My 49 Days as Prime Minister - Liz Truss
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Summary
Former British Prime Minister Liz Truss joins us on the show to talk about her career and life after politics, including her time as the first female Prime Minister of the United Kingdom, her time in the House of Commons, and the lessons she learned from Margaret Thatcher.
Transcript
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I faced really, really quite strong forces pushing against my agenda.
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We have a situation in Britain where we have a very powerful economic establishment
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that has a particular set of views and did not like to be challenged.
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Looking back at your time and power, what would you change?
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I think the biggest thing I could have changed is whether I ran in the leadership election.
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Looking at the Conservative Party now, I mean, to put it bluntly,
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You haven't given many interviews since leaving Downing Street,
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Well, looking back on 2022, I was frustrated about the direction of the country,
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I decided that I had to run in the leadership election
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because I believed we needed more Conservative policies, frankly.
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Lower taxes, smaller government, we needed to get the economy growing.
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And there wasn't really anybody else putting that case forward.
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And I'd been spending quite a lot of time putting that case forward.
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As a member of the government, you know, you can argue your corner.
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But the general trajectory, I know that was partly because of COVID,
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it had been towards higher taxes, higher spending, more intervention.
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And I very much believe that's what people in Britain vated for.
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They vated for that in 2016. They vated for that in 2019.
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And I knew at the time that it would be difficult.
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I knew that I wasn't going with the grain of what people,
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or particularly the sort of broader elite and intelligentsia in Britain thought.
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But I thought it was the right thing to do, so I put myself forward.
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And what happened, I mean, I write about this at length in my book,
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Ten Years to Save the West, which goes through exactly what happened.
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But essentially, I faced really, really quite strong forces pushing against my agenda.
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And ultimately, those forces were able to stop it happening.
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We're going to get into the forces, because I think that's a very interesting conversation
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that we've had with previous politicians on the show.
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So Ella Braverman was sitting in your chair only a month ago,
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basically saying she couldn't do anything for the same reasons that you're giving, actually, in many ways.
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But the first thing I want to get into is this idea of smaller government and lower taxes.
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That got Margaret Thatcher elected and re-elected numerous times in this country within living memory.
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I'm not sure if it's true that it got her elected.
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I think what got her elected was the winter of discontent.
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It was the fact that things had got so bad that people were saying, we need change.
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But she offered that off the back of it was clear that Britain wasn't working,
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that our industry was doing badly, that our economy was doing badly.
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So all the hard work that was done, getting Britain on track, getting our economy on track,
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making the private sector successful, has gradually been undone over time.
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And people don't always learn the lessons of history.
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And I think people have forgotten what it was that transformed Britain.
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So yes, those ideas have become unfashionable, even though they're right.
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So what I mean by that is, first of all, I mean sort of general political and ideological forces.
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Constantine was just talking about how it's not fashionable to believe in supply-side economics.
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You know, those ideas that were shown to be correct in the 80s have been superseded.
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You know, they've become, they're no longer fashionable in our universities.
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They're no longer talked about free market economics and profit.
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You know, it has become something that is not popularly talked about.
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So I think that was one issue that the general tide was not pointing in that direction.
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But the second thing, and when I say forces, I mean people who are part of the bureaucracy,
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part of the government administrative state, did not support those policies,
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and in some cases made it harder for those policies to be delivered.
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So I think there's a general problem about the intellectual tide,
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the ability of conservatives to make arguments.
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But, you know, we have a situation in Britain where we have a very powerful economic establishment
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that has a particular set of views and did not like to be challenged.
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Yes. Yes. So the bureaucracy is, of course, it's the civil service itself.
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So organizations like the Office of Budget Responsibility is part of the quangocracy.
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The Bank of England is essentially part of the quangocracy.
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I mean, organizations that are not directly democratically accountable.
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Organizations that are appointed to have independent expertise.
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Whenever we talk to people, and you're not the first person to say this,
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I keep thinking the same thing, which is, do we really have a democracy in that case?
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Because we elect leaders to enact certain policies.
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If those policies can't be enacted because the powers that be,
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the forces, quote unquote, refuse to let them be enacted,
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Well, it's not democratic enough. There's no doubt about that, in my view.
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But that's a very, very serious problem because...
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It is a serious problem. It's an absolutely serious problem.
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And the other side of this argument, we'll talk about things like institutions,
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they'll talk about, you know, tram lines that politicians should be operating in.
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But what they fundamentally mean is that politicians need checks and balances
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against enacting things that are democratically decided.
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And what we've seen, and not just in Britain, right across the free world,
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is we've seen a growth in the power of unelected bodies.
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There's no doubt in my mind. And it's not just the Office of Budget Responsibility or the Bank of England.
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It's also the Environment Agency. It's the Climate Change Committee.
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It's people who are not democratically accountable are effectively making decisions.
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And I think that's a problem. I don't think it's democratic.
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It's a massive problem. And I think, as an ordinary person looking at this, which I am, I'm going,
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I didn't vote for the civil service. I didn't vote for the OBR. I didn't vote for the Bank of England.
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So, at the same time, I'm also thinking, well, the Conservative government has been in power for 14 years.
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Surely they would have been aware of all of this. Why haven't they done anything?
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I don't think, well, so I first got elected in 2010.
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And when you get elected as an MP, you assume a lot of things about the level of power and influence you're going to have.
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These are not always true. And, you know, I became a minister in 2012.
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I was, I was a junior minister. I found it frustrating that it was difficult to get things done.
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But I assumed it was because I was junior in the organisation that if I was a secretary of state,
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it would be easier to get things done. And as a secretary of state, I was able to do some things.
