0:02

This autumn, the government's levelling up and regeneration

0:05

bill became law, promising opportunities

0:07

to be spread out across the country and not just

0:10

concentrated in major cities down south.

0:13

One of the architects of this vision is Andy

0:15

Haldane, chair of the government's levelling up

0:17

advisory council, former chief economist

0:19

at the Bank of England for eight years, part of a 30-year

0:22

career at the bank, and now chief executive

0:24

of the Royal Society of Arts.

0:26

With 12 missions, from devolution

0:28

deals for every part of England which wants

0:31

one,

0:31

to the reduction of the most serious crimes, levelling

0:34

up seems to offer something for everyone.

0:37

But could this also be its major flaw?

0:39

We're very lucky to have Andy here for the final episode

0:41

of season four of the Wee Society

0:44

podcast. He's the definition

0:46

of someone putting the social sciences in

0:48

motion.

0:49

I'm Will Hutton, a journalist, author,

0:52

economist, and president of the Academy of Social

0:54

Sciences, who bring you this podcast

0:56

series.

0:57

Thanks so much, Andy, for joining us. Will,

1:00

wonderful to be here. And thank you for that very kind

1:02

introduction. Well, let's kick off with levelling up.

1:05

Now, I'm on record as saying

1:08

that the first two chapters of this white paper,

1:10

which I...the analysis

1:13

of regional inequality, spatial

1:15

inequality in Britain, the various categories

1:17

in which it's organized, the kind of innovative

1:20

capital, financial capital, social

1:23

capital, a really kind of way

1:25

of structuring the way we think about spatial

1:27

inequality, is one of the kind of best things. And

1:29

all the data that was gathered, kind of really remarkable.

1:32

And then we get to the third chapter,

1:35

which I thought was something of a fiasco, in

1:37

which all the things that you call for aren't actually implemented.

1:42

Now, you worked on this for six months of your life,

1:44

and you're now chair of the advisory council.

1:46

What's your thoughts? Well, I mean, I think

1:48

at the time, that's

1:51

a not unfair summary

1:54

of the white paper, Will. I mean, truth

1:56

is, the first two chapters were about

1:58

setting out the framework. diagnosis and

2:00

the framework for tackling this, which was always

2:03

going to be a long-term pursuit,

2:05

will be a long-term pursuit. And

2:09

the third chapter was about what you're doing

2:11

today. And truth be told, not

2:13

enough was being done at the time for

2:17

that to look very credible given the plan. Are

2:19

you also calling for stuff to be integrated, actions

2:21

to be integrated? You didn't like the idea of there being lots

2:24

of multiple pots and local governments

2:27

and various actors and local economies having to

2:29

compete all over again

2:31

for different pots of money. You wanted it

2:33

all put together and you didn't... And then

2:36

you read all that's going to stand despite the

2:39

framework. Well, actually

2:41

on that front, that particular front, there has been some progress.

2:43

Oh, good. So if you look at the two trailblazer

2:46

deals done for Greater Manchester and the West Midlands and

2:49

signed over the summer, they

2:51

commit in both of those cases

2:53

to a single settlement agreement

2:55

in future, which would be a pulling

2:59

together of the various disparate pots you mentioned

3:02

and the provision of money to those two

3:05

mayoral combined authorities on a long-term basis

3:08

in a way that they themselves can choose

3:10

how to spend it. So actually that is

3:13

now being put into practice in

3:15

those two places. And indeed the Secretary of

3:17

State, Michael Gove, has committed

3:20

that any other

3:22

mayoral combined authority can come

3:24

forward and ask for the self same

3:27

deal. So that's actually an example where there has been

3:29

progress over the period since...

3:33

One of this has been drowned out by the

3:35

noise of other stuff. But

3:38

when it comes to matters of devolution

3:41

and indeed the funding pots to support devolution,

3:44

there's actually been quite a lot of

3:46

progress over the periods since the white paper

3:48

being published. Let's go just spool back

3:51

actually and get you to spell out the

3:54

analysis. I mean, I think it was... Let's

3:56

hear your voice describing...

4:01

drivers of regional spatial inequality

4:03

in Britain. Well, I think that one of the key points

4:06

that has been missed historically, I think,

4:09

will is that there isn't

4:11

a single missing

4:14

ingredient. If

4:16

you are to succeed

4:19

in leveling up places, often

4:21

what's missing is multiple ingredients. You know, I

4:23

often get asked the question, what's the biggest thing

4:25

you do, Andy, to level up X,

4:28

Y, or Z? And what's the missing ingredient

4:30

in that place? And the truth

4:32

is, making a place is a bit

4:34

like baking a cake. And

4:36

the most important ingredient when baking

4:38

a cake is the ingredient that's missing. And

4:41

the ingredient that's missing is different in different places.

