In short
The episode reviews UK Chancellor John Healy’s first major growth speech and argues it’s missing a credible plan to fix public finances and borrowing costs. Hosts say Healy cites improved consumer/business confidence (recruiter hiring up, services output optimism, consumer confidence up, retail and car registrations rising) but largely ignores the “high beta” problem: UK gilt yields and the government’s interest bill rising because US rate chaos spooks lenders.
Key claims
the speech “rearranges deck chairs,” offers little on rebuilding lender confidence, and avoids big reforms like triple-lock changes or clear tax/ spending tradeoffs.
Notable examples
Sizewell C delayed by two judicial reviews; microchipping cats took five years after near-unanimous evidence.
Guests
Greg Jackson, CEO of Octopus Energy, discusses China’s electrification (state oil company planning no petrol stations by 2040). No other named guests appear in the transcript.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOChancellor's Vision for Growth
0:00 to 0:52
Discussion on the Chancellor's recent speech and growth plans.
“The Chancellor says we're turning a corner, but what into?”
Electric Revolution in China
2:20 to 2:32
Exploration of electric vehicle trends in China and their implications.
Analysis of Chancellor's Speech
2:32 to 4:59
In-depth analysis of the Chancellor's speech and its implications for growth.
“It's what the economists look at to work out what's going on in the world from various organisations.”
Challenges Facing the UK Economy
4:59 to 10:40
Discussion on the challenges and uncertainties in the UK economy.
“And it is mainly based on surveys of how people are feeling and it is far from the whole picture, is it, Robert?”
Northern 500 Initiative
10:40 to 14:01
Discussion of the Northern 500 initiative aimed at supporting mid-sized businesses.
“One of the reforms that is widely talked about and is widely favoured in government and labour circles is to capital gains tax.”
Challenges for Mid-Sized Businesses
14:01 to 15:40
Explore the lack of recognition and funding for mid-sized businesses outside London.
“So they feel like there's that, you know, lots of initiatives for starting a business.”
Northern Scale-Up Fund Announcement
15:40 to 18:14
Discussion on the £150 million Northern Scale-Up Fund aimed at helping businesses scale.
“And another part to this is this Northern Scale-Up Fund that was announced.”
Impact of Funding on Business Growth
18:14 to 22:09
How funding initiatives can support business expansion and innovation.
“Because our friends at Phoenix Court, remember Saul Klein came on the podcast.”
The Decline of Non-London Businesses
22:09 to 23:46
Analyzing the shift of fast-growing businesses from outside London to the capital.
“He said, he announced in the speech that the ambition of the government, the target of the government was to double the number of unicorns, right?”
Unicorn Growth Target Discussion
23:46 to 26:15
Debate on the government's ambitious target to double the number of unicorns.
“So if they're going to double that, right, that would take them to 400.”
Show all 18 chapters
Unicorn Growth Target Discussion
26:36 to 27:32
Debate on the government's ambitious target to double the number of unicorns.
“relationship to business, both on this podcast and everywhere else on the internet.”
Challenges for UK Startups
27:32 to 28:00
Discussion on the difficulties faced by UK startups in retaining ownership against acquisition threats.
“And it's a really good story about how he's developed this AI platform now that helps with the maintenance of machines called iMaintain.”
Challenges in British Business Growth
28:00 to 29:27
Learn about the obstacles faced by British companies in securing funding and staying local.
The Ambitious Red Tape Reduction
29:27 to 30:46
Discussion on the government's plans to cut red tape for businesses and the skepticism surrounding it.
“and allow those growing scaling of companies to be homegrown and stay here and supported here.”
Risk Appetite in Government Decisions
30:46 to 32:14
Exploration of the need for ministers to take more risks in decision-making processes.
“And, you know, allegedly the Attorney General has just said to ministers, you don't have to worry about losing in the courts if the project is one that is going to make Britain more prosperous.”
Consultations and Decision-Making Delays
32:14 to 35:33
Analyzing how consultations can delay important decisions, illustrated by a case study on microchipping cats.
“So around this point is around risk then, isn't it?”
Economic Perspectives on Recent Policies
35:33 to 37:54
Insights on recent economic policies and their implications for wealth distribution and living standards.
“have given themselves on why consultations often don't help situations.”