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But it was still the case. It was hard going. It was hard going implementing Conservative policies
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when that was not the broad view of the system.
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Can you give an example? Sorry to interrupt. Could you give an example where you had a policy
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that you wanted to be enacted? And then for whatever reason, it was scuppered or diluted
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down to the point where it was simply unrecognisable?
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So the first job I had was in the education department.
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And I wanted to deregulate childcare to make it cheaper. We've got some of the most cumbersome
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childcare rules in the world. And we've got some of the most expensive childcare. So I wanted to
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change that. And what you find is that no one ever says, no, we're not going to implement the policy.
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What they do is they take a long time about it. It's sometimes called consent and evade.
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So he'll just say, yes, minister, we'll go and look at that. We need to do a bit more work on this,
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blah, blah, blah. So what you'll find is it takes a long time to do things. And often,
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the civil servants in the department will be in touch with the so-called sector,
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which is generally the vested interest within which other area you're talking about, whether it's
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environmental NGOs or the nursery sector or whatever. And you find yourself ending up having
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to compromise to get things done quicker. This is also true of things like appointments as well,
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but you'll have to compromise to get things done quicker. You'll find there's a lot of opposition
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from the sector or the organization you're dealing with. So in the case of the childcare reforms,
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I wanted to do, before I even got them out, I'd had to make quite a lot of compromises,
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so they weren't as good as what I would have wanted to do and what I think is right.
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Making them more like the system in France, for example, which is actually
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better than the system in Britain. So it's hard to describe the process, but it's all very
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long-winded, driven by endless layers of people having to look at things. So it just takes a long
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time. And then by the time I'd finally got the policy out, Nick Clegg had been so lobbied by the
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childcare sector and by Mumsnet that he blocked the policy. And therefore, a policy which would have
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made lives better for families across Britain would have given them more flexibility didn't happen.
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So that's the kind of thing that happens on each policy you were looking at. Or
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a lot of the things we're talking about, take the Environment Agency, for example. In order to override
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the decisions that organisation makes or to change the way the organisation works, you need primary
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legislation. So that will take you two years to get a bill through. You've got to get the bill approved
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in advance before you even get to the stage of primary legislation. So unless you are absolutely
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focused on one thing and absolutely determined to drive it through and prepared to spend a lot of time,
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it is very difficult to make things happen. And unfortunately, a system is being created where
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you're operating in that sort of constant confinement, if that makes sense.
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Well, basically, yes. So as Environment Secretary, I was in…
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You know, the department was in court constantly. So we were in court with the Badger Trust,
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we were in court with the climate change, the sort of clean air campaign. All sorts of
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environmental bodies would be suing us all the time. So it's not just that there are civil servants
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with a particular worldview, and by the way, there are. It's also that they are understandably
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very frightened of being sued. And the sort of powers of judicial review allow that to happen.
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So you've got a system that's constantly looking, covering its back, looking at what bad things
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might happen. Therefore, making it very, very difficult to push a positive policy forward.
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So reading between the lines then, and coming back to your own story,
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you're a junior minister, you struggle to get too much done, even though you try. You think,
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well, I better become a senior minister. You struggle to get as much done as you'd like,
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so you're like, I better become prime minister. And then you get into 10 Downing Street, and I'm
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guessing it's probably the biggest trade jacket of all. Is that fair?
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That's a fair point. And you discover, because I sat there in governments under David Cameron,
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Theresa May, Boris Johnson, thinking, why doesn't the prime minister do this? Why can't we short
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circuit this? Why can't we get on with this? And what I discovered in the job as prime minister
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is how constraining the overall, you know, it's not the case that when you get to the top,
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there's more freedom of manoeuvre. Actually, there isn't. And what I tried to do,
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essentially with the growth plan, which I developed with Quasi Quarteng, was to take on that economic
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orthodoxy, which I think has been behind why Britain has had low growth and stagnation for
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almost two decades. I tried to take that on. But I found that even at that level, trying to take on
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these unelected institutions is extremely difficult. And I didn't realise how ruthlessly those people
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would fight back. Just a very quick question. I thought that, you know, going through the system,
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well, maybe there are political decision makers above me, you know, pulling the strings, making
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sure that these things don't happen. You know, maybe there is a... But when I got to the top job,
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I found that wasn't the case. Very quick question before Francis jumps in,
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and it's a provocative one. But I think it's a logical one, given everything you're telling us,
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and one that we know increasing numbers of young people are asking, which is why should I vote at
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all? If this is the case, why should I vote in the next election? Well, I think it makes it more
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important people vote. Because? I think it makes it more important. I believe we need to restore
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proper sovereign parliamentary democracy in Britain. And I think we've drifted away from it. And I think we
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have become a technocracy. And that is a problem. Part of the problem is, and it's been a sort of
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chicken and egg thing, part of the problem is, a lot of people have become disengaged in politics,
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because it has become so technocratic. It's become something for the political class to do.
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And that has created even more division between what the public actually wants, and what is being
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delivered by the government. So the only way to fix that is through more democracy.
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Ultimately, Parliament is capable of changing this.
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We are suffering. We are capable of changing this. Like one example, the Equality Act. The Equality Act
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creates huge issues for government. We've just seen how Birmingham Council has,
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because of the public sector equality duty and its own mismanagement, gone bankrupt.
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The Equality Act has created mountains of red tape across government. It's embedded the idea of
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identity politics into the way the public sector behaves. And it's also done that in the private
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sectors, particularly, we could repeal the Equality Act. It is one example of something we could do
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to make this country work better. The issue is we don't have a parliamentary majority to do that.
