Can plug-in solar panels save out energy bills - plus what's the fuss about private credit?

0:02Welcome to This Is Money Podcast, sponsored by Trading212. Download the Trading212.com.

0:30money. Plus, soaring fuel prices may be threatening to derail your summer holiday budget, but it's not too late to bag a deal, say the experts. A wave of new towns is set to be built across Britain, but where's the best place to live? And Simon delves into the world of shadow banks and private credit. Should we be concerned? Don't forget, you can start today with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. The first is war in the release threatens to push up energy bills. More of us are exploring greener power sources to save money. Energy Secretary Ed Miliband is desperate to get more of us to wean ourselves off fossil fuel power.

1:07The solution? Could it be plug-in solar panels, which might be heading to a supermarket near you within months, according to Labour? So this is money dug into this a little bit more, what they actually are, how they work, who can buy them, where you can buy them, and whether they could save us money in the long run. Simon, firstly, welcome, overview. Are people really exploring greener options? Like what? What's the evidence here? Well, green energy is a conundrum, isn't it? On one hand, you've got the, it's all a massive swizz. It's driving up our bills. Drill, baby, drill. Why are we not using the gas and oil that we have in the North Sea and exploring for more when we could be and instead we're tilting at windmills and it's all Ed Miliband's fault argument right on the other side you've got the actually quite like the idea of solar panels and a battery system and reducing my bills down to almost nothing side of the equation and there's more people who are interested in that kind of thing than perhaps public perception often gives.

2:18All you have to do is walk around the streets, look at people's roofs and see all the solar panels. People are genuinely interested in this and there's been a real uptick in interest in then connecting those solar panels to battery systems. The problem is I think that often this is accompanied by a government trying to force something onto people that they're not necessarily quite ready to have yet or want to adopt. and laying out a roadmap that goes faster than is probably wise and people just feel like the nanny state's getting involved and i would point to two things here uh which arguably are quite good and make people's lives better when they have them smart meters and electric cars and also currently heat pumps now now people are much less interested in these things and having them in the volume of households than the government is interested in a volume of households having them so it feels like the government is trying to push things on them the government is effectively fining car makers for not selling a large enough proportion of their cars as electric cars it's trying to foist electric cars on people electric cars are great lots of people have them most people actually don't really care what their drives their car drives like and most cars nowadays are designed to be silent and people care about the more things like you know the tech inside it and all that kind of stuff so actually electric cars are ideal for most people and they can be very very cheap to run smart meters look i'm a big fan of smart meters right because i like my energy bills being accurate i spent many years with dumb meters and my energy bills were all over the show and not helped by the energy companies I was dealing with.

4:06Since I've had smart meters, it's definitely been a better scenario. Heat pumps. I can see the argument for heat pumps, right? They are more efficient, but I don't necessarily think the technology is where it could be. And I don't think it's suitable for all homes, but it feels like they're being foisted upon people. Solar panels, on the other hand. Now, this story we did this week on them came off the back of a story we did either last week or the week before when this first emerged and it was talking about them being on sale in the middle of Lidl um no Lidl was going to be flogging them in the middle aisle and I was like oh it's a good story I mean anything that you could put middle of Lidl in the headline of people love solar panels in the middle of Lidl everyone's like what solar panels middle of Lidl what are you talking about uh but then I was having a conversation with someone at the weekend and he's like yeah these plug-in solar panels he's I'm thinking about doing that though so I'm quite interested in that I was like oh yeah he's like what do you do you know much about it and I was like middle of little not a lot more than that if I'm going to be entirely honest we had a story on it um but and I don't really know much about them so I was like we should do something more on this people are interested in that wasn't our only person who's mentioned this to me and that original story did well so we decided to go digging into plug-in solar panels.