Taxation and Public Services Discussion
37:54 to 39:43
Debate on the future of taxation, public services, and economic responsibilities among citizens.
“Obviously, if you are listening and, you know, you are in receipt of the state pension, neither me nor Steph wants to make you poorer.”
Transcript
Automatic transcript. May contain errors.0:00Steph McGovern:The Chancellor says we're turning a corner, but what into? He wants ministers to take more risks, but what does that look like? And there's a new fund for businesses in the North to scale up their operations. Will it make any difference?
0:14Robert Peston:Well, the Chancellor John Healy obviously hopes that it will. He was on his feet for well over an hour delivering his first big speech as Chancellor, in which he said his number one priority is reviving growth. But was there anything that he said that can mend the government's ailing public finances? As Trump's chaos in the world has led to soaring interest rates in America, the interest rate that the government has to pay in the UK has risen even more. Has Healy got any kind of a credible plan at all?
0:52Steph McGovern:This episode is brought to you by Octopus Energy. Greg Jackson, the CEO, is with us now. So, Greg, I've got a question for you. Is it true that by 2040 in China there will be no petrol stations because everyone will be driving electric cars?
1:09Robert Peston:Yeah, crazy as it seems, the Chinese state oil company, the one in charge of its petrol stations, is planning on having none by 2040. If you visit China today, what's really striking is the roads are quiet. I mean, all of the two-wheeled vehicles that used to pump out pollution and noise are now electric. Pretty much all the taxis, buses. Increasingly, more than half the private cars that are sold are now electric. And even this year, so far, 25 % of their trucks are electric. So that electrification means that they're going to be less affected by global oil shocks and they won't have any petrol stations.
1:48Steph McGovern:Greg, thank you very much. Now on with today's episode. This episode is brought to you by ChatGPT. Hey, it's Bill Simmons from the Bill Simmons Podcast. Have you guys heard about ChatGPT work? It's the new way to use ChatGPT for bigger multi-step projects. And when you need more than just answers, give ChatGPT work access to your apps and files, and it can create real work documents like spreadsheets, slides, and structured reports. Get started at ChatGPT.com by selecting work mode available on Plus and Pro plans.
2:32Steph McGovern:so this was the chancellor's first big speech and in it you know he was trying to make us feel optimistic he talked about he wants to get good growth in every postcode hope in our hearts he said as well and we're going to go through some of the things that stood out to us in it but before we do that, I think it's important to explain what he was on about when he referred to a recent uptick in consumer and business confidence, because loads of stats come out every month. It's what the economists look at to work out what's going on in the world from various organisations. And there've been a few recently that have been a little bit more positive than norm.
3:08Steph McGovern:And I just wanted to give you a flavour of what type of things they are. So, for example, recruiters have been saying that hiring's picked up for the first time in four years. and this is based on a survey that comes out monthly from KPMG and the Recruitment and Employment Confederation and it's slightly more positive about private sector employment than it has been so that's one of them and then in the services sector we've seen a little bit of an increase in their output over the summer and they're feeling a bit more optimistic about the year ahead and it's marginally improved and this is another one of those surveys you get every month this is the S &P's global PMI survey and it basically tracks monthly business sentiment and it's based on a survey of 650 service sector companies so that is some of the business confidence and that's what he's referring to there and then on the consumer side of things another survey and that's what's interesting about this is how much this is based on people being asked how they feel this is the JFK consumer confidence index they've all got catchy names a survey of 2 ,000 people.
4:13Steph McGovern:And in it, they ask them how they're feeling about the economy and their personal finances. And they are a bit more optimistic about both. So in the latest survey they've done, British consumers are more confident now than at any point since Labour took power two years ago. But that is how they're feeling in the moment that they were asked about this. British Retail Consortium also had some slightly more positive news out. and then private new car registrations up by a fifth in August too. Although the people who put that out, the Society of Motor Manufacturers and Traders are saying, beware though, September's the important month in all of this when the new plates come out for cars.
4:53Steph McGovern:That gives you a flavour of what he was referring to when he's talked about this slight improvement in consumer and business confidence. And it is mainly based on surveys of how people are feeling and it is far from the whole picture, is it, Robert? And that's a sense. What has been largely ignored is all of the stuff that's going on around the world.