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The issue isn't that democracy doesn't work. The issue is that we need to make the case and get
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Liz, there'll be people listening to this who are going, well, isn't it just not going to be the case
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that you present that? And even if it gets voted through, the blob or the dark forces or whatever you
00:19:02.400
want to call them, are just going to drag their heels to such an extent that you end up back at square
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one with a watered-down bill, which means that it's not that effective.
00:19:12.720
You see, what I didn't know in 2010, that I know now, is that these things that look benign on the
00:19:24.880
surface, you know, who objects to equality? Who doesn't want to help the climate? Who doesn't believe
00:19:31.520
in human rights? Another thing that we need to repeal is the Human Rights Act, which has been a disaster.
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But on the surface, none of these things look bad. They all sound reasonable.
00:19:40.160
But what they have done is they have wrapped up Britain in a huge amount of red tape and
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technocracy that makes it impossible to do things, and also embeds values that are not conservative
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in the very heart of government. So I didn't know that in 2010.
00:20:00.160
And I know that now. So what I'm saying is, if enough people understand what needs to change,
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which is why I've written my book, I want to explain to people what needs to change to create
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pressure to actually make those changes. And parliament is capable of doing that. It's technically
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capable of reversing all of this legislation. We just haven't done it. We just haven't done it. And
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maybe it's, for me, it's taken me that time of being in government, of getting to the top,
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It's a very long list. But the Equality Act, the Human Rights Act, the Climate Change Act,
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the Constitutional Reform Act, 2005. I mean, this is a very important part of why
00:21:00.320
Britain doesn't work. We used to have a Lord Chancellor who was appointed by the Prime Minister,
00:21:07.360
who appointed senior judges. That role was effectively abolished by Taney Blair or denuded of
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its power back in 2005. Instead, the appointment of judges is now down to a quango. So effectively,
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you've created a self-appointing judiciary, rather than one that feeds into parliamentary sovereignty.
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And a Supreme Court was created in Britain, which had never existed before, rather than having
00:21:42.480
the senior judiciary in the House of Lords. And I think that has created a problem. And we've seen
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more activist judges, more activist lawyers. We've seen government policy like Rwanda challenged
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now by the Supreme Court. So that is another act of parliament that I think we need to reverse.
00:22:04.240
I mean, I could go on for a very long time, but I think you go right back to the 1947 Town and
00:22:09.280
Country Planning Act, which is, why is it so difficult to build things in Britain? It's because we had a
00:22:15.680
group of socialists in government in 19, you know, post-war, who put in this socialist piece of
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legislation that nobody has since reversed. But this is the type of discussion we need to be having
00:22:28.560
in Britain. And one of my many frustrations with politics is that so much of politics is focused
00:22:35.840
on the absolute superficial stuff. Like, you know, who's going to be the next leader of the Conservative
00:22:41.280
Party? Or why is X unpopular? What has X done wrong this week? Rather than, what are the fundamental
00:22:49.680
things that are stopping people in Britain pursuing happy and successful lives? You know,
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that's what we should be focused on. I completely agree. And what you've spoken about has led to
00:23:02.240
people losing their faith in the Conservative Party. And I was looking at one bookmaker's odds
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for the chance of the Conservative Party being re-elected, and it was at one percent. I mean...
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This is just why I'm talking about the political media commentating on Flimplap.
00:23:19.120
I don't agree with that, actually. I think Francis has a very strong point, which is after 14 years
00:23:24.240
of a Conservative government, that could have done all those things. But you're talking about
00:23:28.000
repealing the Blair right reforms. You had 14 years?
00:23:30.960
I wouldn't just say the Blair right reforms. I think we need to go back to 1945.
00:23:35.680
The 1947 Blair wasn't around, but, you know, the human rights act, the equality act.
00:23:39.280
We can hold Blair responsible for a lot, but we can't hold him responsible for the 1947
00:23:44.560
I agree. What I'm saying, and I think what Francis is getting at quite rightly,
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is that after 14 years in which you had the opportunity, not you personally, the government,
00:23:55.120
of which you were a part for most of that time, had the opportunity to do all this stuff,
00:23:59.760
is now going to crash out of office, hand the keys to Downing Street over to Keir Starmer,
00:24:05.040
who's going to introduce more Blair right reforms, almost certainly.
00:24:08.320
Yeah, I mean, he's a turbocharged technocrat. You know, the guy wants to strengthen, you know,
00:24:14.400
the OBR. He wants to create new quangos within the Treasury. He wants to put more policy control
00:24:25.680
And more power to lawyers, of course, of which he has won.
00:24:28.240
My point is, Francis' point about the 1% odds of your party being re-elected reflects a failure
00:24:35.520
of the Conservative Party over 14, maybe even 15 years, close to 15 years, to do all the things
00:24:41.680
that you're saying they should do. Why weren't they done in the last 15 years?
00:24:45.440
Well, this is what I tried to do in 2022, is start turning it around. And frankly, I fell at the
00:24:54.320
first hurdle because I found that the economic establishment were not willing to back my policies.
