Avanti West Toast

26:13That it is exploring an option of being bought by Newman, the big Brazilian bank, and going private. But just in terms of, you know, this was a bank that lots of people had a lot of high hopes for, that this would be the big flotation on the London Stock Exchange this year. If that turns out to be true, what kind of a blow is that? So, I mean, I think Monzo has been looking for some sort of exit for its investors. So it's, you know, has floated a purchase by U.S. private equity investors. It also looked at a possible listing in the U.K. And now we've got this third option, which is Nubank from Brazil coming in.

26:53Monzo is a fantastic asset for someone like a Nubank, which basically will acquire a UK banking license and a European banking license. The broader picture is if, you know, a fairly innovative UK bank is unable to actually get an exit through an IPO in the UK itself. It just says that the capital markets here are fairly moribund. And, you know, the exits for an innovative business really is either a U.S. private equity owner or, you know, a foreign sort of competitor. It's, you know, so these are the challenges we need to, you know, to have growth, you need to revitalize capital markets. It's not just government capacity and government initiatives.

27:37We've got to encourage private investor risk taking. Kim, this has been an ongoing concern, hasn't it? not just banks, whatever kind of companies that have scaled up to the size that Monzo have got to, then poof, kind of no longer being British or no longer lesting on a British stock market or etc. And trade's important. I mean, the way in which money moves around the world is part of where growth comes from. And there has been a nationalist sort of flavour right across the world. And that actually, I think, has been to the damage of most economies. The UK is amongst it. I was at a meeting with the trade minister a couple of weeks ago, Minister Sawa, And he clearly understands the need for international trade for the future of the UK.

28:19And financial services, though, is one area that the UK has always been very strong. So it is one of those signals. Higher education is another one. So there are parts of the UK that are still outside our own business, very strong in the international markets. But the confidence of that price measure, it's still an asset someone wants to buy. And someone's been able to develop this amazing asset here. but then where it goes next is exactly like all of them. I've worked in startups before where you mean sustainability. The UK is very good about starting the business but then the money ends up overseas and you end up having to develop it somewhere else and that would be a shame, especially healthcare, health services, all of that.

29:01The UK has always been incredibly strong. There's some very clever creative people both in innovation as well as in the creative arts. that part of the economy I still think needs a little bit of focus and a little bit of help. So nationalising and going back to old industrial ways is a nice idea but actually the powerhouses that I think of the UK economy, you could look closer to home for ways in which those could be supported at the same time. I think that will be a really interesting part of the discussion we're going to have after the news when we dive in a little bit more to both the Chancellor's speech and that sort of one month out from the budget, what you can do to encourage some of that.

29:38I should say that neither Monzo nor Newbank chose to comment publicly directly to us on that. But as I say, we understand that Monzo in the early stages of negotiations with Newbank over a potential sale, a story I'm sure Sean will carry on watching on the programme throughout the week. We've got loads more then to talk about. We're going to dive into the Chancellor's speech one month out from the budget. We're going to do it all. Growth, all that good stuff that we've talked about lots of times on the programme. But we're going to finally crack it.

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31:11Wake Up To Money with Will Bain. Morning, welcome back to Wake Up To Money on Monday the 28th of September. Our panel this morning in a full house here in the studio with me, Kim Sides, Executive Director at the Construction Company BAM UK, Sabitha Subramaniam, Head of Investment Strategy at Saracen and Partners. We've got lots of your texts to try and weave into the next chunk of the programme because we're going to look ahead both to the Chancellor's speech today at the Labour Party conference on what is business day for the government's conference, but also, of course, it's one month out from the budget as well.

31:42And over the next few weeks in the run-up to the budget, we are going to gather regularly a couple of panels to look ahead at, well, some of the stuff that the guys were just talking about before the news, really, about how you kind of unlock growth, what is holding back business, hiring, etc. at the moment. So James Hipkins is also going to join us. James, the Managing Director of Emery's Timber and Builders Merchants with four sites across the Midlands. He's also the Regional Chair of the Builders Merchants Federation. And James Smith is also with us, Chief Economist at the Resolution Foundation.

