I'm not saying it's going to happen tomorrow.

Yeah.

But you could imagine a world where President Xi, you know, to the, to the, to the Plenary Council or to the national assembly announces, you know, that, that now, from now on, or from such and such a date, we're going to peg the remit B to. To gold. And that would be a big deal. And if he did that, I think Ray Dyer's vision would be. Be. Would be realized and they could do it. I'm not saying they will.

Yeah.

You know, and they probably. They probably don't want that attention, actually. They probably don't want. They, you know, they want to. They don't want to draw too much attention for themselves. I mean, my view on China is that, yes, they want to be very strong, but they don't want. They're never going to be a power like Great Britain or the US where essentially we were policemen of the world. They have no interest in that. They're interested in economic power, but I don't think they're that interested in geopolitical power. People say I'm naive thinking that, but I've never really thought that they, they think in the way that Britain did imperially or the way the US does.

Yeah. So back in the day, turn of the last century, early 1900s, there was a coming together of some powerful but independent banks, and they formed a cabal monopoly, whatever you want to call it. I don't know if this is folklore or true. It was written in a book called about the. About Jekyll island. And it seemed to me this is in the U.S. yes.

Yeah.

So it seemed to me that in the early 1900s and before we had competition of banks and currencies, there are multiple currencies in one country and there would be competition, and then maybe there was a unifying monopolistic event.

Yes.

And of course, now there's one currency and a few banks, and when you go to the top, most of them are owned by BlackRock Vanguard. Is it time that that was broken up again? We have too much monopoly on money and banking, and, you know, we need things like Bitcoin and the decentralization and more competition with money and currency.

So I would say that that's happening anyway. I mean, if you look at cryptocurrencies, these are things that have only really emerged in the last 10, 15 years, maybe 20 years at a stretch. And I think that's obviously been in response to the kind of devaluation that we're talking about. The Paper money, the printing press, fiat currency. And I think that's happened anyway. I think the fact that you've got Bitcoin, I can't remember the last time it was trading sort of $60,000. I might be wrong, but in that.

Region, it's had a bullish October. It normally does.

It definitely has. And it's dipped as low in recent times as 20,000, particularly after the FTX business, when that blew up at the end of 22. But, you know, a lot of this stuff is happening anyway, in terms of the history, I think what happened in the us so Britain was slightly different. Now, of course, we had the bank of England from 1694, so it's been around for more than 300 years. And it was a private bank until 1946. That's another story. But in terms of Federal Reserve, I think that was established in 1913, and that really flowed from the fact that there was a panic in 1907, you know, as a consequence of, I think it was a San Francisco earthquake that triggered this. A whole bunch of insurance companies, frankly, very simplistically went bustling. There was a financial panic, and J.P. morgan himself, the original J.P. morgan, essentially had to bring in all these different bankers and say, you know, what are we going to do about this? What's going to happen? You know, and you've got to do this. And he was essentially acting as a kind of central banker before they even had a central bank in the us before the Federal Reserve was created. And so I think as a consequence of that, they said, well, you know, thank God for JP Morgan, but he's not going to be around forever, and we need to have a system that can essentially act as a banker of last resort. That was the phrase used about the bank of England in the 19th century, and we need to have this ourselves. And they set up the Federal Reserve, the Federal Reserve Act, I think, in 1913, which, I'm not sure it's a coincidence, but it was the same time that they, and Trump has talked about this, very interesting to me, that they brought in federal income tax. So Trump makes the point, which is true, that before federal income tax, and that was only introduced in 1913, the, the US government essentially funded itself with the tariff, and we could talk about that. But what. What I think the central bank was created in the US was in response to a financial panic. But of course, then, as usual, you set up these institutions and they grow their power and they grow their influence and become monopolies and become very powerful. And it's Very difficult really to, to kind of curb them. And actually with the American history, it's fascinating because they had a thing called the bank of the United States in the early 19th century, so the 1800s. And Jackson, President Jackson essentially didn't renew its charter, so they did have a central bank 100 years before the Fed. But of course, politically, the Jackson, they were Democrats at the time. They were called Democrats. They were very against the central banking and the monopoly that you were talking about. And they saw it essentially as a kind of east coast elite institution. Yeah, that was crushing enterprise and, and, and, and people in the Midwest and the south were very against that. More rural communities who wanted looser money were very against that kind of. And that was a whole political debate that really lasted till the Civil War in the United States. And then of course, everything, everything changed. The federal government became stronger, essentially.

Okay, so going to come back to the future of money and where it might be and whether we are having a decentralization event, which I'm personally a fan of, because I just think we have too much government and monopolistic intervention and control at the moment. But what would be really brilliant is for you, as the ex Chancellor of the UK to explain simply how the economy works, because I don't think people really understand. And it'd be great to have it in layman's terms.

So I'll try and put it historically if you like. So if you look at Britain, let's say to, you know, after, in the course of the Industrial Revolution, you've got lots of different. You've got farming, you've got manufacturing, you've got other, you know, enterprise, you know, shopkeepers, people selling groceries, services, a whole range of businesses, a whole range of economic activity. And on top of that, the state sits very lightly. There is a state, they used to call it the night watchman state. And that was the liberal small L. Small L. Liberal, classical, liberal world.

So you're saying not too much intervention at that moment.