00:25:06.320
They weren't willing to back my policies. You know, on the day before the mini-budget,
00:25:10.640
the Bank of England sold gilts, announced the sale of 40 billion worth of gilts,
00:25:16.080
and failed to raise interest rates as much as market expectations. And when
00:25:20.320
there was the issue with the liability-driven investments, the so-called LDIs,
00:25:26.800
rather than dealing with it, the Bank of England governor sought to lay blame at the government's
00:25:32.560
door. And frankly, it wasn't something I knew anything about. It wasn't something
00:25:36.560
quality knew anything about. So what I found is when I did try and deal with these issues that
00:25:42.800
you're talking about, these long-standing issues, I faced the most almighty backlash and the most
00:25:48.800
almighty pushback. And partly that was from the economic establishment, but it was also from people
00:25:55.360
within the Conservative Party and the Conservative Parliamentary Party. So the basic answer to your
00:26:01.040
question is not enough people in Britain, not enough people in the governing elite, and not enough
00:26:11.360
people in the Conservative Party actually agree that that is the problem. So we haven't even got to
00:26:18.240
first base, which is people understanding what the problem is. So you can't fix a problem if you don't
00:26:24.080
agree it's a problem. And you can't fix a problem if you don't understand what the problem is.
00:26:28.800
And the problem is that not enough people understand that.
00:26:32.320
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00:27:04.240
I'm going to ask a provocative question. If your diagnosis of the problem is correct,
00:27:10.880
and let's just say it is for the sake of an argument, then basically what you're saying is
00:27:15.200
the majority or a sizable portion of the Conservative Party are kind of clueless, if we're being honest.
00:27:23.280
I'm saying they don't agree. But if your diagnosis of the problem is correct,
00:27:30.720
and they don't understand that, then they don't understand the problem that we've got facing our
00:27:36.000
society and our democracy as a whole. I mean, that's a pretty damning indictment, isn't it?
00:27:41.200
Well, I would say that a lot of people in Britain, a lot of the public understand things don't work
00:27:50.960
and there's something wrong. But I don't think it is widely understood what the problem is.
00:27:58.560
And I think, you know, I've had a unique set of experiences. Being a minister for 10 years,
00:28:03.360
in six government departments, being prime minister, I think I've seen it to an extent other people
00:28:09.600
haven't. So, you know, before I became a minister, I did not know how the government worked or didn't
00:28:17.680
work. I now have a much better understanding of that. So, I think there is a, and as I say,
00:28:24.880
it's a reason I've written this book, is I want to explain to people the issues and problems I faced,
00:28:33.200
and what I think the problem is. But I don't think that there has been. I don't think that is a view
00:28:40.400
that's shared by the whole Conservative Party. Of course, it's not. And also by the commentaria.
00:28:46.400
You know, there are a lot of commentators who say, why doesn't the government just, you know,
00:28:50.240
stop the boats in the channel? Or why doesn't the government just cut taxes? Or why doesn't the government
00:28:54.320
just cut spending? What I'm saying is it's not that easy. There are actual reasons and push, you know,
00:29:02.640
pushback from the bureaucracy that makes these things very difficult, and from the legal profession,
00:29:10.240
But to me, Liz, that seems like a pretty obvious thing. Now, I get, or I understand,
00:29:16.080
if somebody... That might be why you're doing this podcast, because you think it's obvious. I don't
00:29:19.920
think it is obvious. Really? To somebody working in the government who's trying to get legislation
00:29:25.520
passed and is blocked at every route, that's a pretty obvious thing. I understand if the cabbie
00:29:31.600
outside doesn't know about it. But that's not a difficult concept to grasp for the average
00:29:36.960
person walking down the street, let alone somebody in government, surely.
00:29:40.240
But there's two different things. There's people who agree with the policy,
00:29:45.360
but don't understand how difficult it is to deliver. So they just say, well,
00:29:53.680
if you go in there and you do the right thing and you, you know, you're clear with the civil service,
00:30:00.320
they will do what you want. So there are people who believe that, who believe that the system works.
00:30:05.760
It's just a question of the policy hasn't been implemented correctly, or ministers won't get
00:30:10.720
enough at explaining that. But then there's a whole bunch of people, including in the Conservative Party,
00:30:16.480
who believe that even though institutions have moved to the left, we should accept that.
00:30:22.880
So we should accept wokery. We should accept the full implementation of net zero,
00:30:32.880
even if it's damaging our economy. So there are people who believe that
00:30:38.720
that having a straitjacket is not a bad thing. There are people who believe that in the Conservative
00:30:48.240
Party. So there are different shades of opinion here. And what I'm trying to do at the very least
00:30:56.240
is to say to people, if you do want these policies, if you do want to stop illegal immigration and actually
00:31:02.560
be able to deport people, if you do want to move away from our very rigid net zero policy,
00:31:10.640
it's not good enough just to change the policy. It's not even good enough just to communicate
00:31:15.280
the policy well. You're going to have to change the system because the system, the way it is structured
00:31:20.160
at the moment, will not allow you to even deliver the policy. So I'm not even aiming my argument at the
00:31:26.400
group two of people who basically don't agree with it. And there are some of those in the Conservative Party.
00:31:31.520
My argument is about people who agree with the policy
00:31:34.560
and yet don't appreciate where we've got to with our system in Britain.
00:31:40.000
So coming back to your story, you get elected as Prime Minister. It was a pretty fierce election,
00:31:44.480
pretty intense. What is it like walking into Number 10 Downing Street as Prime Minister?
00:31:50.000
Well, it was all very, very surreal because I'd spent the whole summer traveling the country,
00:31:56.560
making the argument, preparing, but there's no way you can prepare for that. It's a quite unique
00:32:06.800
experience. And there was all the, you know, the Queen being in Balmoral was very unusual because she
00:32:14.800
wasn't very well. So we had all the organization. I think in that type of situation, I was just very
00:32:20.640
focused on what I needed to do. You know, I needed to make a speech on the steps of Downing Street.
