Three Things

Three Things with Liam Byrne MP: why government needs entrepreneurs and why wealth inequality is bad for business.

• Jamie Mitchell

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Former start-up founder Liam Byrne’s career is a study in the fusion of public service values and business acumen. In a wide-ranging conversation with Jamie, Byrne reflects on how his upbringing, education, and professional journey - from a tough Essex school to the heart of government - shaped his political philosophy and fuels his urgent call for a more radical approach to Britain’s biggest challenges.

Liam:

one of the things that has always steered me is an ambition to know how the world works. it was a pathological curiosity. If I hadn't had that one teacher that had got me through that math exam, I wouldn't have gone on to do the A levels that I did. If I hadn't done well at a level, I wouldn't have gotten to university. I wouldn't have got the first that I did, wouldn't have gone on to do the things I did. I just had a, a sense The country really needed people who were politically engaged but actually had a business background we needed people who could fix things. And I think you learn that in business better than you do anywhere else.

Hello, I'm Jamie Mitchell, and welcome to this first episode of my somewhat delayed third season of the Three Things Podcast, Today's conversation is a cracker. I've known Liam Byrne, MP for Hodge Hill for over 25 years. We went to business school together. I was an early investor in his startup before he entered politics in 2004. Liam was a cabinet minister within four years of his election, A rise that he puts down to his entrepreneurial mindset and approach. Liam's a really hardworking local mp. He's also a prolific writer whose latest book tackles wealth inequality, explaining its dangers and offering practical solutions. Today we'll touch on inequality. but our focus was on how Liam brought an entrepreneurial approach to government despite its enormous bureaucracy. But before I got to that, I had one question for him. I needed to ask

Jamie AI:

I wanna ask you, you worked for Tony Blair, as a special advisor after the election. But beforehand, you were a,

Liam:

mm,

Jamie AI:

I think you were doing business campaign work and you did a year or so with Tony Blair as a special advisor before

Liam:

going

Jamie AI:

to our alma mater Harvard Business School. And I want to know why,

Liam:

Why went to Harvard?

Jamie AI:

why you left. The most exciting time in politics for a Labor Party member where you were quite close to the heart of it to go and study at Harvard Business School.

Liam:

I was quite involved in politics at university. That's when I got really politically active That's when I first joined, labor students and I was elected leader of the students union and did all of that kind of good stuff. most of my peers were going straight into politics and trade unions and all that kind of thing. But actually I just had a sense

Jamie AI:

that what

Liam:

The country really needed were people who were politically engaged but actually had a business background because actually we needed people who could fix things. And I think you learn that in business better than you do anywhere else. so I actually spent the first four or five years after university in the strategy unit of Anderson Consulting. They just set this up to compete with the McKinseys and so on. Specialized in something that was called the Information Super Highway. Do you remember that?

Jamie AI:

my God, yes.

Liam:

And so I was doing a lot of that work

Jamie AI:

I was

Liam:

really enjoying that. And then I got the call to come and work in Millbank with Tony Brown and Peter Anderson.

Jamie AI:

So this is, let's package this up. you're sitting there as a 20-year-old politically minded kid. Yeah. We're still kids. Yeah. At university. And the insight hits you what, what politics really needs is business experience. Yeah. So if I do want to be a politician, which I guess was in your mind as a Yeah. Back

Liam:

my mind.

Jamie AI:

back of your mind. I

Liam:

quite know how I came to that

Jamie AI:

I mean, I, I, by the way, my decisions were always based on what's, what do I do next? That looks best naturally right.'cause I was at, by the way, I was at Arthur Anderson before and during your university, so We would've crossed over at various bits and pieces But for me it was like, okay, I've done accountancy and all the other people who were. Arthur Sson, scholars, they were called, they were trying to go into consulting, so I better go into consulting. That's the nature of my decision making process. Yeah. At that age. So why were you more strategically minded?

Liam:

Well, I dunno if it was strategically of an accidental, but I ca I came from a public service family, so, you know, my mum and dad were. Student radicals met in, you know, Durham University end of the sixties, inspired by that old Kennedy line of, you know, ask not what your country can do for you, but what you can do for your country. Spent their careers in public services, in local government and, and teaching hard, hard years during the eighties, a

Jamie AI:

Did they parent with that sort of attitude that you are, you should serve as a, as

Liam:

a a hundred, a hundred percent. And my dad came, you know, my dad was second generation Irish immigrant. He kind of grew up with a generation of smart fighty, scrappy Irish kids in West London who. All ended up going to Cardinal Vaughan Grammar School. But at that time, for them, Catholic Social Theory was a really big influence. Which

Jamie AI:

Catholic social theory,

Liam:

which was basically all about the way in which you seek the common good in life and you work through public service. Not just public service, but also through business. But you basically, ought to be steered by a sense of trying to foster the common good. And so that, ethos, that teaching infused our house. And so I kind of knew that I was gonna go into public life one day and you know, I didn't do especially well at school, but I had some brains and you know, my parents

Jamie AI:

You didn't do especially good at school, but you ended up getting a first at Manchester University.

Liam:

Yeah, I mean that was,'cause I was lucky enough to find some teachers who were very patient and picked me up when I went off the rails and I had parents who were even more patient

Jamie AI:

Is the same true of school? did you struggle because of the school you're at or

Liam:

yeah, I've been

Jamie AI:

No,

Liam:

No, I think just schools back then, I mean, I went up to what became a failing comprehensive school in, in Harlow that was reasonably violent.