There's not much too much intervention. There's what they call laissez faire. There's what they call. The state isn't taking very much in tax. I mean, income tax was introduced, I think, in 1799, but it was introduced as a wartime measure because we were fighting Napoleon. That's right. William Penn introduced it in 1799 in order to fight the pay for the Napoleonic Wars. We were in this long war against France and then ultimately against Napoleon. 23 years at war. 1792, 1815, Waterloo. We all know about Waterloo, we won. But that cost a huge amount of money. And they brought in the income tax. And then actually, I think Even in the 19th century, they wanted to abolish the income tax because they knew it was a temporary measure and the state sat very lightly on the, on the economy. And if you look around London, people who know London, who live here, you know, loads of the buildings, lots of the infrastructure, the rail, all of that was private money in the Victorian era, okay? And so they had investment schools, hospitals, buildings, all of that stuff. Lots of the infrastructure that we enjoy.

All built by entrepreneurs who labor now.

Hey, yeah, yeah, yeah, yeah. I mean, I knew you were going to make that point, but. But actually, you look around and you see all the buildings, you see the stations, you see a lot of the infrastructure. And remarkably, it's now 100, 150 years old, more than 100. 150 years old. All of that, you know, Paddington Station, all of these things. And then I think what happened in the 20th century, which totally changed the dynamic in terms of state intervention and the power of the state and how much the state took over the economy. You had two world wars, essentially, which I think, in my view, completely changed the nature. And I'm talking about Britain, the country I live in, where I'm from, that totally changed the relationship between the individual and the state. So as a consequence of the First World War, taxes had to go up. We talked about the income tax in relation to the Napoleonic wars and whatever. Generally, war means that expenditure goes through the roof. And your propensity, your. Your ability to spend money is really, really important. You have to essentially outspend the enemy. And this is industrial warfare with guns and machine guns and hardware and tanks. And, you know, it costs a lot of money to fight that kind of war. And, you know, as a consequence of the First World War, we dramatically increased public expenditure. And there are whole new departments, you know, the Ministry for Transport, I think, was created, Whole new departments of government were created, whole new taxes were created. A whole administrative machine had to be geared up essentially to defeat the. The, The Central Powers, as they were called. You know, Germany, Austria, Hungary. And we did that. But of course, once you've done that, you can't. You don't wind the clock back to 1910 or whatever. You keep spending the money because you've got this huge army, you've got this huge infrastructure, you've got these huge bureaucracy. And you don't just say, actually, actually, we've had that, that. We've done enough of that let's go back to where we were. You can't do that. And so that, you know, massively increased public expenditure, massively increased taxes. Things didn't really go back, you know, after the First World War to. Back to where they were. They couldn't do. And then we did the same thing again, you know, 30 years later. We had a whole other war which cost even more, because instead of the First World War where you had these sort of paper planes and they were reconnaissance planes, you had to build bombers, you had to build fighters, you had to. You had much bigger tanks, you had much bigger ships. So I'm putting it very simplistically, but the expansion of the state there was massive. So by 45, after the Second World War, it's exhausting effort. You know, tens of millions of people, 50 million, 60 million people dead. Billions and billions of billions spent that never. No one could even imagine spending that much money. You had a huge state, certainly in Europe and certainly in Britain, and then we had to rebuild those countries, and the Americans provide a lot of capital, and essentially you've built up a welfare state and a bureaucracy that 50 years before, if you look at 40 years before 1905, let's say, would have been unimaginable. So if you were, you know, a young person in 1905 and you retired in the 40s, the. The world had completely changed, largely, I would say, because of these world wars. And so the state then is a much, much bigger part of our economic lives. It directs us, it tells us what to do. It. It. You know, all sorts of things that would have been unimaginable at the beginning of the 20th century. The state was providing in the middle and the end of that century. Now, some of that was good. People would argue, you know, things like the National Health Service was good. People had to stay in school for longer, more education. But of course, there's higher taxes, there's more regulation, there's way more bureaucracy. And all of this, I think, is. Is historically contingent. It didn't have to be like that. It wasn't inevitable that we were going to fight these wars. It wasn't inevitable. You know, if you'd. If you'd been around in early 1900, 1910, it wasn't inevitable that we were going to have these two wars in the next 35 years that were going to totally change, you know, culture and the economy.

Wow. And do you think that's my view?

I mean, as a historian and someone who's been involved in politics? Yeah, I think they had A huge effect on our lives today even.

Well, I think the point you make that you can't go back. This is why I don't think we'll anytime soon go back to a gold standard. No, it's because the economic effect would be catastrophic. We wouldn't be able to afford most of our services. And as much as money printing costs us, all money, it. We can buy our way out of problems.

Take a, take an example. You know, I just took out another credit card. You know, I haven't gone crazy, don't worry about it. It's got a very low limit and I've deliberately so. Yeah, but people could just take, you know, with the gold standard, there's no way you could do that. You, you can say, hey, you know, with a gold back standard you could just get a credit card and then go to Oxford street and start, you know, spending whatever it is, hundreds of pounds on bags and whatever else you want to buy. Yeah, it's a totally different way of, of thinking about money and credit.

Yeah, it is. It's borrowing money from the future, isn't it?

Yeah, but you've got limitless amounts that you can print and.

Yeah, because no one's really. Everyone thinks that the future be someone else's problem that they'll fix. Is this a problem with politics? Because you, you, you're not guaranteed a 10 year term. In 10 years you could change the prevailing direction of the country or the economy. Can you really, in the, in the terms that we've got?

