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1:41

Hello and welcome to the Rest Is

1:43

Money with me, Robert Peston. Steph is

1:45

still away. She'll be back soon. With

1:47

me is Lord Johnson, Dominic Johnson. He

1:49

is a minister with

1:52

the kind of responsibilities we on this

1:54

program think are terribly important because he's

1:56

in charge of trying to persuade

1:58

investors to put their money in the water. the UK,

2:00

overseas companies to create jobs

2:02

here. He's also got oversight

2:04

of red tape, regulation,

2:07

the kind of rules that not only

2:09

affect the private sector, but also all

2:11

those public services that we depend

2:13

upon. He sounds like

2:16

the quintessential story when you hear him.

2:18

He's about as posh as you could

2:20

imagine. But actually, he comes

2:22

from a very unconventional background. There

2:24

was really pretty awful tragedy in

2:27

his childhood. And apart

2:29

from trying to explore with him

2:31

how we get prosperity back for

2:33

the majority of people in this

2:35

country, growth back for the majority

2:37

of people in this country,

2:40

I also want to talk to him about

2:42

who he is, where he comes from, where

2:44

his ideas come from. I think I should

2:46

also just point out, and

2:48

you know, this will infuriate and

2:50

delight people in equal measure, that

2:52

he was the business partner of

2:54

Jacob Rees-Mogg for many years. They

2:57

created a fund management business called

2:59

Somerset Capital, which made both

3:01

of them pretty wealthy and was the stepping

3:03

stone for both of them to go into

3:05

politics. Dominic,

3:08

great to see you. I thought we

3:10

should set the parameters of this interview,

3:12

because for better or worse, people

3:16

know you as

3:18

a former business colleague of

3:20

Jacob Rees-Mogg. And therefore, people just

3:22

automatically assume you're a Brexiter, but

3:24

you're not, you've got a guilty

3:26

secret. I was not. We're

3:29

all Brexitors now. And I had an amazing 15 or

3:31

20 years nearly

3:33

probably working with Jacob, who's an extraordinary

3:35

individual, actually, and a phenomenal businessman and a very

3:37

good investor. But we know we're not aligned on

3:39

lots of things. I always found that a bit

3:41

frustrating if one just assumed I was

3:43

a Brexiter. And I wasn't, in fact, after the

3:45

referendum for quite some years, quite a few of my

3:48

colleagues who were Brexitors used to hug me and say,

3:50

we did it, bruv, we did it. And I was too

3:52

embarrassed. It was too late by them to actually admit the

3:54

fact that I wasn't a massive Brexiter

3:56

at the time. Talk to us about why you were

3:58

in favour of Romain. and

4:00

how you think it's worked out and be

4:03

honest since then. Yeah. I

4:05

mean, I was never a massive, massive remainder in the

4:07

sense of sort of some great pro European Federalist. I

4:09

just ran a business and frankly at the time I

4:12

thought it was just too much effort and strife and

4:14

friction to separate us off from the European Union. But

4:17

actually on reflection, certainly having done this job for

4:19

the last couple of years, I think we made

4:21

the right decisions, certainly in the medium and long

4:23

term. Even though we're poor. And I can see

4:26

your thorough brow. And the reason was

4:28

I come from a financial services background. That was my

4:30

life's work. And Europe was

4:32

never a common market for financial services. And

4:35

actually I feel and the more I

4:37

do government work, the more I see

4:39

this, that Europe is completely differently about

4:42

capitalism, markets, liquidity, finance than we do.

4:44

So the relative, we were sort of

4:46

going down a very different

4:48

and in my view, wrong path in terms of

4:50

the wealth of the nation. I also think, and

4:52

this is a good idea that gets a lot

4:55

of coverage. The Indo-Pacific tilt is very sensible. Where

4:57

are the future growing markets of the world? They're

4:59

not so much in the European Union. They're in

5:01

the rest of the world. So that's completely right.

5:03

I mean, this is a sort of business restructuring

5:05

that actually will have huge positive benefits for the

5:07

nation. Even though over the last few years, we

5:09

have been poorer as a result of leaving. Well,

5:11

I'm going to refute that a bit, but I

5:13

will say that close relationships with Europe are essential.

5:16

And I've never had time for people who sort of said

5:18

we want to have a difficult relationship or we want to

5:20

sort of, you know, front up to them because that's completely

5:22

nuts. We're not going to get richer. And I'm quite frustrated

5:24

as a business person and as a minister that we still

5:27

have areas of friction when it comes to dealing with the

5:29

EU. And we shouldn't. We should do every

5:31

single thing we can. I find called Project Grand Amor,

5:34

which means big love, as you know, in English. And

5:36

it's very important that we have Grand Amor with Europe. We do.

5:39

We bend ever backwards to stifle the emotions

5:41

that are often around. Brexit. It's a separation.

5:44

It is emotional, but we have to be

5:46

practical and rational. And Really, we have to

5:48

also, you know, give a bit more back

5:50

in, possibly, in order to make sure that

5:52

we have a seamless training relationship because that's

5:55

how people get richer. You Talked about Grand

5:57

Amor, Big Love, and you want excellent, warm

5:59

relations with. The you young people really regret

6:01

the fact that they com go and live

6:03

and work in the Edu and vice versa.

6:05

Good for Britain to have exchanges of young

6:07

people say if we want this big love

6:10

why don't we just reject out of hand

6:12

this proposal from the you for young people

6:14

to go back and forth repaired of years

6:16

of what is it we we have rejected

6:18

that if that will ever she's a like

6:20

for her life formerly said would not going

6:22

to do that while in in terms of

6:25

migration and we all know what the debates

6:27

are Not nominate my grandson this was at

6:29

this was an hour but even sort of

6:31

the the slow of people Dc classics. Or

6:36

we want Hillary com be functioning as well. Say

6:38

no. Importing fast consists of labor probably isn't in

6:40

the medium long term. Sensible. Some on by quite

6:42

comfortable with that in some sort of principles but

6:45

you're right, we should we should. I was much

6:47

remove his as possible. I find him my pasta

6:49

when I get to Europe. Bizarre. That's all they

6:51

insist on in at the same time you gonna

6:53

be very where the fact we need to make

6:55

things coming in from the and shot him as

6:57

effective as possible. I mean they're annoying things like

7:00

students. I think after had to have passports

7:02

it was a comedian. Many them didn't say

7:04

we saw a decline in some students to

7:06

use changes I saw things have to be

7:08

solved and will make a big efforts to

7:10

say but in a bit exercise subdue the

7:12

tank and says really important that they also

7:14

feel that we all sort of food for

7:16

his and gives a Pm he's credit the

7:18

Windsor agreement with was a massive deal I

7:20

really felt his of physically at the time

7:22

this that let a lot of air ask

7:24

the tire a lot of rejoin the horizon

7:26

them sort of in a science professor programs

7:28

be changed to tempo intensive. for discusses well

7:30

european partners but there's more to do and we

7:33

are pushing that and i think as i say

7:35

my my my truck with the future as we

7:37

go to be an oprah winfrey trading nation texas

7:39

me is not about closing up raising borders mean

7:41

it but we already went solo with a these

7:44

checks are going on as we speak on foods

7:46

coming into the country yes i would you object

7:48

to well object is the wrong word i'm if

7:50

i would prefer that we had you know open

7:53

borders and in in their senses but i'm very

7:55

sensitive to the fact that specific obligations under wtf

7:57

sex such bizarrely we have to make sure you

7:59

ever get three the same European imports or imports

8:01

from America or wherever. And

8:04

people are concerned about what they call PSP

8:06

measures, which is sort of sanitary, vitae sanitary

8:08

controls, and actually we're not importing disease and

8:10

so on. Now, my view, and this is

8:12

something that I've been working on, and we've

8:14

got this white paper coming out on better

8:16

regulation in the next couple of weeks, is

8:18

that international equivalence should be something we should

8:20

be a lot more brave about. If you're

8:22

making something in New Zealand or some pharmaceutical

8:25

from France or a machine made in Germany, it's basically

8:27

going to be safe in the UK. And I think

8:29

that we should try and be as open-minded about

8:31

that as possible. But, you know, there's an emotional

8:33

feeling in this nation that we want to sort

8:35

of, in a vertical way, protect our borders, which

8:37

is true, but at the same time, you've just

8:39

got to be realistic and rational about it. That

8:41

makes people richer and it doesn't, in my view,

8:43

make them less safe, as long as you've got

8:45

sensible controls. Now, look, I'm going to come back

8:47

to regulation, but I just want to stick on

8:50

the other big bit of your

8:52

job. We were talking about prosperity.