5:26And people really wanted to read this story. Yeah, I'm not surprised. I've got a lot of questions about it. I mean, firstly, I've got a big TV right in front of where I'm sat. And I'm thinking, is it about that size? And then I'm thinking, okay, right, once you've bought it from your middle aisle at Lidl or wherever you can buy it from, then you sort of presumably plug it in. But then how do you get it to then feed into the power network? I've got a lot of questions, right? so let's start with the obvious how big is it it's the size of something that you could put on a balcony a rooftop a garden an external wall i'm i'm looking at a picture of some plug-ins so yeah but i think we've got a big one yeah we're talking you know not huge um yeah maybe you know a meter by a meter kind of thing could potentially be bigger could potentially be smaller the smaller you go the less you're going to generate um you know you see them on the roof of uh canal boats yeah that's the site how much would that generate how does then that it practically work well this is a great question isn't it because i must admit this is something that i didn't really engage with first time around when i was just amused by middle of lidl references which is like yeah i totally get how you plug something into the wall when you get electricity but the electricity comes out of the wall into the thing the electricity does not go from the thing into the wall i i my electrical knowledge is very limited i do not try and do home electrical work and it's advisable not to but i know that power comes out of walls doesn't go into them it doesn't come out of the walls comes out the plug socket you know please don't feel the need to write in georgie's georgie's tv in front of her, the power comes out of the wall into the TV.

7:15It doesn't go into the wall from the TV. Well, so they can be plugged into a home's mains electricity system using a standard three pin plug. They don't need to be fitted by a qualified electrician. And this is where you're like, okay, how does this voodoo magic work? Well, plug-in solar panels can already be purchased in the UK but rules prohibit them from being plugged into a circuit connected to the grid including household plug sockets. Retailers are working with the government to update the rules and enable households to do this. So standard household plug sockets are not designed. We spoke to an expert and he said standard household plug sockets are not designed for electricity to flow backwards into the system.

8:01Because of this directly plugging generation into a socket is generally not compliant with existing electrical safety standards but the technology does exist for you to be able to do this and what happens is you have the the plug-in solar panel and then it has something called an inverter and the inverter changes the power so the panels generate dc electricity from the sunlight and the inverter converts it into ac electricity that matches the home's power supply so dr phil who's i was talking about his chief executive solar panel company absolar told us in simple terms it works like a small power station feeding your home directly reducing how much electricity you need to import from the grid um you can instantly use it to power your home or you could if you had a battery system that was capable of storing it you could put it into the battery system what what it's being suggested they are not going to be able to do is do that thing where you put power back into the grid and then you get paid for it it's going to be for your own home use basically and they have these all across europe apparently but due to our rules we can't have them in this country and that's what they're trying to change right then i think about how much they cost and and are they quite safe they are safe yes i mean this is the obvious question that you would first ask but in germany where you can get balcony plug-in kits from ikea they cost anywhere from about 449 euros to 2761 euros so you're talking like 400 quid to about 2400 quid kind of thing that's pricey yeah but that's if you bought 2400 quids worth you'd be getting quite a lot of solar panel for that you would retailers in britain expected to charge about 400 pounds per solar panel right and a household could save about 70 to 110 pounds a year according to the department for energy security net zero by installing plug-in solar now dr wu said that actually you're not going to get payback in in in four years he said that he believes on the basis of current electricity prices payback periods could be longer six to 10 years so the cost of the panel it's going to take you six to 10 years to to earn that money back which again and this is where i go back to electric cars is you think how long realistically are you going to have it for how long are they going to last for you kind of have to weigh up are these things and they some of them look quite flimsy really going to be lasting you six seven years to make any sort of difference i mean i would strongly recommend not putting them in the garden where the kids play football or something like that yeah adrian arbib owner of solar installer evolve electric said that plug-in solar panels would be most useful for people with south-facing southeast or southwest facing properties right if you live in a non-facing property forget it he said there's no point buying them um but he said that solar panels he's working on now have a lifespan a long lifespan and can last for around 40 years but those are the wow Those are the kind of solar panels I think that you're installing properly on a building.