4:43

And of course, in places doing least well, it's

4:46

multiple ingredients that

4:49

are missing. Sometimes it's the lack of business.

4:52

Sometimes it's the poor infrastructure. Sometimes

4:54

it's the poor education. Sometimes

4:56

it's the absence of social infrastructure in many various

4:58

forms. In many of the worst-hit places,

5:01

it's all of the

5:03

above. So the key point was, it's

5:06

not just all about one thing, skills.

5:09

It can be a whole range of things. And therefore,

5:12

that's why you need 12 missions, not

5:15

a singular mission. I'd have liked nothing better, Will,

5:18

than to have a singular mission, because singular is

5:21

simple. But singular

5:23

is also a misdiagnosis of

5:26

what UKPLC and its many and various

5:28

component parts needs

5:31

right now. And that's why it

5:33

has to be a cross-governmental endeavor,

5:36

because it isn't just one thing. It's all

5:38

of the moving parts of Whitehall. And

5:41

indeed, even more importantly, it's having

5:44

those moving parts exercised

5:46

locally rather than from Whitehall. And

5:48

so your pushback from my introduction would be,

5:51

it's not, sorry for everyone, and that's the weakness. You're

5:54

saying the 12 missions are a suite of options

5:56

which need to be customized in particular places.

6:00

even a suite of options, they are necessary conditions

6:02

for success. In a pick and mix

6:05

counter, you need each

6:07

and every one of them to be

6:10

in place to lift the

6:12

fortunes of a place on a

6:14

durable and sustainable basis. Let me give you an example,

6:17

right? You could smash out

6:19

the park when it came

6:21

to businesses

6:23

in a place, to infrastructure

6:26

with a physical or digital inner

6:29

place. But if that place

6:31

still has nowhere

6:33

to go after 6pm in an evening, it

6:36

lacks the theatres, the high streets,

6:39

the youth clubs, the football clubs. No

6:43

one will want to live there and it will not succeed.

6:46

So it's always a question

6:50

of a broad range

6:52

of fronts on which you must make progress

6:55

as part of a coordinated local

6:57

plan. And that's why it requires

7:00

coordination and it's also

7:03

why that plan cannot be

7:05

executed from the centre, it must be executed

7:08

locally, which is why DEVO is so important.

7:11

Now it's strong on devolution, it's

7:14

strong on human capital, it's

7:17

strong on physical infrastructure. But

7:20

one of the areas where I found it persuasive,

7:23

I thought I wasn't sure you actually

7:26

got the root of it, it was the social capital part. And

7:29

I just thought, what can even,

7:31

if you decentralise to a kind

7:33

of well-devolved urban

7:36

administration, whatever character, what can

7:38

it do to a social capital? And we

7:41

might like to define it for our listeners who kind of might

7:43

say, what's Will talking about, what's Andy Halvian talking about? Well,

7:46

on social capital, I mean, first thing is I was absolutely

7:48

clear going in that I wanted social capital

7:50

as a key part of the raw ingredients and it

7:52

got in there. And that's despite

7:55

the best efforts of a number of white-hall departments

7:57

who've chose to turn a blind

7:59

eye over many years. What is it?

8:02

Well, in some ways it's that set of

8:05

relationships, the trust

8:07

that exists within communities, the

8:10

social glue that we know is crucial

8:13

to getting things done. It's about

8:15

sometimes broken down social capital into

8:18

bonding capital. That is to

8:21

say the common causes or

8:23

objectives or aims that glue us together

8:25

as a society. And bridging

8:28

capital. That is to say the connexions

8:30

that exist within a community or within

8:33

a place. And how is it nurtured? It's

8:36

nurtured by investing consistently

8:39

and comprehensively in social

8:42

infrastructure, which is that nexus of

8:44

things we mentioned earlier on. It includes decent

8:47

high streets and the museum,

8:49

the library, the youth club, the football club,

8:51

the green spaces that

8:53

we want to occupy. And the truth is,

8:56

as a nation, we have structurally

8:59

under-invested in that social

9:01

infrastructure relative to the more

9:04

common infrastructures, the physical, the digital,

9:06

that dominate debate. If you break

9:09

down the investment in

9:11

places across different parts of the UK,

9:14

one, you see absolutely

9:17

astronomical differences in

9:19

the scale of that investment.

9:22

And two, if you dig down into how that money

9:24

has been spent, the tiniest

9:27

of slither goes towards the social

9:29

infrastructure compared with the other two.

