This is an audio transcript of the Political Fix podcast episode: ‘Trump’s trade war: trouble ahead for Britain’
Lucy Fisher
Welcome to Political Fix from the Financial Times with me, Lucy Fisher. Donald Trump has shaken up the global economy with his seismic new tariffs schedule. UK imports to the US will face a 10 per cent levy, less than many other countries, but still a headache for Britain’s fragile economy. We’ll discuss what Keir Starmer can and should do in response.
Plus, ministers have wheeled out a raft of policies aimed at longer-term growth this week, including the expansion of Luton airport. Are these headline-grabbing gimmicks or sensible tactics? Well, with me to discuss it all are my colleagues Robert Shrimsley. Hi, Robert.
Robert Shrimsley
Hello, Lucy.
Lucy Fisher
And Jim Pickard. Hi, Jim.
Jim Pickard
Hi, Lucy.
Lucy Fisher
Plus the FT’s public policy editor, Peter Foster. Hi, Peter.
Peter Foster
Hi, Lucy.
Lucy Fisher
So let’s kick off with so-called ‘liberation day’ that came on Wednesday, which we’ve been waiting for some weeks now. Peter, you are the expert on all things trade and tariffs. So is it fair to say the UK got off lightly with this 10 per cent universal baseline rate? Has Keir Starmer sort of earned that or is it just the bog standard deal that Britain was always gonna get?
Peter Foster
It’s a bit of both, right? So if you look at the way, the extraordinary way in which they calculated this, they’d said they were going to add up how everyone’s non-tariff barriers were impacting people — VAT and carbon taxes and environment stuff — but actually did none of that. They did some really basic GCSE maths where they took the size of your trade deficit, they divided it by the amount of goods that you send to us, and then they came up with a number and everybody got that number.
And because we have a balanced — in goods, at least — trade relationship with the US, we got 10 per cent, yabba-dabba-doo, lucky us. But so did almost everybody else, apart from the sort of top 60 bad countries, including proper US allies like Japan and South Korea, and some South-East Asian countries like Cambodia, about a third of Cambodia’s GDP is accounted for by exports to the US. They got whacked by 46, 47 per cent. And so when you look at it in that context, the UK, has as bad a relationship, you’ve got it at 10 per cent.
Lucy Fisher
Robert, how damaging is this 10 per cent levy on UK exports to the US going to be to Britain’s economy?
Robert Shrimsley
I mean, I think there are sectors of the UK which face significant challenges as well as this and also the more important things, the other higher tariffs put on steel and automotives. There are sectors of the UK which face potential damage; pharmaceuticals we’re waiting to hear from again.
So, it has potential damage but I think truthfully, the bigger damage is the potential damage it just does to the global economy and the waves and backlashes that come from that. I think the UK’s real concern is perhaps less the specific impact on UK businesses, although that’s real and important, and lots of jobs at stake, than the potential for this to derail the global economy in total.
Lucy Fisher
We were recording this on Thursday evening. We saw the FTSE 100 tumble by about 1 per cent on Thursday, Asian markets a bit further, US a bit further, too. Just give us a sense of how big a problem that is in scale. And will they settle there? Could it get worse?
Robert Shrimsley
Well, the big question is this, your last one, will they settle? I mean, when I looked not long before we recorded this, I think I’d seen falls of up to 4 per cent in some markets. So that’s a lot. That’s certainly a lot if it keeps going that way. I mean what you always look for with market falls is sustained falls that people don’t nip back and sort of profit take from the fall and they don’t get back into positions having sold at the peak or whatever. So I think what you want to see is what the markets do over the next few days, what US treasuries do, I think, particularly important.
Some of the other stuff, policies that Trump was espousing as part of this, could have a very significant bearing on US Treasuries. So I think you’re waiting to see where the markets settle. I think one thing that happened when this was announced is that people who were expecting far worse were slightly relieved by the 10 per cent tariffs in lots of places, so the markets saw it as less bad news. But I think let’s give it a few days to see where they land.
Lucy Fisher
And Jim, Keir Starmer’s been clear that while he’s keeping all tools at his disposal, at the moment, there’s no prospect of the UK imposing retaliatory measures on the US. Is that the right tactic for the UK to go along with for the moment? And do you think the business and consumer sentiment might harden, might want to see the UK Prime Minister stand up for UK industry better?
Jim Pickard
So I think for now, my angle on this is that this has suggested two previous things, which I wasn’t a massive fan of: firstly, Brexit, and secondly, sucking up to Donald Trump completely unashamedly seems to have yielded a relatively good result.