No. So we had a very. And that was one of the things that we, we got wrong. I mean, I think Liz Truss, as Prime Minister, thought two years was too little time and that she had to get going. And that was one of the reasons why we, in the end, I think two years is slightly longer than, than people think it is. It is in this 247 world, quite a long time. But you're right to say that if you're in government, and I'm sure this government thinks the same.

It's like turning an oil tanker, isn't it?

That's exactly right. Yeah, that's exactly right. It's not a speedboat.

No.

And actually the real fear we talked about China is that they don't have that problem. I mean, essentially President Xi, I think he came into power 2013, which was what, 11 years ago?

Well, this is, these are maybe the upsides of a dictatorship. Some of these dictators, they're not, they won't call themselves.

No, but they are. They are. They are.

You Know, if you look at Saudi and Dubai, you know these one people.

That's right.

Well, so they're strong for a long time.

They're strongly authoritarian regimes, but they can have a vision.

I mean, look how quickly they built Dubai and look what they've done there.

So. So.

And that wouldn't have happened with change in leadership every four years, wouldn't it?

No. So. So. And they look at our system, probably laugh at it, and they think it's mad. Yeah, they think we're crazy. I mean, I know, you know, I've got Chinese friends who say, but how can you do anything?

It's not long enough.

How can you plan anything? And I said there's. That. That may be true, but there's a fundamental attachment to being able to change your leader. And I think that in a way is. Is. Is worth having a little bit more instability than having a dictator, because who are you going to decide?

We didn't choose Liz, Truss, Rishi. We didn't. So.

But there was a democratic process. It might not have involved the whole country, but. And also, ultimately, you could kick these people out. You know, once Rishi was there, it's not as if he was going to be there for life. No, he had. He came to a term and people voted him out. Just with, as with Kier, you know, he's going to have four years or five years and we'll be able to have the opportunity.

Should they be given 10?

No, because I think, I think that is too long. So what? So what?

And, you know, I just don't think you can change. How can you, like, how can you get control of the dramatic devaluation of money and the soaring increase in cost of living and the soaring cost of housing compared to wages?

But a lot of.

How can you take control of that over, yeah, two years?

You need to have good policies. But a lot of those problems are faced by those authoritarian regimes as well. I mean, it's not as if they don't have any problems. And so a lot of those problems are global problems. Now, I think that the way that our democracy works is, in a way, we have too little democracy in a way, because what the stable element is, the civil service is the, Is the officials, and they, for good or ill, can. Can stabilize in inverted commas those governments. So the extent to which we are truly democratic and we can change, I think is questionable. You know, I mean, I think I didn't like using the phrase deep state, but you know what I mean by that. Yeah, I think there are, there are certain things. And I think Trump, if he comes back in America will find this. There are certain ways of thinking that the bureaucracy has, that does provide a more stable framework than just chopping and changing all the time. Yeah, but, but you're right, I think it does, it is destabilizing. But the alternative is just having a dictator. And it's all very well having a dictator if they're a benign dictator, but if they're not a benign dictator, that's not a very fun place to be. And I don't think people would want that.

So you talked about the deep state. So, you know, there's a lot.

I mentioned it.

Yeah, yeah, yeah. Is that, is that something different talked about, mentioned?

Yeah.

No, no, no semantics. But I think. Yeah. What you're saying.

Yeah, I mentioned it. Yeah, in passing. That's right.

Passing as opposed to talk about it. Okay.

Oh, yeah, yeah. That was the distinction. I was trying to.

I get it. But I am fascinated because a lot of people do think that, you know, maybe we are moving towards a one world government. And you know, people do talk about the World Economic Forum. And you know, there are some very powerful, almost monopolistic companies like BlackRock. You know, they're major control in pharmaceuticals, major control in banking. You know, they have major controlling interests in media, a lot, a lot of industries that have influence over us. Do you think we are moving more towards this, More centralization?

I think that's the nature of capital, actually, because, you know, if you've got a global system where you have free movement broadly, let's say, of people, you certainly have free movement of capital and you don't have free movement of labor, but there is a lot of movement of labor. I mean, look at migration, immigration. I mean, these are huge issues in the west. And you've got this sort of free flowing system. You can see how very quickly monopolies build up. You know, if you're good at investing, you can invest anywhere, you can build companies, you can take money out of places and put it in wherever you want. And of course, if you're good at that and you've got capital, that's great. It's like you're in a playground and you're the biggest beast in the playground. And you know, it's fun. And you know, to put it very simply, that was the world we were in probably 20 years ago. You know, China came into the WTO, they were, you know, producing these very cheap goods. We were buying those goods, they were buying our debt. So we were essentially they were they were borrowing money, lending us money to buy their stuff. There was free movement, all that sort of stuff, and the eu, and then the EU expanded and, you know, we had Romanians and Poles coming into the UK and all of this sort of stuff. There's global movements. And for those companies that could invest globally, that could draw on global talent, human capital, that was great. That was a wonderful world. The problem was that, of course, the people who were affected by this didn't particularly vote for it or didn't particularly like it. So you had two events, both in 2016, that really shook the world, actually. One was Brexit, where essentially people said, enough of this in the context of the EU and the uk and the other was Trump and Trump's genius. One of the things he did, he said before the election, 2016, his election, he said, I missed a Brexit. Do you remember? Nigel went over there and said, Hey, I. Mr. He literally borrowed the cloak of Brexit. And people could see, okay, this is a revolt against the elites and the globalism and the, the one worldism, for want of a better phrase. And there was a big reaction against that. And I think that was. I wouldn't say it was inevitable, but it wasn't surprising when it happened. And I think at the moment, a lot of the. Let's call them the globalists and give them labels, you know, are scratching their heads and thinking, what the hell is this? You know, what these people are asserting, you know, national identity, national culture. People don't want to be part of a whole globalist, homogenized world. They don't want, you know, essentially social credit or all of that sort of stuff. And at the moment, it's. I think the globalist trends are slightly in abeyance. They're slightly. They haven't encroached as much as. As they could have done, but it's still, you can see why, you know, people who are deploying huge amounts of capital are. Are trying to push, you know, for that kind of deregulated, you know, free flow of people capital, that kind of stuff. And I think. And that's the problem you'll have. Because, you know, in Britain, you know, I was a constituency MP for 14 years, that was a settled community, but we had lots of immigration. But there's a certain culture that, you know, communities have that they want to preserve. I get that they're welcoming, they're friendly, but they don't want the entirety of the community that they've. They've lived in to essentially change. And Be unrecognizable. I mean, nobody wants that really. So you could see that this is these currents. I, I, I think it's, it's not clear to me that the globalists will win, but it's definitely a force. You will always have people who will be arguing for free borders, movement of capital, and the rest of it.