5:12Robert Peston:Yes. I mean, I should point out that when he was giving this speech, which, as you say, was all about explaining what his growth strategy is. And it is his first big outing as chancellor. Yes, he started by saying things are looking up on the basis of these studios, but he delivered both that optimistic story and indeed his plans with all the enthusiasm and joy of an undertaker. So I'm not sure that he didn't slightly undermine his own case. He's got to do something about his demeanour. But my bigger issue is not about the content of the speech. It seemed to me that quite a lot of the policies that he said he would be promoting is stuff that we on this podcast, you and I think it's not a bad idea.
6:06Robert Peston:The issue for me is it was a bit like rearranging deck chairs on the Titanic, to use the cliche, in the sense that if you are Chancellor right now, the thing that you should be desperately worried about is what we talked about in our last podcast. which is the way that the price of government debt in America has been falling. The fact that that has therefore led to a very significant drop in the price of UK government debt, gilts, UK government bonds. And the impact of that is that the interest that the government has to pay on its debt has been rising very significantly. We talked on the previous podcast about that enormous interest bill for the government.
7:06Robert Peston:And actually, we just did a great event, actually, on the South Bank, Rest His Money Live, in which we showed this chart, which showed, actually, that if you're just not talking about projects, But if you're just talking about departments, you know, if the interest bill was a department, it would actually be the second most expensive department. But I mean, you know, obviously, in terms of projects, DWP and health are bigger than interest. But, you know, the interest bill is well over£100 billion and rising, twice what we spend on defence. And at the root of all of this is that the UK is what economists or traders call a high beta economy.
7:53And what that means is when America catches a cold, we get, well, not quite life threatening flu, but we get a much worse bout than they do.
8:08Robert Peston:because investors do not have confidence in the public finances of the UK. And other than trotting out the normal thing that we heard from his predecessor, Rachel Reeves, which is he will honour the fiscal rules and indeed also said that he would make sure the headroom, that's the sort of rainy day money, would be rebuilt to sensible levels. He said absolutely nothing about the thing that matters more than anything else, which is how do you persuade lenders to the UK not to punish Britain when America is making terrible mistakes? There was, I mean, literally almost nothing in this speech of relevance to that.
8:55Robert Peston:And that's why I'm afraid to say it just felt like a totally wasted opportunity.
8:59Steph McGovern:Yeah, it's interesting, though, isn't it? Because you're right. We don't have any idea where these early cuts to public spending are going to come from.
9:06Robert Peston:He didn't even say there would be cuts. He just said they would control public spending, which is completely different.
9:13Steph McGovern:Yeah. And he's deferred tackling things like the welfare budget until next year, hasn't he? He hasn't ruled out tax rises, which is interesting because that, I mean, they're going to never do be going to have to happen, aren't they, on the 20th of 28th of October?
9:26Robert Peston:Well, you assume so on the basis that if the headroom has collapsed from Rachel Reeves' 24 billion last year to, let's say, 5 billion. Yeah. You know, if he's not, you know, and if he's not yet in a position to cut public spending, cut the welfare bill or do the thing that you and I, I think you agree with me. So I'm not sure whether you do. But one of the things we talked about at that live event, and we actually talked about it, I talked about it at length on the last podcast, in my own view, is if he announced the reform of the triple lock, I think at that point, the confidence of investors in the UK, of lenders to the UK government would increase enormously.
10:03Robert Peston:I do think the interest bill paid by the British government would come down significantly. And that would have just so many positive ramifications for the government and for Britain. Anyway, it doesn't seem to be anywhere near making that judgment. So as you say, if he's not prepared to do something as bold as that, what are the alternatives? He's going to put taxes up.
10:24Steph McGovern:Yeah, and inevitably that means everyone will be trying to guess until the budget what they might be, which adds to what we always talk about is a huge problem in this economy, which is uncertainty. So all of those surveys I mentioned where people were feeling good, I bet if you ask them now how they were feeling, things will have probably changed a bit for them.