9:31

And that's a big miss. We

9:33

give it some welly in the white paper. Does

9:36

it need even greater welly? I would say absolutely.

9:38

Yes. I mean, it's striking

9:41

if you look at the evidence either within countries

9:44

or between countries that

9:47

those countries or communities

9:50

that have the highest social capital also

9:52

do best when it comes to more objective

9:55

measures of income

9:58

or wellbeing.

9:59

is not an accidental fact.

10:02

You know, without relationships, without bonds

10:05

of trust, places

10:07

will not work and will not survive. And the

10:09

evidence suggests that very, very clearly. Is

10:12

it yet in our policy bloodstream?

10:15

No, not sufficiently. It's

10:17

amazing, actually, the extent to which social capital

10:20

lives on. I mean, I was looking at some background reading

10:22

before interviewing you, talking to you. I

10:24

was struck, for

10:26

example, in Italy, the city-states,

10:29

you know, Bologna or Vicenso

10:31

or Modena, whatever, Ferrara,

10:34

that were kind of city-states in the Middle Ages

10:36

and had were self-governing communities, still

10:39

have close to 500 years later

10:41

high levels of social capital than other parts

10:44

of Italy. You know, it just kind of, it's

10:46

generative. It goes on and on and on. And actually,

10:48

you know, desperately

10:51

large parts of the Midlands and the north of England

10:53

have not had that. It

10:56

applies at every geographic scale. So,

10:58

you know, I've been very struck, reinforcing

11:00

your point, Will, by the

11:03

recent, I think, amazing research

11:05

that Raj Shetty's been doing in the US. This

11:07

is a superstar Harvard social scientist.

11:10

Now, Raj did this early work, very influential,

11:13

which was constructing an opportunity-at-less

11:15

circle for the US, which was a very granular

11:17

breakdown of which parts

11:19

of the US were good in

11:22

nurturing social mobility, generational

11:24

progress, and which were very poor

11:27

in doing that. Now, it's a fascinating

11:29

piece of work because it was a very patchwork

11:32

quilt map, opportunity-at-less

11:35

in terms of which areas enabled

11:38

generational progression and which ones

11:40

did not. But even more interesting

11:42

for me is this recent

11:45

research that builds on that. What

11:47

it does is take this amazing

11:49

database from Facebook,

11:52

actually, from Meta, and

11:54

construct a social

11:56

network from it. Who

11:59

knows who and well do they know them? What

12:01

is your social network? Who's in it and

12:03

how big is it? And then

12:06

he poses the question, the Vojna hypothesis,

12:09

can that social network

12:12

help explain spatial

12:15

patterns of social mobility

12:18

in the US? You can probably guess the punchline. Yeah,

12:20

emerge from this, which is not just

12:23

can the social network help

12:25

explain patterns of social mobility. It

12:27

does a better job than any

12:30

other indicator that you could

12:33

look at and buy some margin, buy some

12:35

margin will. So this really is, I

12:37

mean, it's a point we all know in our heart of hearts. I

12:40

know that, I know that research a little bit and it goes

12:42

on to argue that actually the more that you bridge

12:45

kind of social and ethnic divides,

12:47

then the more rich the results are. Absolutely.

12:50

So, you know, whether it's ethnic divides or

12:52

socioeconomic divides, you know, you put rich and

12:55

poor kids together in the same classroom, that

12:58

is a huge leg up in

13:01

progress terms to the poor kid and comes

13:03

at worst, no harm to the

13:05

rich kids. So people should send their kids to

13:08

state schools, not to private schools. Oh,

13:11

I mean, I'd go on, I should say, you know, we

13:13

are doing now this, the same thing for UK,

13:15

working with meta. Oh,

13:17

really? Are there also active arts? So

13:20

yeah, we're doing the UK leg of this

13:22

now. And I'm excited about it. One,

13:24

because I'm a nerd, as you know, and therefore

13:26

working with billions of dead observations to figure out,

13:29

you know, that the patterns is social science at

13:31

work out here. Don't call it

13:33

that. It's not nerd issues. Well, it's

13:35

geek chic. Well, you know, I'm all for it. But

13:38

the important part, you know, that the bottom actually

13:41

even more excited about than the data bit, the

13:43

nerdy researchy bit is what we do with that. So

13:45

I want to take this into the field, right? I want to say,

13:47

look, we know what

13:50

connections really count for

13:52

promoting sustainability in a place

13:54

like Sundance, where I was born. I

13:57

want to reconfigure the

14:00

institutions in that place, indeed in every

14:03

place, to be actively

14:05

nurturing of social mobility.

