Bricks & Mortar

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0:43Wake Up To Money from BBC Five Live. Hello, morning. Welcome to Wake Up To Money. What is holding house building back? The government has this pledge to build one and a half million new homes in England by the end of the decade. But there's concerns the target will be missed. We'll be hearing from one firm on some of the reasons why shortly. Also today, we'll take a look at why cocoa prices have come crashing down from their all-time highs in 2024 and what it means for the price of chocolate. And the Lunar New Year is upon us. And in Chinese culture, we enter the year of the fire horse. This is probably the busiest time of the year.

1:17We do have like three more times the customer come into the shop. Yeah, we will be finding out what those celebrations mean for businesses around the UK. Wake Up To Money with Will Bain Morning, welcome to Wake Up To Money on Tuesday the 17th of February Just gone, 5 o 'clock in the morning Will with you this morning, great to have your company as always first thing Yes, we've got more UK data out later on this morning as well The beginning of the next kind of month's run But it's being so closely watched at the moment, isn't it? Not just by the Bank of England for what's going on with interest rates But actually at a wider level The data we're going to get today is about hiring, jobs, unemployment, wages so it gives us a pretty good snapshot of what's going on right across the economy and whether some of those changes that we've talked about a lot in policy are having an impact on employers and employment as well.

2:06So there's going to be loads for you to get your teeth into this morning should you wish to join us and get involved in the conversation on the programme this morning. You can do so all the usual ways. 85058 is our text number to get in touch. The WhatsApp number is 08085 99 693. also going to be a lot for our panel to help steer us through over the next hour and max reese is back with us max is the co-founder of the high protein snacking brand the curators max morning great to have you back on the program morning will great to be back do a better description of the curators for me than that well we make protein packed super snacks um so yeah it's all about kind of savory snacking with the same amazing taste that people expect uh but with better nutrition so protein is kind of the main claim for us but we also have some high fiber snacks as fiber is becoming more and more important for everyday consumers yeah both of those things been very in vogue recently haven't they absolutely yeah and it's a good time of year where people look for kind of healthy resets and i'm willing to try new things after a bit of maybe overindulgence the christmas period and how's business going at the moment then as a result as you say boom kind of time of year yeah it's the year it started really well for us it's been really encouraging so yeah um past the kind of christmas period where we don't seem to get obviously quite the same kind of share of voice on the supermarket shelves uh but as i said like consumers are looking for new things in the new year they're looking to kind of start slightly healthier new diets and they're willing to try new products and new brands so um this is the eighth full year we've been trading and the year's got off to a really strong start brilliant and we'll get your sense and your picture of the kind of landscape as well of what's going on for sort of consumer confidence and things as we move through the morning too.

3:49Alongside Max for the next hour is Sophie Queen. Sophie, the Portfolio Manager and Strategist at BNP Paribas Asset Management. Sophie, great to have you back on the programme as well. Morning. Good morning. The data, the big thing to watch then this week, is it that and then the inflation data later on in the week as well, do you think from a markets perspective? Oh yeah definitely especially for the UK where we're all waiting for the stars to be aligned for further easing for the Bank of England so really looking forward. So why don't we start there because that's going to come up at seven o 'clock this morning and we'll probably bring you a bit of what those numbers are from the Office for National Statistics into Five Live Breakfast a little bit later on as well but so if you perhaps contextualise then this set of data it It looks at a whole bunch of stuff, doesn't it, from the ONS.

4:37A great kind of sort of clutch of it comes out together. But really, it's all about kind of employing and employment this morning at 7 o 'clock. Yes. So what we're expecting and what I think the broad consensus is expecting is what you see is that the UK labour market has continued to lose momentum since the start of 2026. So with falling employments, weak hiring demand, but also this easing wage growth. And all this is basically reinforcing the idea that we could have the sustained slowdown, which is a green light for the Bank of England to basically cut rates. given that the concern about soft jobs demand have become much more prominent and that's basically something they've been looking at.