10:41Robert Peston:One of the reforms that is widely talked about and is widely favoured in government and labour circles is to capital gains tax. And one of the things that happened, you know, more or less exactly the same time as he was giving his growth oriented speech is a man called Chris Rokos, who is the third wealthiest man in Britain. And I think pays a colossal amount in tax. I think he may be the third largest taxpayer in the UK. He runs a big hedge fund, big investor. In fact, I think you and I, when we were at the BBC during the financial crisis, I'm pretty sure we interviewed him back then. Anyway, he's announced that for tax reasons, he is leaving the UK, relocating to Greece.
11:33Robert Peston:As I understand it, one of the drivers of that is because much of his wealth is in assets. I think a lot of it actually in his own fund. And, you know, his concern, I am told, and Chris, if you want to join us on the podcast to confirm any of this, you're welcome to, is that he fears that, you know, with any CGT reform, you know, he would have to pay really rather a large sum of money on that UK based wealth. Now, you know, there are plenty of people listening to this podcast who may not regret that a massive hedge fund guy is leaving the UK. But as I understand it, this is a guy who does pay at the moment quite a lot of tax in the UK.
12:16Robert Peston:And if he moves to Greece or when he moves to Greece, presumably you'll pay a lot less tax in the UK.
12:22Steph McGovern:Yes, exactly. But the only thing I would say on the point about him saying, you know, talking about optimism. And although you say delivered it like an undertaker, at least we had a bit of that because you and I in earlier podcasts talking about Rachel Reeves and Kia Starmer kept saying, please, we know things are tough, but be a bit more optimistic, like give us a bit of hope. And I think we did get that from them in some respect. Also, I think it's worth us just talking about some of the plans he did announce. You know, OK, he talked about his plan for growth, but it lacked an enormous amount of detail.
13:00Steph McGovern:But there was a few things that stood out to me that I think are worth talking about. And one of which is obviously, you know, here we go. The Northerner banging on about the North again. And I mean, I've never felt so loved in all my life as I do at this moment in terms of, you know, political love. They're obsessed with the North. In fact, it's too much. I'm finding it suffocating now. But, you know, we have talked a lot on this podcast about businesses and the investment they need and how it's much harder. Yes, there's various funds for starting a business, but it's much harder to get that scale up investment.
13:35Steph McGovern:So two interesting things that I think came out of the speech were, one, this Northern 500. OK, I can see you rolling your eyes.
13:43Robert Peston:No, no, that's not what was happening at all. I was just hanging on your every word.
13:48Steph McGovern:Right, let me tell you what it is. I had a chat to Kim McGuinness about this. So this Northern 500 is their attempt at Germany's Mittelstand. So the medium sized companies, which they say are the backbone of the economy. And what she was saying is that in the UK, especially outside of London, a lot of these businesses feel left out. So they feel like there's that, you know, lots of initiatives for starting a business. And then obviously the big PLCs, the big larger companies get recognised. But there's very little recognition or funding for those mid medium sized companies. So this whole Northern 500 is about bringing together the most ambitious, apparently, mid-sized businesses into a single growth community, which will be led by mayors and then supported by private sector and government.
14:35Steph McGovern:Although I would question, how do you make it into that group and how are they going to work all that out? Isn't that just one homogenous lump?
14:41Robert Peston:So years ago, a friend of this podcast, Andy Haldane, was at the Bank of England. Now, I think he's called president or chair of the Chambers of Commerce. But anyway, he's out there representing small and medium sized businesses. He did quite a lot of work about sort of soft measures that can improve productivity. And one of them is getting businesses to talk to each other about what works for them in terms of working practices that improve output per hour, output per worker. So if this could become a genuine community of businesses with trust, enough trust in each other to, in a sense, share their experience.
15:29Robert Peston:Yeah, that could help. Yeah, totally. But as you say, we just got to hope it's not more than some sort of government branding thing. We've got to hope that it becomes a genuine, you know, proper institution with the ability for that communication between businesses.
15:45Steph McGovern:Yeah. And another part to this is this Northern Scale-Up Fund that was announced. So, this is a£150 million fund allocated through the British Business Bank. And just to say this isn't new money the Treasury are putting in, it's a reallocation of money the British Business Bank already had. And the point of this money is to provide investments of between 5 million and 15 million to businesses scaling up, essentially. So in return for equity, equity, because what we already have is like the regional angels program. So this is for early stage equity. And then you've got the more significant northern powerhouse investment fund, part two.