Of course it’s not a bad result in the sense of we’re gonna have all our exporters and manufacturers of goods hit by these tariffs, but it could have been an awful lot worse. And being outside the EU has given us that relative advantage. And the fact that we’ve been creeping up to Donald Trump and staying out of his way to some extent might’ve helped us. Although of course, maybe it just came down to the weird formula as was pointed out earlier.
Peter Foster
Yeah, loads of countries that didn’t creep up got 10 per cent. I mean, you could cut that the other way, couldn’t you?
Jim Pickard
So in terms of how British voters will see this, will they expect Keir Starmer to go in harder? I think for now he’s got a very good narrative that the approach of just tiptoeing around the new US president has worked for now. But I think, you know, people always said, what would Trump have been like during his first term if he hadn’t been restrained by all these people that weren’t complete fellow travellers and were established figures from the military or from big business or whatever? What if Trump had just been able to do whatever he liked on a whim? We are now experiencing what that looks like.
And I don’t think it’s a massive exaggeration to say that in terms of the potential impact on the UK economy, and of course we don’t know how much this will turn into a full-blown trade war, it could be like Russia’s invasion of Ukraine effect on the energy markets. It could be like the pandemic. It could be like the Brexit. We are talking about an extraordinary level of potential damage to the British economy if this spreads and becomes bigger. Is that correct?
Robert Shrimsley
I do think you touched on something important in your question, Lucy, which is the issue of the politics of retaliation versus the economics of retaliation. The politics is quite easy. Ah, yes, we’ll stand up to the orange bully, you know, and we’re gonna slap tariffs on lots of things that America values, like Teslas, and I always wonder how many Harley-Davidsons actually get sold in the world because everybody talks about putting tariffs.
Lucy Fisher
Can you tell?
Robert Shrimsley
I’m only the one. And so there’s that political imperative and that desire to look tough and not be a pushover. And as you say, it can play well with audiences and voters. On the other hand, actually, global retaliation would be the absolute worst thing to happen at the moment because it will go into a really, really bad doom spiral. So in fact, I think everybody needs to hope that people keep cool heads, at least for a little bit, before they jump back in and retaliate.
Lucy Fisher
That’s right. Certainly the assessment by the Office for Budget Responsibility at the Spring Statement last week was that if tariffs of 20 per cent were levied on the UK, it would double the harm to the British economy if the UK were to retaliate. Peter, we know that Keir Starmer, Jonathan Reynolds, the business secretary, want to negotiate a trade deal and they hope that that will see further mitigation in this 10 per cent rate. Is that . . . I mean, we don’t know, but what do you suspect? Is that wishful thinking?
Peter Foster
Speaking of what Jim was saying, what’s so interesting is all of the reporting about this trade deal comes from the UK side, right? All of it is being briefed out by the British government about how Jonny Reynolds is talking the whole time with Howard Lutnick and they’re all best buddies and they are all talking there’s heads of terms in agreement. But the actual out-turn of that thus far has been zero, right? We got the same deal that everybody else with the same trade balance that we have. So we genuinely don’t know.
You know, the executive order says, if you come and remedy the situation, we can give you a lower deal, but we don’t know what the price of that is, right? The Brits say, oh, we’ll cut agricultural tariffs. We’ve offered to dilute digital services tax, the tax on American big tech. None of that moved the dial. We still got the 10 per cent. Now, maybe we’ll get 6 per cent or 4 per cent or 2 per cent, maybe.
But there’s another sort of theory of the case here, which is that actually Trump is, this time, not trying to be transactional. He’s not putting up a load of tariffs so that people come crawling and cut him deals. He’s actually genuinely trying to be transformational. He is trying to rewire global trade. And he talked at the press conference about bringing back American manufacturing. He also talked about how tariffs were at one point a substitute for income tax. And there are governments around the world who were literally looking at all the things they’ve offered.
The Japanese, for example; they’ve offered to buy LNG, they’ve offered to buy more American defence, they have offered $500bn SoftBank investment. They got 26 per cent tariffs against them. So maybe this time, this is about Donald Trump actually wanting to do something that he’s wanted to do since 1987. If you read his first New York Times advert for his first run at the presidency, it’s the same language as now.
Jim Pickard
And he was, of course . . . He talks about being inspired by William McKinley, who was some US president from the end of the 19th century. What Donald Trump doesn’t talk about is that McKinley had a change of heart and gave a big speech in which he said, you know what, I’ve actually got a kind of, I’ve got a funny feeling about this whole tariffs business (laughter), maybe I should sort of recalibrate a little towards free trade. And the next day he was assassinated.