00:32:26.320
I needed to do things like appoint a cabinet. And I was just really aware of how big the
00:32:33.280
in-trade got because the Conservative Party had spent several months debating our leadership. Meanwhile,
00:32:39.920
there was some very serious, the war in Ukraine was taking place. You know, you had the rise in energy
00:32:48.800
prices, economic problems, all of these things have been piling up. So I was just very aware of the need
00:32:57.600
And I think one of the main criticisms that people would make about your time as Prime Minister was that
00:33:05.440
actually, some of the policies and viewpoints that you've just espoused, you abandoned when you
00:33:11.040
were challenged on. I mean, 60% of the mini budget was giving money to families and businesses to help
00:33:19.360
with rising gas prices, which doesn't seem like a small government thing to do. Is that fair?
00:33:26.400
Well, that was... The way I would put it is what we did was an energy price guarantee. So we were
00:33:34.400
saying to people, if energy prices go over a certain level, then, you know, the government
00:33:40.480
will underwrite the energy suppliers. And the way I look at it is, over the past 30 years,
00:33:47.040
Britain's energy policy hasn't worked. You know, we haven't built the nuclear power stations,
00:33:52.160
we didn't get on with fracking, we didn't get on with making energy cheaper. And we were headed
00:33:59.440
for a serious recession. I mean, if energy bills had gone up to £6,000, households would have needed
00:34:05.760
money anyway. So the government were going to have to bail them out. And likewise, businesses would
00:34:11.040
have gone under anyway, just because of the sheer strain of those prices. So what I wanted to do is
00:34:16.640
protect confidence and protect business confidence and protect consumer confidence by giving some kind
00:34:22.640
of guarantee whilst we got on as quickly as possible with fixing the supply side. And that's why I
00:34:28.800
wanted to get on with fracking. It's why I wanted to get on with long-term energy deals. But these
00:34:35.120
things are always a judgment about what you need to do and political reality. And the political reality
00:34:41.760
was that there was going to be some kind of energy package. That was just the political reality of where
00:34:50.080
the Conservative Party was, where the country was, where the economic situation was. I mean,
00:34:55.440
it was happening around the world that governments were protecting people against very, very high
00:35:01.520
energy bills. I sought to do it in the most free market way that only paid out if the energy bills went
00:35:10.160
high. What we'd previously been doing is paying out money regardless of what the energy bills were,
00:35:16.480
which I thought was incredibly inefficient. And what I wanted to do was fix the supply issues in Britain
00:35:23.360
so that ultimately Britain became a net energy exporter. And look, I mean, there's always a
00:35:28.560
judgment in these things. But my view was the government was going to end up paying out money.
00:35:33.840
Let's at least pay out money only if the bills go that high. And in fact, the cost of it was far less than
00:35:42.160
was estimated because the energy prices didn't go that high.
00:35:47.040
I agree with your points about failure of government policy over 30 years on energy. And I suppose
00:35:53.280
that's kind of where we are on a lot of issues. You have government failure over a long period of
00:35:57.840
time to deal with certain things. And then, yes, the last resort is for the government to step in and
00:36:02.720
rescue people from the consequences of government failure.
00:36:05.360
But the other thing that really, I think, shocked quite a lot of people, including I know a lot of
00:36:11.600
people who are very, very clued into the financial markets and the economy, was this issue with LDIs.
00:36:19.040
Because I don't think people quite realize how close we came to essentially something resembling
00:36:24.800
another 2008. I mean, this was really, really significant.
00:36:27.920
Absolutely. I mean, what I have since discovered about LDIs...
00:36:32.960
Liability-driven investments, or derived investments, whatever they're called.
00:36:36.640
Yeah, exactly. And what they were is they were a way of pension funds investing in
00:36:44.880
bonds, say government bonds, that would deliver a higher return. But they delivered that higher return
00:36:52.240
on the basis that interest rates wouldn't go up. Which is obviously completely unrealistic,
00:36:57.120
because interest rates have been too low for too long. And the UK had 60% of the global market
00:37:04.800
in these investments. And we were highly exposed to changes in the interest rate.
00:37:11.040
Now, it's the responsibility of the Bank of England and the pensions regulator to maintain
00:37:19.520
proper regulation and financial stability. And it was the effect of interest rates rising,
00:37:28.640
gilt prices rising, on the LDIs that created the market turmoil. And that was something that I didn't
00:37:37.200
know about, Quasi Quarteng didn't know about. So we were blindsided by that. And I think to this day,
00:37:44.800
it's poor that the Bank of England hasn't had a proper investigation into what happened. Instead,
00:37:52.480
what happened was the Bank of England governor and the Bank of England tried to shift blame
00:37:57.680
onto the mini budget for something that was essentially caused by a failure of financial oversight.
00:38:05.600
And given how exposed this country is to these things, and these are pension funds we're
00:38:11.040
talking about. They're quite important in the health of the British economy and to ordinary people.
00:38:15.360
Do you think that the LDI should be banned, more regulated? What do you think should happen?
00:38:23.440
Well, look, a lot of the positions have been unwamped. And that's what happened after the exposure of the
00:38:32.000
LDI. And I'm not somebody who's in favour of banning pension funds, investing in particular products.
00:38:38.560
I think it was partly because they were so restricted on equity investment that they tried to find
00:38:44.160
somewhere else they could make a return. So it was the perverse consequence of overregulation
00:38:50.080
in another part. What I'm saying, though, is that the system didn't work. Why didn't the Treasury
00:38:57.440
know about this, the extreme exposure to changes in interest rates of a lot of British pension funds?