16:27Steph McGovern:So it went through and it's in its second phase now. And this provides debt and equity of up to five million. So what they felt was missing was this next level investment for companies that have done the startup stuff. They've outgrown that early stage funding and now they want to scale up. So that is another big announcement that he said yesterday. interestingly it's also this announcement of this money is the same week that we heard the southeast investment fund was launched so that didn't get mentioned in a speech but that's probably because rachel reeves announced it in the last spending review but that launched this or is launching this week and that's 210 million of funding and that's sort of some would
17:10Robert Peston:say that's a bit depressing that they actually funded the southeast scale up fund before they
17:15Steph McGovern:did no they did so that's interesting i've been looking into this so actually this is the the southeast is is behind the north in terms of what they're getting on this because the this is the equivalent of that first one i mentioned the northern powerhouse investment fund part two
17:30Robert Peston:so they're reinvesting some of the proceeds of that aren't they yeah and so that so that that
17:35Steph McGovern:npf or whatever they're calling it npf i don't know you know what they're like with all these puffins um this is so it's the southeast equivalent of that so this northern powerhouse one was launched in 2024 that's when they first did their big deals they've supported so this is
17:49Robert Peston:a second round whereas the south is only getting a first round yes and yeah and interesting just
17:55Steph McGovern:looking as it made a difference that's probably one of the questions you might be asking yourself 400 businesses across the north have been helped by this kind of startup one and it's facilitated almost 275 million pounds of investment not all money from the british business bank because obviously part of this is yes they will put money in either as debt or equity and then they hope to crowd in that private investment and that's a big part of this and I was looking at examples you know of companies that have done well for it and and one of the ones that I think is a good example is is a company called Tickets for Good so this is a like a platform that basically provides key workers with low cost tickets for live events so obviously uh the idea is it's got that you know it helps nhs workers teachers charity staff that type of thing get low cost tickets but at the same time it helps venues who want to make sure they maximize their capacity and so through the funding through this northern powerhouse investment fund part two um and this private sector investment they've now been able to expand quite rapidly so you know they're in the us now they're looking at expanding in Europe and that's what this money is helping them to do because all of this is about well the other big announcement trying to improve our number of unicorn businesses isn't it so I'm
Read the full transcript
19:10Robert Peston:going to come on to that in a minute but I just also just wanted to reinforce the importance of getting more fast-growing ambitious businesses could be in tech yeah life sciences could be an advanced manufacturing, but we just need more of them outside of London. Because our friends at Phoenix Court, remember Saul Klein came on the podcast. He is arguably the most important early stage seed investor in British tech. He's developing this fantastic database of Britain's fast growing young companies. You know, actually, I hate these, this isn't this nomenclature, these clichés, the colts, the thoroughbreds, the unicorns.
19:58One of the things that this database shows,
20:02Robert Peston:and this is sort of depressing and slightly depressing. So if you go back to the 1990s, right, and you looked at these fast-growing young businesses, the colts, the thoroughbreds, the unicorns, 65 % were outside of London, right? 65%. Yeah. Right?
20:22Steph McGovern:Good.
20:23Robert Peston:If you go back to 2000, if you now go to 2020, you know, since then, it's fallen to just 31 % outside of London. So, you know, there has been this massive shift of fast growing businesses to London, which is really bad for sharing prosperity around the country. So, you know, he is absolutely right, the Chancellor, to focus on how do you spread the wealth. His, you know, growth in every postcode, these sorts of businesses in every postcode, incredibly important. Yeah. You know, because at the heart of why so many people think the economy doesn't work for them, it's just because, you know, over that period since the 90s, You know, the gap in wealth and income between London and the rest of the country, it widened enormously.
21:19Robert Peston:And sadly, in recent years, just hasn't narrowed really to any significant extent at all. I mean, maybe there's a little bit of narrowing with Manchester, but not really. Statistics don't show that to any significant extent, despite Andy Burnham's claim. So, you know, there does need to be a massive initiative to make sure that these businesses, these fast growing businesses, aren't seen as a sort of uniquely London, southeast phenomenon. So that is the right ambition. You raised the unicorn ambition. And so unicorns, just to remind people, these are businesses with an equity value, a value of a billion plus.
