EU Relations and Future Political Challenges

How does a banana trigger a CIA backed coup Do AirPods herald the arrival of a new global order What do LED lights say about the future of humanity I'mt Conway, and in each episode of my new podcast, Stuff Matters, I take an object, crack it open, and reveal the world shaping forces hidden inside. This is economics told through the things we think we understand. Search Stuff Matters on your podcast app to listen and follow Hello, good morning and welcome. It's Tuesday, june twenty third, a decade to the day from the Brexit referendum and politics still in perpetual motion that's followed that In less than a month, Britain will have its seventh prime minister and anyone other than Andy Burnham would be a miracle My name is Anne McKlvoy from Politico up early today after a night of thunder and lightning over Central London and the weather god must be a starmerite Yeah I could believe I woke up to a smattering of rain. I'm Sam Coatates of Sky News. There's fleeting talk of opponents to Burnham and opponents of a coronation rallying aroundound maybe Darren Jones, maybe Al Karns, but I was out with Labour MPs last night and you think that that's a serious prospect. unless, unless O the next three weeks we're hit by some unknown unknowns. So all of that means that it looks like Andy Byrn will be our new Prime Minister on or about july the seventeenth, the first day of summer recess after Parliament rises the day before. So you know that's my best guess. I do wonder the vacuum over the next three weeks until july the ninth when nominations open bring a lot of uncomfortable coverage of Andy Berham sort of picking over everything he's ever said and ever done But even so I doesn't really feel like that even would throw Burnham off the current path that Labour andPs have set agreed, it's Burnham and C and some splutters of maybe but not definitely a contest, playbook reporting that the rumoud runner, Darren Jones was seen hugging the prrime Minister at an emotional Downing Street garden party. last night. some of Jones's allies taking soundings on the theory that a battle of ideas is what labour needs right now is a bit of a minority view. I think want Stara supporting official probably has hit more where the mean the meanedian of the argument is when they told Playbook that manufacturing an argument in front of the country would now be the wrong call The biggest conundrum with huge implications for the goovernment and for the rest of us is who is going to be the next Chancellor and from there quite what sort of economic policy he or she would Purue We've got names, we've got a sense of who and the what that Burnham is weighing up for you today. Yeah. It was quite the moment yesterday as Andy Burnham took a black cab from Eouston to Westminster, having tralled down from Manchester in the Avante West cooast, of course, delayed. sitting in that black cab with his all female aides, figures are going to become quite familiar to us in the future Prchard Abby Tomlins supporters said that in the cab as he winded its way to Westminster, he was calm. And there was that sense of transition yesterday. I don't know about you, Anne, but given that Kirahmer resigned or announced that he was resigning as Prime Minister in a few weeks sort of early in the morning, T talk of Starmer sort of faded pretty quickly and the political water seemed to close over his head by about lunchtime and we were looking to the future almost all day. It's an unforgiving business, isn't it? Yeah it was definitely I left the North again, I travelled south again for Smiths fans out there. and that was the journey we were watching all day was Andy Burner. arriving. One noticeable moment was that Rachel Reeves, the Chancellor wasn't in Downing Streeter for the resignation speech by Kia Starmer Hours later, she was visible in a photo call with Andy Burnham after his swearing in ceremony, starting his new life as an MP And only a few cabinet ministers took the time or were around to stand in Downing Street And here the Pime Ministers Farewell and that rather long list of things he thought had gone. Vy well, but they did include Daron Jones, Chief Secretary to the PM and personally very close to him as well as David Lammy the Dputy PM Praetorian guard still there to the bitter end. The rest will be presentent cabinet at nine AM today and that will be well orks now. Totally. I think, by the way, you mentioned Rachel Res, I think there's more of the story of the how Rachel Res and Kissed Armmer's relationship ended to come out. It doesn't feel likeike it ended on a high, whether it was the defefense investment plan, whether I think it was reality hit herurt some weeks ago, maybe some months ago is my sense over I feel like that's not the united front between Prime Minister and Chancellor that you would want And indeed, you know, for all the public comments about and, you know Team Starmer and Kir himself and all the talk of the orderly transition I was out and about last night and there is a deep, deep reservoir of business around the Labour Party, something of a poisonous undercurrent that I was picking up yesterday You know, it's MPs who are just sort of You don know't already regretful that they've had to commit regicide Try style, staffers who are about to lose their jobs MPs who picked a side and it turned out to be the wrong one. out on the commons terrace last night, you know, there was champagne bottles kind of mass drinking businessness and resentment in sort of equal measure. You