14:07

So there's absolutely no reason why

14:09

if the key location for

14:11

doing this is schools where we can't actively

14:14

intervene in schools to make

14:16

this happen, or indeed in the workplace, or

14:18

perhaps the best mixing

14:20

environment is not educational

14:23

work, but sports or

14:25

social activities. I mean, interesting, what

14:28

Chetty finds in the US is, what

14:30

do you think is the institution in the US

14:34

gets the richest mix so significantly

14:36

between rich and poor? American football, I'd

14:38

imagine. That is okay. Actually,

14:40

church is the answer. Ah.

14:43

Well, it's declining a little

14:46

bit, isn't it? In the US it is. And

14:48

that pattern almost certainly will not be matched

14:50

here in the UK. But nonetheless, whether

14:52

it's social sphere, or educational

14:55

sphere, or work sphere, could

14:57

we think of interventions that

15:00

the evidence, the nerdy evidence

15:03

suggests can make a real difference to

15:06

disadvantaged kids' life chances

15:08

against a backdrop, against a backdrop where

15:11

patterns of social mobility in this country have

15:13

not budged for at least 50 years,

15:15

and arguably for 200 years. So

15:18

this could turn the key even a little bit

15:20

and unlock that opportunity. In

15:23

people. Hallelujah. That's

15:25

as good as it gets when it comes to social science and social

15:27

policy as it not. I

15:31

just want to take a moment to talk to you very briefly

15:34

about the organisation behind the We Society.

15:37

The Academy of Social Sciences is a national

15:39

body for academics, practitioners, and

15:42

learning societies in the social sciences.

15:45

As the president of the academy, I can tell you that

15:47

we championed the vital role social sciences

15:50

play in education, in government, in business.

15:52

The list goes on. You can find out

15:55

more about the Academy of Social Sciences work,

15:57

support us, or read up on our fellows

15:59

by going to the website. to the website acss.org.uk.

16:03

That's acss.org.uk.

16:07

Tell us what we should be covering, who we should

16:10

be speaking to by emailing wesociety

16:13

at acss.org.uk.

16:17

Now, back to the conversation.

16:27

As you were speaking, I mean, you probably weren't aware of

16:29

it, is really, you know, you're passionate,

16:32

you know, your boy language is really

16:34

passionate. And I think to myself, is

16:36

this the kid from the council estate in Sunderland

16:39

wants to kind of, you know, I mean, we

16:41

all come from somewhere, right? And we can't

16:43

not be shared by experience. And I'm like

16:45

everyone else in that respect. And

16:48

I lucked out, you know, doors opened

16:50

conveniently at convenient moments. And

16:52

that's why I'm lucky sitting here talking to someone

16:55

like you. But lots of people

16:58

equally or more talented than me didn't

17:00

have that luck, didn't have that opportunity.

17:02

And finding ways

17:05

of nurturing, and that's what

17:07

the leveling up white paper for me was all about. You

17:09

know, it is about unlocking potential

17:12

in people and in places, which

17:15

we know well from the evidence, because it's clear as

17:17

the nose on your face, have not had

17:19

that opportunity, that for many people,

17:22

history is destiny. And

17:24

that's what the absence of social mobility is about.

17:27

You're locked in by your background. For

17:30

others, their geography is

17:32

their destiny, because where they grew up determines

17:35

where they end up. And

17:37

for many, of course, that they are bound

17:39

in both by their history and by

17:42

their geography. And that leaves

17:44

them doubly constrained. We need

17:46

to be able to unlock those

17:49

chains from people with potential.

17:51

I completely agree. And I'm

17:55

my invitation is it's not any kind of

17:59

I mean, some people's potential. or may take them to

18:01

be chief economist of the Bank of England and

18:03

do the things that you've done in your life. But some

18:05

of them may be being

18:07

a great boxer or starting a kind

18:10

of being a great fisherman

18:12

or whatever it might be. Completely. I mean,

18:14

it's a kind of... Completely. We all have our different

18:16

pathways and it really isn't about size

18:18

of job, much less income from job. It's

18:20

about satisfaction in your

18:23

job. And I mean, one of the topics that

18:25

you and I have discussed in the past is,

18:27

and some of the manifestation of what we're describing

18:29

will, has been how much less

18:31

likely it is that you

18:34

are to become an entrepreneur from a poor background.

18:38

You picked up on this phrase, which I like

18:40

a lot, of the lost Einstein's, to

18:43

make it more gender neutral, or the lost Marie Curie's as

18:45

well. Okay, quite right, quite

18:47

right. You know, I think in terms of giving people agency

18:49

over their life, being an entrepreneur I think

18:51

is of tremendous value. But

18:54

in terms of having your own business, something that is yours

18:58

that you own and take responsibility for, and

19:01

nurture and grow and cultivate

19:03

relationships, customers and clients, I think

19:06

that's a tremendously virtuous thing. And

19:09

that lots of people who could do it well are

19:12

not being constrained from putting their

19:15

foot on the foot. It is really depressing. And

19:19

what they lack, when you look into it, what

19:21

are the lost Curie's and Einstein's missing?