8:54

You are the minister who

8:57

is responsible for trying to get people to

8:59

invest in this country. Now, one

9:01

of the most striking

9:03

consequences of Brexit

9:06

is that foreign direct investment

9:08

in this country fell. And

9:10

actually, I saw that you were bigging

9:13

up the fact that foreign direct investment

9:15

is rising in the UK at the

9:17

moment. But let's be clear. Foreign direct

9:19

investment in France is still greater than

9:22

in the UK. Well, that's not actually

9:24

correct. It is, according to the E

9:26

and Y. You yourself have been bigging

9:28

up. It shows that in 2023, although

9:31

in the London region, it has

9:34

increased so that it's now bigger than in

9:36

the Paris region, but for France as a

9:38

whole, their foreign direct investment is still greater

9:40

than foreign direct investment into the UK. But

9:43

as you know, as one of the great

9:45

economists of our time, you will know that

9:47

it's about money, not quantity. So the EY

9:49

survey measures Deals done..

9:51

And If you actually look at jobs

9:53

created and money invested, we're substantially high.

9:55

I think we're sort of 30%. Are

9:58

You talking about stocks or flow? We

10:00

talking about cash coming into the Uk say that

10:02

what they do they count and and I've often

10:04

but such a a meeting with with the why

10:06

a sense of is a great some it's very

10:09

useful be no to be consistently just can the

10:11

project so i didn't have these housing projects are

10:13

all whatever it is and then a so how

10:15

many jobs created when they can't because of inconsistency

10:17

so so day so much of the actual amounts

10:20

been intensive jobs crisis was important in terms of

10:22

value the a case where headsets estimate frustrating sometimes

10:24

he was of it comes out the the subject

10:26

to france but actually next to protect procession of

10:28

us increasing some percent more. Roof.

10:32

Monreal. The have fewer license the Uk and

10:34

investments and and lot a little ones actually

10:36

been. It's about the quantum and and I

10:39

made a big F in my department to

10:41

shift us from measuring the number of deals

10:43

to measuring the value of deal system volume

10:45

to valleys and that works and has been

10:47

hugely successful. We've managed to I'm a target

10:49

the key sovereign wealth funds and and capital

10:52

pools around the world and get them into

10:54

the Uk and Us. Been just going to

10:56

ask some people saying and friends from city

10:58

for some people have been on Britain and

11:00

we shouldn't talk ourselves down because the. Fact

11:02

saw that we're doing better than everywhere

11:05

else. I would never tell Button Down

11:07

of Desperate for Britain he has either.

11:09

Patriot, prosperous, the and ah so that

11:11

we get in fights it as of

11:13

yet. That indeed is something I want

11:15

to talk to a will thank you.

11:17

I'm okay so why why particularly that

11:20

are Otherwise it's because all though you

11:22

know we shouldn't be snooty about where

11:24

money comes from if is creating jobs

11:26

the big. Sale. Yeah! In

11:28

this country which massively pre dates

11:31

for exit this is a non.

11:33

breaks at issue is the Uk.

11:36

Pools: Of Capital or

11:38

Pension Funds for example,

11:40

have massively reduce the

11:42

amount that they invest

11:44

in the Uk and.

11:47

One. Of the things that worries me. And.

11:49

Soaked In Law survives on

11:51

this podcast about our dependence

11:54

on overseas capital is when

11:56

you are dependent on overseas

11:58

kept. Oh and the going

12:00

gets tough. Typically those overseas

12:02

investors take the money and

12:05

run. And. They have saw

12:07

last have an incentive a commitment

12:09

to try and sort things out

12:12

here because emotionally this is not

12:14

their home and in a very

12:16

got to look at the crisis

12:19

the Thames water is in. Largely

12:22

controlled by overseas investors from places

12:24

like China and Abu Dhabi, it's

12:26

in terrible trouble. Lave said your

12:28

on investable. We're not putting money

12:30

and and in a similar concern

12:32

is we'd be in a better

12:34

place in terms of long term

12:36

investment if we were less dependent

12:38

on overseas investment and we just

12:41

had more money from. For. Example

12:43

our own pension funds yeah he makes it

12:45

an incredibly valid point is we're rich enough

12:47

as a domestic economy to fund our investments

12:49

and I'm nothing to sick other heard it

12:51

on your fabulous show which are most of

12:54

the regular listener to or another show but

12:56

when i started work the thirty years ago

12:58

since then the number of listed companies i

13:00

think his heart is that the has actually

13:02

the United States in that upon with listing

13:04

box anywhere from very keen to construct but

13:07

to and we've had this sort of saudi

13:09

also that pension funds but invested we had

13:11

twenty odd years he about half. Of that

13:13

capitalism in the Uk and now it's about three

13:15

or four percent. Is it hyena? It is in

13:17

even that's below what that was a global average

13:20

to be sufficiently Embassy I global index. The Uk

13:22

should probably be six or seven or maybe even

13:24

a percent. and I think there are a number

13:26

of root causes and is get back to to

13:28

regulation. Actually, we've regulated the stewards of capitals of

13:30

people who run these big. Be

13:33

trying to remove risk from the market and

13:35

past financial crisis and although the trend was

13:38

happening in any event was last. Seen

13:41

requirements raised. how puppet of

13:44

us will manage to have not been

13:46

as he's accomplished all this has led

13:48

bizarrely not to reduction and risk because

13:50

actually the risk is now they come

13:52

in that we compiled pencils returns is

13:54

in fact that i'm as are outcomes

13:56

his father's money invested uk economy chances

13:58

time he's recognizes It's actually taken in my

14:01

view quite a long time to recognize it. But

14:03

we have recognized it. You know, Jeremy Huntsman is

14:05

very sensible about that. So the Edinburgh reforms, the

14:08

match has compact follows on from that is absolutely

14:10

key. So interestingly, I'm more

14:12

optimistic about the UK investment market than

14:14

I have been for the last 20

14:17

odd years, because the amount of money that will

14:19

shift back from what I would call non-productive, if

14:21

you can say government debt is non-productive, I think

14:23

probably part of it possibly is into

14:25

the productive elements of the economy, both

14:27

illiquid, so unlisted private capital and listed

14:30

markets, I think is going to be absolutely

14:32

huge. But it's a cultural change too.

14:34

You know, if you're on the board of a pension

14:36

fund, anyone listening to your program is probably you know,

14:38

possibly a trustee or whatever. They're under so much pressure

14:40

by the consulting industry as well as the general sort

14:43

of body politic and body economic to

14:45

keep risk to zero. That

14:47

needs to change. We need to accept there is risk

14:49

in the market, it's got to be managed, that there

14:51

will be failures in the market that again has to

14:53

be managed and protected. We've got to get back to

14:55

investing. That's the lifeblood of the country. The point you

14:57

made earlier, just to congratulate you on a well-made point,

15:00

was that we have such high levels of

15:02

FDI, as I said, that most other countries

15:04

in the world, because we need it. And

15:07

actually the overall total sort of equals roughly what

15:09

you see in Europe, but our domestic investment level

15:11

is far too low. And the final point, I

15:13

think what Jeremy Hunt's done with the sort of

15:15

expensing where you can, you know, expense in the first

15:17

year, your capital investment. Just explain

15:19

what we mean by this. Jeremy Hunt made

15:22

much more generous the tax break

15:24

for businesses that invest. Yes. And

15:27

that's helpful because you need to incentivize that. But the

15:29

relative, you know, we again, it's a cultural change.

15:31

So more domestic investment for companies or specific

15:33

investment and then changing the culture to bring

15:36

managed risk back into the market. That's really,

15:38

really important. And I think probably one of

15:40

the biggest long lasting projects of this government

15:42

is undertaken. But let's break that down a

15:44

bit. I mean, on the

15:47

one hand, Jeremy Hunt's reforms do

15:49

not entail actually any compulsion.