32:15We'll hear from both of them in just a moment. But first of all, shall we hear from the Prime Minister? Because I think he set out the stall pretty well, actually, when he spoke to Felicity here on Wake Up To Money and was asked about to what extent his government can help business. So there are things that we can do and we'll do everything that is possible for us to do. But I think everyone knows that I'm in a position with limited room for manoeuvre. Let's come to the specifics, Kim, but perhaps in generalities at the top. Are there two or three things that make sense to you that would, as the Prime Minister is saying, help business?

32:53is? Certainty is always what we're after and reliable policy settings and there have been a lot of changes. The challenge is going to be, as he said, he's got a limited space to move so it will depend on how ambitious they are about tax. Most of the tax elements that were in the manifesto are directly personal taxes and they've said that they won't go back and change those. The difficulty with that is that the ones that they feel able to fiddle with are the ones that affect businesses directly and they've shown an intent to do that in 2024 with the national insurance change. Really, I don't know whether they thought it through or were surprised, but it had a material effect, not just on us, but we have an enormous supply chain.

33:39We spent£640 million amongst our supply chain partners in our local supply chain in 2025. all of those people suddenly had an unexpected cost on jobs that they were already delivering that had been priced to a fixed price. So it's not a cost that can be passed on to consumers and it's not a cost that can be absorbed. Construction doesn't make the sort of margins that a lot of other businesses do. So the concern would be about where the tax spend could easily go and there is a very piecemeal feel about it. There's a nibble here and a nibble there and this is fair and they should pay more. But I haven't seen that there's a big stepping back about a whole cohesive consideration about it.

34:25And any one of them, you can say, oh, it's only another this. It's only another percent there. Overall, though, it's unbelievably complicated. And the cost that is involved in it is not just the financial cost. It's the human cost of our teams having to work out what that means. And that's not madly productive activity. when you're spending a lot of time to work out however many forms need to be done in which order rather than that money being spent in the community to deliver a building that will mean that people get educated sooner and can go on and have productive careers. We still take 200 apprentices every year.

35:01We'll continue to do it. We take graduates. But you need the continued confidence of us in our supply chain to be able to continue to employ. and some of those signals have been very negative and very short, sharp changes coming through. So it will be a question about whether there's a policy that's all tied up from my point of view rather than what they think they can get away with because they're looking for money. Money and tax needs to be aligned very much with a policy outcome that leads to an overall good. We can all understand that there's a need for taxation and for change over time. It would be just nice for it to be a little bit more cohesive.

35:40I'll get James Smith and Sabitha to break that down in a moment. James Hipkins, why don't you give us a top line thought about what, a morning by the way, what sort of help would look like from a government's perspective to a business leader like you. Well, yeah, you know, can I just echo those comments? I mean, you know, good morning to you all. I think the way we're describing it very much in the industry at the moment, it's a cost of doing business crisis. So it is the knock-on effect to all industries. So yes, it is our own, but it's also the fact that everybody that invoices us for services and does stuff, all their taxes, all their costs have gone up.

36:18And so all our costs have as well with rates, taxes all round. And it is a cost of doing business crisis. So it isn't just the 1 % as it sounds, or a couple of percent here or 1 % there. It's the knock-on effect all around. So I really just totally echo those comments and that agree. Now, I think with what I'm sort of quite pleased to have heard about, and I don't want to steal any thunder if you're about to mention this later in the show, but we've been lobbying and saying, look, we want some sort of help to buy scheme or something to go on to just stimulate the market a bit. So I believe there's something like that coming on, which means that I see that.

36:59Yeah, that's brilliant news. You know, let's be honest. Just to be on the radar, I think, is superb, because this shows that it's actually been thought about now, it's been considered, and actually something does need doing. And whilst there is a limited amount of wiggle room and there's not much money to play with, at least we can see that there is an appreciation that there is a problem in our industry at the moment and construction needs some stimulation. So I think that's a good head start. It's a good starting point. And you've teed it up nicely, James. We are exactly going to talk about that in just a moment.

37:33We'll just do the big picture first of all. James Smith, morning to you as well. Good morning. Chief Economist at the Resolution Foundation. It's interesting, isn't it, hearing the guys already straight away in that. The Chancellor, we've got the, we were joking about this in the first half of the programme, that obviously here in the media we get lots of the kind of leaks of bits and bobs that the Chancellor wants to talk about as the top of the FT's website at the moment, spending plan on Royal Navy contracts, confidence, new partnership with business, all that kind of stuff. And yet actually what people really want to hear about is what's going to come on with tax.