Okay, and then where do I go from here?

Well, no, I mean, this is just a free flow. I mean, the other thing I would say is that I think the world just the geopolitics, like, you've got China, you've got Russia, you've got a growing Middle East. I think, I think, you know, you need to have supply chains. You know, I was, I was speaking to a friend of mine is in the steel industry, and he was saying that, you know, now we want to have resilience in steel and critical minerals and things like that. So the way the world is is that it's, it's the nation states come back.

Yeah. You know, so when you say you need supply chains and that, because ultimately you have competition yet.

You have competition, but also you've got some degree of security. I mean, if you look at energy, for example, you know, you need to be able to have your own domestic energy sources. You don't want to be totally reliant on foreign sources. I mean, look what happened with the Russian invasion of Ukraine. Very interesting case. Putin didn't believe that the Germans would sanction him because he thought, look, they rely on my gas. 50% of the gas that Germany uses, their industry, all of it comes from Russia. So why on earth would they sanction Russia? They need the gas, and so they'll let me do what I want. That was his calculation. And of course they did. They went, they, they, they, for whatever reason, they said, no, you can't do this. But what they've had to do is say, okay, we can't take any, we're not taking any more Russian gas. We're going to essentially ship the gas in the form of liquefied natural gas from overseas, from Qatar, maybe from Germany. We're going to try and develop wind farms and all that kind of stuff. But that's a classic case of having your own energy supply, which the French do. Independence. Independence, that's right. Resilience and independence. And that's very much a theme now, which we didn't really talk about 10, 15 years ago.

Yeah. So I do know where I want to go now.

Okay.

I was at a crossroads and I know where I want to go. Central bank, digital currencies.

Oh, yes.

So do you think these are good or bad for humanity, ultimately, where, um, there is a cashless society and there are digital currencies controlled by central banks?

No, I, I think a cashless society poses risks because just imagine if everything was digitized, you could just get. I mean, it happens already, you know, sometimes the bank will just shut down your account.

What happened to Nigel? It got debunked.

He got debunked. You know, and there's no freedom in that.

No.

Or you might even go. I mean, as I've done.

Cyber security risks.

Yeah. I mean, I, you know, when you go abroad, you know, I remember being in. I think it was Egypt or somewhere in North Africa and my, you know, I just went to the ATM and the bank said, only, you know, we think you're not. You.

Yeah.

Because you're in Egypt. You've got to ring this number to unfreeze your account. And it's deeply embarrassing and really inconvenient and it's a big curb on freedom, you know, that someone can just randomly look at your. What you're doing and say, no, we're going to freeze the account. Well, I understand why they have to do that, because there might be fraud or whatever.

Yeah. But they're also now labeling people politically exposed.

Completely. PepsiPs completely.

And choosing completely who they're closing.

Yeah. So I was an mp, and, you know, around Westminster there are a number of banks and typically, I think I went to Barclays and opened the account and there wasn't a problem. This is probably 14 years ago. And then, of course, now it's practically impossible to do that, even though I've left the House of Commons.

Yeah.

I think it's, it's, it would be much harder for me, as someone who's been in politics, to open an account than it was when I was an MP 12 years ago as an actual sitting MP. So I think all of that and what Nigel went through was completely ridiculous and deeply concerning because as far as I can make out, they just didn't like his political views.

Yeah.

And that should have nothing to do with whether you have an account or not. You know, obviously, if you're, if you're, if you. Doesn't matter what you think, what you believe, as long as you're abiding the law. Obviously, if you do something illegal, but that's a matter for the police and the legal authorities. Administrators of Justice. Administrators of justice. Something to do with your bank. I mean, it's like utility, what you're going to cut off their water because you don't like their political view.

I mean, it's a good analogy.

Yeah, well, it's a utility. I mean, having a bank account. Yeah, it should be, it should be. I mean, even though it's private, it should be a utility in the way that electricity is. And what are you going to do? You're going to stop people's electricity because you don't like the way they vote or the world or what they think? Yeah. I mean, that's crazy. And banking should be on those terms in that category. But for whatever reason, you know, they decided to debunk Nigel and, and his.

Family couldn't get bank accounts. He tried to open nine bank accounts, couldn't get one of them reopened.