22:03Robert Peston:He came up with, oh, I don't know, I sort of hate, this is the sort of thing, so there was a lot of good detail in this speech. This sort of thing, actually. Gets you good. I don't like it. Never mind your unicorn. He said, he announced in the speech that the ambition of the government, the target of the government was to double the number of unicorns, right? So the two things absent from this ambitious statement. One, how many unicorns does he think there are today? And part of the problem is you go to one data provider or another, you know, the estimates of how many unicorns are all over the shop.
22:40Robert Peston:Some say they're as few as 50. Others say they're nearer 300. And then the other thing is no reference over what sort of time scale we were going to double the number of unicorns. I then did go to the Treasury and say, I need this detail. but guess, you give me a guess over what time scale they're going to be judged on this. What are you going to guess? Over how long are they going to double the number of unicorns?
23:08Steph McGovern:Well, given that, I mean, they're showing more optimism than they normally do. So five years?
23:13Robert Peston:Ten years.
23:14Steph McGovern:I was going to say ten, but that's the best of my life. It's meaningless.
23:17Robert Peston:It's so meaningless. I mean, who in ten years' time is even going to remember the...
23:23Steph McGovern:Yeah, the number of unicorns in 2026.
23:26Robert Peston:I mean, you know, the charges of John Healy still being, or, you know, Burnham still being in charge in 10 years time. I wouldn't put a huge probability on that. So it's the sort of commitment you make when you know you're not going to be held accountable. And anyway, for what it's worth, they think there are roughly, just so if anybody's listening and cares, they think there are roughly 200 unicorns now. So if they're going to double that, right, that would take them to 400. unicorns. I have to say, you know, against a position where we do have by far the most vibrant tech and high value, you know, high value sort of small company sector in Europe by a wide margin, whether it's life sciences tech, we, you know, way more vibrant.
24:20Robert Peston:So all they're really talking about is that 200 of those would be worth each, you know, another billion dollars over the next 10 years. If I'm honest with you, I don't think that's a very ambitious target. No, and take into account inflation. I'm not sure that, you know, that the reality of that is quite as exciting as, you know, as it ought to be. As I say, look, the idea that they've worked out, that there's a huge opportunity here, It's something we talked about many times on this podcast because, you know, we do have a brilliant university sector that spins out these brilliant young businesses.
24:59Robert Peston:But again, there wasn't enough detail about making sure that British money goes to these businesses so that they don't feel obliged, as so many of them do now, to relocate to America, float in America, raise money in America. Again, you know, Phoenix Court has provided me with stats about how many of the big pension funds that committed to, you know, in the Mansion House Accords, to Reeves and to Hump, to back these sorts of businesses, how many have actually done that? I mean, it's so few in the context of this sector that I'm not even going to, you know, it's almost a rounding error how little money these pension funds have provided.
25:53Robert Peston:As for local government pension schemes, which have a colossal amount of money, they've done almost nothing in this sector. And again, there just wasn't anything in this speech that talked about how to unlock British savers money for British growth, for British fast growing companies. You know, a big opportunity missed again.
26:16Steph McGovern:Lots more we want to get into about the consultations. We're going to see acts in judicial reviews that won't be happening, but we'll do that after this quick break.
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27:31Steph McGovern:I was talking to a lad the other day called Adam Stockwell, who is an engineer in a manufacturing company. And it's a really good story about how he's developed this AI platform now that helps with the maintenance of machines called iMaintain. and he was telling me how he had loads of help at the start in terms of you know investment opportunities and getting his business going and all of that and I said to him so what are the chances are of you being bought by an American company now and he said oh absolutely we'll be bought by an American company because there's nothing once you start growing you know we got all the help from from the government at the start of the of setting up the business the business is now doing really well globally because it helps you know with productivity and all the things we talk about it helps engineers when they are fixing machines be able to fix them much faster because it gives them all the information via ai on how to do it based on everyone else's learning from using it um anyway he was just adamant he said you know he'd love to keep the company british but it's just not gonna happen he's there'll be americans who buy us and for loads of money like he was so he was only only young lad but even he was just like i'd love to keep it here we've got the skills here we've got the brains here but it will be yeah it will be a pretty much 100 %
28:46Robert Peston:dead on it'll be American and then I was told a story and if the business British Business Bank is listening they can come back to me on this I'm not going to name the individual company but there's a particular again amazing high growth company in the agri sector we're trying to get money from the British Business Bank and they were actually told we're not going to give you money unless you have an American lead investor. I mean, what the hell is that about?