5:29So the market is at the moment pricing 70 % priority of a cut in March and we're waiting for this print this morning to basically confirm or not confirm this dovish bias. Yeah, and these are all backward looking, important to kind of mention that as well isn't it so these are potentially still numbers that are quite close again they all kind of cover confusingly slightly different data periods don't they but most of them cover uh the back end of the year so right after the budget and all the speculation about what may or may not have been in it that we talked about loads on the program yeah yes definitely so it's still a bit backward looking you could you had like quite dovish sentiment.

6:11I think it's coming against the cross currents where everywhere, especially in, you know, like the small countries such as Sweden or Australia, the market is starting to price actually hikes. So the UK with the US is clearly where you have this bias where central banks are expected to cut. But if you have improving economic fundamentals in the next couple of months. Let's see if this cut in March is going to be a one-off or the start of a trend. And you make a really important point, Sophie, as well, that the data is sort of flashing two almost contradictory things, isn't it? One, that if wage growth, so the speed of which wage rises are going, is perhaps coming back a little bit, that that's better news in terms of the overall inflation picture and that really high period of inflation we had a couple of years ago.

7:06And yet, as you say, the Bank of England worried about what's going on in the jobs market in particular. And I'm just looking down the numbers from last time we did this on the programme, 135 ,000 fall in people on payrolls in the three months to November as well. Lots of people saying that's policy. Yes, so the vacancies have been falling for a while and you see that the labour market has started to soften also and it's basically like a consequence of the fiscal measures and the increased employment costs for employers. So it's really trying to be this tug of war between how much the labour market is going to deteriorate with the impact on weight growth and potentially the interpretation you could have on inflation in the next couple of months.

8:03But on the other side, I would say that the activity overall remains quite solid. So if you look at the PMI data, for example, which is an indicator. This is sort of factory data, isn't it? Yeah, like sentiment indicator, which is a bit more forward looking. So if you look at the forward-looking indicators across the board, not only the UK, it's showing that you could have some signs of pickup. And just wondering how much at this point the weaker labor market data is a sign that AI could potentially have an impact already. Activity is strong, labor market is weak. So is it AI or is it like a sign that we have some decoupling?

8:50And the infrastructure and cap expanding is taking a bit more importance rather than consumer. That's really interesting. So, yeah, take the impact of that already. Max, what are you seeing out there broadly, perhaps not just from yourselves, but customers, clients, et cetera, as well? Yeah, well, all those things are just key factors. And I don't think it's anything in particular. It's maybe a kind of perfect storm of all the kind of cost rises that businesses are facing. So we're fortunate we're a growing business, but like for like, everything is getting more expensive for us. So inflation on kind of raw materials, the taxes we pay as a business.

9:32So NI in the food industry for suppliers, there's something called extended producer responsibility, which has come in in the last 12 months. So we now pay more for the packaging that we use to hopefully one day help improve our recycling infrastructure in the UK. And then, obviously, with those rising costs, we are looking at things like AI to be more efficient than ever and try and recover some of that. So we're a small business with a team of nine. If you're, you know, one of the major supermarkets in the UK, like Tesco, Sainsbury's, Asda, you know, NI alone is a reason to try and, you know, shed jobs and be more efficient where you can.

10:09Because, you know, the food industry has always operated on very tight margins. Just want to come back to that in a second. So there's a tax that you guys pay that's meant to help beef up recycling infrastructure? Yeah, it's a new one. And every year there's always a kind of curveball feels like it's thrown at us. But essentially, yeah, it's been in place now based on the last 12 months worth of data for all food businesses that qualify over a certain size. It's called extended producer responsibility. It's been quite controversial, actually, in the food industry. Not that we don't think we all have responsibility to kind of, you know, be as sustainable as possible, but actually the way it's been applied and the rules and guidelines and transparency from the government.

10:52We're relatively fortunate because our packaging is light. But if you've been operating a business, for example, that sells in glass jars or bottles and glass has been held as kind of the high point of recyclability, you're now paying a very high tax for essentially heavy packaging and its transport. And the idea is that that then goes to the government to support better recycling infrastructure. It's probably above my pay grade to really get to the bottom of whether that is having any positive impact yet or where that tax is going in, obviously, the kind of wider pressures in the market. But just explain a tiny bit then as well, Max.