11:17I don't think a portable one is going to last you that long. But I guess the great thing about a portable one is if you move, you can take it with you. That's the problem people have with solar panels and the investment into them is it can take quite some time to get that investment back. And if you move, they're on the roof of your house. You can't take them with you. It's impractical to do that. are they going to raise the potential value of your house for someone buying off you maybe maybe not you know are you going to get the money back it's not quite sure you know solar panel installers will tell you yes other people may tell you no there's other factors at play but at least for the portable one you could take it with you but i think it's not just about the money you're saving for people as well i think there's something else going on here i think there's this thing where people are like i would like some energy security for myself yeah that isn't reliant upon the power network i think people are a increasingly concerned by costs for obvious reasons we saw the energy price spike in 2022 we're seeing an energy price spike again now we don't appear to have learned a number of lessons from the last time around and somehow we're still paying electricity prices based on the marginal price of gas-powered power stations um you know i would have thought that that might have been something that would be a good idea to sort out in the last four years um but i think people are also worried about well not just the cost of power what if i can't get any power i don't want to be doom-mongering and things like that because i'm not overly concerned about this myself but there's a lot of prepping going on in this country you know low level prepping there's there's hardcore prepping going on you know amongst the real preppers but there's a lot of low level prepping there's a lot of people who've got extra food in the cupboards who've got bottles of water stored in the house well that's all very well and good but how are you going to cook that food um i mean my wife for example has encouraged me to go get a newly filled up uh gas barbecue bottle um may potentially be to do with the fact the gas prices are going up rather than her thinking that armageddon is coming there are people you know storing extra stuff because they're like well you know if the lights go out if the power goes off if something happens then i want to be able to last for a few days and if you've got some of these plug-in solar panels it's a relatively inexpensive way of of doing that you know and i think actually that's one of the things driving quite a few people towards the solar panel and battery system as well this ability to be off grid if they need to be Could it realistically make a difference?

13:57Should we have more power cuts and that sort of thing? Could it generate enough to have three meals a day or a warm shower? Like what do we actually I mean obviously it depends on the size and where you have it etc but is this a realistic viable option or is it just sort of a almost a nice to have I feel a bit better for having it? I think that if you didn't have any electricity from the mains and you only had to plug in solar panel and you just bought yourself one 400 pound solar panel, you may need to adapt how you normally live. For example, you might not be able to have dinner at the time you normally have dinner because the sun may not be shining.

14:43Welcome to the Doomsday Edition of the This Is My Podcast. Buckle up, everyone. Happy Easter, everyone. say there is a scenario where you don't have any power maybe it's just down to a good old fashion power car look at what happened in spain where they messed up their grid a couple of years ago and they had widespread power cars say there's a scenario like that it's not due to any kind of nefarious reasons it's just plain old incompetence you would be better off being able to generate some electricity and do some stuff and go okay well i can have a a very short tepid warm shower or i can at least cook this or have some lights on or whatever um than i'd be having no electricity whatsoever yeah better to have to adapt than to just completely camp out so when are we going to see them in the shops simon um i think ed milliband's going to be walking around in the aisles punting them on monday no it's not that soon uh as i said they're working on sort of changing things it's in the roadmap basically it's the government launched consultation in 2025 after publishing its uk solar roadmap things are stepping up ed milliband was talking about this the other week uh as part of our plans uh in a statement on 24th march 2026 he said the iran war has once again shown our drive for clean power is essential for our energy security so we can escape the grip of fossil fuel markets we don't control.

16:12Arguably, we may possibly control the fossil fuel markets in the North Sea that we do control. Whether, he didn't say that bit, I did, whether through solar panels fitted as standard on new homes or making it possible for people to purchase plug-in solar in shops, we are determined to roll out clean power so we can give our country energy sovereignty. The government said plug-in solar panels would be in shops within months, offering households chance to significantly cut their energy bills. We're going to stick with the theme of rising bills as a result of the conflict in Iran. We're moving away from solar panels now and on to our summer holidays, because they could be about to get more expensive.

16:54Airline bosses have been coming out speaking in the news that increased fuel costs, as they have seen, might have to be passed on to travellers if the conflict drags on. The cost of flying has already jumped over the past month amid the growing oil crisis. The average price of a barrel of jet fuel, I believe, has soared over 100 % since February, and Europe's supplies are reportedly drying up. But it's not all bad news, Simon. Apparently, you can still secure a reasonably priced deal if you get in quickly, because you have been speaking to the experts. But first, a bit of context. What's been going on?

17:28Every day, I feel like I'm reading an article about oil prices just up and up. Someone sensibly decided to set fire to the world at the end of February, and things have not gone amazingly well since the iranian regime is pretty awful i think it's generally seen as but i'm not sure this is unfolding as planned and the uh disruption that i don't need to go into any details to explain to people about because they've been getting wall-to-wall updates on it over the past month has been immense and it is really big for the travel industry because of two things one it has sent the price of jet fuel through the roof as you said and is also leading to expectations of higher inflation across the board on you know literally everything from energy costs to food to inflation for your staff so you're going to have to pay them higher wages and so on and so on right but also due to the rise of the middle eastern airlines not just for people flying to the Middle East as a destination which obviously has been a lot more popular over the last you know 10 to 15 years than it was in the 10 to 15 years before that you know the airlines the the emirates of this world have really claimed a lot of the international airline market you know the emirate countries have been very successful in sort of creating travel hub at airport hubs where you know people might not be flying to those countries but they're stopping over in those countries and so we saw huge disruption when this first kicked off not just from people who were in Dubai or you know the other emirates and and the and that area but people who were trying to get back from other parts of the world and were coming, you know, via Dubai, via Doha and things like that.