19:25

Well, to a degree, it's cash.

19:27

It needs a bit of money, but a seadcorn

19:29

capital gets started if you're running a business.

19:32

But actually the largest thing they miss from the evidence

19:35

is what we've just

19:36

discussed, which is connections. These

19:39

kids have never met anyone

19:42

who would call themselves an entrepreneur. And they certainly

19:44

haven't got a network, a social network

19:47

of ready-made entrepreneurs. And

19:50

that is something that is eminently

19:52

fixable. You don't need loads of money. Imagine

19:55

about the Chetty work and about that is

19:57

that it doesn't take buckets of

19:59

cash. to connect people

20:02

to other people. And

20:04

if that's a springboard for

20:07

discovering the lost Einstein's and Curie's,

20:09

for creating a new cohort of

20:12

stealth-sanding agency providing

20:14

entrepreneurs in the poorer parts

20:16

of the country, I mean that

20:18

too would be a huge boon right

20:21

now to our economy which is, you know, stuck in the

20:23

mud. Now, our economy is stuck

20:25

in the mud. I can't have the former Chief Economist

20:27

of the Bank of England in the studio without

20:30

discussing this for a bit. Stuck

20:32

in the mud? Why do you say that? I

20:34

mean, I have my own answer to that but

20:36

I want your answer. Yeah, I mean,

20:40

well, I mean, the data, God

20:42

bless it, is, I mean, reasonably clear,

20:44

we certainly haven't moved as an economy for

20:47

the last 18 months and if you believe

20:49

the forecast my former shop

20:51

put out just yesterday will, it will

20:53

be moving for the next 18 months much

20:56

in growth terms. Your former shop, the Bank of England.

20:58

The Bank of England, yes, that is. So,

21:00

I mean, the data makes clear

21:03

the extent of the treading water

21:06

that the economy has been undertaking.

21:09

Looking backwards and prospectively looking forwards, I think

21:11

treading water might be optimistic over

21:13

the next 18 months. That's why you too, by the way, yeah.

21:15

I think we may well find ourselves thinking sedately

21:19

below the water line over the next six

21:21

to nine months. But let's see, what's driving this?

21:23

I mean, it's ghastly. I mean, the rate

21:26

of growth productivity has been negligible for

21:29

more than 15 years now. Rates of

21:31

investment, you know, sorely below long

21:34

run averages. There are bright spots,

21:36

you know, the startups, the unicorns,

21:38

the companies are going from nothing to kind of a billion

21:40

dollars. But I mean, it's a very,

21:43

very sad landscape. I

21:46

mean, if you had to put your finger on the

21:48

drivers and how you'd get yourself onto

21:50

a virtuous circle where these things aren't happening,

21:52

what would you be doing? Well, in

21:54

some ways, the diagnosis is really

21:57

easy. There's a very simple

21:59

explanation we haven't really grown at anything

22:02

like the pace we could and should have been

22:04

doing, not just relative to our past, but relative

22:06

to other countries. And that is a failure to

22:09

invest. It really is that simple. We

22:12

know that that's the wellspring of

22:15

boosts to productivity and therefore

22:18

to income or GDP or

22:20

pay over the long term.

22:22

And the truth is we've been through

22:25

a 15 years and counting drought

22:27

when it comes to private sector business

22:30

investment. We've gone through a 15 years

22:32

and counting drought when it comes

22:35

to public investment. And that's

22:37

in physical stuff. It's been accompanied

22:40

by a drought of at least that duration

22:42

when it comes to investment in

22:44

what's sometimes called human capital as distinct

22:46

from physical capital, that is, educational

22:49

skills and experience of our workforce.

22:52

On all three fronts, we

22:54

fair poorly, not just by historical comparison, but

22:57

by international comparison as well.

22:59

If you don't invest in those things well, your

23:02

productivity will not grow and neither will your economy

23:04

or pay package. And that has been the story the last 15 years.

23:08

Now, what's, I mean, there's various

23:10

dimensions of this. I mean, some of that manifests itself

23:12

in the inequality that we've been discussing

23:14

and the lack of leveling up. It's

23:17

not for want of exhortation. I mean, talk to anybody,

23:19

they said, we've got to raise investment. What's inhibiting it?