Robert Shrimsley
Didn’t he change his name to William Denali as well?
Jim Pickard
Sorry. (Lucy laughs) But again, you know, it feels a little bit like Donald Trump has been cherry-picking his history and he’s alighted on one predecessor who loved this stuff. When you look at the history of protectionism in the UK, things didn’t end very well for political parties such as the Tories who presided over protectionism and in around 1903 went to the 1906 election and got absolutely crucified.
And there is of course the Smoot-Hawley Tariff Act of 1930, which the US introduced, imposing huge raft of tariffs across the board and it plunged the world basically into a recession which fanned the flames of populism throughout the 1930s. And though there’s not a straight line between that and World War II, but it was part of that cocktail.
Peter Foster
Actually, I mean the thing about Smoot-Hawley is it disappeared quite quickly. But it disappeared quickly because the US at the time was a major goods exporter, right? The markets in Asia and Africa weren’t able to accommodate those goods, so it forced the European markets to lower tariff that fast forward to the Uruguay round when tariffs were already coming down and the US accepted that we would be able to protect our farmers and some of our industries in exchange for IP protections, protections for US services, which have made America fantastically rich, right? And the inequity that Trump rails against, because it is true, Europe and Asia has higher tariffs on agricultural products than the US does, that is true. But what it misses is that system was built for the US, by the US in the Uruguay round, to privilege US services which it did to great effect.
Jim Pickard
I think the problem as well with him referencing McKinley from 120 years ago is that obviously things were very different then. There was a much smaller tax base in the USA and therefore perhaps you could fill the difference with higher tariffs. You know, the American state is vastly bigger, requires vastly bigger tax income streams. And secondly, global trade is now far more widespread, integrated, just in time supply chains, the kind of thing when you start throwing sand into the finely-tuned wheels of global commerce, the consequences will be much more problematic and hard to predict than they were 140 years ago.
Robert Shrimsley
The other curious thing in all of this is Trump’s fetishisation of manufacturing, which is actually one of the reasons the UK has come out of this a little bit better is because most of our exports to America are services. He’s not interested in that. It’s all about not only the issue of who manufactures our goods, but also driving American employment and industry back down the value chain rather than up. It is terribly strange. (Overlapping speech)
Lucy Fisher
Do you detect a kind of a political method to that, that you know he wants to keep the auto workers of Michigan and so forth on side?
Robert Shrimsley
Absolutely, that’s part of it. But I think it’s even deeper. I think . . . I can’t remember who was quoted that Trump said something to the effect of, if you don’t have steel, you don t have a nation. I mean, there is a sort of fundamental resilience point, which is deep in the psyche of him and indeed many Americans. And I’m not saying that’s completely wrong, but I think ignoring the economic consequences of services imports is just odd.
Peter Foster
But also to quote — I spent most of today speaking to economists — that the idea that you would have zero trade deficits with all nations is, direct quote, insane. Right? I mean, so, for example things like, you know sneakers or clothes are made in Bangladesh or white goods made in Cambodia. Those goods are made there because they’re cheap to make them. When they land up in Walmart, so, by putting a 35 per cent tariff on that country, you just destroy . . . They have no comeback, right? And the US consumer ends up paying more for shoddier goods.
Lucy Fisher
Well, I’ve been writing today about the Falkland Islands, obviously a British overseas territory, which . . . It only exports $27mn worth of goods to the US and it’s almost entirely the Patagonian toothfish, also known as the Chilean sea bass. And unsurprisingly, it has this trade deficit with the US, which means it’s now won itself a 42 per cent levy, which is, you know . . . (Overlapping speech)
Peter Foster
Not as bad as Lesotho, 50 per cent.
Lucy Fisher
Not as bad as Lesotho. To drag it back to the UK then, Robert, what’s your understanding of the status of what the trade talks between the UK and the US encompass? Because I’ve noticed a change in definition about the way it was talked about initially, this very narrowed technology data deal to what Downing Street at any rate is calling an economic prosperity deal, which sounds a lot wider.
Robert Shrimsley
Sounds better, doesn’t it, in retrospect? Let’s have some economic prosperity. I think it has widened a bit because it had to, because there wasn’t enough. I mean the US doesn’t really care that much about British tech offerings in this respect.
Peter Foster
Trump can’t do that deal. Imagine Trump shaking hands with Keir Starmer. I’ve done this great deal with sir Keir, and then all the agricultural lobbies in the red states in America are gonna go, well, what did you get for the hog farmers of Iowa? The guy that runs the ways and means committee is a massive seventh-generation Wisconsin farmer.