know, there was the vibe in the heat of a political party having a bit of a breakdown Um it was it was like the guilty u sort of tricateurs after the execution having a party, it was it had the feel of something quite not very at peace with itself, should we say? Yeah, Champagne, but a slightly bitter vintage. I think you're absolutely right about that undercurrent mood Let's turn as well as number ten in that aftermath to number eleven and the likely next incumbent Still uncertainty about whether Burnham does dispense with Rachel Reeves and signals a new start for his chancellor At the same time, you know a lot of senior city figures I've spoke to in the last few days shaking their heads and saying They will be a bit put out if she goes unless they're very certain that they're going to get something better and steady worried about the reaction of the markets, but not just that, Sam, I think They're saying this transition. has to be very clearly marked on growth on a general kind of steadiness deeanor and ability to put up with the slings and arrows that affect a chance that we saw Rachel Ree struggle with that last year in the deb over welfare reform and her moment in the Cons when she just clely felt unable to cope with that they want anti inflation policies. They're concerned about that. And of course pro growth. So I was sitting while you were living at large on the commommons terrace. I was with Maorris Glassman, the Blue labour guru and peer My neighbour at the Arc dinner, that kind of right wing dinner led by Paul Marshall and his teams. And Morris Glassman said this to me and he did clear the quotes to use on the podcast. He said, God had a plan for Andy Burnham and it was to put him in Makerfield as MP Why was that? And he said, because it's pro Brexit, it's culturally conservative overwhelmingly and thinks rejoining the EU is a very bad idea. And he went on Sam to tell me that he thought makeake a field gives Burnham a reality check, his words. understanding the country walking back any ideas that Berham might have had in the past about rejoining the EU and essentially prodding him in a much more blue laborish direction. And we also talked about who the best replacement for Reeves might be. and he came up with an idea I hadn't heard, but I thought was an interesting one ould the answer be Healy Until recently, Defense Secretary had, of course a bus stop with Rachel Reeves, Hisama and the Treasury. So he's been benched ever since, he's benched himself, but he does know the treasury from a previous job there And he would be a reassuring figure What do you reckon? I think that's a fascinating suggestion. and like completely hands up, I'm not able to solve the conundrum who's going to be the next Chancellor because there are two indiff different partaths I would say about John the Healy as Cynk might point out that he absolutely couldn't make the suumms ad up at the Ministry of Defense Um but, you know, wise cracking won't really cut it because I can't really see a path yet There are two widely perceived front runners.? Edmill Laband, who is literally making calls, sort of sounding people out about cabinet jobs on behalf of Andy Burnham and is clearly central. He's been, as we've talked about before, he has been giving economic advice to Andy Burnham during this campaign. hisis campaign team is Andy Burnham's campaign team, figures like Grace Pritchard commommunications chief worked for him, he's absolutely central to this project. So he is one sort of obvious and key figure, but he would mark quite a big departure from Rachel Reeves. And that's where some of the kind of nerves around u, you know, that you were talking to with your your city contacts do come into play, I think The other assumed frontrunner sort of popped up yesterday, that's West Streeting. Now, we know that about an hour after Kistm resigned, And West Streeting folded his own leadership campaign and threw in his weight behind the King of the North, Andy Burnham. And I was very struck that his letter specifically talked about, you know just how his views on prosperity aligned with those of Andy Burnham. So it sort of looked like a hint that he was bringing, you know parts of his philosophy into line with the next prrime mininister. But you know, it's far from clear that that is enough for them to together and of course the Burnham campaign would deny that any jobs have been handed out and would absolutely deny that editing's a done deal And what do you make of West Streeting as a prospect as well? West Streeting certainly sounding very interested in remits beyond his old health beat. You and I have spotted on this podcast that he's taken having views about infrastructure funding in the detail, very growth facing topics, you, fun party topics Not everyone finds streeting a completely reassuring figure. It's just a word that I find myself using quite a lot this morning because I think there's something that are going to be looking for, particularly in the business community with this shake up. And he can seem to be at his best in his very zesty, almost permanent campaign mode. He does like to stir things up, and he certainly did with his early resignation, one of the bricks out of the wall for K Starmer One detail someone mentioned, who'd known him for years since his N US days, he said it wherears his best at selling uncomfortable reforms as he did with tuition fees as a lad to folk on the left. You know He likes that kind of going across the lines role. Chancellor is also a place where you need a degree of of