38:09Yeah, and what we're going to hear about in the coming weeks is the tough outlook that the Chancellor really is fighting with. So there's good news in the economy. So we shouldn't be all doom and gloom. If you look at productivity, if you think about how employment should be measured, we're seeing productivity picking up to levels that we've not seen sustained since before the financial crisis. So I think the government can point to some green shoots in that space. But unfortunately, the effect of what's happening in the Middle East, higher inflation, really hitting growth, really making some of those spending items more expensive, that could knock something like, you know, 13, 14, 15 billion off that key headroom number that the Chancellor's got.

38:57So there'll be a repair job on this budget for the Chancellor. And there's a big question about how you do the things we're talking about here, how you reduce that tax burden, particularly for families struggling with the effects of what's happening in the Middle East. How do you support those families without actually adding to borrowing, creating an even bigger problem in terms of the fiscal side? That's going to be the big challenge for the Chancellor. So hopefully we'll hear something about that today. He'll set the ground out. But also, I agree with what the others are saying, that we need to focus on growth at the same time.

39:37So I'm going to get your thoughts in just one moment. But James, I think it's probably in that time of year, actually, aren't we, in the next few weeks, where people are going to hear that phrase about headroom over and over and over again. And they won't have heard it for kind of 11 months of the year. So can you do the basically what should be my job and break that down and explain it for people? So they've kind of got it jotted down for the next few weeks. Yes. So basically, the government have said that they will balance tax receipts and day-to-day spending, so the sort of current spending items.

40:06They'll do that in 2029-30. And Rachel Reeves left John Healy quite a sort of chunky margin for error on that fiscal rule, something like 24 billion of headroom. of the headroom. But what's come along since we had the spring forecast is what's been happening in the Middle East. And that raised inflation, that increases spending. I mean, there'll be some offsets to that because, you know, wages will be higher. But the key thing here is borrowing costs for the government have been rising. And if you look at benchmark government bond yields, they're hitting levels that we haven't seen since before the financial crisis.

40:47So how does the Chancellor respond to that. I think what we need to see is a Chancellor who's still able to bring down borrowing so the government can take some credit for having brought about a percentage of GDP of borrowing down already and is able to keep a decent margin against that fiscal rule so that things that we know the government is not going to tackle at this budget like how to get to 3%, defend spending, let alone fixing social care, building more council homes, all the things Andy Burnham says he wants to do, then, you know, we need a government that prioritizes that public finances problem.

41:30Okay, so I will pick up on possibly two things. First of all, I feel like generally there's a bit of tax fatigue across the economy. So while the government's now floating different types of taxes, it might introduce I think overall, I think the efficacy of these taxes are unlikely to be that great. And I think that government is focusing consistently on the demand side of the economy. And that's actually slightly beyond its control. If bond deals go up or if there's another energy shock, the fiscal headroom that the government has will just get wiped out. And I think where there is quite a bit of opportunity is on the supply side of the economy.

42:12So this comes through from the regulatory backdrop, which provides a lot more certainty for businesses to take risk. And here we haven't heard much. We've got a new minister of, you know, science, innovation and technology and, you know, the use of AI to improve the productivity in the economy. It's really not sort of, you know, we haven't heard much from this side at all. And, you know, lastly, I would say productivity has been surprisingly good over the past two years, as James has just mentioned. But what I would say is some of this productivity is coming because businesses are really reluctant to hire workers.

42:51And the sort of like the Employment Rights Act, the increases in, you know, national insurance and the minimum wage have actually been quite counterproductive because businesses have been very reluctant to. they basically hired machines and capital and used technology instead of hiring. And if you look at the retail and the wholesale sector, they've basically cut about more than 100 ,000 jobs and produced the same amount of output. So what we're seeing is businesses basically facing sort of a relatively challenging environment are starting to basically just innovate and outsource labor. And this is something, you know, we have almost a million young people who are not in employment, education or training.