Robert Shrimsley
The fundamental point about a trade deal with the US, the reason why the Tories, who clamour for it all the time, one of the reasons why they didn’t manage to do it is because at the core of this, the two markets the US most want opened up are, as Peter says, agricultural produce and the other is the NHS drugs market. And British governments quite reasonably look at this and go well that could be problematic. We also have chlorine-washed chicken, well that’s a small part of the equation.
The truth is, to give the US a trade deal that the US really wants. And they’re not about to roll over and play, you know. When they do trade negotiations, they take them seriously. To give them a deal that they would value really meaningfully, you have to give something substantial on either of those two: agricultural goods or NHS pharmaceuticals. And that’s a massive problem for the UK.
Jim Pickard
So we can agree it’s not a trade deal in the sense that we understand them post-Brexit.
Robert Shrimsley
No. I mean, look, I mean if they do a deal, an economic prosperity or whatever we call it, and Trump lowers the tariffs on the UK from 10 per cent to 6 per cent, well, that could be worth having and that’s not nothing, depending on what’s been done to get it. But I don’t think we’re looking at one great, big, giant, jumbo event.
Peter Foster
But it’s the price. That’s the thing we don’t know. And I don’t think even . . . But from what I understand, even UK ministers and officials really know the price, right? They don’t get clarity on from the US side because they often don’t what Donald Trump thinks. What’s the price? Saying that we want a deal, that we’re negotiating this deal, that’s all fine, keeps the media happy for a while. But what’s the price? And that is ultimately why we don’ have that much agency.
What it comes down to is the point at which Donald Trump decides to extract the price and if he says OK, we want to kind of make you look good against the Europeans, divide a wedge with Europe, you can have your deal. You know, we’ll accept a few lower tariffs on fish and meat. That might be great. He might say no deal unless I get, to Robert’s point, access to your agricultural markets and you give up those unscientific, dodgy old practises that you’ve got from the EU on your phytosanitary SPS rules that keep out our chlorine-washed chicken and our healthy ractopamine-fed pork and our hormone-washed beef, right, from your market, because we want you to choose. Right? And then the British government will be made to choose, but the choice is ultimately Donald Trump’s choice, right? Donald Trump will choose whether to make us choose, if that makes sense.
Lucy Fisher
Well, isn’t that the thing with Trump, whether it’s in the trade sphere or defence and security, you know, the UK, all other governments are having to be very reactive. You can’t strategise easily on the front foot. Pete, because you’ve look at this very closely, I wondered, is one of the silver linings here that Trump’s unpredictability on the economy makes a more favourable backdrop against which the UK is trying to negotiate its reset with the EU? How does it change the dynamics of those talks?
Peter Foster
It’s a really good question. I think the first thing to say is the EU-UK reset is pretty small beer at the moment, but it includes — leave aside the security and defence partnership, which might open the door to deeper defence co-operation, including with this €150bn facility for re-arming Europe. On the trade piece, there are two bits of it that are substantive; one is an SPS deal, a veterinary agreement, which would require . . .
Lucy Fisher
Remind the listeners, SPS.
Peter Foster
The SPS is all that stuff that holds food and meat and cheese and plants up at the border. So the entire EU rule book that keeps out ractopamine-fed pork and chlorine-washed chicken and hormone-infused beef — all that American good stuff that keeps Americans healthy, right? And so that’s point one. That deal is hyper, cuts across US offensive trade interests.
The second part of the EU-UK reset is the linking of carbon markets, the linking of the emissions trading scheme. Now, I don’t know whether anyone’s told Donald Trump about carbon border taxes, but when he finds out about them, he’s gonna go nuts. And so if we’re gonna do what we said we want to do, which is re-link our carbon markets that were split after Brexit to facilitate the trade of North Sea energy and green electrons back and forward across the channel through all these interconnectors, that again is gonna cut across American complaints that all these green taxes and green regulations are excluding US businesses.
Robert Shrimsley
If we don’t link them, then we face the carbon border tax from the EU which is actually a bigger trading (inaudible).
Peter Foster
Precisely, so this goes back to the moment where we have to choose. Maybe it’s a problem, maybe it’s not. The same with our relationships with China.
But the question about whether or not the EU-UK reset is impacted by what happens with Washington depends really how far Washington pushes on veterinary stuff, pushes on carbon stuff. And frankly, we don’t know that. And it might be a trade thing, but it also might be an ideological thing.
JD Vance and the ideologues in the Trump administration, they really don’t like Europe. We saw that with that Signalgate thing. And they could use that as a wedge to make us choose. I would say also things like the digital services tax — this 2 per cent tax on earnings which is popular with the country because it means that big tech companies, Amazon and Apple pay their way, pay their dues. We’re busy diluting that. That’s not where the European Union is.