Jamie AI:

were an Essex boy?

Liam:

I was an Essex boy.

Jamie AI:

reasonably violent.

Liam:

It was pretty, yeah, pretty Harlow was, I mean, for kids. Harlow was pretty violent and the school was, was pretty violent. And the teachers just did a heroic job at, at, at doing what they could, but you know, we, we had 48 people in my math class.

Jamie AI:

So, are you being self-deprecating when you say, I didn't do very well at school

Liam:

No, I didn't do well at school.

Jamie AI:

but could you have done very well at school?

Liam:

I don't know. I mean, I don't know what I do know.

Jamie AI:

mean, you are one of the smartest people I know.

Liam:

I didn't pass a maths exam until my O levels, and that's because I had. Teachers who were really patient with me and made me do it again and again until I passed. And I look back now and I tell this story to kids in Schools I visit in the constituency. If I hadn't had that one teacher that had got me through that math exam, I wouldn't have gone on to do the A levels that I did. If I hadn't done well at a level, I wouldn't have gotten to university. I wouldn't have got the first that I did, wouldn't have gone on to do the things I did. And so. You know, when I kind of look back, I sort of think, crikey, what's serendipity that I had a teacher like that who interest

Jamie AI:

it's so interesting and if by the way, you'd made a billion dollars as a tech entrepreneur, you would've owed everything to that moment. and we'll talk later because you talk in your book about so much about how having money allows you to then acquire more wealth. It's a sort of inherently cumulative process. But I think the same is true of opportunity. that every time you get an opportunity, it opens up. Further opportunities, and can scale.

Liam:

Yeah. And there's a saying that we overuse here, which is that talent is everywhere, but opportunity is not. I have kind of come to believe that really, you know, I'm not saying I had talent, but I'm saying that there were a lot of kids in my school that had a hell of a lot more talent than I did. But what was given to me was a bit of opportunity.

Jamie AI:

what was it? Great.

Liam:

talent is everywhere, but opportunity is not, and I'm not, there were a lot of kids at my school who were a hell of a lot more talented than me, but they just, they didn't have people around them who put opportunity in their way. I was blessed enough to have that.

Jamie AI:

Okay. So, you got a call, you said to get involved with the election campaign.

Liam:

Peter Mandelson of all people

Jamie AI:

knew you because of your time in politics

Liam:

Yeah, and I'd been working, setting up an organization called Progress with a couple of friends, which had become, a group of like-minded people who were supporters of Tony Blair and Indeed Gordon Brown. and we were doing all kinds of projects in and around that,

Jamie AI:

that's,

Liam:

That's how Peter, that's how I gotta to know Peter. and that's how he roped me in to go and initially reorganize Millbank and build the war room around the Labor 97 campaign. That was my first

Jamie AI:

my Peter stories another time. very exciting time. you are there at the heart of this historic election moment, and, then you get a job as a policy advisor afterwards in number

Liam:

Well, no, I stayed on to reorganize Millbank, but actually then I went to Rothchild, so I went back to the private sector and I did a couple of years at Rothchild before going on to business school.

Jamie AI:

clear in, my Wikipedia surg.

Liam:

I've never read my Wikipedia page, so I've no idea what was on it.

Jamie AI:

so you didn't stay on after the election?

Liam:

I stayed on for about three months and I reorganized, labor Party headquarters for, the party that had to kind of reformat itself and the way that it worked with the government.

Jamie AI:

And you went back to the private sector this time to a merchant bank, as I believe they like to call themselves rather than investment bank. and one of the oldest English names in banking. What, why banking?

Liam:

I suppose it was a pathological curiosity. So, you know, one of the things that has always steered me is an ambition to know how the world works. And because I'd grown up in a public service family, I'd not come up with really any commercial experience or from family. But, so that was something that I wanted to kind of understand, in my kind hunger to try and understand how the world really worked. That's where I wanted to go next, and I was, again, I was incredibly lucky with some people

Jamie AI:

it sounds like a really good excuse to go into banking, but I know, I dunno, anybody on this planet who really went into banking.

Liam:

I'm not sure how good a banker was,

Jamie AI:

but let's talk about it for a second because, you know, you're, you've, you've got, should we call'em solid middle class upbringing, but you, not not privileged in any way really, what are you motivated by You, you think there may be a political career here, but actually you're building a, you're building your career. how motivated are you by. The life of the investment banker, the money of investment banking, the, the glory of investment banking. This is like, you know,

Liam:

Yeah. not much is the truth

Jamie AI:

You must be the only person who's ever gone into banking who doesn't sort of slightly think this is going to be a great ride. For me personally.

Liam:

I mean, yeah, not much motivated by the lifestyle, unfortunately. but Rothchild, you know, the reason for gonna Rothchild is because they did so much public sector work. they were brilliant architects of so much of what governments haven't done around the world for so long. And so, you know, again, I knew that one day I wanted to go into public life, and therefore understanding public finance and understanding what public and private could do together just felt to me like something that I really wanted to understand. And again, you know, my goal, I suppose was that long-term impact, making a long-term impact on the way our country has run. And I wanted to acquire the skills, the analytical capabilities, the insights, the networks in order to do that. So I suppose, you know, going to Roth Charles was partly About trying to make sure that I understood this bit of the way the world works, but, it was definitely a hunt for skills that I thought would be important to me in the long term.

Jamie AI:

trying not to be a cynic, as in

Liam:

are not a cynic.