steadiness and of delivery. And I just wonder whether that would end up being West Streeting, but it's perfectly plausible. This Pac McFerden definitely would stand for steadfast some treasury Mandarins I was with the weekend that he would be very good. Though Morris Glassman said that he had heard that Pack McFerden had some very tough plans ahead to go back to welfare reform on his terms and that he'd like to stay in post and that he thinks that this is know something he wants to push through. he seems toort of indicate as much also himself at her party just on the fly. Shaban Mahmud at the home office, well, you know, she is said to want to stay there, but if the prime Mister asks you to do something and thinks you're the right signal in one of the top offices of state, it's hard to resist. and John Healley would be a daring choice and a sign of toughness and grit, but we do know what he would splash out on And you did point that out. some it would be defense. Yeah I thought you made really interesting points about where streeting. It makes me recall, there is a lot of bad blood that involves him, if I'm being honest. neverever as a speech calls more ongoing strife. than that deecember twenty twenty four spectator parliamentarian of the year speech by Streeting where he savaged Louise Hag and basically mocked her. She'd just been sacked over that business involving her Louise Hag now the by election mastermind. As far as I can tell probably the single most important person around Andy Burnham right now. So maybe West Streeting picked the wrong target I mentioned that because I mean, it was only a few weeks it definitely this year Another ally of Andy Burnham's was absolutely savaging W streeting over that speech. I think we even brought it up on the podcast in sort a day or two. after You know, the the dislike of how he humiliated Louise Hagig was had not been forgotten a good fourteen months on And that incident and that perception that you rightly point out of perpetual campaigning. and that tone in the letter that sort of almost implied that you knew what part of the government he might end up in having done the decent thing and feled it behind Andy Berham like I do you think that there's a bit of sort of teams treeting that can come across as presumptuous As for the other names, yeah, friends of Mahood say She's determined to stay, you know, the times put her in the home office on Friday, now put her back in the possible Chancellor camp this morning. I think we really don't know. One more name. you wonder about Louise Haagig herself. I mean at the moment, I think Allies think she might end up in the cabinet office, but there is something of the joint political project with Andy Burnham. that you know, that you can see. and you know, she was the author of that pamphlet just before the leadeadership contest on fiscal rules and she would align quite closely with Andy Burnham because, you know, she's the one that's masterminding so much of this. So I just did wonder about that. but we will see. I think there'd be a lot of caution about that. partly on grounds of experience. She does have a corporate governance background in insurance in all fairness. but she has been on the left of the economic debate and in general very associated with the soft left. How much does Berham want to lean into that for his Chancellor, I think that would certainly be a bracing wind through the city of London. Let's not forget Ed Milliband, shaping up as you mentioned, some to be influential and certainly a force in cabinet, but we know that there's quite a pushback against that, particularly, I think in more conservative circ So they think that would absolutely nail on the fact that Dandy Burnham is red in tooth. And Claw, so does he just say, like, I'm going to style this one out? because Ed Miliband's experience. and it is also fair to say, if you go to people who are in energy transition, things like the fusion programe, which is quite a big deal is one of the big more adventurous things the UK is out there and doing. They're not so nervous about Edmilibam because they think he understands ennerergy quite well. They might disagree with some of his policies. I think more broadly in the city, that would go down quite badly. More certain is that Jim O'Neill, the ex Gman Goldman advisor, Northern powerhouse minister under the Cameron goovernment is set for a major role probably as chief economic advisor to Burnham government, you do think actually, why not you know Wild Card Choice for Chancellor because he has had a bit of ministerial Experience, but it's still a crowded field, that one, isn't it? It is. Yeah, and we're all hunting for clues about what Burnham's economic policy looks like and the kind of reboot of economic ideas that could get us out of the sort of doldrums that we're in at the moment So as part of that Manchesterism film that we were put out over the weekend. I spoke to Jim O'Neill. the interview was about two and a half weeks ago. So that was before he was confirmed as an advisor and therefore a little bit more free to speak than he is right now And actually, the interview inevitably, in the way that these things work, was quite a lot longer than the bits that were used in the film. Now at Jim O'Neill' front and center, hearing him go into quite a lot of the specifics about what he thinks might be a good idea suddenly becomes massively more relevant So I thought I'd just play you the sort of extended, you know gereonial reducts director's cut version of the interview. And forgive me, it's