43:36And this is only going to grow if we don't actually allow more flexibility on the labour market side. And they're going in the other direction right now. James Smith, I'm fascinated by that, actually. And Kim, I'll get your thought on that too in just a moment. But someone who, we had a chipmaker on the programme, I think a couple of weeks ago, saying exactly that. Actually, we've talked about the tax picture and that clearly is an issue. And we're getting lots of texts about that as well, particularly about national insurance. But James, also just that there's little things that could be done.

44:05I mean, this chipmaker we had on the programme, for example, was talking about non-competes in people's contracts and gardening leave periods and things like that, sort of stripping out some of the bureaucracy to try and boost a bit of growth. Yeah, and I think the problems that the government is facing, so the NEATS crisis for sure, the low growth problem, even the tax issue, those can all be thought of as different sides of the same coin of low growth, hitting the public finances, making the government's life difficult. So what does it need to do? It needs to tackle those big problems. So I totally agree it needs a tax strategy.

44:49And we've had a fairly sort of scattergun, we've talked about a smorgasbord type approach on tax. So being strategic on tax in a way that streamlines the tax system, simplifies it and boosts growth, helping young people through get into jobs, get into high productivity jobs. That's definitely a priority we're going to hear from Alan Milburn in terms of what exactly the big challenges are for that group. And the government say that they want to do things in that space. and trying to do all that, but at the same time, not forgetting to prioritise the public finances. So with all of the sort of cost of living pressures that are bouncing around in the background, the big challenge is how do you provide that support without making it difficult to do those other things?

45:38And the key to that is to provide targeted support for families, so particularly on energy bills. Don't do expensive blanket schemes. James VAT, the VAT cut was something that the government sort of had to do in a way to provide some support for the winter ahead. But the next step should be to help families on low income through that big crisis. Kim, quick thought on that, because I want to get us on home territory for both you and the other James in terms of house building in the moment. There is a lot of good already happening in this and there's support business can give to government on this.

46:14So I've got two examples on that. One is we've got a very good example recently of a 19-year-old homeless youth not far from the conference actually in Liverpool who got an opportunity to do a week's played work experience on one of our jobs up at Blackburn College near Preston. And the relevant subcontractor, Murray Wood, working with us was very impressed. We were all very impressed. And Murray Wood didn't have a role, but one of their other subcontractors has taken that youth on now onto a ground working apprenticeship. So he's moving out of support care, has got a full-time job, is now on his way.

46:51It's a very small instance, but business does a lot of this already. And we did have the opportunity with, we're part of the Royal BAM group. Pat McFadden actually came on a trip to the Netherlands to meet with some of the youth interventions that are done in the Netherlands market to try and see, again, with that Melbourne inquiry about how we can try and improve that. I think it's important that it's part of what we're approaching, but it's also not just about youth. There's a lot of people in mid-career who are not as employed as they would like to be. There's a lot of opportunity for people to come into construction from other careers.

47:27There's directly applicable skills. We take a lot of people from the forces. But I think there's a lot of underemployment in that part of the market as well that we shouldn't only focus on youth, but it does come back to confidence of employers to be able to reliably employ them. and not be stuck short. And the cost of doing business. I mean I've got three or four texts from various people around the country all about when are Labour going to realise their mistake with the national insurance rise just here on the screen to the left of me as well. Let's turn to what James Hipkins was talking about though and over the weekend the Prime Minister also announcing this new scheme to help people get on the property ladder.

48:01Your first home to be open for first-time buyers in England with a deposit of 2.5 % providing them with a loan worth 20 % of their new-build properties value to help pay for the purchase. The government has a target of building, of course, 1.5 million new homes in England by the end of this parliament, which the Prime Minister also confirmed would still be 2029. Ante Lorraine told Laura Koonsberg that there was only a slim chance of meeting that target when asked about it a couple of weeks ago. So we are making a difference, but the headwinds that are coming our way internationally and through those construction costs are having, you know, a negative effect on that target.

48:39James, I want to get your take on that. And also Trevor, who is a regular texter into the programme, who's down in Bristol, he runs his own, I know, small construction company, has texted in on 85058. Despite all their rhetoric, since coming into power, this government has only built 66 % of their target of 300 ,000 houses per year, measured against the same target the previous government built 77%, hardly an improvement. So, one, you pick up on both, James. One, what's going wrong? And two, does this move over the weekend, this Your First Home scheme help address some of the issues? Well, yeah.