Jamie AI:

No. Sadly I'm not. but if there is cynicism here, it's coming from the fact that my mode of thought couldn't have been different. and that. in general, the world is not full of people who are brought up thinking about the public good. let's move on. You, you are in banking. No, no doubt. I don't need to ask you. Why'd you go to half a business school now? I mean, it's the logical next step for a banker. you were quite aggressively negative about Harvard Business School in your latest book in terms of what it taught you. I think Kill the competition at all costs was a quote or something, is what they taught you. And I'm very negative that there was never one discussion around what business is for, and what its purpose is in

Liam:

was one class that came close, I think, which was that initial case of the Milton Friedman article, the Only Purpose of Businesses' Profit,

Jamie AI:

Did we have a case on that?

Liam:

it wasn't a

Jamie AI:

that in the,

Liam:

it was an initial warmup conversation.

Jamie AI:

see, I only remember it was an ethics class where, you had to debate whether you tell people that you run whatever the, aspiring brand is that killed someone and should we tell people about it?

Liam:

public?

Jamie AI:

it certainly, like every business school hadn't at this stage, embraced, and indeed every economics class in universities, and embraced anything other than Freedman esque view of the world. did it feel uncomfortable in that regard

Liam:

No. Again, I mean in pathological curiosity, I mean, I was kind of interested. I mean, the skills were world class. I did most of my second year at the Kennedy School. that's where I went to go in my mind.

Jamie AI:

this, and for the second year is where you get to choose what you want to do. Yeah. And you can, I admit I had fun in the second year choosing subjects. I didn't go to the Kennedy

Liam:

Yeah. So I did all my macroeconomics over there and public sector finance. I probably split my time, between the two, in the second year.

Jamie AI:

by the way, I'm not down on the education itself and the quality of teaching and the quality of, of the school. I'm down on the fact that It was part of the problem.

Liam:

Well, but this is, so I was lucky that Michael Porter came back to teach strategy for the first time

Jamie AI:

didn't have him teach.

Liam:

and he taught

Jamie AI:

the strategy course in the

Liam:

taught, he taught me the strategy class and I was incredibly grateful that he gave me a one at the end of it. but when I sort of sat back and thought, okay, look, what is it that he's teaching us here? It was basically. to destroy the competition. I mean, that is the whole kind of logic of on competition is to conquer the competition. And that then shows up much later in Peter Teal's book, zero to One. It, you know, it's a similar kind of philosophy and you can see that concentration now that's really accelerated since we left Harvard Business School, which was, you know, actually something Joseph Ter predicted back in the 1930s would happen. but I think I, I mean, I'm, I've got my 25th reunion coming up, so I'm, I'm, I'm going back to.

Jamie AI:

mine was last, last year and, I just, I don't know.

Liam:

I'm curious.

Jamie AI:

I stopped drinking three years ago and the idea of going to a half a business called Reunion without alcohol to fuel me, it was obviously too scary. Let's talk about, entrepreneurship. Yeah. Because after business school, as I know very well, because we worked together. Yeah. you co-founded a startup, which, you were, well, gosh, how many years was that before you became a'cause you did four years of that before. Then this back of the mind childhood ambition becomes reality and you become an mp. What did you learn from actually doing. Entrepreneurship, doing business that really Harvard didn't teach you, and importantly, that might have stayed with you and influenced you?

Liam:

Great question.

Jamie AI:

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Liam:

So the key thing, um, again, I didn't appreciate the importance of this lesson at the time, but the, uh, one of the courses I did in the second year, incredibly lucky with a friend of mine, ed Hadden, was about you basically went through and wrote a

Jamie AI:

coach, coach Ed.

Liam:

Coach Ed. Exactly.

Jamie AI:

him in years. No, no, no. Very. Oh,

Liam:

I don't think he's aged at all. I think if anything, coaching, I believe he is. I'm hoping to see him.

Jamie AI:

Great guy. If you need a coach, call Ed Haddon. Call Ed

Liam:

Haddon. And we had a course that basically entailed us writing a business plan together. So I, had that, the benefit of that and, but one of the lessons that, our teacher gave us was that in many startups, hustle is strategy. And it was only, I think, in, startup land with you and I working, together, that I really appreciated the importance of that lesson. And of course, what you realize then.

Jamie AI:

is strategy.

Liam:

a strategy.

Jamie AI:

just explain a little.

Liam:

basically you've just gotta try a lot of stuff and you've gotta try a lot of different things. And in an evolutionary way, you will learn from that what works. And then you basically double down on what works and push behind that. You know, no plan, as we know, survives being punched in the face and all entrepreneurs know what that feels like. You're on that rollercoaster ups and downs. It's the downs when you learn what fails and it's the highs. When you learn what works and you know what successful entrepreneurs do is they have the tenacity and persistence to be able to manage ambiguity, figure out. the a way to stay motivated when things are going wrong, but they then evolve quickly, adapt quickly, and if they're wise, when they make those breakthroughs, they will then double down behind those successes and push on and build out from there. And what you then learn as a minister, Is that actually, that's what successful ministers do, because ultimately in government there's only one department that's got kinetic energy of its own, and that's the treasury because they've gotta produce a fiscal event every, you know, at least once, sometimes twice a year. Every other department, the minister has to put the kinetic energy. Into the department to move the agenda up.

Jamie AI:

it's a machine.

Liam:

Yeah. Huge bureaucratic inertia basically.

Jamie AI:

can, I can

Liam:

to learn that hustle.