And it was, the whole thing was, was disgusting. And you know, Alison Rose had to fall on her sword essentially because, you know, ultimately the buck stops with the leader.

Head of NatWest.

She was the head of that. She was the CEO of Royal bank of Scotland.

Yes.

Of the whole thing.

Right.

As I remember.

Yeah, RBS own a lot of banks.

Yeah. As I remember. And on that west, I can't remember, they keep flipping anyway, but she was the CEO of the, of the bank and Nigel's bank at Coots, which was owned by, you know, the bank that Alison headed and she fell on her sword and it was, you know, I know Alison, I think she's a professional lady. I don't think she was probably that involved in that particular case, but she took responsibility because she was head of the. Head of the group and. But what happened was. Should never have happened.

Yeah, I mean, this does scare me quasi because friend of mine went into the bank recently and well, he phoned him up first and he said, could I take £20,000 out? And they said, what for? And he said, none of your business, it's my money. And they said, well, we don't think we're going to be able to do that. So come in the branch. So went in the branch, he asked for £20,000. They said what for? He said, none of your business. And they said, unless you can prove what it's for, you can't take your own money.

That's crazy.

Out of the bank. Your own money, that's crazy. And I tried to put some money into crypto recently. It's a five grand a month limit now that I could put into crypto.

Is that right?

Yeah. I did not make the amount. The amount of cash you can put in is going down and down and down and down.

And he's regulating that. The. Because I've been out of office for two years, but I don't know who's regulated. I'm surprised.

Who controls the bank?

I mean, well, there's the fca. I mean, that would be a natural thing. And obviously the bank of England. But. But I'm surprised that that limit is so low. So you couldn't just put a million pounds if you had the money. If we were lucky enough to have.

Into Bitcoin. Into Bitcoin. You couldn't even put five grand a month in.

Wow.

Yeah.

Okay.

And I didn't know that less cash you can put in, less cash you can take out. That's going down and down and down and down. It angers me when you go into shops and they don't take cash because cash is legal tender.

Yes.

So I know some people have gone viral because they're like, no, this is legal tender. There's a 10 to keep the change.

I. I think it's. I'm surprised that they're allowed to do that. I mean, I use cards, so I don't have a problem. I don't carry that much cash anymore. But you should always be able to have used cash because as you say, it's legal tender. And for a lot of people, I mean, you know, when I was a constituency mp, there was one area in the constituency where there just weren't any banks, you know, for whatever reason. And everyone in Britain will know. High streets where there used to be a bank on the corner, and it's just disappeared. So a lot of these banks don't even have any physical imprint. People, you know, of a certain age or certain disposition don't like online banking. You know, some people still get wages in cash.

Well, a lot of people even can't even access the Internet. And the elderly, that's just alienating.

So it's. It's completely insane.

Yeah.

That you and it. And it's. In London, you see it more that you go into a coffee shop and they won't even take care.

Yeah.

You know, it's like a pound for.

I always try and lecture the people about the importance of cash and they're just like, I'm just working for Starbucks, mate.

But it's not the. It's not the fault of the people working in the. On the front line.

No, but they need to. In these cafes, they need to know.

But it's the policy of the, of the owners of the. Of the.

Here's the thing that people don't Understand, we, as the people, can take the responsibility. If we all didn't watch BBC or pay for the TV license, all of us mainstream media in the UK would change overnight.

Yes. So that's the power of the people.

Yes. And if we all refuse to shop anywhere where they didn't take cash. They would all take cash.

Yeah, they probably would.

So we gotta take personal responsibility.

Yeah, but you're never going to. Again, we talk about a lot in our conversations about turning the clock back. And again, it's a very difficult thing to do. I mean, to use, to mix my metaphors. Once you let the genie out of the bottle, it's very difficult to put him back in the bottle because. And I think with car, with cashless, you know, a lot of people, I mean, I'm nearly 50, but a lot of people under the age of 40, 30, they don't even know what cash is or they rarely see cash. I mean, I can't remember the last time I had a ten pound note. I honestly can't. Maybe a few weeks ago, I don't know.

This is madness to me because here's the thing. Let's say it's cashless. You walk in the wrong place, a fine just came out your bank, you park in the wrong place, a fine just came out of your bank, they decide they want another lockdown, then they disable your bank. If you go beyond a certain area, so you can't leave a country, you're totally exposed.

You're much more vulnerable to central control, state control, bank control. In, in a cashless society, 100%. And actually that's.

And you better do nothing about it.

There's a but, but, but, but. He's also, I'm afraid, I mean, I hate to say it, bloody convenience. You just have a problem.

But you can't, but it's not that.

You can't expect people, people.

I always carry cash. Look, it's not that inconvenient to go. There you go. Taxi Driver, there's a tenor. That's what a tenor looks like.

Far.

That's what 50 looks like.

No, no, yeah, exactly. But, but, but you see, so, so you're quite right. And look, I remember, you know, when I was at university in the 90s, I used to take out £10 a day.

It's easier to budget when you have cash, isn't it?

Absolutely, absolutely, absolutely.

And if you tap, tap, tap, you.