So, then you start to get a situation where UK playing hooky with Trump saying, oh yeah, we’ll cut our digital services tax, and also kind of by implications saying, don’t worry about us, Donald, you know, we’ve got a balanced trading relationship. You should go and worry about those Germans and those Irish with their farmer industry. Why don’t you go after them?
But they read that in Brussels, right? They can see, so we’re going to have a summit on May the 19th and we’re all going to be mwah mwah mwah, (Laughter) you know, with our European friends, right? When we’re also busy playing hooky with Trump. And I think it’d be really interesting to see whether the politics infects that wider conversation.
Robert Shrimsley
I mean you could argue that that is an incentive, which I don’t believe for a second is gonna happen by the way. It says for the European Union to make a bigger and more generous offer to Britain than it currently shows any appetite for making, so why wouldn’t Britain play that role?
Lucy Fisher
But also, Robert, I mean, isn’t there an argument that Britain itself might want to rethink the red lines that were in Labour’s manifesto? Not admittedly from people inside government, but in the wider kind of Westminster environment, people are increasingly talking about whether the red line on being part of a customs union with the EU can survive contact with reality in the new Trump era.
Robert Shrimsley
I mean, well, all the people who wanted to be in the customs union before are now talking about how it would be a good idea to be in the customs union again. (Laughter)
I haven’t come across many people who didn’t think it was a good idea who changed their mind. Now, I mean look, the people who were anti-Brexit, who are in various degrees of rejoining mode, absolutely see the opportunity to push the UK back into the European sphere and keep pushing that argument and see how far it gets them.
Personally, I don’t buy it. I don’t think that’s where we’re going at all. I think it was a red line and I think Starmer has shown a fair degree of inflexibility in most of his red lines. And I just don’t see us moving in that direction. I think actually what Peter’s been describing is cautiousness and incrementalism.
Jim Pickard
Well, I think in terms of the voting public, have any of us actually met a regular voter in the pub, family, or anyone else who’s even mentioned customs union?
Robert Shrimsley
Well, you and I live in south-west London, so it does that. (Laughter) But not normally.
Jim Pickard
Yeah, fair point. I’ve never done that.
Lucy Fisher
Hey, north London, we talk about the customs union, too.
Jim Pickard
We talk about it from breakfast (Overlapping speech) until cocktail hour, we’re just talking about nothing else. But no, I mean, I think that’s the kind of area where you could push, maybe not straight away, but a few years down the line.
But it just comes back to this point that if we don’t rejoin the customs union or the single market, everything else is failing, right? Like, what is the big gain that we could negotiate outside of those two massive areas?
Peter Foster
No, I mean, so again, this goes right back to . . . Imagine a world where Keir Starmer is coming with the 170-seat majority, say we’re desperate for growth. We want the car factories of Sunderland to be humming. We want our exports to be going. I’m gonna do a quick deal with fish, right, to get the (inaudible) French complaining about their fish the whole time. I’m gonna get out of the way really quickly. I’m gonna embrace the youth mobility deal because I know that the Germans are quite keen to bleed the youth mobility deal, which is, you know, young people 18 to 30 coming back and forth into a professional mobility deal so we can make it easier for our services professionals, right?
And then you get into a much deeper conversation about maybe the customs union, because that’s where we do half our trade. We need to move the dial. I completely agree with Robert that they made a strategic decision that the immigration implications of that and the idea of going back and rejoining institutions with Europe was politically beyond the pale. And I don’t really see any evidence that that’s changing.
Robert Shrimsley
But do you not think that . . . I mean, my sense is that actually the dynamics of politics, of international politics at the moment, the dynamics Trump, the issues within the European Union are actually gonna pull Britain further away rather than closer to in the end, aside from on security.
Peter Foster
From Europe.
Robert Shrimsley
Yeah, because actually there are significant figures in the British government who like the fact that we’re gonna diverge on tech policy, on digital policy, on AI policy, who I just think I can see how, for all the wish and desire to get close to the EU orbit, the realities of politics are gonna pull us further apart for a bit.
Lucy Fisher
I think, Trump, generally, is moving us towards a world that is more multi-aligned, as Jaishankar, the Indian foreign minister, likes to put it, as David Miliband put it to me in an interview last week, whereby there’s a shifting patchwork of coalitions depending on the issue, be it trade or climate change or health, you know, rather than these stable alliances we’ve enjoyed in the past three decades.