Jamie AI:

it is a skill required in ministry work. I think that the bit that must be different, certainly, harder is the element of that, that is like the minimum viable product and trying stuff. and then if it works, you can do it. And I had a part of my last conversation was with John Vincent, founder of Leon. It might. Be published before this or after this. Who knows? but we had a big debate and discussion around strategy. And his definition, he hates strategy and he found it very difficult when

Liam:

his board

Jamie AI:

directors wanted him to lay out these strategies and these big decisions that

Liam:

were gonna last

Jamie AI:

a year. He wanted to do whatever's next and he wanted to make sure that whatever next. Didn't close down opportunities necessarily, but was trying stuff and getting on with it and learning from it. That hustler strategy line sounds very similar, but in politics, everything you try is so public. Mm-hmm.

Liam:

That

Jamie AI:

That it's quite hard to just be that kind of, let's give it a go and see what happens.

Liam:

but I don't think I would suggest an absence of analysis. I mean, you and I are both very analytical people, so you've got to, you've gotta have an analysis that dictates your priorities, but you've got to marry that with a kind of ity that gives you the ability to, to drop things when they're failing to move on things. And it, it's difficult to do that in government, but it's what government needs because what government radically lacks is innovation and what entrepreneurs do, what do entrepreneurs do? Entrepreneurs make history by inventing the future. That's what an entrepreneur does. They bring entrepreneurial insight. They bring innovation, they turn it into something, new. and you know, they will adapt it and evolve it until they've got a proposition that works. It's really difficult to do that in government, but it's absolutely what government needs and it's why I moved from by-election winner to cabinet in four years because I had. leaders like Tony Blair and Gordon Brown, who kind of knew that they just needed someone who was gonna bring kinetic energy, entrepreneurialism, innovation force to the kind of work that they were trying to do.

Jamie AI:

So your, your ministerial career, I think care services for a couple of years in the NHS, then immigration. If you go two weeks in police or whatever it was, that was quite a big chunky role. but again, probably a couple of years. Yeah. And then the big one is chief secretary to the treasury. So what's the most entrepreneurial achievement, do you think, in

Liam:

So they all had their entrepreneurial moments. So in the NHS job, I was introducing individual budgets that basically created, a kind of a single pot of benefits that empowered individuals to design their own care. immigration was the big one. I, that's where I created the UK border agency, put everyone in uniform.

Jamie AI:

let's talk about that.'cause I think that was, you know, and today a

Liam:

big, right?

Jamie AI:

was this something you knew you wanted to do

Liam:

Oh man.

Jamie AI:

it the government was already planning

Liam:

I went in, I mean, the funny thing was, so Tony rang me, Tony was terrible at Reshuffles. I mean, he, the first job he kind of rang and said, look, I want you to join the government. You're going into the business department. Please ring Alan Johnson. And then literally 10 minutes later, Jonathan Power rings back and said. He didn't mean to say, business, he meant to say health. Um, anyway, anyway, he, uh, he got the next one, right? He made me minister for, policing counter-terrorism. But it was at the time where the immigration system had gone into meltdown and John Reed, who was the home secretary that had just gone in to study the ship, took one look at it and said, Liam, you are the only one with a business background. You need to go and sort

Jamie AI:

and sort out. Up until this point, it had killed every minister who'd had that

Liam:

every minister.

Jamie AI:

the press had just savaged everybody. You did quieten the press.

Liam:

I did. You did? I did. And I used to say to my team that I drew on everything I had done before in that job. So all of that theory that I should build up some private sector experience and some. understanding of how the world worked. came into work with me every single day. And so, you know, we created a 2 billion pound agency, that had biometric visas abroad. We brought UK Visas outta the foreign office into the agency. We brought customs out of treasury into the agency. you know, we doubled immigration policing, you know, we introduced biometrics. It was a massive change management program.

Jamie AI:

To use the sort of entrepreneurial, like what was the vision, what was success gonna look like, when you took that job on, do you think,

Liam:

Control, oddly enough. So, I mean, the lack of control, I don't wanna scare people, but the lack of control at the border that I saw when I went into that job was, was breathtaking. I mean, look, we were literally letting immigration offenders out of jail who had committed the most heinous of crimes, and we weren't deporting them. I mean, it was a really depressing level of state breakdown.

Jamie AI:

you got a bit of a reputation of being fairly right wing when it came to immigration, do you think?

Liam:

Yeah. But the funny thing is, you know, I didn't do anything that I hadn't discussed in the Constituency first. So I served one of the most diverse communities in the country. And I've got this habit of doing residence meetings every month. We just get people together to kind of chew the fat about stuff. most of my constituents from all walks of life, from all backgrounds. Always urging me to go harder and faster. And so that kind of told me that I was onto something. You know, I'd done a lot of political research, so I knew where the public was,

Jamie AI:

also, uh, it's not actually left and right. Politics is, I mean, I'm quite intrigued. Is it

Liam:

it's just making a system that works.

Jamie AI:

that has this, the social democrats that have basically tried to outright the right on immigration because it's the right thing for social democracy

Liam:

and it's procedural justice.

Jamie AI:

Okay. my definition of entrepreneurship that I really like, for the reason that it is applicable outside of business is, Howard Stevenson's. The pursuit of opportunity without regard to the

Liam:

resource

Jamie AI:

control. Awful phrasing, but what it basically means, it basically means you say, I want to achieve this. Yeah. When you have no. Bloody reason to be able to think you can achieve it because you've got no money, no skills in that area, no knowledge in it. So to money may have been available, but in many ways, did you have any experience of immigration when you took on this?