Spend all your money, you're 100, right. And then you look at the end of the month, did I spend that? Did I Spend that. Exactly. So I remember, you know, and I would go into the. It was in that west branch and I would. I don't think I even had an ATM card at that point. Maybe my second or third year at university, I did, but I would literally write a check for myself. Ten pounds. You know, the old days, you could do that and you'd write a check, ten pounds, you know, put your name in Kwasi, Kwatang, whatever. And then the cashier would say, oh, hello, Mr. Kuartang, here's your ten pounds. I used to do that every day, you know, when the bags were open. And then on the weekend, you might take 20 quid, so you knew exactly how much you were getting out of your account. Whereas now, as you say, by contrast, you're literally just flashing this thing around and all of a sudden you're down 300 quid or whatever, and you don't even know what you spent the money on. So in terms of budgeting and control. But then, of course, there's convenience. So, you know, you might be in a situation where you want to buy something, but you don't have the cash on hand, you know, because otherwise you were just carrying wads of cash. And, you know, people got mugged. People, you know, you're exposed.

Yeah, but you can, you can get your phone mugged and you can get all your banks hacked.

That's right. That's. That's, that's true. That's true.

And this is happening on demand in London. People just on.

Yeah, there's a crime issue there. And also you sometimes just lose the money. I mean, you know, drop a fiver and all the rest of it.

Yeah, but I'm glad you mentioned this, because convenience, you're talking about the upside of convenience. But there's a cost to convenience. So, for example, we all conveniently thought, oh, Facebook is free to use. Give them all my data.

Yeah, that was, that was, that was.

We've give, like, so we don't own our data anymore.

I'm not saying I agree with you that there are risks and there are downsides. But what, what I started this bit of the conversation is putting the genie back into the bottle, turning the clock back. I don't think you're going to be.

Able to, but it doesn't mean you shouldn't try, though, does it?

Well, if it's not going to happen, why bother trying? I mean, if you could slow it.

Down, so how would you.

Okay, so you're, let's say you're in charge of, you know, the treasury or the bank or the people responsible for cash and money in this, in, in Britain, what would you do to try and get people back onto cash?

Well, I'd have to speak out about the benefits of cash. Yeah, but you know, the ability to budget, the ability to have a certain sense of freedom.

Always independence.

Yeah, in independence. That's right, yeah.

But then you've got, you've got to persuade a whole generation of people for whom cash is pretty alien. And they're flashing that, you know, they've all got Monza, these Monzo cards or whatever it is, and they're going, you know, ping, ping, ping, whatever, and that you're going to say to them, actually you shouldn't be using a card or cashless payment, you know, get some 20 quid out of the ATM and then, and also it used to happen the ATM would run out of money. Do you remember that? I mean that's just really annoying. And then you'd have to walk down the street and get to the other atm.

But there's a cost of convenience.

I accept that that is the case, but what I, what I, where I dispute, where we can have a discussion, where we are having a discussion is how easy is it?

But just because it's far doesn't mean it's wrong.

I think it's almost impossible, honestly. It would be like trying to persuade people.

But that's not me saying I'm not going to vote because there's no point, because I only have one vote and it's making different because it doesn't, does it? One blow makes no difference.

Well, it can do in certain constituencies. But look, so, so I think there are certain things, there are certain technological developments which are impossible to reverse. So one example of that would be, we're talking about the early 20th century. You know, everyone was the horse, horse drawn buggies. And then when cars were invented, people went to cars and nobody went back.

Yeah.

And I think it may well be the case with cash.

The thing with cars is it cars gives you freedom. Cash away.

We've gone to a point where the, the traffic now in London moves at about 12 miles an hour.

But you have a choice to get a scooter and a choice to work and a choice to go on the underground. And if there's no cash, you have no choice.

You have.

Like this, you can choose to walk, you can choose to run. There are different modes of transport, but you can go on the underground.

There are different modes of transportation that.

You can use at the moment. There's Cash or there's digital and you take cash. There is only digital.

So I think you're right. I think you've got to run both. But I think again on this, people are voting with their feet.

I mean, I'm amazed because of ignorance. That's why I want to talk about it. It's because of ignorance because they, they don't know the downsides of cashless. They only know the upside. Convenient.

Yeah, they do, they do. And also, to be honest with you, if you just, you know, flinging your card or pressing it around, you don't have to worry about how much cash you're gonna have on you. I mean, I remember it back in the day, you know, you'd be thinking, actually, how much should I take out of the ATM? 20, 30 quid?

Enough for a taxi home.

Yeah, you're making all those calculations and the, and the card just basically, you know, it totally removes your, your need to do that and it frees up, you can think about whatever.

We have the cost of living crisis. People are getting in more and more debt and that's only making it worse because tap, tap, tap, tap is not budgeting properly. So we're forgetting or we're not being taught basic money management.

Yeah. And that's probably true. So. So you know, back in the day you would get wages.

Yeah.

You know, and people would get their.

Wage every week in a brown envelope, in a brown cash.

And then they would have to budget through the week.

Yeah.

And yeah.

And you wouldn't spend more than you.

Earned because you couldn't, you could, you literally couldn't. You didn't have credit cards. You didn't. I mean, it was only in the 60s that you could, you had that stuff. So, you know, the people listening to this program maybe, but people certainly alive, who are alive today for whom growing up, they had none of that and it was more disciplined. But you, as you said, you know, we quite like credit. We quite like the fact that, you know, I bet you have a credit card.

I have a few.

Exactly.

I got, I'm an air mails millionaire.

Exactly, exactly, exactly. And I'd love to do an experiment with you where if I, you know, let's say on Monday we just took all your cards and said, right, you've gotta, you know, you've got to basically live in a cash on cash. You'd hate it. You would hate it.

I might try that.

Really?