Robert Shrimsley
I mean, what I’m saying is that the presumption would have been, from Brexit onwards, that being outside of one of the great trading blocs, the EU, would be a problem for Britain because it would be weaker and it would more exposed. What I am saying is that the way Trump has operated this so far, and given his objections to the European Union, that the incentive to keep going, is that actually you could deliberately keep pulling Britain further from alignment rather than the other way around.
Peter Foster
To be clear . . .
Robert Shrimsley
You have to demonstrate why it’s bad for Britain to be outside of this trading bloc.
Peter Foster
Which it is! Oh my lord, I mean, (Overlapping speech) I know you, but let’s not kid ourselves, because we console ourselves, not you, Robert, but the nation consoled. You know, we had a new government, big majority. It has, we’re going to turn down the barriers to trade with Europe. Same red lines that Boris Johnson had to make the wretched trade and co-operation deal in the first place.
The trouble the UK has is that actually, European trade policy and European mercantilism is actually echoing US mercantilism. It’s not just Donald Trump that’s a mercantilist. Europe is increasingly getting mercantilist about having strategic autonomy from the US on defence stuff, but also on tech. Some it’s not going to be able to do because China monopolises solar and battery, but actually the direction of travel both in the US and in the EU and also in Asia or in India, is it going to regional blocks?
If it wasn’t tricky already, I think a really tricky place for a small open economy that relies on trade like the UK, that relies on international supply chains that are fracturing are gonna come under immense strain with these tariffs because we don’t have the heft to play in the game.
[MUSIC PLAYING]
Lucy Fisher
That’s a perfect moment to move on to our second big topic of the week, which is the government’s longer-term growth strategies.
Jim, you’ve been a scoop machine on various different measures that the government is looking at. Tell us a bit about who you’ve been interviewing and what they’ve been saying.
Jim Pickard
So I had probably the two most pleasant in terms of the backdrop interviews that I’ve done for a very long time.
I interviewed Darren Jones, chief secretary to the Treasury under some blossom on a bench in St James’s Park because it was a beautiful day and his office was a little stuffy. And we talked about the spending review that’s coming up and he sort of basically let slip that Sizewell is going to get billions of pounds from the government in the June spending review. They’re gonna sign that off and he’s very optimistic they’re gonna reach final investment decision. So that’s . . .
Lucy Fisher
Just to remind people — Sizewell C, it’s been going on for a long time, it’s this Suffolk nuclear power plant project.
Jim Pickard
It will be the second big nuclear power station in this very, very long awaited nuclear power programme that the British government has been trying to get off the ground for an awfully long time.
And then on Tuesday, I got to interview the environment secretary, Steve Reed, by a beautiful lake with birds of prey flying overhead and I imagine lots of other wildlife. I think I saw a cormorant there (Laughter) and trying to interview him against the sort of lovely blue skies. And he was talking about this whole theme of the Labour government believes that they can be a lot tougher in terms of pushing through developments. And Steve Reed in particular is making this argument that it doesn’t have to be to the detriment of nature.
And the reason he had chosen Aylesbury is because there’s a huge development there of housing — 2,500 homes, all different shapes and sizes. It’s a very nicely architecturally designed development. But the important thing is there is a hundred hectare area of wildlife land that they’re building wetland and woods and that kind of thing. And it probably will end up net more nature than was there when it was agrarian land. So . . .
Lucy Fisher
You obviously wanted to say that, you know, you can have development and protect nature, but as I read it, some of his quotes to you also were very much trying to stress that, you know, he’s going to take on the green quangos and make clear that the priority needs to be building and development . . .
Jim Pickard
Exactly.
Lucy Fisher
Not the back tunnels of HS2.
Jim Pickard
And it’s very much in this theme of the government ordering regulators to become more pro-growth. So he’s changing the remit of environment agency of natural England. He’s accepting loads of recommendations from a guy called Dan Corry, who used to work in Downing Street. He’s issued 29 recommendations. In Corry’s report, he does openly say environmental groups, green groups looking at this might worry that there could be detriment to nature, but the status quo isn’t really working for nature or for development. I think there are genuine ecological issues about some of the things they’re proposing.
So for example, if you’re building a housing development, you used to have to do comprehensive surveys and you had to get your mitigation in place beforehand. What they’re now gonna have is they’re gonna have a nature restoration fund where the developers just hand all the money over to . . . (overlapping speech)
So funnily enough, on this lake, at this development, they took the carp out of it because they’re not very good for nature, Robert. Where was I?