15:51

It's sort of encouraging pension funds

15:53

to do more investment in the

15:55

UK. But as you

15:58

say, because of the risk

16:00

aversion particularly of trustees, there is a concern

16:02

that many of these trustees will be too

16:04

scared to take the risks because they feel

16:06

ultimately that there'll be lots of a program

16:08

if it doesn't work out. And we've got

16:10

a, as you say, really important to encourage

16:12

people to take the risk of failing. Yes,

16:15

I've said more times in my life than

16:17

I've succeeded. And that journey is what matters.

16:19

I mean, clearly, you don't want to encourage

16:21

a profligate investment, but a culture change is

16:23

really, really important. And I hope we can see that. You

16:26

don't want to force people to do things. I think that's

16:28

not the way forward. I mean, I think people talk about

16:30

insisting that the UK market, for example, is

16:33

a sort of primary investment destination for pension

16:35

funds. What you really want is a great

16:37

UK market. But there is something that you

16:39

could do when it comes to regulation. And

16:41

again, that's also part of your brief, is

16:44

you could change the rule that

16:46

says when pension funds

16:49

measure their liabilities, they

16:52

have to use what's known as

16:54

a discount rate, which is very

16:56

closely linked to the yield,

16:59

the interest rate on government

17:01

bonds, which gives them

17:03

a massive, I would

17:06

say, a pernicious incentive to

17:08

go overweight to invest too

17:10

much in government bonds and

17:12

too little in shares

17:14

and risk assets. So businesses that are

17:16

starting up and businesses that are growing.

17:19

So surely the most constructive thing that

17:21

the government could do is

17:23

look at that

17:25

so-called discount rate and

17:28

actually remove that

17:30

ridiculous incentive for

17:33

pension funds to ignore the kind of investments

17:35

that we need to become a more prosperous

17:37

economy. These ideas are very sensible. I mean,

17:39

I'm sure the chance is looking at all

17:42

these points. I mean, I think that... Are

17:44

you sure that he's looking at this as

17:46

a discount rate? I'm not sure what's on

17:48

his desk today, but I mean, this is

17:50

a discussion that's being held broadly across government.

17:53

I think it's very important. I mean, I

17:55

think that there are some issues around

17:57

how we look at liquidity as well. So if you look

17:59

at sort of... your liabilities period,

18:02

there's a sort of determination everything has to be calculated

18:04

as of today since the market to market principle, which

18:06

actually is unnecessary. And in fact, if you're taking a

18:09

long term, you don't want to be doing that, you

18:11

want to take a discount so that you get the

18:13

premium later. So those sorts of measures need to be

18:15

looked at quite carefully. And one of the things we're

18:17

trying to change, if you look at the DC market,

18:19

so for- Well, that's just explained to people the difference.

18:21

There's something called the defined benefit pension schemes, which are

18:24

the older generation of pension schemes, which guarantee to

18:27

those who save a particular salary

18:29

when they retire. And they've mostly been

18:31

phased out by the private sector, but they

18:33

are still a big part of public sector

18:35

pensions. And then there are defined contribution pensions.

18:38

And those are the pensions where what

18:40

you get when you retire is completely

18:42

dependent on the performance of the investments.

18:44

So there's more risk involved. And what

18:47

we've seen is massive growth in the

18:49

defined contribution part of the market because

18:51

regulation, this thing that is not a

18:53

good or bad, depending on

18:55

your point of view- Well, it can basically be

18:57

for a massive closure in

18:59

my view, very important defined benefit pension schemes. And I

19:02

actually think that's a big cost to the UK. I

19:04

think it's a shame that there are fewer of these

19:07

less risky for savers pension schemes. I mean,

19:09

I totally agree. The allowed benefits have been

19:11

shifted from the company onto the individual. And

19:13

I mean, just as a few points, so that's

19:15

a very good example of where sort of regulation

19:17

around having to mark to market and adjust to

19:19

all liabilities just made the volatility of those big

19:21

calls of capital in some instances bigger than the

19:23

companies themselves that became very difficult to administer. I

19:25

mean, the issue that we're going to start off

19:27

on tangent, which is important because it's about the

19:30

future of the UK is that people don't work

19:32

for the same company all their lives now. So

19:34

if you go back to our parents generation, it

19:36

made logical sense. Now people move around a lot

19:38

more, they want more flexibility. So defined contribution is

19:40

a good thing. And rates might be clearly need

19:42

to increase. But one of the issues we have

19:44

is that you can only invest in products that have

19:46

monthly liquidity. The more liquidity

19:48

you have, the less risky it is. And of

19:50

course, that's completely ridiculous in my view.

19:52

If you're looking at investing in property or

19:55

liquidity, doing more liquidity, having liquidity mechanisms

19:57

attached to those instruments is very deadly.

20:00

So we're trying to change it so that

20:02

you can make a liquid investment in your

20:04

defined contribution scheme and you can invest in

20:06

private equity and long term. And just to

20:08

be clear, again, just to translate this so

20:10

that people understand, what you're saying is you

20:12

want to encourage all pension schemes, including these

20:15

defined contribution schemes, you

20:17

want to give them

20:19

greater incentives to invest

20:21

in the kind of

20:23

younger, riskier businesses that

20:25

our prosperity is going to depend on. Yeah, absolutely.

20:27

Sounds like I'm speaking a foreign language, you have

20:29

to translate everything I'm saying, but

20:32

these are your individual savings pots. So they're not

20:34

schemes in a vertical in the way that you

20:36

might be invested in. I don't know, the shell

20:38

pension plan, it's up to the

20:40

individual to control them. I think it's very exciting

20:42

because we want to have a share earning investing

20:44

democracy. And so the more we can do in

20:47

that sense, the better. But we need to make

20:49

the mechanisms far less bureaucratic. We also became very

20:51

obsessed about cost or price. So

20:53

if it was a, you know, if it had a

20:55

high fee, it was somehow bad and it couldn't go

20:57

into these systems and people were measured on fees. Fees

20:59

aren't relevant, it's net returns after fees that are

21:01

relevant. Yes, you get expensive products that don't work, you

21:03

get cheap ones that don't work too. And

21:06

this pushes me on to a final point, which

21:08

is more intellectual than my role, which is about

21:10

why are capital markets being seen to fail? So

21:12

we've got a lot of talk about the long

21:14

stock exchange as if we're doing a bad job.

21:16

But actually, if you look around the world, many

21:18

listed markets are having these problems. I mean, I

21:20

think Singapore was an article a few days ago

21:23

about the issues around the Singapore stock market, for

21:25

example. And I've seen a number of things happen

21:27

in my own business career. The rise of the

21:29

passive tracker, which is where you just buy, you know,

21:31

the footsie or whatever from one of the big providers, I

21:34

think has created, you know, extreme distortions.

21:36

And so trying to find products that

21:38

will allow investors sort of long term

21:40

access to the market to create alpha

21:42

is getting harder and harder. But we

21:44

must do that. And again, alpha is

21:46

basically the potential of the individual business

21:48

as opposed to market potential or market

21:50

risk. And these things are very important

21:52

because we want we've got to save

21:54

for our old age, you know, and

21:56

we talked about this before that the

21:58

change in life of people.

22:00

people from my generation, I'm only 50, I

22:02

say only 50, I think I'm probably very

22:04

old, to my daughter who starts her GCSEs

22:06

today who's 16 is going to be just

22:08

so marked that governments, and I think our

22:10

government is doing this, and Rishi Sunak's particularly

22:12

aware of this, just need to make some

22:14

massive sort of handbrake turns in sort of

22:16

intellectual thinking about how we're going to provide

22:18

for our citizenry over the next 50 to

22:20

100 years. Anyway,

22:23

I should just point out that although

22:25

you're right, this issue about how you

22:27

get momentum back into stock

22:29

markets attract more companies to list there is

22:32

an issue that is a pretty much a sort

22:34

of Western world or developed

22:36

economy issue, but we

22:39

should point out that the

22:41

performance of the UK stock

22:43

market over the last few

22:46

years has been worse than

22:48

most of our competitors. And

22:50

again, a lot of the evidence suggests

22:53

it got a lot worse after Brexit.

22:55

We can't pretend these facts don't exist.