That might be a good experiment for a week.

Yeah, yeah. No cards.

Yeah.

Nothing.

So I, I wouldn't be able to Rely on any of my direct debits?

No, no, but I mean, obviously, maybe the direct. We'll allow you that.

Pay my mortgage payment.

No, no, no, no, we will allow you that.

It would be fun, though. To all the direct debits, you actually had to walk in with cash because about half of them wouldn't even take it.

Yeah, they wouldn't. But. But, you know, give you the mortgage payments and the. And the. And the regular payments. A direct debit. But just functionally, you know, going to restaurants, using public transport, taxis, whatever, you do use having to pay in cash.

But even in restaurants, at least when you give the waiter or waitress a tip, you know it's going to them when you hand them the cash.

True, but I would love you or somebody to have that experiment.

I might take you up.

It would be. It would be pretty hellish, I think.

Yeah.

You know, you go to a restaurant with your partner or whatever and you have to pay the 100 quid. I mean, I remember doing that. And you make sure that you get the money out. And I remember, I can't remember, it's my 20th birthday or whatever. We went to a restaurant and I had to make sure that I had all the cash, you know, in my pocket because the credit card limit was, what, 50 quid or whatever it was. It was 100, whatever. And it was a. Is a pain in the ass. And then you work out what the. You work out what the tip is and the people are putting their hands in their pockets.

This saddens me. Saddens me that you've just capitulated.

Because I remember. I remember those days. I really remember those days.

Your freedom.

Yeah, but because also, do you not.

Feel less free now in. No.

So I remember a dinner I had. I think I just left university. No, it was before that. I can't remember. Anyway, it was. And I had 50 quid in my pocket. And I was thinking, you know, I was with a friend and I was thinking, this dinner better be less than 50 quid, because if it is over 50 quid, I literally can't afford it. I literally don't have the money. So then you look at the menu and you're thinking, and this is where your budgeting point is. True. And then of course, you're doing the sums in your head. You're doing the sums. Cause you don't have a. You didn't have an iPhone to do the calculation. You'll do all the subs in your head. Okay, this is 795. This is 895. So it is nerve wracking and stressful. And I remember at the end the bill was something like 4850 and I could only give 150 tip. And I'm thinking, mate, that's all I've got. I've literally got this two twenties and a ten and that's it. And thank God it didn't go over that budget. But it was stressful. I remember 30 years ago, I still remember it. And I, you know, people don't want to live like that. They want to be able to tap and go or whatever. They don't want to.

Maybe that's why we have a huge debt problem.

It could be, it could be. But you, but what you can't do. But what you can't do is expect people to go back to, you know, exclusively running on cash.

No, not expecting that. But at least in parallel, I'd love.

You to do that experiment.

I might do, I might do and.

See how you, but you would find it very, very difficult because, you know, you're making calculations about what you're going to be spending every day. You're taking cash out of the ATMs and all of that business. And it's, it's just, it's just a, it's just a. So you remember that you must have experiences like that when, when we were, yeah. Using cash.

It's a rite of passage. I remember back in the day when you were dating.

Yeah.

And you'd have to go to a bar and check someone out and go and talk to them face to face. That was anxiety inducing. But many of the younger kids who are just on. Yeah, they're all out, they should go out and learn how to do that.

So that I, I, I think is important because you learn social skills.

Yeah.

And I think that's important.

And having the money, you learn budgeting skills.

Yeah, but true, true. But I wouldn't force people, just as I wouldn't force people to, to, to abandon whatever it is. I don't know.

But education maybe educate people.

Yeah, you should educate people and you should give people choices. I agree with that. So where I do agree with you is that I don't think cash should be banned or just eased out. And it irritates me that there are shops which refused to take, as you say, legal tender. But what I, what I am saying is I don't think you can turn the clock back to 1990.

No, no, I don't think you can. So final question. How do you grow an economy?

So as I've said, I think you need to have, there's a line in, I think Adam Smith, who was one of the great, well the founding father in many ways of economics, and he said, you know, you need peace, easy taxes, which basically means low taxes. And I think the phrase, a tolerable administration of justice. So it's a, that's a long phrase which means rule of law, basically.

Peace, low taxes, rule of law.

Yeah, that, that was his formula and I wouldn't add too much to that. I mean, you know, you need law and order, you need a peaceful environment, so you don't need wars. And that's one of my accounts of where we got to.

You need capital though, don't you?

Capital. So his point was that, you know, if obviously you start off with a little, but you assume a little bit of capital, but if you have these conditions, human ingenuity, I mean he talked about the invisible hand and all that sort of stuff, but human ingenuity and the desire to improve your lot in life. Yeah. Will generate economic growth. And I think he was broadly right. But what we've done is we've kind of distorted that by creating a huge administrative bureaucratic state, maybe over intervention and all of those things and which need to be paid for. And again, a lot of what we've been talking about is setting the clock back. Once this stuff has been created, it's very difficult to, to reverse.

Yeah.

And so the thing just grows and grows and grows and grows. It's absorbing more and more money. And if the economy isn't growing then you, you have, you, you're basically extracting the money from more of the money from businesses and individuals and, and, and that has an adverse effect on your ability to grow the economy. That's the doom loop. That's a vicious cycle.

Yeah.

That many people think we're in. I'm, I think we're probably in that, in that world, but I, I, I'm prepared to give the government some time to see if we get growth. I don't think the growth has happened. But if for whatever reason they get 2%, fair enough.