So the nature restoration fund, the problem with this nature restoration from an ecological point of view is that the developers are handing over the money, they’re trashing a load of wetland or forest, natural England will build new wetland or forest somewhere else in the country, but that won’t immediately have a rich habitat. That will take years and years to establish. So you will have a bit of a lag. And so there are genuine concerns within the ecological community that the stuff that Reed is talking about is gonna put development first at the expense of some nature.
Lucy Fisher
So reining in green regulation to get Britain building investment in nuclear. Robert, on Thursday, the government gave the green light for Luton airport to expand and you’ve also been very interested in red tape on Britain’s nightlife being pared back.
Robert Shrimsley
Yeah, they’re also looking at allowing Sadiq Khan, the mayor of London, to call in restrictions on pubs and nightclubs and restaurants and see, you know, well, maybe we could be a bit more flexible with them and let them go later into the night. I have to say, I mean, I find the argument that there’s no loss to nature or greenery in this total, isn’t it? (Laughter)
You would not be hacking back environmental regulators if you were not also hacking back some of the environmental regulations that maybe that this can be done better, but there is no victimless building here.
Jim Pickard
I’m gonna, I’m gonna take over here, Robert. (Overlapping speech)
Robert Shrimsley
If you look at long enough, let me finish up with myself before you come in and jump in and tell me why I’m wrong. So I just think the idea that you can have everything is deeply flawed. More important, look, there’s lots of quite good little initiatives, perfectly good ideas.
I think what Steve Reed is trying to do is probably right. I think the airport expansion, probably a good idea. Some of the other things we’ve looked at, the Oxford-Cambridge Arc, these are all good ideas and the government’s right to sort of push them through and get out of the way. But the idea that these are the growth solutions is for the birds. These are not the big ticket things are going to change everything. They’re mood music. They’ll help in locations.
I mean, certainly, if you really want to see significant enhancement of Britain as an investment destination, you want to massively increase compute capacity for the AI and tech companies. And I just think some of the things we’re hearing, they’re perfectly good, you know, two cheers, but the notion that this is about to move the dial is, I think, wrong.
Lucy Fisher
Peter, you’ve recently been in Cambridge, written a Big Read — I’ll put a link to it in the show notes — about how that could potentially be a model for growth in R&D across the country. Tell us a bit about that.
Peter Foster
It’s genuinely interesting. I think that is like the ground zero of Labour’s policies. It brings together the planning reforms, it brings together the new town development, it bring together emphasis in R&D and tech, etc. Essentially, you want to double the size of Cambridge in 25 years. That’s a massive undertaking, not least because the sewers are already overflowing and there’s a huge water shortage.
And when we talk about hooky offset schemes, you know, they’ve got a great one there, which is called water credits. And so you can buy credits to set against your water pollution and water usage, if someone else is offsetting that elsewhere by, I don’t know, putting in water saving devices, etc, etc. I think there are a lot of people who are extremely dubious. A bit like, yes, go polluting if you plant loads of forests, and then when someone goes and actually checks whether the forests ever got planted or if they did get planted, did the trees ever grow? They tended not to be there. So we will see.
That said, I think this is a government that has indicated that if it comes to a choice between, they’ll never admit this, the chalk streams of Cambridge and building a science tech arc that they need to build, where possible, they’re gonna err on the side of the builders. And that is gonna cause, I think, immense political difference. You know, that water credit scheme, people saying, you know, that is a scandal waiting to happen. It may have happened already after the fact.
Jim Pickard
I don’t sound like I’ve drunk the Kool-Aid and I understand that . . .
Robert Shrimsley
One romantic meeting under the blossoms on a park bench with the chief secretary . . . (Overlapping speech)
Peter Foster
[Making duck sounds]
Jim Pickard
I don’t want to sound like I’ve drunk the Kool-Aid, but it obviously sounds like nonsense that you can do nature and the land at the same time. If you take a 10-acre site of agricultural, you take arable land, do you think that’s a rich habitat? Do you think that is teeming with animals and voles and birds? It’s literally just earthworms and mud.
So if you put five acres of your science park there and you put a five acres of new forest there, you would have a net gain for both. You might lose out on food production — that’s a whole different question.
Peter Foster
Yeah, no, we were mobbing Jim.
Jim Pickard
I hope someone will speak to the earthworms.
Peter Foster
But actually, Jim’s right. These offsets, they’re not nothing. The devil is in the detail that there is a delay, as Jim said, between implementation and all the rest of it and between implementation and realisation and that creates space for abuse. And what the government’s really saying is we’re gonna assume that this stuff is gonna work because we want to build.
Lucy Fisher
And because Rachel Reeves needs it to work, you know, £10bn headroom, which could be wiped out with the trades.