29:15Steph McGovern:Well, let's hope because people like, you know, obviously I talk to Kim McGuinness quite a lot because of where I live, is really adamant that this type of fund now is going to make a difference and allow those growing scaling of companies to be homegrown and stay here and supported here. Let's see if any of this makes a difference. Shall we chat though now about your love of red tape and the fact they're going to, once again, they've given us another ambitious target to cut red tape.
29:44Robert Peston:Yeah, I mean, look, again, this is one of those sort of, you know, motherhood and apple pie things, right? You know, he announced an ambition by the end of the Parliament. He said, I think this was not 10 years. I think this was actually genuinely the end of the Parliament, that they would try to cut costly red tape for businesses by, I think, 25%. Yeah. Right? Again, nothing, you know, I mean, so long as they don't, you know, actually abolish regulations that we all need to, you know, protect our safety. Of course, that's a brilliant ambition. I have lost count since I first got interested in government and business of the number of chancellors and business secretaries who've made these sorts of pledges, bonfire with the regulations.
30:32Robert Peston:You know, I mean, it may or may not happen. I mean, you know, this may be the first time that the relentless on sort of new regulations does get reversed. But, you know, forgive my scepticism because I've heard it so many times. There are some other things that are related to this that I massively approve of. He said that the attorney general had just given advice to all cabinet ministers and ministers that where they've got a controversial decision to make, they so long as they've got a sort of credible legal case for what they're doing they don't have to essentially be convinced the decision that they're making let's say it's on a on you know some planning decision that it's a hundred percent legally watertight you know because they're you know there has been a problem in the uk that you know too many ministers have have delayed making decisions because they were fearful that they might lose in the courts.
31:32Robert Peston:And, you know, allegedly the Attorney General has just said to ministers, you don't have to worry about losing in the courts if the project is one that is going to make Britain more prosperous. Well, that's a great ambition. Let's see whether actually ministers and their officials have the guts to do that.
31:48Steph McGovern:There's a good example given for that, which is Sizewell C. So this was delayed by two judicial reviews, both of which ended up being dismissed by the courts. And this then obviously delayed the clean power to the equivalent, apparently, of six million homes and 10 ,000 jobs at peak construction. So that was delayed by, as you say, two judicial reviews that ended up being dismissed by the courts. Load of money wasted in all of that, too. So around this point is around risk then, isn't it? Because, you know, John Healy talked about basically wanting ministers to take more risk. And he's written to the ministers to say that, to say, I want you to be able to feel like you can make more risky decisions and not constantly having to worry about the legalities around all of this, which has got to be a good thing.
32:37Steph McGovern:Because we keep saying they don't take enough risk.
32:40Robert Peston:No, neither ministers or officials, in particular officials, you know, have enough of a risk appetite. That is certainly true. And look, there was something else which is definitely important, which is when it comes to expensive government capital projects, they have reduced what's called the discount rate for assessing whether or not that project represents value for money and should go ahead. They've reduced it from three and a half percent to three percent. Now, the practical impact of that is that it means that more projects whose returns only come in the long term will be will pass the threshold for being approved.
33:31Robert Peston:And it is thought that this means, for example, that projects in the north of England, for example, where because of the absence of current infrastructure or enough businesses, all the rest of it, the returns from many projects in the north are regarded as more long term and up to now because of the discount rate have not been approved. it is thought that this will allow more approval of big investments, you know, in the North Midlands and in the North East and Northwest. And it'll, in a sense, reduce the privileged advantage position of London and the South East, which is great. Yeah. Right. But people should not be fooled into thinking that this means that these projects will necessarily happen because it doesn't magic money from nowhere.
34:23Robert Peston:Nowhere. The money has still got to be there. It allows, it should allow a chancellor or indeed other ministers to choose a northern project over a southern project. But they've still got to make the choice.
34:36Steph McGovern:And on top of that as well, you've got this other news, which I think is good in this, which is around an adding on to this risk taking vibe that Healy's going for now is around consultations and him wanting to basically not use as many. We all know when a minister goes to make a decision, before they act on it, they have to do this public consultation.