22:57

Well, I don't know where you've been for the last couple of

22:59

months because the first he's been performing

23:01

extremely well. Two months does not

23:03

make up for years and years and years. That's

23:05

a full run decade. But I do think if

23:07

you look at how domestic savings are going to be

23:09

reallocated, I think you're going to naturally see more go

23:11

into the market. And what I see a

23:14

lot is key weeks. Obviously, that would be good for

23:16

UK pension funds if only they had more invested in

23:18

stock markets. One thing then leads on

23:20

from another because you start creating momentum. And interestingly, and I'm

23:22

very sensitive about talking about the markets, it's not my job

23:24

to give investment advice as a minister, but we've had three

23:26

take over bids in the last couple of weeks. And

23:29

that implies, and just listening to some of the

23:31

commentators this morning, just as a

23:33

daily anecdote, that there is significant value,

23:35

intrinsic value in the UK market. And

23:37

stock markets, they're not like a consumer product.

23:40

They are numeric indicators. So you can make very

23:42

clear comparables in the sense that the UK market

23:44

isn't a discount to the US market. It is

23:46

because it's performed so badly. But that shows that

23:48

there's implied an intrinsic value in the UK. And

23:51

that's why the UK market is performing quite strongly at the

23:53

moment. I think this government has been right to

23:55

talk about the markets and see it as an issue. And

23:58

there are some specific momentum issues, which is around the world. and

24:00

getting the UK pensions and savings market

24:02

back into the domestic stock market.

24:04

But also there are some regulatory issues. We

24:06

have made our life harder by trying to

24:08

continually reduce risk. The natural type of company

24:10

on, let's say, the front-seas more of an

24:12

established dividend payings type company, the future companies

24:14

obviously do not fit that mold. They're newer,

24:17

they have higher debt levels, they're reinvesting their

24:19

capital. Again, I need to point out, we've

24:21

been banging on this show for months and

24:23

months and months about the underperformance of the

24:25

UK stock market and this should be a

24:27

political issue. I haven't heard the Prime Minister

24:29

talk about it once. So, so

24:32

much more gripping stuff to talk about

24:34

with Dominic Johnson. We'll be back in

24:36

a minute or two. I

24:43

want to get on to you because you're

24:45

very, very, very keen to point

24:47

out that you don't

24:49

think of yourself as the

24:52

sort of predictable Tory

24:54

member of the House of Lords. I saw a

24:57

very amusing little film that you made recently for

24:59

your department in which you

25:01

pointed out a fact that most

25:04

people wouldn't know about you is that

25:06

you were, these are your words, from

25:08

a single parent household and you were

25:10

raised on benefits. So tell us about

25:12

that. So yes, I mean, my father

25:14

died when I was born and my mother brought

25:16

us up in a slightly chaotic household, to be

25:18

frank. And we did, you know, bizarrely,

25:20

I came from quite a wealthy family, but we ourselves

25:22

didn't have anything. So we lived off her widow's

25:25

benefit, which I think was £20 a week, which even

25:28

in 1974 wasn't a lot of money. And

25:30

the rest of the family didn't support. The rest

25:32

of the family did a bit. So we know

25:34

there was, you know, we were the cottage that

25:36

we were housed in by my grandfather, which sort

25:38

of saved us. And importantly, my father's life insurance

25:40

paid for a large portion of my school fees.

25:42

The rest was done on. I was going to ask

25:44

you, because you did go to what people would think of

25:46

as being a very close school mover. So it doesn't seem

25:48

consistent with a life on benefits, but I was hugely fortunate.

25:50

And I got, you know, I was beneficiary of a bursary

25:52

at Marlborough. And I went actually I went to an event

25:55

a few weeks ago, and for the first time I talked

25:57

about being on a bursary and I found out the guy

25:59

who'd left the money is going to have been

26:01

killed in the Second World War. And this man I

26:03

never met paid for me to go through private school,

26:05

which is why I'm not being political, but why I

26:08

think these education associations are so incredible. It changed my

26:10

life. And I'm very humbled by that. And I had

26:12

the benefit of having a wealthy family. So I mean,

26:14

it's not a hard luck story, because I had the

26:16

benefit of the contacts and that background. But at the

26:19

same time, I know what it's like to,

26:21

you know, we didn't have central heating. A lot

26:24

of people didn't in those days, you know, the television was

26:26

rented, it only got taken away on my birthday, because we

26:28

hadn't kept up with payments, little faces all in a

26:31

row watching these men come in and take the TV

26:33

away. I think my children will be very embarrassed if

26:35

they heard me talking about this, because I think they

26:37

like to think everything's smooth. But you know, you can't

26:39

tell a book by its cover. And we've also all

26:41

got our own journeys. And that's why I'm proud to

26:43

be where I am now as a minister in the

26:46

House of Lords, giving back to my country and having

26:48

an amazing time at the same time. Because I'd read,

26:50

but maybe this isn't right, that you were brought up

26:52

by your grandparents. Effectually, yes. So when I got to

26:54

about 10, I moved in with my grandparents and they

26:56

brought me up and gave me that stability, which you

26:59

need. And I think that again, when I think of

27:01

sort of families in this country with something going off

27:03

topic here, but do we do enough to

27:06

think about the stability of children in these

27:08

very chaotic environments? And I think

27:10

it's important for people who, you know, look at people

27:13

doing my role in the Conservative government, that it's not

27:15

sort of, you know, rich hedge funders coming in, it's

27:17

people who've had real lives and know what it's like

27:19

and know what the friction is like, and actually how

27:22

it's okay as well. I mean, bizarrely, I never

27:24

felt poor growing up. And so I moved in

27:26

with my grandparents who were wealthy and, you know,

27:28

my life changed. What I did feel, and this

27:30

is quite interesting, is I felt out of control. So

27:32

I felt being very poor and on benefits. I felt

27:34

treated differently at school. Obviously, the chaos of my background

27:36

made, you know, I didn't get lovely packed lunches and

27:39

I never had sort of, you know, the right clothes

27:41

and stuff. So I felt very out of control and

27:43

very secondary and without a voice. And

27:45

I think a lot of people feel like that in

27:47

the world in general, and knowing that people understand that

27:49

I think is very important. And that's one of the

27:51

reasons why I learned debating and I went into politics,

27:54

I think probably because I wanted to have a personal

27:56

voice and sort of project

27:58

what I thought was, you know, right and do what wanted to

28:00

do as a result. And one of the things about

28:04

how you sound as an individual

28:06

is people then immediately project onto

28:08

your ideas. Now you obviously

28:10

had a very challenged early life.

28:12

I imagine almost everybody that you've encountered since

28:15

thinks you're just very privileged. Yes I can't

28:17

shake off my accent to my relationship with

28:19

Jacob Rees-Mogg. It's something that I spend much

28:21

of the last few years doing. But has

28:24

that ever caused you sort of frustration? Because

28:26

I do know people who've had very very

28:28

hard backgrounds and yet they say you

28:31

can't talk about it because once you've in this

28:33

country because once you sound posh people just think

28:35

everything must have been amazing for you. Yes I'm

28:38

quite careful about saying you know how difficult

28:40

it is sounding posh because most people have

28:43

far more prejudices directed against them. And

28:45

I don't think it's been an issue. I mean I've

28:47

had to work a bit harder. This sounds a bit

28:49

bizarre but I think there's an assumption I sort of

28:51

rolled into these these positions. I haven't worked incredibly hard

28:53

and sort of thought hard to get to where I

28:55

am and built my business and gone into politics. That's

28:58

no easy journey. So I've had to work doubly

29:00

hard and I feel the work I put into my

29:02

job is probably more than I

29:04

would have done if I'd had more been an

29:06

easier upbringing possibly. But I'm obsessed about proving myself.

29:08

People don't just think you know I am a

29:10

another toff sitting in the House of Lords having

29:12

a nice and easy life. But I feel I

29:14

have to work harder to make sure people know

29:16

I'm relating to them and can actually do something

29:18

for them. Now I don't know

29:21

if you've ever talked about the

29:23

death of your dad. Do you want to talk a bit

29:25

about that? Well it's a tragedy.