19:24Our own Helen Crane was due to fly out of Australia that morning and ended up stuck for the rest of that week. Now, the obvious knock-on effect of this is that A, prices have gone up due to all of those factors, but then B, demand is getting shunted elsewhere because the people who would have been going to Dubai on holiday are now going, where else can I? Spain. Drop some cash. Yeah. How much extra are we talking about? Again, it depends how long this conflict goes on for. But I mean, it could be quite significant, couldn't it? So is there something we can do? Yeah, I mean, you need to think strategically is what I would say.

20:03There's that where are people going to try to go to instead question that we talked about. If they can't go to Dubai or Amman or wherever, or the flights now to maybe somewhere they were going to connect to via those airlines are going to be more expensive. then they're going to go right where's a safe a safe place right and and a safer hot spot and and it but still a bit luxe caribbean fancy parts of portugal as you said you know i think those are going to be hit more and also then it's some other countries so people are thinking turkey should i go to turkey cyprus again people are going should i go to cyprus although a colleague of mine came back from cyprus we said yeah it was great it was brilliant it was lovely you know i'm just wondering where the airlines will reduce the number of, are we seeing that?

20:54They're reducing the number of flights in places like Cyprus. So then inevitably, even you think, oh, well, I'll get a deal because no one else wants to go there. So even if demand stayed the same, it would get more expensive to get there. Yeah, you saw that in the pandemic, actually. You know, flight prices were all over the show in the pandemic. You could fly unbelievably cheaply or you could pay an absolute fortune. It was a bit of a lottery. So Alistair McLean of travel agent Dorking Travel told us if everyone decides not to go to Turkey and instead wants to go to Spain, then the airlines will add a premium.

21:27We spoke to comparison website Kayak and it said that overall flights from the UK to all European destinations are still pretty much level with last year's prices. So that was looking at average economy fares between the 1st of March and 22nd of March for flights within 120 days compared to the same dates in 2025. but tickets to long-haul destinations such as america increased by as much as 15 percent quotes for return tickets to central american hot spots guatemala and costa rica they're up by 15 percent on last year return tickets to south america cost nine percent more flights to the caribbean are up four percent so again doesn't seem like there's a lot of rhyme or reason there because actually no one's swapping dubai for guatemala and costa rica they'd be swapping it for the Caribbean but the Caribbean's gone out by less but then you know you've got the extra cost of the jet fuel and so on but then we spoke to John Morfitt owner of luxury resort Royal West Moreland who has seen inquiries surge by 25 % in the last few weeks for its Barbados villas and he expects this this spike to continue so you don't need to be a rocket scientist to work out what's going to happen to the price of the villa in Barbados do you so I mean what can you do definitely consider buying now because the price of fuel hasn't come through yet to the airlines a lot of them hedge their fuel costs for quite a long time as they start to have to buy more expensive fuel and they'll hold off doing that for as long as possible they're going to start pushing up prices you'd think they'd be doing that now ahead of it but it's a very competitive industry flights and price discovery is very very easy you know to compare flights so they're not always in a position where they can do that they'll always be someone who will try and go a bit lower than someone else um and there's quite often a lot of choice the other thing is to think you know a bit more strategically it's like okay well maybe this wouldn't be the year to go to Barbados you've always dreamed of a trip to Barbados maybe this year wouldn't year wouldn't be the year to do it or you want to go to to Portugal well okay the Algarve's probably I mean it's Algarve flights are always pretty expensive through summer right but maybe look at booking them now if you want to go to the algarve um maybe it might be that bit more expensive but what about if you fly to lisbon instead and instead of flying into and you go to somewhere in portugal that isn't the algarve which is less likely to pick up that dubai overflow i went to the west coast of most of the coast of portugal is the west coast but what's referred to as the west coast of portugal last year uh above you know the algarve and it's much emptier than that very popular bit of the bottom absolutely lovely and you could fly into lisbon and drive down there it's not that far also don't fly on a saturday like far and away the most expensive days to fly don't try and fly back on the last weekend of the school holidays don't try and fly out on the first weekend of the school holidays even if you fly on a friday or a sunday you can quite often save quite a lot of money compared to flying on a saturday and if you can fly on a thursday or a monday you can quite often you know i mean in busy school holiday times which unfortunately yours truly is someone who has to travel in those times if you can travel on one of those days instead then you can save an absolute packet so you know think about it in in that way the worry is that people are going to start getting hit by fuel size charges as well you know money that gets added onto their ticket i was talking to someone the other day about airline stocks and it just made me remember the thing that we have spoken about many times is never underestimate make the capacity for brits to want to travel abroad post 9-11 post covid come hell or high water we'll use our plug-in solar panels to save our money to go away just look at the commitments going on holiday from people in britain over the pandemic they were you know i mean a you couldn't get anywhere to stay in this country for love nor money um during the staycation boom but people were you know that lottery game of like stuff being you you're going somewhere and then it goes on the naughty list so if you go there you have to then quarantine when you come back and things like that it was driving people nuts but it was driving lots of people nuts because actually considering what happened there was a surprising number of people who were still like i am going on holiday somewhere where the sun shines and i was one of those people these uh people have not been going so much where the sun shines.