23:21

Why, you know, if you had to

23:23

put your finger on one or two, kind

23:26

of the most important causes of this, what would

23:28

they be? Let me take one each from public

23:30

investment, private investment and from human capital

23:33

investment just to make it nice and simple. And

23:35

let me take public investment first.

23:38

That is the smaller part of investment.

23:41

But then again, the public sector is a smaller

23:43

part of the economy. So that probably makes sense. Have

23:46

we been leading

23:48

by example when it comes to public investment? No, we

23:50

have not. We've fed poorly on

23:53

that front. And that's in part,

23:55

I think, because we've boxed ourselves

23:57

into what I think are frankly fairly silly.

24:00

fiscal rules, prioritise

24:03

insufficiently investment

24:05

on a sustained basis over the

24:08

medium term. Now let's get this, I mean

24:10

there'll be people who get it immediately

24:13

and people are kind of bop, I think

24:16

fiscal rules, you know suddenly kind of thinking this

24:18

is above my head. I mean brutally

24:20

what you're saying is that the

24:23

economic establishment, the public economic establishment,

24:25

the economic leadership of that, the

24:27

form of Chartsticks Checker and the successive Treasury

24:29

teams have prioritised lowering

24:32

debt, lowering taxes over investment

24:35

and that actually that's reinforced by

24:38

a kind of, I saw a very important piece you wrote

24:40

on this, we don't account

24:43

for our public balance sheet properly.

24:45

So we don't look at the schools, the hospitals,

24:47

the R&D, the infrastructure that we've developed

24:50

that. Well I mean if you're a business

24:53

making choices about how to spend your

24:56

money, you think what I want to do

24:58

actually is make those spending choices in a way

25:00

that boosts the net worth of my

25:02

business over the medium term, right?

25:05

You wouldn't fixate on a measure of debt

25:08

or a measure of debt servicing to do that. You'd

25:10

say what are the choices I want to make, the

25:13

investments I want to make to

25:15

nurture the assets of tomorrow that boost

25:18

the net worth of the organisation. That

25:20

will be balance sheet management 101

25:23

if you're a business model. And yet when

25:26

it comes to managing the national economy

25:28

we somehow don't do that. We do

25:30

fixate on the debt part, I'm

25:33

not saying it's unimportant, but if that's

25:35

at the expense of investing in

25:38

the assets and therefore the incomes

25:41

of tomorrow, we are missing

25:43

a huge trick and we have a

25:46

focus on debt over short horizons

25:49

that led to a structurally under-investing in

25:51

assets and the net worth of

25:54

the country as a whole in a way

25:56

that have limited public investment and therefore productivity

25:59

growth. growth. So our fiscal rules

26:02

have, you know, people say, you know,

26:04

the debt ratio is too high, the ratio

26:07

of debt GDP is too high. That might

26:09

well be. But the next obvious question

26:11

is how then do you want to lower

26:13

it? If you look at the... Either

26:15

raise GDP or... Do

26:19

you shrink the numerator

26:22

through austerity or grow

26:24

the denominator through growth? Let me tell you,

26:27

the first is self-defeating. The only

26:29

route out is to grow out

26:31

of a debt hole, not to dig yourself deeper into

26:34

one. And that's why investment

26:37

in the roads, in the schools, in

26:40

education, in schools, the

26:42

wellspring of growth is the right

26:44

route to getting debt even

26:46

in those terms down by

26:49

boosting the denominator, the growth, you

26:52

know, the investment pays for itself. So

26:54

I think that has been an element of what's gone wrong. I

26:56

don't give the impression from what I just said, that

26:59

the route to redemption is all through just spend, spend,

27:01

spend, I do not think that at all. I

27:04

think the mobilization of private finance

27:07

through business investment is absolutely the key to

27:09

elevating places and to elevating the national

27:12

economy. The truth is, Will, as

27:15

you know, the world is absolutely awash with

27:17

cash. It's a conversation you and I have been having

27:19

for at least a decade if not longer. It's

27:22

just that too little of that cash currently

27:25

is finding its way into the right

27:27

businesses and the right places for the

27:29

country to yield the biggest return.

27:31

We have a three trillion

27:34

pound pot of pension money, but

27:37

only the tiniest sliver of which goes

27:39

into UK businesses. Of course

27:42

we can change that. We even get to the

27:45

massive pot of foreign money that prospectively could

27:47

find a home here if

27:49

we could find a way of

27:52

putting in place a serviceable

27:54

pipeline of projects right

27:56

around the country, in business right around the country, which we

27:58

absolutely. can and match

28:01

up that chronic demand

28:04

for investment in poorer places

28:07

with a plentiful supply

28:09

of patient capital that

28:11

is out there. And some of the work at the RSO has been

28:13

about how do we connect demand

28:16

with supply locally to

28:18

nurture that investment and to nurture that

28:21

growth. And we're getting to the end now, and

28:23

I've got two kind of things in my mind.