49:10I mean, we can't knock anything that's a positive step in the right direction. So it is. It is a positive step. And it does mean that we feel like at least we're on the map with this. Otherwise, at the moment, I think the economy is falsely buoyed up by lots of other industry and lots of other tech and things that are keeping the FTSE very strong and keeping growth figures just there. But at the end of the day, building is backbone to our country, and it's too expensive to build at the moment. So there's still a massive problem. We've still got – we need access to cheap money still. We need to get interest rates down.

49:45I know there's lots of other inflationary pressures at the moment, and these are macroeconomic effects and everything. It's just making it difficult, so difficult to access money on a local level cheaply to do it. So, yeah, help to buy, great start, but we've got to continue to try and see interest rates come down. And these are going to be, you know, political decisions with getting borrowing down and controlling costs. Because, yes, we've got a cost of doing business crisis, but, you know, the country's got a cost of living crisis and a cost of borrowing crisis. So it's like, yes, we're all having to cut back madly in business to try and make some money.

50:26But in the country, we've got to be controlled with spending and get our control on costs as well. So I think that is massively important as we need to get back to interest rates where people can afford to borrow money to build, to invest and do that. And then I think there's another quick win, and it could be a quick win, and it's where AI could come into effect more. But it's in the planning policy or planning permission, the planning system. There's still so much stuff held back with planning and waiting in a system which is broken. So whilst we're not actually talking about finances here or such, but the knock-on effect is huge.

51:08So planning policy, it takes too long, everything gets delayed, and whilst the sort of headline numbers, yes, we do it within this time frame and that time frame, it's knocked back because you've either got to have a BNG report or a net diversity bit, or you've got to have additional bits with the lead local flood authority or whatever it is. But rather than actually, say, putting this in place and having it there, and I think I'd be right in saying, and I'd be interested in some of the other people on here, but I think we'd all be happy to pay a bit more on planning, to see planning departments properly sort of staffed and turnaround times done properly, but actually to say, look, let's have this information at the beginning.

51:55If we know we're going to have bats and newts on a site, let's have a bat box up and let's have protection for newts but let's get on with the project and not hold it up for 12, 18 months. We know what needs doing now. We've done it for years. We're well-educated on it and we care about the environment. So let's do that as a matter of course but get on with planning and not holding stuff back. So I think that's a win without spending any money. And in fact, you know, I think it could even generate a bit of money within the planning department to just ease the backlog in the system and, again, stimulate that.

52:32So, you know, it's not all finances. Yeah. I'd agree absolutely with that. Great Creston Newt's come up quite a lot. You'd be surprised how many school sites have got. I remember this from my local reporter days. But it's a very good point. I think the planning system is one area where the government had a lot of ambition, and I don't think that's necessarily come through. So I think that is getting in the way of its other policy objectives, including in this one. And I still find it astonishing that if you've got a school that is building a new school on the same site, building a new school, eventually taking down the old school, you need such extensive planning consent for it.

53:10I find that astonishing. and it's an area where government money is being spent in a delay loop that I'm really not sure adds much to the local environment or the local circumstance. So these are where the government could improve that whole market environment. Well, let's whiz around you then. In a word, and I really do mean in a word, confident then that we're seeing a bit of change? I'm naturally optimistic. Will? Sabitha? I think the mood music's changed. I'm still waiting for some real change. James Hipkins? Pleased to see help to buy and construction getting on the radar, so yes. And James Smith, despite the challenges you've outlined?

53:47Yeah, I'm optimistic. The economy's turning up and I think there's a real opportunity to grow something here. Well, thanks all for your time. James Smith, the Chief Economist at the Reviv's Illusion Foundation. James Hipkins from Emery's there and Kim Sines and Sabitha Subramaniam here in the studio with us. Wake Up To Money with Will Bain. This is the football story of the century. It's pandemonium, it's ecstasy. It's an authoritarian regime. For the past 15 years, English football has been dominated by Manchester City. They are champions again, but not only that. They've won it four years running, and no one's done that.

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