34:59Robert Peston:I mean, literally, nobody knows how many consultations this government is currently carrying out. Because there have been, since Starmer became prime minister, there have been so many consultations launched. I mean, literally, I don't believe there's anybody in the world. Maybe an AI super brain can calculate it. But literally, yeah, look, I mean, that must be a good thing, mustn't it? to actually basically force ministers and their officials to actually take responsibility rather than farming out the assessment to some outside people.
35:27Steph McGovern:And to do that, what they're saying is, you know, it's about involving a wider range of people earlier on. There's an interesting example, which actually the government have given themselves on why consultations often don't help situations. So they talked about when they were looking at whether to microchip cats in the same way as they do dogs. So this was back in 2019. They did a call for evidence before the big consultation and they got 99 % of respondents said that cats should be microchipped in the same way as dogs. It then took nearly five years to make it happen because there were two further consultations, the legislation through Parliament, and then it was finally enacted in June 2024.
36:14Steph McGovern:So five years to microchip cats in the same way as dogs, despite everyone thinking pretty much that they should right at the start of all this. So it's that type of thing that they want to try and get rid of.
36:24Robert Peston:Now, we have said, therefore, that there was a lot of good stuff in this speech. I'm going to make, I'm afraid, one other slightly what you might call negative the right word, carping the right word. I don't know. I'm going to sort of make a point, though, that I think is relevant, which is Rachel Reeves gets pushed out by Andy Burnham because, you know, he takes the view that everything that's happened over the last 40 years economically has been a disaster. This is going to be a total reset. I have to say there was nothing in this speech which Rachel Reeves might not have said. Every single initiative was either stuff that she'd already paved the way for or was about.
37:13Robert Peston:You know, this this was basically written by a very cautious treasury. It's the same treasury which basically controlled Rachel Reeves. and I have to tell you, at this particular juncture, it's early days, it doesn't seem to me that Healy is showing any more independence of thought or courage than his predecessor was. It may come to it. He may, by the time of the budget, start doing much bolder things. We shall see.
37:39Steph McGovern:Because we know that Burnham does not like leaks either, does he? So maybe they're going to bring out some big guns in there.
37:46Robert Peston:Maybe the triple lock is going to be reformed. Maybe they're just building up to it. And, you know, interest rates in this country will fall and we'll all feel much richer. You know, who, well, I say all. Obviously, if you are listening and, you know, you are in receipt of the state pension, neither me nor Steph wants to make you poorer. But the transfer of income and wealth to retired people from younger people over the last 20 years is one of the big trends. And it is, you know, if you're a struggling family on low incomes, the idea that just some of that money could be transferred, some of that pensions money could be transferred in ways that would improve your living standards, and in particular if it led to lower interest rates, you know, that's got to be something that this government has to take seriously.
38:33Steph McGovern:Yes, and we will find out in October. But in the meantime, we started right at the beginning of all this about talking about borrowing costs. And interestingly, the Resolution Foundation have got some analysis that they've done on all of this. and we are going to get Ruth Curtis back to go through it. But do you want to just give us a headline?
38:49Robert Peston:Well, it is just that she and the Resolution Foundation have actually done some work that actually we've talked about as a sort of general principle, you know, in previous episodes, which is around the idea that taxes for people on middle incomes are high. In fact, there are all sorts of ways you could argue that tax on people on middle income are not high. And so what we want to talk to her about is what should the Chancellor do in this forthcoming budget? And actually, is there a case for not loading everything onto businesses? And actually, you know, is there a case that all of us need to pay a little bit more if we want to have, you know, the public finances, the public services that we think we deserve?
39:43Steph McGovern:Yes, so that will be in our next episode, which will be with Ruth Curtis from the Resolution Foundation. But that's it from us for now. Bye bye.
39:52Robert Peston:Goodbye.
From the publisher
The chancellor says we're turning a corner, but into what? He wants ministers to take more risks, so what does that mean? Why was their nothing that directly addresses the UK’s vulnerability to a debt crisis? The North is getting a new fund for businesses to scale up - will it make a difference? And what can we learn from microchipping cats?
Robert and Steph dissect the Chancellor's first big speech announcing plans to remove barriers for investment, cutting red tape, tackling risk aversion and getting PuFins to invest more in the private sector.
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