29:27

It was a terrible accident. It's on

29:30

my Wikipedia page bizarrely. Every time someone

29:32

tries to take it down there's some

29:35

person out there who insists upon this being

29:37

public knowledge. And I kept it a bit

29:39

of a secret until Lord Ashcroft published a

29:41

book about Jacob and put this chapter in

29:44

about it. And it was an awful accident

29:46

unquestioningly. What happened to my

29:48

mother after that was very difficult. Do

29:51

you want to just give us the summary? Well

29:53

she you know she accidentally

29:55

stabbed him at a dinner party.

29:58

I think because he burnt the duck. It's

30:01

an awful series of accidents

30:03

and tragedies that lead up to serious

30:05

life-changing events. She obviously didn't intend to

30:08

do that, and it ruined her life

30:10

and made her, as I say, chaotic

30:13

and a very difficult world for her mother. I can't

30:15

imagine what she must have felt. It must have been

30:17

awful. I think she will. She lived with it

30:19

until she died at the end of last year, and I think she

30:21

found the whole thing very difficult. She drank a

30:23

lot as a result, and I understood that. I never

30:25

judged her for it, and I'm very unjudgmental of

30:28

people and their actions. I think in society

30:30

we leap on everyone's actions, as

30:32

if it's a sort of leaner than that one can. Often

30:35

it's just a series of circumstances that have driven

30:37

people to have these terrible misfortunes. I can't imagine

30:39

what it was like living with her. It's

30:41

pretty bad for me living with it as well,

30:43

though. It was harder for me and my sisters,

30:46

actually. Were you the oldest? No, I'm the youngest.

30:48

So I've got an amazing older sister, Arabella, who

30:50

is incredible. So how old were you when you

30:52

were dad? So I was six months old, so

30:55

a little baby. But you never knew him, right? I never

30:57

knew him, no. And that's really interesting,

30:59

because I've adopted older males

31:01

as mentors. My

31:04

father was a line very close to him. He was in the

31:06

House of Lords, was a minister. But other sort

31:08

of parents... This is Archie Hamilton. Archie Hamilton, a very great

31:10

man. And other fathers of friends of

31:12

mine have sort of stepped up and taken these very

31:15

important roles in giving me guidance and mentoring, and my

31:17

uncles, Nicholas and Charles and stuff. So I've been quite

31:19

lucky, and in a way, I've not just had one

31:21

father. I've had many. And if you don't know something,

31:23

you don't miss it. But it does make it harder,

31:26

I think, for me to be a good father to

31:28

my children. Because interestingly, you

31:30

know, you learn from example, and I don't know... I don't know...

31:32

I've never seen what a father does. So I mean, I use

31:34

that as an excuse when I'm a terrible father. I

31:38

don't go and watch their match. But it was in a

31:40

way great, because it drove me, and it reduced

31:42

my risk. So I know what it's like

31:45

to have a very chaotic, difficult, hard

31:47

life at the beginning of my life. I don't think

31:49

I've had a hard life or my life at all.

31:51

I've been incredibly lucky and very privileged. But that means

31:53

I can go back to zero, and I think that

31:55

risk tolerance is all about that. Can

31:57

you go back to zero? Are you willing to stake everything? And

32:00

that drove me to set my businesses up and take

32:02

the risks I've done. I'm very grateful for that.

32:04

I'm very grateful for the amazing level of support

32:07

that the rest of my family, like, you know,

32:09

that amazing grandmother and stuff gave me. So I

32:11

look upon everything as a good fortune, actually, that

32:13

this pathway has led me to where I am

32:15

now. And, uh, are you less frightened of failing,

32:18

having been, totally, having lived through this period of

32:20

having chaos and very little?

32:22

Absolutely. The only thing to fear is fear itself.

32:24

And I think we become very risk averse. Government

32:26

is very risk averse. And I think people are

32:28

being pushed to being risk averse, all the

32:30

regulations and safety issues around

32:32

our lives. And actually risk is, risk is everything.

32:34

And as long as you manage that and you're

32:37

not afraid of it, then you can do anything

32:39

you like. Having, in a way,

32:41

been saved by the state, you talked

32:43

about widow's benefit and benefits in

32:46

general, some would therefore

32:48

expect you perhaps to have ended

32:50

up politically, sort of more

32:52

on the left. How did you become a Tory? Well,

32:54

because I wanted to, I wanted to build my own

32:56

life. I wanted the freedom. I mean, I hated the

32:59

feeling of lack of freedom that came from

33:01

loss of control. So a sense of personal

33:03

control and a sense of control over my own destiny is

33:06

what drove me unquestionably to want to be a

33:08

conservative. So weirdly, even though the state, to

33:10

a sense, saved your family, personally,

33:13

you felt I've got to rely on myself.

33:15

Yes, absolutely. And in fact, the state provides

33:17

a crucial role, but it doesn't replace your

33:20

own efforts or your own ability to it,

33:22

to realize your best self. It was vital

33:24

that. And the conservatives are smart

33:27

about the welfare and the importance of safety nets

33:29

as any party. And I think actually the government

33:31

can do more in other areas. It's not just

33:33

about money, actually. It's about the care around you

33:36

that the government can do more on. Now, I

33:38

love the conservative philosophy, because it's about freedom. It's

33:40

about individual freedom. And I've always felt the state

33:42

was actually rather overpowering. And being a part of

33:44

the states and being dependent upon it in my

33:46

early years, I really felt the power of the

33:48

state. And the state didn't listen. You know, it

33:50

gives you money. It's got these very complex by

33:52

the time procedures often. It was very difficult in

33:54

those days. It wasn't nearly the flexible welfare system

33:56

we have today. And I felt rather

33:58

in the power of the state. which I never liked

34:00

and I think people want to be free. I read

34:03

something really interesting the other day that ambition levels in the UK,

34:05

I don't know if you saw this, were like 46% so 46%

34:07

of people describes themselves

34:09

as ambitious. The global average is 56. In places

34:11

like India, I think it's 90%. That

34:14

was one of the sort of worst statistics

34:16

I've seen for years because we should be

34:18

ambitious in this country. People should want to

34:20

do their own thing and it's not just

34:22

about making money or being an investment banker,

34:24

actually it's about being a great nurse or

34:26

a teacher or parent. Personal ambition

34:28

is really important and I've embraced that. I

34:31

completely agree with you. I don't think

34:33

anybody would accuse me of not having

34:35

had ambition. I do often think about

34:37

where does that, I do

34:39

often think to myself, what is it in my

34:41

background or how

34:44

much of it is it genetic? How much

34:46

of it is it generational? You're the sort

34:48

of a peer of the realm as well.

34:51

It's not like you didn't know what the

34:53

House of Lords was. No, no. But I

34:55

come from immigrant stock, one of the things

34:57

that all my family of Jews came over

34:59

from Eastern Europe, Russia, Poland,

35:01

Ukraine, Austria, late 1930, 20th century.

35:05

I think a lot of my determination to

35:08

succeed comes from them. I've got this charity

35:10

speakers for schools, which is all about encouraging

35:12

young people to make the most of themselves,

35:15

young people in state schools to

35:17

be ambitious. So I agree with you that ambition really

35:19

does matter. And I

35:21

think thinking about how you help

35:25

people to have more

35:27

confidence in themselves, because you

35:29

know, ambition and confidence do go hand in

35:31

hand. And one of the things that I

35:33

think is a real problem for this country

35:36

is how many young people have just lost

35:38

all hope. And restoring that hope is vitally

35:40

important. To make a school is a brilliant

35:43

initiative. And I'd love to be involved if

35:45

that's ever useful, because I think that I

35:47

think about speaking in schools. So or oracy,

35:49

I think is a terrible word that's used.

35:52

But I mean, I like the concept of

35:54

rhetoric and teaching students to articulate and

35:56

I think a lot of people particularly social media,

35:58

which is bizarrely unarticulate. in articulates.

36:01

People don't feel they have a voice and that goes

36:03

back to my point as growing up, I

36:05

never felt I had a voice and I wanted to have a

36:08

voice, right, you're wrong, and I think that that

36:10

leads to an enormous amount of frustration in society

36:12

and conflict and sort of sectarianism

36:14

and identity politics and so on because people

36:17

don't feel that they can express themselves properly.