Peter Foster
We all do, we all do. The country’s got a productivity crisis.
Jim Pickard
But do we think this stuff cumulatively is gonna counteract this massive meteor of tariffs heading towards Britain and the rest of the world? Obviously not.
[MUSIC PLAYING]
Lucy Fisher
Well, we’ve just got time left for stock picks. Jim, who are you buying apart from Steve Reed, Darren Jones, the cormorants, the earthworms?
Jim Pickard
I’m buying nature. No, I’m . . . I’ve not traditionally been particularly long on Lord Peter Mandelson, but I’m buying him on the basis that we’ve come out of this initial tariff salvo with a preferential deal compared to Europe. And I totally . . .
Lucy Fisher
So you’re giving kudos to the UK ambassador to the US?
Jim Pickard
Yeah, along with others including Keir Starmer and Jonny Reynolds, but I’m gonna pick Peter Mandelson, US ambassador, because although Peter is absolutely right that the fact that we got away likely might be because of this weird formula that is the US goods trade deficit divided by the total goods imports and divided by two, rather than how charming Peter Mandelson is, but politically, the man in the dog and duck is gonna look at the government and think they probably did a good job here, rightly or wrongly.
Robert Shrimsley
I have said with every fibre of my being, I want to sell Ed Davey for the atrocious photo op he did this week, where he ran around the field on a child’s hobby horse, jumping over a little hurdle. It was one of the most ridiculous things I’ve ever seen.
Lucy Fisher
Are you going to tell us why he did this?
Robert Shrimsley
I can’t even remember because he had nothing . . . But anyway, the point is, I’m not gonna, because I know that these ridiculous stunts have worked for him and Lib Dems are probably going to have quite a good local election.
So in a similar vein to Jim, I am going to buy Jonathan Powell, who is the national security adviser in Downing Street. Because one of the things that also has happened this week, quite understandably less noticed, is it looks like the Chagos Islands deal is going to go through. And although he’s a long way from being the only architect of that, he played a pretty important role in selling this to the US.
And there was a point where I think all of us looked at this and thought, this is about to go horribly wrong for Starmer and it hasn’t, so I’m gonna buy Jonathan Powell.
Lucy Fisher
Peter?
Peter Foster
I can see myself selling both of those, right? This narrative that Starmer’s played a blinder and Mandy’s played a blinder — well, let’s see how that lasts in a month’s time. It may well hold up, it may not.
I’m gonna buy somebody who is, I think, much less controversial and is on to a good thing, which is Patrick Vallance, Lord Vallance to me and thee, because he’s the kind of innovation minister and he is gonna drive this Cambridge project. And I do think the government is deadly serious about making this Cambridge Arc thing happen.
Plenty of governments have fallen down on it before, but he’s the figurehead and because of the pandemic and because he’s a science guy, not a politics guy, I think his stock is going to rise.
Lucy Fisher
I’m gonna hold Shabana Mahmood, the Justice secretary, because she had a win this week in that the Sentencing Council, which was threatening to impose these guidelines at the centre of a row over supposedly two-tier justice, backed down at the eleventh hour, but it did get to the stage where it was about to be introduced and she’s having to bring forward legislation to block it.
And I think it shows that, you know, it’s not a good sign that the Justice secretary was not aware that a quango was going to introduce these controversial proposals for judges to be asked to seek pre-sentence reports that could affect the sentences of people from certain backgrounds — faith minorities, ethnic minorities, women and young people. So she’s had a win, so that’s why I’m not selling her, but I’m not sure it’s been overall a total success for her.
Well, that’s all we’ve got time for this week. Robert Shrimsley, Jim Pickard, Peter Foster, thanks for joining.
Robert Shrimsley
Cheers, Lucy.
Peter Foster
Thanks, Lucy.
Jim Pickard
Thanks, Lucy.
Lucy Fisher
Just a quick reminder that we’re about to launch a semi-regular format of special Q&A episodes in a few weeks’ time. So if you have a burning question you’d like me to put to the panel, please send me a line at politicalfix@ft.com or even better, record a voice note with your name and question and send it to the same inbox and we’ll play it on the show.
And that’s it for this episode of the FT’s Political Fix. I’ve put links to subjects discussed in this episode in the show notes. Do check them out; they’re articles we’ve made free for Political Fix listeners.
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Political Fix was presented by me, Lucy Fisher, and produced by Lulu Smyth with help from Fiona Symon. Manuela Saragosa is the executive producer. Original music by Breen Turner. Sound engineering by Joe Salcedo and Simon Panayi. Cheryl Brumley is the FT’s global head of audio. We’ll meet again here next week.