25:56It's rather expensive, if nothing else, the US. So that's where we're going to go right now, because you have an interesting story on your website, Simon, written by your good self. It's about Blue Owl. Nothing to do with ornithology. It is a so called US shadow bank, lending money to high growth tech firms through a somewhat opaque and lightly regulated market. What could go wrong there? Well, well, investors now want out of the owl and can't seem to get their money back quickly enough. They've been trying to pull out more than five billion of the Wall Street firm this week. Now, this isn't an isolated incident over there in the States.

26:40Nothing to worry about here because the Bank of England has actually been warning not specifically about this case, but generally about the dangers of private credit. So Simon, the question is, how worried should we be? Before we get there, a bit of an explanation I think is required here. I know you enjoy this and you've written the article on this, so you should be all primed for it. Private credit and shadow banking. Is it as dodgy as it sounds? Shadow banking? It does make it sound very dodgy, doesn't it? Right? Yeah, it does make it sound very dodgy. This is what happens when you're working on a bank holiday.

27:14Sometimes you have to write the stories yourself. Shadow banking is so-called because it's not the actual banking system and it's operating, you know, on the side of it, but it's doing some stuff that the banking system does. And the main thing it's doing or the real thing it's doing is lending money to companies. so it's grown massively in recent years and it's grown a lot since the financial crisis but it's grown massively in recent years and what it basically involves is investors funding loans to companies and then picking up a interest rate return off the back of that and the rate of return tends to be higher than if you were to um you know put your money put your money in the bank um buy corporate bonds and so on and for companies who are borrowing this money um they may not be able to borrow as much as they want or at the rates they would like to uh within the normal banking system you've also had this thing where obviously due to like the huge rush forward in valuations of exciting tech companies and things like that.

28:31If you're a business, so say you run your tech company and your tech company is worth A and then at the next funding round it's worth B and that's like an order of magnitude bigger and then it's worth C which is an order of magnitude bigger and then it's worth D which is an order of magnitude bigger. One of the things you can do off the back of that is you can borrow more money. People are keener to lend you money because it looks like it's lower risk because the amount of money you're being lent compared to the valuation on your company is smaller it's like oh right yeah well i mean look at it it's a it's a billion dollar company you know yeah we can afford to lend it the money and charge at this rate we'll make some money um and people have been making money and then people have been trading the debt and you know i'll buy i'll fund this debt and then i'll send you sell you this debt and so on it's very interlinked it's very murky and it works well when everything's going well and um valuations are going up these things tend to come unstuck when valuations start coming down and then you start getting a few bad apples there's that old saying about when the tide goes out you can see who's been swimming naked and there are concerns that the tide may be going out this is now a roughly three trillion dollar global market private credit and it was two trillion not that long ago and it was one trillion not that long before that and it was smaller than one trillion not that long before that and if you just do something that i did earlier google uh global size of private credit market you'll see a number of reports from very legit sources right um moody's morgan stanley the s &p the likes of that quite often published around you know roughly from a sort of similar time they're all recent right there's not really actually even an agreement on how big this market is some say two trillion some say three trillion and so on but what you'll also see is an awful lot of stuff around basically like why it's such a good market to invest in um even as people are getting increasingly worried about this market you know to the point where there's been a couple of collapses of businesses as a mortgage lender um mfs in the uk last year um there was a auto parts uh maker first brands in america and there's also a subprime uh lender tricolor not the maker of the french books that we used to do when we were in school so yeah there's there's a lot of stuff around this a lot of concern but at the same time it still seems to be being punted at people now it's mainly hedge funds institutional investors you know big investors it's not small individual private investors but they they can invest in this through there are some specialist funds that they can although it's recommended you know that they don't and actually not all private credit is bad right there are actually some private credit investment trusts that have delivered really good returns to people and i did an interview with a fund manager one of them uh over a year ago and he was saying no this has delivered good returns and actually if you manage the portfolio properly it's lower risk than bonds um but you know he's the fund manager of a fund that does this stuff.