36:19

So any project that goes into schools, in

36:21

fact, it gives people an example of what

36:23

success can be in all its different myriad

36:25

forms, but also ways to empower people to

36:28

have voice, to speak, to debate, to understand

36:30

the principles of communication so they

36:32

can articulate themselves. Actually, one

36:34

of the things, you know, let's look at

36:37

you. I mean, you know, I'll definitely get

36:39

you into some state schools because actually one

36:42

of the things that is most powerful when somebody

36:44

like you goes in is if you're prepared to

36:46

talk about the hardships and the challenges that you

36:48

overcame, that is something that is relevant to young

36:50

people because one of the problems we've got is

36:53

I said to you earlier, people will just listen

36:55

to you and think you had it on a

36:57

plate and it was all terribly easy. And explaining

36:59

to young people, actually, I didn't have it

37:01

that easy and there were certain things that I

37:03

myself had to deal with in order to get

37:05

where I am. That is helpful. It is can

37:08

be inspirational. We would do something else, which is

37:10

we also get underprivileged young people

37:12

from state schools into institutions,

37:14

successful institutions like the Bank of

37:16

England to learn about the

37:18

world of work and to learn about how they,

37:20

you know, what they need to do to

37:23

get themselves jobs like that. I mean,

37:25

I think that's absolutely crucial. And I've ran some

37:27

projects when I have my business in order to

37:29

do that because the advantage private education gives

37:31

you in most many instances is that sense of

37:33

how you present yourself. So when you interview two

37:35

candidates, you know, one from, you know, to dreaded

37:37

Ethan will turn up, you know, beautifully dressed, read

37:40

the FT, they'll have been told by their sort

37:42

of, you know, parents what stocks and bonds are

37:44

and all that sort of stuff. So that automatically

37:46

is an advantage. And so anything that

37:48

brings people into the workplace and shows them how to how

37:50

you have to interact is very important. And my by the

37:52

way, my children teach me a lot because I say about

37:54

the heart luck story. And they say, hang on, you went

37:56

to Morbrough, you ran the investment management company, you're in the

37:58

house of Lord's doesn't sound that hard. So it's

38:01

not all about projecting the hard luck story because it

38:03

wasn't us. I've ever been hugely lucky It's

38:05

about allowing people to relate to you and

38:08

we all think I think that we have our

38:10

own specific problems and no one else Has them

38:12

in an Instagram? Everything's perfect in the world. Everyone's

38:14

shiny reality. You know, we've all we've all got

38:16

these Anxieties and issues and personal problems

38:18

and secrets in the family and all that sort of

38:20

stuff So having someone to stand up in front of

38:22

you saying by the way, you know, I had this

38:25

journey Which is a similar journey maybe to the way

38:27

you're feeling today. So you can do it I think

38:29

it's what I've been delighted to do more of how

38:31

old were you when you became political? That's a good

38:33

question when I was at school when

38:35

I said I've got a guilty secret I didn't know

38:37

you've got you've got me to sharing everything now But

38:39

I was a liberal Democrat when I was 16, which

38:41

is probably a secret I've kept hidden most of my

38:43

life But I rather enjoyed that period because they're very

38:45

good campaigners So I learned quite a lot and I

38:47

joined the conservatives when I was about sort of 17

38:49

18 and then went on went on from there I've

38:52

been pretty pretty comfortable in my in my physical tribal

38:54

view since then this truss was a Lib Dem I

38:56

think originally that's anything we haven't got Yeah,

38:58

well, we had a long conversation with

39:01

this truss about more recent events.

39:03

She's amazing to work for I work for her for

39:05

Two three years in the department for

39:07

international traders. I lead board member. She was actually

39:09

phenomenal She she had an enormous deep got institute

39:11

about what was right and wrong. She had laser like

39:13

focus So from my personal experience of

39:16

working with that, it's actually very different So how

39:18

she comes across on on

39:20

media on TV, although let's be

39:22

clear your ability to get investment into

39:25

the UK Would not have

39:27

been what it was if the kind of unbelievable

39:29

financial instability we saw during those 50 days That

39:31

was a that was a difficult period. I found myself

39:33

sitting in meetings In fact the last two days she

39:36

she said down I started a meeting with what became

39:38

one of the biggest investors we've ever had in the

39:40

UK by Saying as you have to do the government

39:42

minister. It's all going absolutely swimming. They couldn't be going

39:44

better It's just a blip don't worry about it at

39:46

all And I got a text pinging up

39:48

on my phone during the meeting that said that she'd resigned

39:50

and so the enemy's like well I mean the good news

39:52

is we're gonna have Seamless transition to

39:55

a new leader nothing will change stay

39:57

focused and I think the guy thought

39:59

this completely But he actually handed the money

40:01

over. Eventually I went back to him

40:03

and the point is, because the point

40:05

is, this is a really important one. It's the

40:08

UK economy that sells investments. It's got to be

40:10

stable. Well, the principle, the framework's

40:12

stable. Actually, Richard Sunak and Jeremy Hunt, they

40:14

came in and they absolutely soothed and calmed

40:16

the situation very quickly for which we all

40:18

should be extremely grateful. So that allowed me

40:20

to have a reset. But I just do

40:22

remember that slightly bizarre yes minister moment

40:24

when during a meeting when you've just been saying how

40:26

she'll definitely be there for the next decade, you then

40:28

have to sort of slightly pedal back. But I

40:31

want to ask you about regulation because

40:33

I think your focus, but you can

40:35

correct me on this, is what people

40:37

think of as red tape, for business.

40:40

But if I look at the

40:42

failures of regulation, and I was

40:45

talking a bit earlier about the

40:47

crisis at Thames Water. I heard

40:50

your podcast tonight. It was well

40:52

put. I worry that the greatest

40:54

failures in regulation have been those

40:57

affecting the utilities that are so

40:59

important to all our lives, whether

41:01

it's water or energy, or even

41:04

the media, the examples

41:06

of regulation having

41:08

deleterious impacts on the quality of our lives.

41:10

Well, there are just far too many of

41:13

them. Can I just ask,

41:15

are you narrowly restricting your examination

41:18

to essentially what people think of

41:20

as red tape? Or are you

41:22

looking more broadly about how you

41:24

create a regulatory structure that

41:27

is not just about growth, but also about

41:29

quality of services? Yes, I think that's really

41:31

important. Regulations are bizarrely emotive.

41:34

I get people come right up to me, right into my

41:36

face and go, what are you doing? We need more regulation,

41:38

and then sort of walk off in a fury. In a

41:40

slightly bizarre way, these are sort of your politicians. And then

41:42

other people come up to me sort of furtively shaking by

41:44

their hands, say, well done on the deregulating. And

41:47

clearly, it's somewhere in the middle. You want to

41:49

have better regulation. As you say, there have been

41:51

regulatory failures. It's not a question of more or

41:53

less, it's doing it right. And

41:55

the project I've been working on is to look at

41:57

how you initiate regulation from government departments. cost

42:00

it to be transparent about how

42:02

regulation is costed, whether we look for

42:05

alternatives. We love heavy-handed regulations from Parliament,

42:07

which actually end up having unintended

42:09

consequences, right the way through to how

42:11

the regulatory policy committee, which is this sort of group, this

42:15

actual government group that looks at regulation and

42:17

this impact, to how regulations behave. And we've

42:19

got this white paper coming out in a

42:21

week or so, some sense about talking about

42:24

details, because obviously I think it's right that

42:26

the Parliament hears those first. But broadly speaking,

42:28

and I've talked about this very openly, regulation

42:30

needs to be a service as well.

42:32

And the regulators need to think about economic

42:34

growth and the impact on the economy of

42:36

their actions with the view that it's

42:38

holistic. That's not making money versus the environment

42:41

or whatever, that's just completely absurd. A good

42:43

strong environment, our physical stock, etc., in

42:45

levels of pollution, levels of legal activity are

42:47

all very, very important. So how at

42:49

the same time do you make sure you're

42:52

thinking about innovation so you can get the

42:54

investment to power the science and

42:56

technology revolution we need if we're not to become

42:58

a second-class nation? So that's areas such

43:00

as novel foods or drones. I mean, I don't

43:02

know if you knew this, you can't fly a

43:05

drone out of line of sight. This is the

43:07

law. So things like that, clearly, we would say,

43:09

well, that sounds obvious because you

43:11

don't want some life like a drone onto the

43:13

M4. But at the same time, how are you

43:15

going to power the new concept of delivery for

43:17

medicines or whatever if you don't change those laws

43:20

and regulate better? So pushing regulators to think about

43:22

innovation, and it's not contradictory with good practice. You

43:24

think it's a good idea to have drones, delivering

43:28

Amazon parcels? Well, I think it's a great idea.

