‘In politics, you don’t have that time. Your political capital is draining away like an egg timer. So you have to do your big things really early.’
Britain is in trouble. Its economy is stagnant, and its politics are in turmoil, with Andy Burnham set to be our seventh prime minister in a decade. Yet former chancellor Jeremy Hunt has a surprisingly upbeat take on Britain’s potential – if our politicians can be bold enough.
In this episode of The Capitalist, he sits down to discuss his new book, ‘Can We Be Rich Again?’
Hunt advocates a radical programme for growth, and has a warning for Andy Burnham – reform welfare on day one, or see your administration fail like Keir Starmer’s.
For Hunt, scrapping the pension triple lock is now an economic and moral necessity. And he says we’ve got devolution completely wrong; if that’s Burnham’s big idea, he needs to fix it, fast.
We also discuss why our hidden strengths mean Britain is still on course to become the world’s fifth-biggest economy, and why its best days can still lie ahead.
Below, you’ll find some short excerpts from our conversation.
Marc Sidwell
Editor, CapX
On the welfare stakes:
‘If [Burnham] ducks welfare reform, he will have to put up business taxes, and the economy will continue to be in the slow growth lane... But if he confronts welfare reform... he could save potentially £56 billion a year within five years...
If he is scared off welfare reform, he’s misunderstanding why Keir Starmer ended up having to resign.
When Starmer ducked those welfare reforms, Labour backbenchers began to realise that they had a veto on anything the government did – and essentially it made him an impotent leader...
The moment Andy Burnham arrives as Prime Minister is when his authority is at its highest. That is the moment he can win the argument with the Labour Party...
But if you don’t even try, then Andy Burnham is very soon going to find himself in the same position as Keir Starmer and Rachel Reeves.’
On the triple lock:
‘I would like to replace the triple lock with an inflation guarantee that says the state pension will always match inflation.
It’s something I’ve given more thought to after leaving office.
The savings are not as big as they would be from the working-age welfare bill. But the thing that my research uncovered, and that really struck me as significant, is that although the triple lock has done a good job at helping to reduce pensioner poverty – and pensioners used to be the group most likely to be in poverty – every year that we’ve had it, the country has been in deficit.
So what that means is that the pensioners who are benefiting from above-inflation increases in their pension are seeing that partly funded through more debt on their children and grandchildren.
And I think if pensioners understood that, they might think differently about whether it’s actually fair.’
On devolution:
‘I’ve long been a supporter of decentralising power... But we’ve done devolution totally wrong in this country.
Greater Manchester had more devolution than any other region in England – still three quarters of its income comes as a grant from London.
So to work, devolution needs to be funded devolution... If Andy Burnham as Mayor of Greater Manchester wanted a new ring road, he has to bang on the door of Number 11 Downing Street and persuade the Chancellor to give him the money – and that’s why Manchester’s GDP per head is still only around half of London’s.
The biggest single thing we could do to make devolution work is to say to all local authorities: any planning decisions you make, you get to keep all the extra tax revenues generated... It could add 0.3 to 0.5% annual GDP growth, which over time is a pretty significant amount.’
Why Britain’s leaders need to be radical:
‘I’m nervous about these labels like centrist, or left or right – I think we have to be radical...
The times I’ve left office disappointed is where I haven’t been radical enough; the times I’ve left office proud is where I took bold decisions.
You can get a bold decision wrong, as my predecessor did with Liz Truss and the mini-budget – but it’s really important not to confuse that with boldness being a bad thing.
We’ve got so much potential in this country: three of the world’s top ten universities, potentially overtaking Japan to become the fifth largest economy in the world... and the third largest tech sector outside America and China.
But at the moment there is an inertia, which is why we need bold and radical policies.’