00:39:04.720
And what it seems to me is we've not only created a very powerful bureaucracy, we've also created a
00:39:13.360
very powerful siloed bureaucracy that often doesn't talk to other bits of the bureaucracy,
00:39:18.560
and that leaves us very exposed in those circumstances. So I'm not going to get into which
00:39:26.320
financial products should be regulated. But I think there's a problem if the system isn't talking to
00:39:32.240
the rest of the system about what is a major exposure.
00:39:36.560
Do you regret the way that you handled the issue with Kwasi Kwarteng? Do you think you should have
00:39:42.320
stood by him looking back on it? Well, I think by that point, we were in very serious trouble,
00:39:51.840
to be honest. So I don't think it would have made... Looking back on it, I don't think it would have made a
00:39:56.400
massive difference either way. I mean, the bank had successfully laid the blame on us.
00:40:06.960
Much of the Conservative Party in Parliament wanted to accept their version of events.
00:40:13.360
We simply did not have the support or the strength of support to continue with the policies.
00:40:29.440
As I explained, Kwasi was in the US, I thought it was a mistake for him to go there. I ended up handling
00:40:36.400
it all during that week, which is difficult not being the Chancellor, handling the fallout and the
00:40:44.160
need to change the policy. But essentially, the policy was changed. And the critical thing
00:40:51.120
was corporation tax. That was the absolutely critical policy. To my mind, putting corporation
00:40:57.520
tax up from 19% to 25% is a massive mistake for Britain. It's resulted in investors putting their
00:41:05.840
money elsewhere. It's not bringing into the Treasury what they expected. And I'm a believer in the
00:41:12.880
Laffer curve. I believe if you raise rates too high, you don't get the tax revenue. So the reason we were
00:41:20.640
forced to reverse that policy is because the OBR forecast was leaked of what the alleged hole in the
00:41:30.160
government budget was. So it was a forecast of £70 billion. Now, that forecast has turned out to be
00:41:37.680
untrue and wrong. But at the time, that forecast being leaked, which clearly showed that we lacked support
00:41:46.720
from the economic institutions, because it was either leaked by the OBR or the Treasury,
00:41:50.560
that essentially put huge pressure on us to reverse the corporation tax cut. And that was, you know, I was
00:42:05.360
essentially threatened that if we didn't reverse that, we might not be able to fund government debt.
00:42:11.920
And that would have created a huge crisis. So I couldn't, in all conscience, do that. That's why
00:42:19.600
the policy had to be reversed. Now, I don't know to this day whether or not it was the case that that
00:42:25.840
would happen, but I believed it was a credible threat. And once the policy had had to be reversed,
00:42:30.880
I thought it was very difficult for Quasi to continue, to be frank. So I think the issue was the policy being
00:42:38.640
reversed. Because you think if I put myself forward to be prime minister to deliver a change in Britain's
00:42:48.800
economic policy, to move away from the economic orthodoxy of high taxes, high regulation, close
00:42:55.280
alignment with the EU, high migration, stagnant, you know, stagnant growth. That's what I wanted to
00:43:02.640
move away from. I wanted to move to a dynamic, open for business Britain, lower taxes, keep better control
00:43:11.280
of public spending, don't raise welfare so much. Those are the policies I wanted to adopt. Get on with things
00:43:19.440
like fracking to actually liberate the supply side of the economy. And, you know, by then it was clear I
00:43:25.760
couldn't deliver any of those things. Conservative MPs wouldn't vote for fracking. They wouldn't vote
00:43:32.400
for restraining welfare spending. The OBR was leaking. The Treasury were leaking against the corporation
00:43:49.440
No, no. True, that's a very British understatement. But I guess what we're getting at, and please
00:43:55.200
understand, this isn't a... It may sound like a personal question, but I actually think it's a broader
00:43:59.680
conversation about leadership and principles. Because Francis and I are friends. We started this together
00:44:05.440
six years ago. We have the same vision for it, as you and Kwasi did. If at some point we did something that we
00:44:11.760
both agreed was the right thing to do, and then something went wrong, and I was like, hey mate, actually, I think you
00:44:17.600
need to go. I would feel that one of two things would happen there. Either he'd be like, well,
00:44:23.360
why is it just me? But I myself would have thought, well, we did this together. We should leave together.
00:44:30.800
If I can't deliver the things that I agreed with my chancellor, you know, the game's up, time to go.
00:44:37.200
We gave it our best shot. Because... Are you still friends with Kwasi?
00:44:41.600
Yeah, yeah. And look, I think the... Kwasi had been out of the country all week at this IMF meeting,
00:44:47.840
so that was a very tricky situation. But what I felt was, these policies had been forced to be reversed.
00:44:56.720
I still believe they were the right policies. I still believe that the people who undermined the
00:45:03.120
policies were in the wrong. And that's a great shame. And I feel that Britain is in a worse position as a
00:45:10.160
result of that. But what I had to think about at that point is I had to think about the country.
00:45:18.400
And what I couldn't risk is if Kwasi had stayed on, he hadn't had the credibility in delivering
00:45:25.680
that U-turn, which needed to be delivered, and then we had not been able to fund our debt.
00:45:30.800
Could you not have first resigned, is what I'm asking?
00:45:34.480
That wouldn't have been a serious... If I'd resigned as well at that time,
00:45:47.600
Well, I think a few weeks later. But by then, Jeremy Hunt had been installed.
00:45:53.040
He was essentially following the Treasury orthodoxy. The markets had calmed down.
00:46:00.320
If I had resigned at that moment, when there was about to be a cliff edge on... Because this is
00:46:06.640
another issue. The Bank of England governor, on finding a solution for these LDIs, set a cliff edge.
00:46:15.360
Rather than saying that the Bank of England would support
00:46:18.160
into the medium term, he created a cliff edge, which was the following Monday.