43:30

Yeah, it's much better for the environment. And probably one of

43:32

the technologies is far safer and it means people can be

43:35

employed doing other things. So yes, wouldn't you agree? I

43:37

don't know. I mean, I've thought about it enough. I

43:39

know there's been a lot of talk around it. So

43:41

are you going to scrap this line of sight rule?

43:43

No, it's not about whether we scrap it or don't

43:46

scrap it. The point is the regulator needs to be

43:48

thinking about how do we enable the new innovation in,

43:50

let's say, you know, drones or unmanned

43:52

submersibles, or how do you allow novel

43:54

foods to be created that are safe

43:56

without sort of stopping the industry coming

43:59

here because we're slow to allow the

44:01

things. This is common sense. It's just

44:03

allowing the regulators to think about the

44:05

economic consequences of their actions. And let's

44:08

just think about it in general but

44:10

important terms. Do you think

44:12

historically, and I'm thinking about water here,

44:14

but it could also be true, I

44:16

think, of energy. There has

44:19

been too much focus

44:22

on the short-term charge

44:24

or the short-term charges

44:26

to consumers and not

44:29

enough on the benefits of

44:31

encouraging long-term investment. Yes, I do. And

44:33

I think that that's a consensus for

44:35

you as well. So

44:37

how do you get over that?

44:39

Because of course, in an electoral

44:41

cycle, what politicians care about is

44:44

what their constituents are saying about what they're

44:46

paying for water or gas. How

44:49

do you persuade politicians and their voters that they

44:51

may have to pay a bit more to

44:53

ensure that sewage doesn't get pumped into rivers and

44:56

seas? Or they're going to have to pay a

44:58

bit more to make sure there are fewer leaks?

45:00

Yeah, it's extremely sensitive. How

45:02

do you do that? Well, I know you can't. There's

45:05

a person who says, I wouldn't start from here if

45:07

I was going there. It would have been better if

45:09

there had been a better blend of consumer price and

45:11

investment over the last 35 years

45:13

because then you wouldn't see the need for more

45:15

marked increases. It would just be gradual if I

45:17

having a floating currency versus fixed currency.

45:21

Who's to blame for that? It's really the wrong word in

45:23

this. Why? You have to hold people responsible, don't you, for

45:25

mistakes? Otherwise, how do you learn from them? Well,

45:28

sometimes this is a really big

45:30

issue actually about how government functions and

45:32

the way that society looks at government, which I

45:35

think prevents it often from doing the right thing.

45:37

I mean, governments find it very difficult to admit

45:39

when they're wrong. I'm not hoping to be an

45:41

example of that now. You want to have an

45:43

open conversation. It's been great that

45:45

we've kept prices down across the board in

45:47

many areas. Telecoms is another good example. But

45:49

it's had effects on investment, as we know,

45:51

and the same with power. We

45:54

need huge investment, hundreds and hundreds of billions,

45:56

if not trillions of pounds to go to

45:58

pay for new power networks to make sure

46:00

that we've got all this new technology for telecoms and

46:02

to make sure that our water systems function. And we've

46:04

made a decision that we want to have separate pipes

46:06

for overflow and all that sort of stuff, which is

46:08

going to cost hundreds of billions. And this needs to

46:10

be paid for. And actually, we want to encourage investment.

46:13

I think you touched on your podcast earlier

46:15

about investors in the water companies. Investors

46:17

go people, by the way. These people,

46:19

because the implication, I think, is that

46:21

investors and it's not just Chinese state

46:23

investors. You've got the Canadian pension fund,

46:26

so you have a huge degree of

46:28

social responsibility about how they operate. You

46:30

know, the Australian Supras and all these other

46:32

organisations are in these entities. We want to

46:34

encourage investment into this sector. It's essential for

46:36

the future of the UK, you know, if

46:39

we're to survive. So I don't

46:41

think you can look at sort of blame, because this

46:43

is part of the conversation, if you was at the

46:45

beginning of these prioritisation processes, to keep prices as low

46:47

as possible to try and create

46:49

the environment where you have competition, which is

46:51

extremely difficult in utilities, as we know. You

46:53

discussed this on your show recently. But

46:56

it is bizarre. Again, we've had this long

46:58

conversation, I think really important conversation about the

47:01

lack of British investment in

47:03

risk assets. But even, you know,

47:06

in a world where British investors

47:08

are risk averse, you'd have thought

47:10

the utilities would have been a

47:12

place where, again, our pension funds

47:15

would have been absolutely piling in,

47:17

because actually, historically, they've been pretty

47:19

safe. But it is important to say that,

47:21

you know, there are quite a few water companies. Some

47:24

are actually performing quite well. And

47:26

investors, you know, are very contented with their

47:28

investments in them. And they're providing the level of service

47:30

that we want. So we've got to be quite careful about simply

47:33

looking at one point and then extrapolating it around the

47:35

rest of the world. It's the biggest by far. It

47:37

is. So I want to go back to

47:40

the point you mentioned, which is an important philosophical point.

47:42

Who is to blame in inverted commas? Really? All

47:44

of us are guilty, to some extent,

47:47

of wanting something. And that is low prices and

47:49

not necessarily wanting to have the conversation about the

47:51

cost of investment. I do it as a person.

47:54

We all do it. And as a nation, we do too. And

47:56

I think one of the most important things we can do is

47:58

have a very open and honest conversation. okay, we are

48:00

where we are. If we want to have these companies

48:02

performing like this, this is what we have to do.

48:04

It means we have to invest. The

48:06

pricing of the consumer has to reflect that.

48:09

So do the returns, by the way, to

48:11

the investor. If we're giving effectively guaranteed returns,

48:13

that needs to be carefully thought through. How

48:15

these companies engineer their finances is very important.

48:17

It's great that you're saying this because you

48:19

don't have to be elected because you're in

48:21

the House of Lords. But actually, I very

48:23

rarely hear any elected politician saying to the

48:25

British people, there is a cost which could

48:27

go on for several years of having the

48:29

kind of lifestyle you want.

48:31

I do, Kex. I'm in the government. That's elected.

48:33

Being in the House of Lords is neither here

48:35

nor there. It's just important to have a sensible

48:37

open debate and to reach a consensus around these

48:39

things. Otherwise, society can't function. But look, it's great

48:41

that you want to have this debate. I

48:44

wish other elected politicians would join

48:46

in because they don't on the

48:48

whole. Another example of how we

48:50

failed, it is absolutely terrifying that

48:52

we talk the talk about all

48:54

sorts of forms of renewable energy

48:56

that we've got to build and

48:59

we've got some investment coming in.

49:01

But we still haven't got

49:03

the cables and

49:05

the pylons and the

49:08

distribution networks to get

49:10

the power from these

49:12

new generators to factories,

49:14

homes, all those

49:17

different services that need the power. One of the

49:20

things that's terrifying, if you just look at why

49:22

businesses are not investing in the UK, particularly these

49:24

new generation of businesses that are massively dependent on

49:26

data centers, you can't build a data center in

49:28

the UK at the moment because they can't get

49:30

the power. I mean, you've hit on a very

49:33

important issue, which we're very aware of. I mean,

49:35

in all countries in the world are facing this

49:37

problem. We've just landed a massive data

49:39

center deal in the Northeast. One of

49:41

the biggest, I think, well, certainly the

49:43

biggest data center investment announcement ever is

49:46

going to be an enormous injection of capital

49:48

into that area. And it's going to use, and we

49:50

had long conversations about how we make sure we've got

49:53

the power. Have we got the power?