28:25

I'm thinking, you know, listeners would like

28:27

to hear maybe just a little bit about, you know,

28:29

you the man. I mean, you know, here you are, amazing

28:32

kind of back streets of Sunderland to,

28:34

you know, the Pinnacles for the Bank of England. And

28:37

actually, you know, you're one of the driving forces to some

28:39

of the public policy innovations

28:42

of our time. I'm interested in how

28:44

you, what are the private conversations

28:46

you have with yourself in the bath or in the

28:48

shower? You know,

28:51

what's, who is Andy Haldane?

28:53

I want to know. Yeah,

28:55

less interesting than you think, Will. But I've

28:58

been driven from an early

29:01

age, I suppose, by

29:03

public service. I think I always wanted

29:05

to be a public servant. Thus far, I always

29:07

have been a public servant. I hope I always remain

29:10

a public servant. That

29:12

gives me huge amounts of

29:15

psychic rent. It's not always great for actual

29:18

rent, but it's great for psychic rent, you know. Psychic

29:21

rent. I'm not sure I've ever heard anyone

29:23

talk about psychic rent. Only you

29:25

could talk about psychic. Well, being polite. It's one of

29:27

the things about you, actually. I mean, I think if the, what's

29:30

the dog and the frisbee, one of your, you

29:32

can't with these titles for things, you know.

29:34

When you look at the Bank of England website,

29:37

look at the speeches, the how these speeches always

29:39

got these extraordinary titles. I mean, where does that come

29:41

from? Well, some of that is-

29:43

Where does psychic rent come from? It's

29:46

certainly not my, all of a sudden, these expressions be, you

29:49

know, begged, borrowed and stolen from someone somewhere.

29:53

Well, I've made a point and

29:55

very much have enjoyed being able

29:57

to work in a cross disciplinary fashion. very

30:00

much true to the Academy and social sciences,

30:03

but I'd like to bridge from social sciences to

30:05

natural sciences and lead in the arts and humanities

30:07

actually. The fusion of those that

30:09

was the wellspring of the Enlightenment movement and will

30:12

be the wellspring of the new Enlightenment,

30:14

which I hope we can usher in economically

30:16

and and societally.

30:20

I love the crucible

30:23

of creativity that comes from

30:26

reading and learning from and hopefully

30:29

applying in the field lessons from different

30:32

disciplines to common problems that

30:34

we face. And what's on the way you do that, it

30:36

throws up characters or throws up metaphors

30:39

or throws up stories that

30:41

are useful in cutting through to a wider audience.

30:45

You mentioned Dog and Frisbee. I mean that was drawn from

30:47

a study that I read about how

30:49

it is that dogs catch Frisbees

30:51

and the psychological heuristics

30:55

that they use in Frisbee catching

30:57

the same ones that we use as humans.

30:59

You know they make a complex problem very simple.

31:02

So I do think it helps having that wide-angle

31:05

lens on your discipline, which

31:07

means looking beyond your discipline to other disciplines.

31:09

Something that economists haven't always been as

31:11

great at as they might have been.

31:13

And combining that I suppose maybe

31:16

a little bit with an eye to what

31:18

might work. That's why you know I've made

31:21

a point of wanting to be able to

31:24

I'd want to be able to go along to the

31:26

most academic audience imaginable

31:29

and to hold my own and presenting academic paper. Be

31:32

the uber nerd if you like. But

31:35

equally I've spent as much time with communities

31:40

or charities on the ground

31:42

listening to them and trying to

31:44

explain my story of the economy

31:47

to them. I need to be I want

31:49

to be able I need to be able to work off either

31:52

foot equally well. One

31:54

of the reasons I spend so much time speaking in schools

31:57

is because it's without question.

32:00

the best media training known

32:02

to human beings, right? They are the most

32:05

unforgiving audience. Oh, yeah, just trying to hold an audience.