32:01So he's obviously going to say that. He's twerking his shop. He's twerking his shop. And there's been a lot of people talking their shops that's going on. But anyway, that's the market in a large nutshell. But the issue is it's not a very regulated market, which is a rather surprising thing given everything we've been through sort of post-financial crisis. Because anyone reading your article and we'll get more into the details of Blue Owls, but it wasn't that long ago, the financial crisis, full of very shadowy sort of products and financial instruments and stuff. So is there nothing that can be done in terms of the regulation side of it?

32:38I mean, hence the shadow banking term, you know, because it is murky, it is in the shadows, it's not the actual banking system. And it's generally considered, generally being considered that this isn't a problem, because it's not something that ordinary investors are getting involved in it's you know institutional high net worth hedge funds private offices all that kind of stuff but as you say talk about short memories it's ultimately it's like well yeah but they were all involved in it last time around as well and that blew up there are concerns that have been raised about could this be trigger a rerun of something like the 2008 financial crisis.

33:20Now, the Bank of England has been warning about this for some time, not that it would trigger a rerun of the 2008 financial crisis. Bank of England has been talking about private credit markets. Andrew Bailey talked about them again this week. The Bank of England talked about it in its Financial Policy Committee report. What it has said is that it does not foresee this being a 2008 financial crisis type thing. And the reason why this is different is because that involved mainstream banks. The mainstream banking system was at the heart of what went on, the big mainstream investment banks. But, you know, you don't know how involved they've got in making investments into these private credit funds.

34:03you know it could be that there is actually an exposure there and there is concerns over that kind of domino effect of once one goes down something goes down another thing goes down and another thing goes down three trillion is a lot of money in an area that's not regulated if the bank of england don't think and i can't imagine andrew bailey coming out and saying yep we're we're in for another another one guys i can see why he's sort of being a bit cautious about the approach of what his concerns are. But what are the concerns of the Bank of England, particularly from a UK perspective, with some of this stuff happening in the US?

34:38Obviously, it's not isolated to the US, but just this particular case is. What is he saying? What are the concerns? How bad could it get? Well, he said that we should be careful not to just dismiss individual private credit failures as isolated incidents. He said, don't just write this off as, oh, it's just a one-off. It's just a one-off bad thing. Don't worry about it. It's nothing to see here move on. The Bank of England said while retail participation in private credit remained relatively small in aggregate stress originating in these retail funds could spill over to other parts of private credit and private equity markets as well as in other correlated asset classes.

35:16For example there could be an unwillingness to refinance existing loans or provide additional lending to businesses. Firms should continue to factor the potential for such dynamics into their liquidity risk management translated into normal person speak. Ordinary investors are not that exposed to this. However these funds which have been limiting withdrawals this could trigger problems elsewhere in the financial system that reduces lending in private credit so that would be bad for businesses because they're not going to be able to raise money in the same way that they could and they can't refinance their debts and then all of a sudden they could end up getting hit by a bit of a credit crunch and could also hit private equity markets which you know private equity is massive and involves ownership of some very very large companies in the world quite often involving a lot of debt and it's always debt that's the problem whenever anything goes wrong it's always debt that's the problem and the bank of england has said, you know, one of the problems with this could be that businesses might suddenly discover that the cost of refinancing a loan that they've got goes up substantially or people aren't willing to lend to them.