49:55

I think we have got the power, which is great. But it's

49:57

going to use, I think someone said, half

50:00

the power of London. When you think about that, it's

50:02

just just I mean, the processing power for artificial intelligence

50:04

is AI. We haven't talked about AI, but we need

50:06

to be a leader in it. So we've got to

50:08

make that investment. And every country's in this issue, there

50:10

are issues over supply and capacity. And I'm behind the

50:13

curve, though, if you look at if you look at

50:15

this compared to America, we are so far behind the

50:17

curve. The point is, we need to

50:19

make sure that we have the capacity in the infrastructure. Because

50:21

if we don't, we can't be ahead on the concept such

50:23

as AI and science and technology, you know,

50:25

super revolution. So I completely agree with you. We're putting a

50:27

lot of money into it. I think a good example of

50:30

a really good regulator actually is Offgem who are

50:32

completely on this. And they're all feeling innovative and

50:34

thinking about the supply chain. So the issue is,

50:36

it's not just laying the cable, getting planning permission

50:38

for it and so on. It's also buying the

50:40

boxes, these transmission boxes and there's a global shortage

50:42

of this stuff. So we need to get an

50:44

industry in the UK that can provide us with

50:46

that sort of technology. Otherwise, we're not going to

50:48

be able to build the thing. So it's

50:51

a major national endeavor. And it will allow us,

50:53

I think, in the end, because we've got the

50:55

brains, we then need the cables to connect us

50:57

all up and make sure we've got the right

50:59

level of infrastructure to really be at the

51:01

forefront of the AI technological revolution, which as

51:03

I say, I keep repeating this is core

51:05

to government ambitions for the country. There

51:08

must be, and

51:10

I'm trying

51:12

to keep a straight face as I say,

51:14

there must be a chance that in a

51:17

few months time, you will no

51:19

longer have your magnificent office in actually before you

51:21

get on to that. How on earth did you

51:23

get the best? That's a great question. The best

51:25

office in government. Don't tell my colleagues. I

51:28

should tell people that Dominic's office

51:30

is the room, I think that

51:32

Ian Fleming occupied during

51:34

the Second World War. And it

51:36

was next door to where the

51:39

head of the Special Intelligence Services used

51:41

to be. Well, Em's door is there. It's

51:43

completely bizarre. And they were, Ian Fleming sat

51:45

by the window, which overlooks horse cars. It's

51:47

a fantastic sort of late Victorian building. And

51:50

there were 18 of them also in that room, all smoking away. And

51:52

you got it to yourself. There were 18 in a room. Yes, I

51:54

know. Well, that's how it should be. But I mean, they were they

51:57

were they were war days. And I

51:59

think it's full of. typical, great government property agency,

52:01

whatever the service is called. Not great, by the way,

52:03

but it was full of chairs and sort of old

52:05

tight writing. Who do you have to bribe to get

52:07

that right? I just made it faster. I walked past

52:09

it and they were moving me out of my office.

52:11

I said, hang on, I've got to be in James

52:13

Bond's office. This is just too good. And

52:15

there's a lot of pushback. Oh, you know, they couldn't get

52:18

it ready and stuff. But actually, it's a massive marketing tool

52:20

because all these in value, and I realized last year I

52:22

had 770 business meetings in terms

52:24

of marketing to individual businesses, which is a

52:26

lot. And a lot of people, nearly 200

52:28

a month coming into my office. And

52:30

so they come into the Fleming Room, they see the books, they

52:33

see the James Bond posters, and they love it.

52:35

And it just sort of everything that's great. And

52:37

Churchill's office, interestingly, was the floor above, the exact

52:39

room above. And Ian Fleming's father had been killed

52:41

in the war next to Churchill in the trenches.

52:43

So in the first days of the war, which

52:45

went very badly for the UK, they'd send Fleming

52:47

up to tell Churchill the bad news about the

52:49

number of ships that had been sunk and so

52:51

on. And so you've got this

52:53

amazing sense of history. So it's a real privilege to work

52:55

in that room. Yeah, I don't take

52:58

that for granted. And Kemi Bandenock, your boss ever come

53:00

down and say, I want that room? Yes, well, she did come

53:02

there. She's saying, why have you got the nicest office? So don't

53:04

tell her that I'm still there.

53:06

Because I think she's got a lovely office

53:08

as well. And by the way, working for

53:10

her is amazing. She's the most empowering person

53:12

I've ever worked for. I think she's completely

53:14

brilliant, very driven. And it's got this sort

53:16

of great gut about business and free markets

53:18

and stuff that I really admire. So I'm

53:20

lucky to have her. She's not quite the

53:22

room above me, but she's pretty near. So

53:24

I think, obviously, in saying that, you're just

53:26

guaranteed you keep your room and your job

53:30

to the election. You never know. But what

53:32

I want to know is given, as I

53:34

say, even the Prime Minister is now conceding

53:37

that there's a fairly good chance that you're

53:39

not going to win the election. What does

53:41

Dominic Johnson do after the election? Well, I

53:44

mean, on the election, and I'm not one of

53:46

these people who sort of, you know, like sort

53:48

of comical Ali or whatever, who says everything fantastically

53:50

in the polls, because clearly, you know, the evidence

53:52

is there. But I will say this, that I've

53:54

learned that anything can happen in politics. And

53:57

the 2017 general election, which I was involved with a bit.

54:00

in the party. Theresa May went in 20

54:02

points ahead of Labour. Unassailable, biggest lead of

54:04

any party, I think, in history or something

54:06

bizarre, and ended up effectively losing the election.

54:09

And if you read the one for Alan Clarke Diaries, he says the

54:11

same thing in She didn't

54:13

lose the election. She lost her majority. She lost her

54:15

majority. She was propped up by the DUP. She lost

54:17

that 20

54:19

point lead in the space of four, five weeks. And

54:22

I think people forget that. So you don't know what's

54:24

going to happen. And as far as I'm concerned, we've

54:26

got six months. That's 10% of an

54:28

electoral cycle. That's quite a long time. And we've got to look at

54:30

the next six months. Like we look at the first six months in

54:32

terms of trying to do stuff and get

54:34

from my point of view to continue to work to show

54:36

the UK is stable and predictable and get as much money

54:38

in as possible and give people a sense of sort of,

54:40

you know, trajectory that the UK is a great place to

54:42

invest. And I know if you haven't answered the question, though.

54:44

Well, what am I going to do? Well, I do

54:48

not. My wife asked me this a lot. She

54:50

gets more and more anxious. What are you going

54:52

to do? I don't know. I mean, I will

54:54

as I say, we'll cross that bridge when we

54:56

come to I mean, you set up with Jacob.

54:58

That doesn't exist anymore. I believe it doesn't. Yeah.

55:00

But do you think you'll go back into fund

55:02

management? Possibly. I mean, I'm quite keen.

55:05

The election issue aside, I mean, like,

55:08

I can't I wouldn't do the whole of the rest

55:10

of my life. I would like to, you

55:12

know, at some point to rhetoric in schools and try

55:14

and and try and teach oracy. But we're not there

55:16

yet. We're really not there yet. And I think it's

55:18

unhealthy to spend all our time speculating about it. We've

55:20

got a job to do. So 10 percent of an

55:22

electoral term lies ahead of us. We

55:24

still want to make sure people's lives are made better. I've

55:26

still got a huge amount of work to do to get

55:29

more money into this country and to try and

55:31

get better regulation, which if I can do that

55:33

would be a legacy I'd be I'd be really

55:35

proud of. And then make sure there's a good

55:37

debate around these new concepts such as AI, new

55:39

technologies and how people live their lives and and

55:41

have a mature conversation about that. Because I think

55:43

whatever whatever parties empower any point

55:45

in the future, we've got these these

55:48

society changing sort of tidal

55:50

waves coming through that I just don't think we

55:52

are necessarily as a body politic addressing and being

55:54

open enough about. I'm afraid I agree with you.

55:56

One of the things I bang on a lot

55:58

about is I do think AI

56:00

is the industrial revolution of our time. I don't think

56:03

our leaders are talking about it enough. So what I'm

56:05

going to say, because I think we probably do have

56:07

to sort of wrap up now. Yes, of course. Come

56:09

back. Thank you. And

56:11

we'll do an AI special. Well, that'd be fantastic. I really appreciate

56:13

it. I appreciate saying some of the things I've never spoken about

56:15

before as well. So thank you very much for giving me that

56:17

opportunity. Donut, great to see you.