32:07

Hold an audience with them. And if you can do that,

32:09

you can do anywhere, right? So

32:11

speaking to every cohort

32:14

of society in a language that is theirs,

32:17

not mine, and being able

32:19

to straddle across disciplines,

32:21

natural and social sciences, arts and humanities,

32:25

and also straddling, I think, well, the third dimension

32:27

I'd mention, is straddling across sectors. So

32:29

on the face of it, my career looks like it's been lodged

32:32

pretty firmly in the public sector. But

32:34

actually, I think, in

32:36

terms of where I've spent my time, I've spent about a third of my time

32:38

facing off to business from the private sector, a

32:41

third of my time facing off to government and working with government,

32:44

a third of my time facing off to

32:46

civil society in the charitable sector. And

32:48

for me, for me, and this is a

32:51

born of history and quite a lot of theory, the

32:53

absolute bliss point is

32:55

the partnership, if

32:58

you can create it, between public,

33:01

private and civil society. That

33:03

was the essence of the Enlightenment going back

33:06

to that. Many of the greatest leaps forward,

33:08

society, have come from

33:11

that fusion

33:13

of sectors and the fusion of

33:15

disciplines and the fusion of stakeholders,

33:18

society. And I think that's

33:20

where I've pitched my tent. The

33:23

Enlightenment, the Enlightenment, they've mentioned

33:25

that a few times now. How

33:28

hopeful are you? I mean, here we are. I

33:30

mean, just to round this off. If you talk

33:33

about devolution, I mean, burning

33:35

of city councils gone bust. I

33:40

mean, we talk about education and spending

33:43

on education is at dismal levels. The

33:45

economy is in a sad state,

33:47

as you described. We've

33:49

seen quite a long way away from any kind of Enlightenment

33:52

with

33:52

people kind of

33:54

anxious to kind of close down discourse

33:56

and with safe spaces and all the rest. I

33:58

mean, just give us a...

33:59

sense of, you know, there's always downsides. I

34:02

mean, you're quite a tiggerish kind of guy. Can

34:05

you find optimism for us? I mean, how would you, you

34:07

know, just round this off? Just what, you know, what's

34:09

the how they view? I'm hugely optimistic right

34:11

now, Will. And you have to be. Because

34:15

it's contagious. We need to be contagious right now.

34:17

When I travel around the country, I can spot a mile

34:19

off places on the

34:21

up and places stuck in the mud. And it's about

34:24

the story they tell about themselves, Will. So

34:27

it's a story that people tell about their places or about their

34:29

lives. Is one that

34:31

looks backwards and

34:33

down. I know they're stuck.

34:37

And in a way, the story we're

34:39

telling ourselves nationally right now is

34:42

looking backwards and down. Quite fatalistic, quite

34:44

defeatist. Because our recent history

34:46

has not been the history any of us would wish. But

34:49

by contrast, when I go to places that are on the on

34:51

the up, the story they tell themselves

34:54

is not backward looking and down, but

34:57

forward looking and up. And

34:59

seizing on those things, maybe just a glimmer

35:03

of success and seizing

35:05

it and leading into it and investing in

35:07

it. There are loads of aspects

35:10

of UK PLC, where there are

35:12

those glimmers. It could

35:14

be our brilliant businesses,

35:16

of which there are many. It could be our brilliant

35:19

people, of which there are many. It could be our

35:21

brilliant universities or research

35:23

institutes, of which there are

35:25

many. It could be our creative industries, our capacity

35:28

for creativity. All

35:30

those are huge assets and

35:33

give me grounds for us needing

35:35

to be optimistic about our future,

35:37

sufficient, provided we invest in it. So funnily

35:40

enough, the flip side of

35:42

us having got so many things wrong,

35:46

of not having unlocked the potential

35:48

in so many people and in so many

35:50

places, is that there is a huge

35:52

amount now of latent energy

35:55

in the UK economy and in

35:57

UK society. It is our job. Will

36:01

you and your role, all of your listeners

36:03

and certainly me and mine to seek

36:05

ways to unlock that

36:07

potential to carry that spirit and

36:10

story of optimism? Because

36:12

without it, we will remain stuck. With

36:15

it, we have a chance of changing the narrative. Well,

36:18

Andy, you've... That's

36:20

an inspiring way to end. Look, you've been

36:22

a... And we've known each other for a while,

36:24

but I feel I've got essence of Halvain this afternoon.

36:29

You've come into leveling up, unlocking

36:31

potential. That was well done. Your

36:33

role of how you speak about

36:35

social capital on the run of networks, your

36:38

view of the lack of investments

36:40

in the UK and public and private

36:43

and so on. And you're giving us

36:45

kind of window into, you know, you. It's

36:48

been great talking to you. Thank you so much. And that's

36:51

it from the Wee Society podcast, the

36:53

last in our series. And thank you so

36:55

much, Andy Halvain. Thank you so much, Will. It's

36:57

been fantastic. As ever. Speaking

37:00

to you.

37:05

The Wee Society is brought to you by the Academy

37:07

of Social Sciences. Find out more

37:09

about the society by going to www.acss.org.uk.

37:15

I'm Will Hutton. The producer is Emily

37:18

Finch, and it's a Whistledown production. If

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