00:46:23.760
Which created, again, a speculation cycle by the markets.
00:46:29.440
So I think it would have been a dereliction of duty, frankly, if I had stood down at that time as well.
00:46:35.200
I mean, I instinctively knew that I wasn't much longer for this world.
00:46:39.600
But the idea that I would just leave the whole thing in a terrible situation and resign,
00:46:50.560
I don't think that would have been the right thing to do.
00:46:53.440
Looking back at your time and power, what would you change?
00:47:00.080
I think the biggest thing I could have changed is whether I ran in the leadership election, because...
00:47:06.800
Well, I think, knowing what I know now, I think I was in a pretty impossible situation.
00:47:15.200
That there were the types of changes that Britain needed.
00:47:27.840
Well, they probably need now, I believe, a sort of full electoral mandate to deliver.
00:47:32.960
And, you know, I knew it would be difficult, but as I said, I didn't realise how ruthless
00:47:42.560
the sort of forces of the economic establishment would be in taking it on.
00:47:47.200
But there were lots of small things I could have changed about the way we
00:47:55.360
But I think it was pretty much impossible to actually deliver that programme that autumn,
00:48:03.760
because of the lack of support for it, both within and outside the government.
00:48:10.960
I mean, it was even hard, you know, it's back to the point we were talking about earlier.
00:48:14.480
It was even hard finding external economists who would back the policies up,
00:48:19.280
even though they exist, it's just not a fashionable thing to believe.
00:48:24.960
Some people in Britain are still saying, you know, the government's not big enough.
00:48:28.000
I mean, it's absolutely incredible when we spend 45% on GDP, but people are arguing for
00:48:34.400
industrial policies, they're arguing for more government spending in every possible area.
00:48:39.360
We're not in a broad atmosphere where supply side economics are seen as the logical thing,
00:48:54.240
Yeah, I think the other question is, is there anybody who could have gone in
00:49:04.560
Because, you know, if there was a possible way of doing it, I didn't have the skill set to do it,
00:49:09.600
I mean, is there somebody who could have gone in that autumn and delivered those policies?
00:49:21.280
But what's certainly true is that no other prime minister has successfully cut taxes.
00:49:32.080
I did actually manage to reverse the health and social care levy, which was going to be a new tax
00:49:37.520
imposed on people in Britain. I did do that in my time in office. But what we've seen
00:49:42.880
is constant pressure on the government to spend more and tax more.
00:49:46.560
Before you move on to a different subject, actually, on this thing, Liz, I'll be honest
00:49:51.200
with you. I like small government and I think low taxes are the way to grow the economy. So I agree
00:49:56.960
with you. But if you listen to someone like Matt Goodwin, who's a regular guest on our show, he's a
00:50:01.840
political analyst and pollster and all sorts of other things. He'll tell you the country is not
00:50:06.720
there. The country wants to be right on culture and left on economics. The country wants big government and
00:50:13.120
it wants to be socially conservative. That's where the majority of the public are at.
00:50:17.760
Is it possible that the reason the policies you and I actually quite like
00:50:21.920
are just that it's not what the British people want anymore? They want big daddy government to come
00:50:26.240
in and wipe the bomb. Well, I think it's true that people do want culturally conservative policies.
00:50:33.680
So he's absolutely right about that. He's right on immigration. He's right on wokery.
00:50:39.440
Mm hmm. But if we look, you know, why is the government big? Why is growth stagnant? Well,
00:50:47.200
one reason is net zero and the fact we're not doing things like fracking. One is very high regulation.
00:50:56.480
And certainly a lot of people I speak to in my constituency are frustrated, particularly about
00:51:01.600
the level of regulation on their small businesses or their farms. So I don't think the voters I speak
00:51:08.320
to are not crying out for more regulation on their business or more regulation on their farm,
00:51:12.400
and they're not crying out for higher taxes. I don't agree with Matthew Goodwin on that.
00:51:18.560
But they're not crying out for any of those things. But as we know, you know,
00:51:23.520
the general public often don't connect things. People will demand lower taxes and more money
00:51:29.200
for the NHS in one. Exactly. So this is, it's like the point about fracking. If you ask most people,
00:51:35.360
do you support fracking? I don't think support for it's very high. But if you ask people,
00:51:39.440
would you be prepared to allow fracking if it meant your energy bill is half what it was,
00:51:44.800
then they might support it. Yeah. So it's a question of communication.
00:51:48.640
Mm hmm. Liz, looking at the Conservative Party now,
00:51:52.560
I mean, to put it bluntly, they're in pretty dire straits, aren't they?
00:51:56.320
Well, the polls are not good. I mean, all I can say, though, is, you know, to me, like to me,
00:52:09.520
Conservative policies are still the right policies. We just need to show people we can deliver them
00:52:16.880
and be be clear about what what is the problem. I think that's the start of being able to make the
00:52:25.040
argument as Conservatives, saying, here's why we're not able to currently do this policy.
00:52:31.040
Here's what we're going to do to change it. I think we've got an opportunity to do that in our
00:52:35.360
manifesto. We've got an opportunity to do it with what we say. But we have to be honest about where
00:52:42.240
we are now. Because the average bloke or woman on the street will be going, like Constantine has said
00:52:48.720
many times, you've had 14 years to implement these policies. Why is it going to be any difference if I
00:52:53.920
put an X next to the Conservatives now? We need to explain why. So we have delivered
00:52:58.720
good policies in 14 years. So on education, we've improved English education. You can see
00:53:05.680
by the comparison with what's happened in Scotland that England's maths and reading results have got
00:53:10.720
better. We've delivered Brexit, which is a massive constitutional change. We've delivered trade deals.
