00:00How do you think that the Labour government under Burnham delivers on the great challenge now for Britain of growth
00:07and prosperity?
00:08Something that you say, you know, Greenspan was instrumental in helping to deliver in the US.
00:13I mean, that's a massive challenge for Britain today.
00:17It is. And that's why I return to the point I made earlier, which is I think Andy Burnham will
00:23need to develop and have clear intellectual convictions of his own,
00:28which he believes in, which will enable him to ride through the occasional difficult patches which he's bound to confront.
00:37And we don't know what those convictions are. They're rather vague at this stage.
00:41Well, fair enough. He's not been in office. He hasn't been asked to produce an alternative plan.
00:47But from now on, he will be asked and confronted with a whole series of very difficult questions.
00:53You know, how much would you spend on defence? What would you do about the triple lock?
00:58For old age people, are you going to start to change social care now rather than wait until the end
01:06of the parliament?
01:07There are a whole range of difficult questions, practical questions.
01:11But I think what's very important is the only way to tackle them in a convincing way.
01:17So the public understands why difficult decisions are being taken is to have an overarching vision of what all this
01:24adds up to.
01:25So I'll give you one concrete example. Abolishing winter fuel allowance for old age pensioners made no sense as a
01:34single individual action.
01:35The only way you could explain and sell what you were doing was to do in the context of a
01:42budget for the public finances as a whole, where we needed to raise more money, we should contribute that and
01:49why pensioners might benefit from some other of the other measures in the budget, even if they lost from this
01:55particular one.
02:00But the reason for taking them is to ensure that the economy will improve so that our children and grandchildren
02:10will not be burdened by an unnecessarily high level of debt, which will raise taxes on them.
02:16Which helps make the case for more hope under Burnham than Starmer, because by all accounts, he is a better
02:24communicator.
02:25He's better at painting a vision. Let me ask you then, what is the best case scenario for the UK
02:31economy under a Burnham premiership when he's going to be just as fiscally squeezed as his predecessors?
02:37Well, I think the best case is that he is bold and takes some difficult decisions, but explains why they're
02:44being taken in the interest of future generations.
02:48And I do think that one thing that's been underestimated is that I think that growth in the UK economy,
02:56whatever the government does, is likely to return to its pre-financial crisis level of around 2% or so
03:03a year.
03:04We've been through a very unusual period in which interest rates have been held down to very low levels, and
03:11as a result, companies that would otherwise have gone out of business or contracted and released people and investment to
03:20more successful firms, that has been happening on a much smaller scale than would normally be the case.
03:27And that switch of people and resources from poor to good companies is always part of the underlying aggregate increase
03:36in productivity, and I think we'll get that back.
03:40So I don't think we should be pessimistic about the long run.
03:43What we need to find is a government that is prepared to put forward a comprehensive plan of difficult decisions,
03:51which will not be seen as attractive to many voters, but they will understand the reason why, because it's being
03:59done in the interest of future generations.
04:02And the biggest issue in the UK is that we save, as a country, less, a smaller proportion of our
04:09national income than any other major industrialised country.
04:13And we have to increase the national saving rate in order to switch resources to investment and to exports.
04:20And that means that we can't go on consuming at the same rate as we have.
04:25That's not a happy outcome in the short run, but it's a necessary condition of putting our country back onto
04:32a course for greater prosperity in the future.
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