36:29And businesses need to factor this in when they're planning ahead and not just presume that because they were able to borrow at 6 % now, they will be able to borrow at 6 % next time. Debt is always a problem. You know, we live alone, Simon, do we? So Blue Owl Capital, the canary in the coal mine or just a blip over there in the States? described as the i've read it of something earlier where it was described as the poster child for fears of a financial crisis it's like wow what a way what a way to be referred to uh investors it basically revealed it specializes in this kind of stuff it's a wall street firm uh it revealed yesterday investors tried to pull 5.4 billion dollars from two of its funds in the first quarter of the year which meant it's had to put in place a cap that limits redemptions to 5 of the funds which actually exists across most of these funds um you know some other very big names have this and actually if there's one thing that you can take away from this as an individual investor it is if you're going to invest in higher risk illiquid that means you can't easily be bought or sold assets whether that's debt smaller company shares property exciting biotechs or whatever a open-ended investment fund is not probably the best place for it because they are structured in such a way that as money comes in they have to basically spend the money and buy more assets and as money gets taken out they have to sell the assets in order to give the money back to investors this is exactly what happened with neil woodford's fund there was a rush in woodford had to invest that money so arguably he was making investments and weren't as good as he could have made um even if his skill as a fund manager was still tip top which many people would argue with then the problem was exacerbated by the fact that when people rushed for the exit he was having to sell his investments in order to fund people rushing for the exit and the things that you need to sell in order to do that are probably your best quality assets because they're the ones you can actually sell so you end up with a situation where the quality of the assets in the fund gets worse and gets more illiquid if you are going to invest in this kind of thing as an ordinary investor in the uk i would strongly recommend you use an investment trust investment trusts are what's known as closed-ended so they're actually listed on the stock market themselves and have a limited number of shares.

39:02Now, in the instance where money comes in, they don't have to go buy those assets straight away. They can sit on that cash and their share price might go to a premium above the net asset value, which is the total value of all the assets that it owns, right? Or it might be that if people rush for the exit, then the share price falls to a discount to that net asset value. So you could be sitting on shares that are worth less than they're theoretically worth but what you won't have is an investment trust that is forced into a fire sale and becomes a forced seller because it doesn't have to do that in the same way that an investment fund would so it's highly likely that people listening to this podcast we're never going to have money in anything like blue owl but you might have that choice to make one day of i want to invest in commercial property or i want to invest in some you know really small companies or might want to invest in this slightly more unusual investment.

39:59I would say if you're going to do that with a more unusual investment or something like that, do it in an investment trust. Don't do it in a fund. All right, then, we'll put that to one side. Earlier this week, the government announced plans to create a wave of new towns across Britain. Seven sites have been earmarked for development. Each one will comprise at least 10 ,000 homes and some up to 40 ,000. Now, the housing department says the new towns spread across the country will be well-connected new communities with jobs, schools, green space and transport links planned from the start. Hurrah.

40:31But which one will be the best to live in? So this is money spoke to celebrity property guy, investor. I actually did Google this. I was like, what does he do? I think he trained as a surveyor. Anyway, it's Phil Spencer, by the way, co-presenter of the Channel 4 show Location, Location, Location to get his opinion. So I'm going to have to say, when I look at this, you know when you go, where am I least surprised there's a place? Milton Keynes. I just feel like if there's going to be a new town, it's going to be around your Milton Keynes somewhere. So the plan, Simon? Right, seven new towns. And the idea is that what these will do is deliver a large amount of homes and they will create new places for people to live.

41:12They'll be close to places where it makes sense to do that. So they'll either be well connected or they'll be close to major cities or growth areas so we've got Thamesmead in Greenwich up to 15 ,000 homes Cruise Hill and Chase Park in Enfield up to 21 ,000 homes this is basically a load of countryside off the top of North London there's like if you go out of North London there's a chunk of countryside between London and the M25 and it's basically there I know this because I literally drive through it on the way to my sisters um who lives kind of north london way so i know exactly where this bit is uh thompsford in bedfordshire this is possibly the most controversial of all of them up to 40 000 homes i also know where thompsford is it's up the a1 from me and it's currently basically a small village uh although a small village that doesn't won't be for long no it for long a small village that is bisected sort of by the um by the a1 i'm not sure it's the village of thompson that's bisected by that or whether it's like just a bit near it but some of the you know it's the countryside around there is very nice got lovely rivers and stuff very controversial but will potentially be excellently located on uh in terms of rail links because they're trying to build this oxford to cambridge rail link and that's where you know it's going to link up at Tempsford and then Tempsford's going to be where it then links up to the south rail link that goes up that side of the country um so theoretically well connected Leeds South Bank West Yorkshire up to 20 ,000 homes Manchester Toria North Greater Manchester 15 ,000 homes Milton Keynes Buckinghamshire around 40 ,000 homes and then Brabazon and the West innovation arc.