00:53:17.920
We've been on the front line of supporting Ukraine. So we've done good things in our period in government.
00:53:23.520
But I think we should be honest and say, the reason we haven't been able to deliver
00:53:28.320
the other things that you, the British public, want, you know, the reason there's wokery in your
00:53:33.920
schools, or the reason we haven't been able to deliver on immigration is because we didn't change
00:53:42.240
enough of the Blair legacy. We should just say that now. We should say, we didn't change enough of the
00:53:47.360
Blair legacy. Of course, we should have realized that quicker. We were wrong to say Tony Blair,
00:53:54.240
you know, as some of the Cameroon said, we were wrong to say Tony Blair was the master. We were wrong to say
00:54:00.160
Cameron was the heir to Blair. Actually, these Blair policies, such as the Equality Act and the Human
00:54:06.240
Rights Act, are part of the problem. We now recognize that and we're going to deal with it.
00:54:11.600
And I think people, you know, the public are not stupid. You know, they appreciate honesty.
00:54:19.680
And it's not easy to be honest as a politician. You often get absolutely hammered, as I've discovered
00:54:24.320
myself. But I think we've got to, we've got to say it like it is. We've said, here are the good
00:54:28.400
things we've done. We recognize in these areas, we haven't done enough. And here's why. And this is
00:54:33.920
how we've changed. But also as well. Because by the way, Keir Starmer has got absolutely no answer
00:54:39.680
to any of these problems. He's got no analysis on why the economy isn't growing. He's got no analysis
00:54:45.760
on immigration. He's got no idea about what to do. But also, I was going to say, is there the
00:54:54.080
political will within the Conservative Party to change it? Because earlier in the interview,
00:54:57.920
you just alluded to the fact that some, there's a sizable portion of the party that don't,
00:55:05.680
For those people, you know, I want to convince them. And I think others need to convince them.
00:55:19.920
But you know, what's, what's the alternative here? What's the alternative of actually convincing
00:55:25.040
Conservative activists, Conservative members, Conservative politicians, that we need this
00:55:30.960
systemic change? I think that is what we have to do. That is what we have to do. That's the only
00:55:35.920
alternative. No, the only thing that will convince them, I think, is a crushing defeat of the next
00:55:40.240
election. That's what's going to happen. That's what will get them to realize that going along and
00:55:45.200
business as usual isn't going to work. Let's be honest, in the spirit of honesty, as I say,
00:55:51.760
I agree with many of the things that you support. But let's, we, the people who have that point of
00:55:57.440
view have not won the argument. The Conservative Party's time in government is coming to an end.
00:56:04.320
And I think it's, you know, your book, 10 years to save the West, you're going to have five years
00:56:09.520
of a star in my government. And then you'd hope to come in with, let's be honest, a whole bunch of
00:56:15.440
new MPs with a very different set of views. That's the only way this gets saved, isn't it?
00:56:19.440
Well, the book is 10 years to save the West. So I'm talking about
00:56:24.960
the problems we face haven't just faced Britain. You know, they're there in the US. A lot of the
00:56:30.240
bad ideas have actually been imported from the US. If you talk about eco-extremism, transgender,
00:56:37.120
you know, sort of gender ideology, all of this stuff has much of it been promoted in the US. If you
00:56:46.640
look at what's going on in Democrat cities with crime, you know, defunding the police,
00:56:50.720
et cetera, et cetera. So we also need to change what is happening in Western democracies overall.
00:57:00.800
And part of what my book is about is a warning to the US and saying, if you don't change the system,
00:57:08.480
if you allow this left-wing ideology to flourish in your institutions, you are not going to be able
00:57:15.680
to deliver conservative policies. This is not just a problem in Britain. And this is not just a battle
00:57:21.520
that's happening in Britain. It's happening in Australia. It's happening in Canada. And I want
00:57:27.040
people to learn from my experience. I want people to understand. I try and explain in the book what it's
00:57:33.280
actually like being there. The subtitle of my book in Britain is called The Only Conservative in the
00:57:39.280
Room because I was there with people like Biden, Trudeau. None of these people are conservatives.
00:57:45.440
And the ideology that they back is fundamentally undermining the West. So this is, to me,
00:57:52.400
a big battle that conservatives have to win. Will we win the battle this year? Maybe, maybe not.
00:57:59.200
But we've got to keep fighting it. Liz, it's been a pleasure. Thank you so much for coming on the
00:58:05.520
show. The final question we always ask... Before we go to our locals and your questions. Yes.
00:58:11.280
Is what's the one thing we're not talking about as a society that we really should be?
00:58:16.560
I think we have talked about it here, but I don't think we're talking about democracy enough
00:58:33.840
and how under threat it is. And that is what is ultimately... I believe that empowering people more,
00:58:42.320
having a much more direct relationship with the electorate is what will save the West.
00:58:48.080
And what does that mean? What it means is that most people in Britain actually understand what
00:58:55.200
needs to be done. The problem is the transmission mechanism. The problem is that this bureaucratic
00:59:00.960
state... And it's wider. It's not just the state. It's what's going on in big corporations,
00:59:06.800
what's going on in charities, what's going on in the broader sort of London bubble. You know,
00:59:13.760
that needs to be challenged. Perfect. Well, head on over to locals where we ask,
00:59:19.200
Liz Truss, the former prime minister, your questions.
00:59:23.120
While conservatives in the conservative party... Which is put in inverted commas.
00:59:27.680
Yes. Being held hostage to the progressive agenda.
00:59:31.840
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