Liam:

Yeah, I did because, you know, by that time I'd been an MP for a couple of years and immigration was my biggest caseload. And so I had a lot of case experience of immigration and how badly the system worked, and one of the things that I introduced The team hated it to start with, but I insisted that we spend a day, a week on the road together, talking to frontline staff.'cause you realize in big bureaucracies there's this kind of reflective layer in the middle, and no light bounces down and no light bounces up. And one of the roles of an entrepreneurial leader is to smash those layers to ensure that light is suffusing the organization. And the way that you often have to do that is by often dragging your frontline leaders. To come with you to listen and talk to the front line every day. All wisdom is on the front line. That is, and we learned, we genuinely created a plan that had been co-written by. Frontline caseworkers, immigration officers, counter-terrorism officers. Underpaid, overstressed, they're doing it for the public good. That's where the wisdom is. And so bottling that wisdom, empowering them was at the absolute core of the plan that we produced. And, you know, they were a hell of a lot happier after two years than they'd been when I found them.

Jamie AI:

Where do you think the limitations of being entrepreneurial in government are then compared to being an entrepreneur in business?

Liam:

you have ultimately got to carry the public with you, and you've obviously got to do things in a way that. can withstand 100% transparency. That is a luxury that, businesses don't,

Jamie AI:

The long term must be a problem, though.

Liam:

Yeah.

Jamie AI:

year

Liam:

and you burn political capital, right? So if, if you are, as Machiavelli said, nothing so hard as to introduce change, and so you do burn political capital, you do make enemies. But

Jamie AI:

If anything, the, situation, the current labor government. arrived with much tougher and maybe calls for this opportunity without regard to resources definition. Hundred percent. I'm not sure they're, uh, that's the, that's the image that they're, that presenting that No. That we're getting from, from'em. Um, no, it's,

Liam:

no, it's, it's, but this is such a big point. So, you know, technically when I started working for Tony Blair back in the early nineties, my day job was writing labor's reinventing government policy. And I remember asking David Milliband, who was head of policy at the time, why this was the task. And he said, look, if you're gonna ask people to vote for a progressive government that believes in government, you're gonna need to persuade them that you're using their money well. and we are just about getting to that place as a government now. But we've gotta recognize that in the world that we're in, the new demands that confront the state, the new possibilities that are available to the state, that ought to be a much bolder, much more radical program of reinventing government than you've seen so far. There's the frontline of the state today does not work for people and they are pissed off.

Jamie AI:

So we are missing an opportunity.

Liam:

Huge, huge opportunity. I mean, the way that the private sector has innovated at such speed and pace, with creativity over the last few years.

Jamie AI:

so if you, if you were Prime Minister today Yeah.

Liam:

What's

Jamie AI:

the one big thing you'd like to do

Liam:

Yeah, I mean, look, ultimately it's gotta come down to helping people earn a good life and build a level of security that they don't have today. I have come to the conclusion after 20 years doing this job that wealth inequality is the big thing that is driving our country apart and driving down our country's performance. And it's also driving populism, right? So we've got to, recognize that the places where wealth growth did not keep pace. Are the places that voted for President Trump for lap pen for the a FD in Germany. and indeed for, for Brexit. when people don't feel that they're, keeping up with the way others are driving ahead, they will be unhappy about it and they will try and press the reset button. what was quite interesting about the elections that we had last year, biggest democratic moment in history last year, hundreds and hundreds of millions of people went to vote. the populist did well because. People have had a really tough time for the last 10 to 15 years since the financial crash. they are, impatient, but they're also pessimistic about the future. so what did they do? They rolled the dice, not with complete unknowns. President Trump, marina Lapin, Nigel Farage, they're not unknown quantities. They're actually quite familiar now. They've been around for 10, 20 years. But they wanted to send a shockwave to, their leaders to say, look, this system is broken. I'm pessimistic about the future, and I'm paying you to go to work to fix it.

Jamie AI:

is there enough evidence to say that, these were votes for change, not necessarily for the change that was being sold as

Liam:

So pop populists ask the right questions. They always al they almost always have the wrong answers. And if you,

Jamie AI:

maybe don't have answers. They

Liam:

often don't have answers. And, but if you study their at Toric, as they do, basically see that there are three. big ideas that they share across, across the world. So, one, they're very nostalgic. they want this kind of return to a mythical past second, they argue about, the, the emergency that we're in. They say This is an emergency. This is a struggle right now that we're in. But the third trope that you see, in their rhetoric is state breakdown. Well, state breakdown. And that manifest itself as. The state is not controlling those people and they're taking your lunch, or they are all corrupt or they're imposing this crazy net zero stuff on you. But they will basically argue how the state is breaking down and no longer serving the people. And that's the essence of their, people versus the elite kind of messaging. unless you have bolder state reform and entrepreneurial form of public services today, mainstream politics is leaving itself open to these threats.

Jamie AI:

So why don't we.

Liam:

That's a good question. I

Jamie AI:

not?

Liam:

It's coming, right? So I think in the budget we're sitting here today, day after the spring statement in

Jamie AI:

Who knows?