about two minutes long, which I know is long in this podcast terms U But you wentn't hear anything as detailed as what you're about to hear about direction of travel that he wants to push a Burnham government in. So so listen to this. On the specifics And this relates to something I've tried to encourage this government to be bolder about. I think the second part of the fiscal rule on borrowing to invest I think that could be explored a lot more and not in a way that freaks out the financial markets, especially if what I hoped for the emergence of what's now called NISTA, this combination of the old Infrastructure Commission with the Infrastructure Dellivery Authority, that's been put together and it's now another division of the Treasury What I'd like to see and I think what Andy might explore is a much more publicly transparent entity like that, a sort of infrastructure version of the OBR in which the whole country can see regularly transparently what big infrastructure projects are going to make a difference and what ones won't to get away from this very personal subjective view. I love HS two, I hate HS two and so on. And you've got to have that kind of clarity and transparency in order to pull off many aspects of what Andy appears to be hinting. But does he have that clarity of vision? That's a big bold thing to rip up the fiscal rules. He said he's not going to do I think he'd necessarily have to the fis ch I think you just need to be bolder about borrowing to invest. A lot of people right now, given Britain's history for thirty years or more, think any kind of borrowing just means wasted money. But if you borrow for things that have really positive multiplier effects, my own subjective example would be I'll give you two. One would be for Northern powerowerhouse Rail, which I've always thought way more important than HS to, but let's see what the real experts say transparently. And secondly, things like investing in preventive health issues as opposed to treating that like everything else. And I think if that's done in a really powerful way, it would make investors think the country's growth trend can genuinely be boosted. So to recap specifically that's an infrastructure commission that would stop politicians cancelling big projects like HS two more boring specifically and this is the thing that he names that we didn't get in the film, but we you can hear him that In that excerpt, he names it would be for Northern Powerhouse Ril and for health transformation. So that's where he's coming from fininal point for me, yesterday had the head of the CBI on the sky, Ray Newton Smith. and I asked her about you know, just in principle more borrowing. and She know and she didn't fall off her chair. L she said, the important thing is that we have it all needs to be done in the context of a proper plan. So let let's see You know None of that easy But there's a huge number of tricky things in the intro. I know you want to raise the subject of Europe and what's going on there? The summit's been cancellled? Oh, Sam, the best laid plans of nice men and Europe mininisters. Nick Thomas Simmons was gridded for a Downing Street press conference this morning to talk about the still in conclusive terms of the July summit as intended to reconnect the UK to the EU. on which I have become tragically something of a mastermind level, expert th this knowledge may or may not turn out to be useful because that is now all off till September at the earliest, given the need for a new boss to come in to number ten and set out a stall And I think what the Cabinet office and the team working on this very hard and grinding away that relationship with Marashevkovich the chief negotiator on the EU side will has to give, I think Nick Thomas Simmons some credit for the late knights on that one They were hoping to get this deal broadly done. a source there telling me for a piece I contributed to by my colleague, largely John. stone on all of this that it's constitutionally tricky for both sides to have a new PM agreed to negotiations that finished under a previous PM. But in truth, the summit was pponed very abruptly by the EU side yesterday. And it's a reminder that in this situation, we started saying ten years after Brexit today, we are very much the demondur in the language of Brussels here. We are the ones asking for something. And the bigger question is for Andy Burnham how long or how far he sticks with those self imposed political limits. discussing closer EU alignment in more concrete terms, like something like the customs Union, even if it's short of rejoining. Does he try to really go out there and stir up some feathers on that one? If he wants to go in a different direction, I think there's an element of the EU thinking, well, you know, well let's just see the cut of his jib before we sign up to things about youth mobility and bits of agricultural product stauff. Yeah, that makes a lot of sense. Politics is changing pretty fast. The best case scenario for Andy Burnhamough is not getting into the weeds of the customs Union. it's being a politically astute ime Mister who can tonally deal with the country at a point where actually the main challenger reform looks ever so slightly to be having a difficult time and slightly fraying at the edges, not just the Make of field by election, but the troubles involving Nigel Farage and all the rest of it. And you're off to interview Robert Jenereick this morning. So I'm quite interested to tomorrow how he thinks reform are doing and you know, after that bloody nose in