43:06South Gloucestershire, up to 40 ,000 homes. That's a lot. And I think it's really important at the start that I pointed out that the housing department says that it will be accompanied by schools and jobs and green spaces and transport links. I hope as well, GP surgeries, dentists and those sorts of things, because I think those are things that people are concerned about. But the other concern that I have with sort of new builds and stuff is oftentimes when you see new builds, certainly in the area that I grew up. These are not for people who can easily afford them. These are premium prices. So how can we make sure that building all these properties will actually mean that people can afford to buy them?

43:48Any guarantees there? Well, yes, they want to make sure that they're affordable, although the definition of affordable is a nebulous concept. But by building lots of homes and planning them out in such a way, you can try to deliver that and they're looking at what they're looking to is the success of some of the garden cities and garden towns of the past and things like that you would hope that off the back of this by doing something like this and just going right here is an area where we are just going to build a load of homes 40 000 homes is a a big size town basically um that's what 40 000 is so 20 ,000 is a kind of medium sized town right but it's a whole new one there but you would hope that by doing this they could plan in the green space they could plan in the ability to get places without having to drive they could plan in the schools the doctor surgeries the things like that they could the rail links is obviously important but you know I'm not quite sure whether we'll ever pull that one off but you know they can try to plan in all these things and also they can try and do it without building just a load of identikit houses that are squeezed in with two small gardens whether we ever managed to deliver on that i'm not entirely certain as i said tempsford is hugely controversial because it's just a tiny village the other ones are near nearer areas that do have more people now phil spencer's verdict right is actually Milton Keynes is the winner that's his top choice okay right so he says that um you know basically if your only criteria for choosing locations is to pick spots on a map where road and rail links meet Tempsford is a winner but by every other measure it's a poor choice the Bedfordshire Village sits right on the A1 is due to get a spanking new rail station with direct services to London, Oxford and Cambridge.

45:46But he said the balance between homes, people and jobs is wrong. It currently home to just 600 people with none of the infrastructure or jobs that Milton Keynes has. So successfully building over 40 ,000 new homes on Virgin Territory will be a huge ask. While a disused airfield could provide some of the land required, such a massive development is likely to require the compulsory purchase of swathes of farmland. And while the plans envisage the creation of a new technology campus next to the rail station many residents would have to commute to work meaning tempsford could end up being little more than a giant dormitory town rather than a genuine new town now if you compare that to milton keen's where that is genuinely a real proper growth area for business and enterprise and so on is already well connected and has already has lots of people living there you know that's why milton keen's comes out as a much better option in this for phil spencer all right then simon stat of the week my stat of the week is 760 that is now the annual car tax bill for a chunk of cars that were made in the 2000s and that are potentially only worth a thousand to two thousand or three thousand pounds now but could theoretically give people reliable motoring for years to come but due to the way that car tax was structured for a period of time where it was done on the co2 emissions and it went up at rates that have then been ratcheted up by inflation it has now reached a very very high level and rob hull our motoring editor wrote a story this week about the cars that are basically being taxed off the roads because it's uneconomical to now pay that much to tax them and also you can't sell them and these aren't even the cars that are in the highest band so the highest band is 790 pounds a year now um but it's the band below it where it's being really hard hit because that original band you know the top band sorry um you needed that need did need to be like really big engined cars and things like that whereas the one below it catches out quite a few normal cars so older ford mondeos jaguar x types some saabs um and cars like that you know that are now not really worth that much money but could still give lots of motoring for years to come being taxed off the roads all right simon thank you very much and thank you for listening you can keep up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app.

48:26And if you have any comments or questions for the team or anything you would like them to look into, Simon? You can email us at podcast at thisismoney.co.uk and come to thisismoney.co.uk for such a podcast. Join in the debate and read your comments. If you like our podcast, why not rate us wherever you found us? It helps other people find us too.