Liam:

there was about 3 billion pounds announced for government transformation yesterday. Ultimately, innovation is found on the front line. And so the, you've got to get power out of Whitehall to the closer to the front

Jamie AI:

Let's talk about,'cause it's in, that's one of the things in the book. And first of all, as background, you've quite prolific writer. Um, the, the, the Hamilton words, you know, why does he write like he's running out of time? It feels it's not far off ever for me, you've written a book. I mean, apart from the fact you've edited and written a, a bazillion others, but the big books like local government. China, Asia, and how to make an opportunity out of, out of the east. a wonderful book on a historical book on entrepreneurship, called Dragons, talking about the, the progressive entrepreneurs of the early 20th century, I guess, then some, I didn't read your book on it, counter extremism, but you've written a book on counter extremism and, and now almost like.

Liam:

I have to

Jamie AI:

say it just seems to be the biggest of your books. Certainly if I've read the, inequality of Wealth, which really helps focus those of us interested in this topic and those who aren't not only on, inequality in a slightly different way, because by focusing on wealth rather than income, which, gets all the headlines, you really do shake up. the reader, with a little bit of anger I, I sensed in it as well. and what most importantly you have done what pit keithley or whatever his name is, couldn't do with capital, which is make something accessible to a lot of people. You write very accessibly, but very intellectually robustly about inequality Why we have it and why it's a problem, and the inequality of wealth, and then you present a program to basically turn it around.

Liam:

well I am a solutions guy,

Jamie AI:

all of the other books on the inequality are written by economists or campaigners, not people who've actually been in government and seen how things work. but just to help people listening, understand why have you got a big problem with this inequality of wealth?

Liam:

So, I think, so two levels. One is moral, right? It is, it is bad that on the streets of my city, Birmingham, we have, and had people dying homeless while on the other hand, you had sales of super yachts and private jets and luxury mansions that had, had never been greater.

Jamie AI:

politics of envy, Liam, surely?

Liam:

I don't think so. I mean, but it definitely offends the common good notions of the common good because ultimately, societies are stronger, when they are just, and just societies have a fair distribution of resources and we, and we haven't got that today. And I think, you know, I spent a bit of time actually going to look at how super yachts are made at a time when people are dying on the streets. I just felt this absurdity of affluence was a bit, too much, but I suppose,

Jamie AI:

and it is super rich

Liam:

thing. Yeah. It's the zero point. It's not the 1%, it's the 0.1. I suppose the moral case is one argument, but actually the political pragmatic case is another and that is that polarized societies are unstable societies and, but this

Jamie AI:

this level of equality is a threat to the liberal democracy itself.

Liam:

100% a threat to liberal democracy, which is the story of the next book actually, which is about populism and the'cause.

Jamie AI:

you wrote this two,

Liam:

came out last January. Yeah. So we've been working on the, on the follow up

Jamie AI:

we, we, we have a live experience to watch in the us we have, I mean, I was reading it just amazed at it's sort of like word for word

Liam:

for word. Yeah,

Jamie AI:

had Britain and in particular, I mean it's, it's, it's such an exaggerated case, but it brings it home how Musk has put himself into this position of power and, and influence through, through his wealth and his money. He will see nothing wrong with that'cause he thinks he's doing good, but you know, that's not the issue. it undermines the very. Yeah,

Liam:

yeah, wealth inequality corrupts politics, wealth inequality, corrupts democracy. And I didn't ever expect to be able to describe that here in Westminster, but it is true here in Westminster now, and I've spent a lot of the last two or three years working on economic crime, and I see the spillovers now even, so I can just, and it was ever vast, by the way, back to the Roman Republic,

Jamie AI:

now, so this is two things, right? So what's different today, one is we are in one of those periods of extreme. Stream inequality. I think the last time would've been what's the gilded age in the US and the robber barons. the second is it's all transparent and in front of us and watched on Instagram. and so that powers populism and it powers the, the, the them versus us and makes it much more dangerous. Your solution, of course, is a very untraditional left wing solution because you are. Selling a positive story. Now let's build a democracy of

Liam:

Yeah.

Jamie AI:

How do we get wealth into everybody's hands?

Liam:

That's the point. So this idea of the wealth owning democracy, or what used to be called the property own democracy, I. Used to be one of the things that United left and right. So the idea of a prop sharing democracy is is in, introduced by Noel Skelton in the Conservative Party in the 1920s. And John Rules on the left basically embraces the idea, in the seventies and the early eighties. So it's got good traction on the left and right, but it, it's just got completely lost. And so I take the idea and reinvent it and say, look, let's think about a wealth only democracy. How do we democratize wealth? I've reestablished the ideas of an economist called James Mead, who actually wrote a very good book about wealth inequality in the sixties. and Mead basically says, look, if you care about fixing wealth inequality, you've gotta focus on a couple of things. You've gotta focus on income because it's from income that people save. you've then got to look at, returns to capital. and then you've got to look at tax because you've gotta look at the net position. the solutions in the book basically follow that line of argument. I basically say, look, we need to create not universal basic income, but something called universal basic capital. we need to democratize access to returns by building a sovereign wealth fund that pays dividends into these new bank accounts for everybody. and the way you build that sovereign wealth fund very, very quickly is through restoring fairness to the tax system, through. What some will call in a slightly lazy way, wealth taxes, but I actually focus on two or three taxes, like equalizing capital gains tax, or national insurance contributions on investment income.

Jamie AI:

which the first is mind blowingly simple. I thought I, was gonna be part of Yeah. The labor government, I mean, it still to me, amuses me. The

Liam:

that

Jamie AI:

income I can make on my capital is tax less

Liam:

and I, you know, encourage people, if they don't want to read the book, then at least read the one page, which is Rishi Zak's Tax Return. Rishi Zak is good that Rishi's published his tax return. It's 2 million pounds of income and reveals 23% tax now at a time when one in five people are paying 47% tax. I just dunno how you can justify that.