Yeah.

You know, we've grown the economy, they've expanded it. If for whatever reason that doesn't happen, then, then you're in the doo blue because they'll raise taxes and etc. Etc.

And if there's one thing you think the labor government could do in the short term that may grow the economy, what would it be?

So I think, and I, we tried to do this where we failed as conservatives to do it. I think planning reform is important. We live in a beautiful country, but people need to live in houses, you know, and also the population because of migration and all sorts of things. It's way bigger than it used to be. And in order to absorb that, you do need to have more housing so that people can actually afford a house. And one of the things that comes up again and again is the cost of, you know, buying a house, you know, and that's had a knock on effect. I mean, I was reading two days ago that birth rates, you know, are lower than they ever have been since they were measured in the uk. And a large part of it, I mean, there are lots of reasons, societal reasons, cultural reasons, but a large part of it is because, you know, it's, it's very, very expensive to set up a home. You know, if you, you know, you're a guy and you know, you've got a girlfriend and you want to get married and have a family, you need somewhere to live. And if it's very, very expensive, not only in buying but renting, that will, will limit your ability to, to, to have kids. If you want to have a kind of normal, traditional inverted commas, family setup. And that refers to the cost of living. But a lot of the cost of living is related to the cost of housing and rent. And the only way really to, to help that, to make that situation better is to have more, build, build more. I definitely think that what's in.

Cause you have more supply, you have more supply, it's going to go up slower.

Yeah, yeah. It's a very economic argument is that if you've got demand and limited supply, prices will be very high. If you've got demand and lots of supply, prices will be much lower. And I think we need to have more supply of houses. But it's very controversial because obviously people can broadly agree with it. But then they don't want a house to be built next to, you know, the field, you know, that their kids play in.

Yeah. So I talked about to a top UK economist, I'll keep his name confidential.

Yeah, sure.

And he said to me that in the last, say, decade there's been 12 housing ministers.

Yeah.

And they come in with the same, what he calls ideology to build a load of houses just like labor have come in and they're gone and the next they're gone and the next they're gone and the next they're gone and the next they're gone and the next. And he says that pressure comes from banks and it's the banks that are controlling the lack of housing supply because the banks obviously have trillions in housing. You build a load more houses, you damage the balance sheets of the bank.

I'm not sure.

What do you think about that?

I don't think that's true. I don't think the banks are necessarily controlling that. The housing ministers. Yeah, they come and go, but it's a broader issue. You know, a lot of it will be setting in Treasury. It's almost if, I mean, I know British government. The Housing Minister isn't the person who, you know, he, he's very much the front man. Yeah. But he's not going to be, you know, someone in treasury or the Chancellor will be responsible for. Let's have a house building program. This is how it's going to work, this is how it's going to fund. It's much higher level of government.

But, but why have we failed for decades to even keep up with.

So I think a lot of it is to do with planning reform. And I remember. So, you know, I was sat in the House of Commons all through the 14 years the Tories were in power.

Yeah.

And for most of that time we, we had, we were either in coalitions or we had very slim majorities. We only really got a decent majority in 2019. So that was, it was only really after nine years of Tory government that we had a decent majority. And then there was Covid and all the rest of it. And this came up a lot of the time. And it's controversial. Okay. So if you want to liberalize planning, it does mean that build. People will be building houses on, on certainly in Brownfield sites. There's a whole question about, you know, the, the green belt. But, but just. And the process, it takes a very long time and consistently, Tory MPs, rightly, you know, because they were looking after the interests of their constituents, you know, and constituents would write in and say, we don't want this field built on. We don't want, you know, all this development that's going to disfigure our environment. And the Conservative government didn't feel empowered to bring about those reforms. Now, my understanding is that Labour want to do that and I think.

But didn't Conservatives want to do that?

Yeah, some of us wanted to do it, but we never did it because we didn't have the. For nine years we didn't have a majority or a consensus on it.

Yeah.

And then when we did, we didn't get round to it. And that was the failing of our failing in government, the Labour Party are going to do that. And I think we're going to have to do this because, you know, whether we like it or not, the population of this country is probably about 70 million. When we were growing up, it was 55 million. So if you think, you know, that's like 3, 11, nearly 30% increase. Okay. I mean it's, it's, it's extraordinary. Sort of 25, 26, 30, nearly 30 increase in population. And that doesn't mean we build 30 more houses, but we've got to build more houses and we've got to build more living accommodation.

Yeah.

So that young people can, can, can, can, can afford, you know, their own place. I mean, you've got 35 year olds, you've got 40 year olds living at home.

Yeah.

You know, I mean, that never happened before.

No.

And I think, you know, we do need to, we do need to help people get accommodation. I get all the arguments about, you know, the green belt and looking after the natural beauty.

I just developed 100 apartments in the center of Peterborough. You can take quite a lot of these disused.

Yeah.

Things and 100, you don't have to build 100.

So I think I wouldn't go to the, the banks, kind of sort of vague conspiracy theories about the banks to explain our failure to, to build accommodation. And it's a failure that's been going on for decades now. I mean, it's not just the Tory administration or Labor. I think it's both, Both parties are responsible.

Yeah. Well, this has been a fascinating discussion.

Really interesting. Thank you very much. I enjoyed it too.

Thank you.

Quasi. Very good. This episode was brought to you by Disruptive Media, helping bold entrepreneurs stand out through podcasting, video and social content. Visit disruptive media.comco.uk to learn more.