Jamie AI:

but it's, it is at the wealth tax, which, which is fundamentally hard to do, even though you lay out how you would do it. but it's still then at that point feels like a redistributive, which it is, by the way. And that's a whole, I mean, we should own that. but it's where people will start saying, well, we lose the. Then the wealth creators will leave and the blah, blah, blah, blah, blah, blah. to a certain extent, you're gonna have to accept some of that in order to rebalance this, aren't you?

Liam:

I think so. I think you are, but you've also gotta recognize the way in which our economy has fundamentally changed in the last 20 years. So in income from investment has doubled over the last 20 years. So it's about 80 billion a year now. and about 60% of investment income is in the hands of the top 10%. So the economy's changed in fundamental ways. Now, we all paid for that, by the way, because if you look at the last, say, decade or decade and a half, most of the growth in wealth has been driven by low interest rates. Low interest rates have been driven by 850 billion pounds worth of quantitative easing. That quantitative easing wasn't free. It's paid for by everybody. The fiscal cost of unwinding, quantitative easing is a hundred billion. So here you've

Jamie AI:

got, that is frightening.

Liam:

but this, so you've got socialized, investment in quantitative easing, but the fruits of quantitative easing are overwhelmingly carried off by the very richest, who then pay half the rate of tax of a top rate taxpayer. That that just can't be right.

Jamie AI:

This, that message hasn't landed

Liam:

way. No,

Jamie AI:

Right. quantitative easing was essential. In many ways, but the fact that it has so disproportionately moved wealth, frankly, from middle class mainly to super rich, it it's dramatic and frightening. Now, that said, stable low interest rates, these are good for

Liam:

very good companies.

Jamie AI:

Stable. Low interest rates are another reason why people with capital make more money. Yeah. Because they can borrow and leverage their assets. Yeah. To continue to grow and grow. Grow. And the bit that I couldn't quite work out reading your book is whether you're actually gonna fix that. is it only wars and revolutions that do actually change the, the amount of, inequality and

Liam:

well, his historically, that is unfortunately true, but, and there are plenty of people here, by the way, who would advocate either war or revolution. But I think the task for liberals is to kind of say, well, look, how do you find a Via media? how do you create a reformation? So look, I think you harness that force by just ensuring that those who are doing spectacularly well pay their fair share back. And again, I don't want to damage this, I don't want to damage incentives in the economy. So I'm not necessarily saying you redistribute back by cash handouts. I'm saying, look, do it as a savings match or, or do it as a tax break for savings. let's encourage wealth building or asset building by those who don't have things today Using the money that you could get through redistribution to create sharper incentives to do exactly that. We live in a country here today where 25% of people have net savings of less than a hundred pounds. You know, the fragility that comes with that. And frankly, the limits on their freedom are profound. And you know, we've just got to kind of recognize that if we want to democratize freedom, you've gotta democratize security. There's no freedom without security and there's no security without wealth. so ultimately this is how you create a freer society.

Jamie AI:

Your program of, and it's detailed and it's practical and it's achievable. I would argue, which is why people should read the book, but the output then sort of somewhat deflated me. it's like 10,000 pounds for every young person at the age of

Liam:

Mm-hmm.

Jamie AI:

Mm. And I think, is that really making a difference?

Liam:

Well, I think it could in that you would help Gen Z get a home of their own. And I think when you start

Jamie AI:

up a business or,

Liam:

or indeed start up a business, that's a really important point. crucially, you would just create a level of security and resilience that would allow a more entrepreneurial and risk taking society. I mean, if you think about many of the entrepreneurs that we know. there's not many true rags to riches stories. There's a lot more stories of people, who basically had enough family around them to be able to afford to take a few risks. And you know, when I was writing the book about the history of British entrepreneurs, so this is 10 entrepreneurs who made history. From 1450 through to 1960, what was really striking about that is that there weren't many rags to riches stories there. I mean, there was arguably, William Jardine was one of them. He was the impoverished son of, a Scottish farmer who went on to found Jardine Matheson by the East India company. But they're very, very unusual stories.

Jamie AI:

There's a lot, and certainly in this industrial revolution, it is a lot of very, smart. University business school. Well, business school guys rarely were the ones

Liam:

that is that right?

Jamie AI:

it.

Liam:

2

Jamie AI:

They all tried, but you're right. It wasn't, it wasn't, look, they came from nothing. Totally nothing. and that of course is part of your argument on inequality, isn't it? That sort of, if you've got a bit of money, you can afford to take more risk with the money and therefore you get higher returns. And this is an extreme version of

Liam:

Totally.

Jamie AI:

Okay. So, and, and of course to say 10,000 isn't a lot of money. To 90% of the population, it's a huge amount of money.

Liam:

10,000 pounds is the average shortfall on a deposit for a house.

Jamie AI:

so there's your blueprint. I think within this, there was this cultural thing, and going back to this conversation earlier about your motivation, your upbringing, but this idea that, my success in entrepreneurial business is earned. Versus how lucky am I To have got into a place where I could make this happen. I'm not denying I didn't make it happen, but, I was fortunate along the way. that's really hard to, generate a sense of. acceptance that there's a lot of, wind and luck involved in these things. I look at the people that I graduated business school with and the extreme sort of wealth ones that would've come outta that. and every story has got a stroke of luck in it.

Liam:

Yeah. No,

Jamie AI:

and indeed why they ended up at Harvard Business School in 95% of cases would not really be down to. Hmm. Anything other than, uh, some luck of, uh, one way or another in the beginning. So I do feel that the, the, the, the policies of, of, and the, the story of wealth inequality and the, this, the disappointment of it really needs to also be accompanied by a values

Liam:

No,

Jamie AI:

I think changed. And that's really freaking hard because we've had 30 years of individualism.

Liam:

Yeah. I mean, I think that's quite a big insight and I guess it was lit up for me. During a lot of the work, obviously gone home since about seven or eight years ago. So you know, I lost my dad, as you know, to a lifelong struggle with alcohol and you know, why was he in that position? Well, he was in that position because he was the child of alcoholics. He then lost my mom when she was 52 to pancreatic cancer. That kind of tipped him down into the abyss. He was hit by these twists of fate, but he had enough of a family around him to kind of. Catch him. Many of the people I was working with on the streets of Birmingham had also been hit by twist of fate, but they didn't have anyone to catch them. And so they'd hit the pavement. And once you're on the pavement, it's bloody hard to get back off it. because you have to self-medicate trauma, with substances that kind of keep you in the position that you're in. so. I think you are right to say the role of luck and twists to fate. they can turn either way. you know, many of the successful in life do, work so hard and have done so much to earn their own fortunes. But you are right. I think there will always been a couple of twists of fate. that went one way not the other.

Jamie AI:

successful entrepreneurs and how many of them are self-medicating their trauma with their work. and I always say about Musk is the anomaly in many cases'cause Musk. knows his demons, knows his monsters. And when most people understand they have demons and monsters, they try and make peace with them in some way.

Liam:

Yeah.

Jamie AI:

Musk knows that will dull his ambition and drive. So he leans into his monsters and he uses them, which is. Just the worst lesson in the world for life.

Liam:

anyway, yeah.

Jamie AI:

we have, five minutes before both of us meant to make a call. I had so many other things I wanted to talk about, but it's been a fabulous conversation. Thank you. I actually did wanna talk about your father more, but we don't have the time. And, but big up on how much good I think you've done in, in being so intimate and open about your experience as a, a child of an alcoholic. I actually want to talk about. your book of inequality, wealth inequality and, and take it down to the micro now and to the entrepreneurs and the CEOs, and the people working in smaller, high growth businesses and say, right, here's three things you can do differently rather than wait for the government to change policies.

Liam:

number one, sign up for the campaign for better business. So a friend of mine, Julian, richer, one of our great entrepreneurs, has been the driving force behind this 10 point plan, 10 point checklist of virtuous behavior. the stuff on this list shouldn't be hard. It's about paying your workers well, decently, living wage, paying your suppliers on time, paying the taxes you owe.

Jamie AI:

It's a list of, of of 10 things. Could be classed as a good

Liam:

Go Google, Julian

Jamie AI:

ain't gonna make a difference in inequality though. So let, let's go to number two.

Liam:

I think it could, because I think actually it helps you move up, wages for those at the bottom second. pay your taxes. You know, we are,

Jamie AI:

not having that one, but then of course people are gonna pay their taxes. they're good people listening.

Liam:

it's gotta be there.

Jamie AI:

but pay your taxes and don't seek to find the ways to minimize your taxes.

Liam:

yeah, that is what I'm

Jamie AI:

asking for a moral approach to your tax returns.

Liam:

But then the third thing I think is, is think about how the people you employ. Build wealth, build assets I'm obviously a big advocate of, individuals buying into or sharing in, company equity. I think that is a good thing. people gotta be careful about all eggs in one basket and so on. But, think not just about how your teams, Earn the paychecks at the end of the month, but how do you help them build assets? I've just now become so convinced that wealth inequality is the thing that we've gotta tackle. We've gotta think much more carefully, much more forensically about how we help build wealth. Because Wealth is the source of security, and security is the source of freedom.

Jamie AI:

We're gonna leave it there. That last one is, a place where I think the progressive entrepreneurial community Needs to target its time and efforts now because so much has gone on to how do we act more sustainably and in a better way and certainly some basics on employees, but we are not addressing. the inequality, within our own businesses that we are sustaining or indeed the role we can play in helping people choose, make better decisions early on with the money that they do get. And being proactive in that. I really like that idea. we're gonna have to call it there'cause you and I both meant to be on calls. I wish we had another hour.

Liam:

It's been great to see.

Jamie AI:

the next book is on,

Liam:

do it again. Why are populists winning and how do we beat them?

Jamie AI:

you beat them. Alright. I can't wait to read that. Ugh. I could easily have taken another hour of Liam's time to be honest, and I had so much more I wanted to discuss. Nevertheless, I'm grateful for his time and for sharing his insights into the entrepreneurial mindset and how it can be tapped to take on challenges like rising inequality. Next episode, I'll be speaking with John Vincent, founder of Leon. John, like myself, has recently discovered he. Is the sufferer of a DH. John, like myself, is a John, like myself, has been recently diagnosed with a DHD. As a result, our conversation was two and a half hours long, so I've got to edit that down a bit. First, um, next episode I'll be speaking with John Vincent, founder of Leon, so you don't miss that. Please like and follow this podcast altogether as a not-for-profit. We're powered by our volunteer advisors, so you following and liking this podcast is one of the best ways you can help us get the word out to people who could really benefit from our support. So thank you for that. To next time.

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