11:31So how's it work? They're looking at what data that you provide them, how much you transport around the country. Yeah, we would submit basically a package of data based on everything we've sold in the last 12 months. And then depending on what packaging we've used. So for us, it's crisp packets that reach the end consumer. It's cardboard boxes. And our crisp packets, we try and use kind of recyclable film where possible. But yeah, the total weights that we ship, there are then tax rates depending on the spec of that packaging. and the volume that we've shipped over the last 12 months. We now pay a tax on that that the government has started collecting as of last year, and that's called extended producer responsibility tax.

12:20So it's really hit a lot of food businesses like a ton of bricks. And depending on the packaging type and the weights that you're using, you know, varying degrees of pressure being lumped on food companies that, you know they haven't budgeted for necessarily so again this is all input costs that could lead to price inflation to more pressure on businesses in the food industry in a time when you know it's not easy for for many of us at all interesting insight i should say that uh last time we talked about this on the program the government sent us a statement saying extended producer responsibility moves the cost of dealing with waste away from taxpayers generates over a billion pounds annually must be spent by councils to improve recycling collections and thereby benefit every household across England.

13:05The changes underpin major investments in the UK economy. The government says helping create 25 ,000 jobs in their numbers. And we will continue to listen and work with trade industry bodies as they are implemented. Interesting area, isn't it? We will get more of Max's thoughts on employment in particular as well, because we didn't quite get to that there, did we, perhaps a little bit later on in the programme. A subdued market. That's how Barrett Redrow described the housing environment in the back end of last year during its latest set of financial results that it reported to the markets last week.

13:35The company said it was well-positioned to deliver growth and expected future sales to be solid, though. So maybe some positive noise is that things are beginning to pick up. The government will be hoping so. It's got this target, hasn't it, of 1.5 million homes to be built over the next decade in England. But is that realistic and are things moving quickly enough to meet that target? Well, we're going to get the views of Chris Carr. Now, Chris is the Managing Director at Carr and Carr Builders based in Lincolnshire. Chris, morning. Great to have you back on the programme. Morning, Will. What do you make of that target, first of all, and the reality of hitting it?

14:09It's ambitious. I think we've got to try and achieve it. Whether it's over the five-year period, I think we would struggle, especially the last two years being so quiet. But there is a demand. There's a built-up demand for first-time buyers, especially that are still living with the parents. So, yeah, I think it's a good target to try and achieve. Subdued, then, as a phrase that Barrett Redrow, one of the real big players used. Is that still the picture now then? Yeah, very. We're having people looking online for products, but actually going forward and buying them, they're waiting. There is the uncertainty at the moment that the general running of the country and the general feel, and people have been very reserved and not willing to spend a lot of money on anything.

14:57We're the biggest purchase anybody will ever make, a new home, and there is that anticipation. But it's built up and I agree that I think spring will shoot us all forward. Right. We'll move to perhaps some of the more sector-specific things. But you think kind of the will they, won't they, and what might have gone on in the budget at the back end of the last year, that was a big factor, was it? Yeah, it was. I mean, I think we were hoping for something in the budget that would kick us on before Christmas. Very disappointed, didn't really get a lot through there. It's a bit of a non-entity. but we're quite hopeful that this spring there'll be some sort of incentives to to kick on the market yeah like what uh well you know there's all sorts of things on offer i mean we'd like obviously no stamp duty first time buyers you know we've got to look at the mortgage companies and you know why can't they just do interest-owned payments for three years on a first-time buyer's mortgage you know the house value will increase so they're not losing out on anything uh no council tax for three years maybe and you know maybe incentives as well for people downsizing a lot of four bed detached houses with older couples and maybe we need to incentivize them to move down to stop us building so many three and four beds yeah i had this data didn't we start of the month about average house prices above 300 000 for the first time how much is is that an issue as well and perhaps to what you were talking about um the ability of people to borrow for that yeah i think we've done a survey through the uh the fmb the federation master builders and one of the things was we don't like high prices it might sound odd um but the higher the prices go you take a level of people affording to buy the properties and you know you used to be able to buy a property in your you know mid-20s you're now saving up to your mid-30s um that's not good enough for anybody long term um so we would like prices to stabilize uh the trouble is you know material costs are going through the roof labour costs are going up uh you know i think some of your other people speaking earlier and i and the likes are there or thereabouts and it's all adding more and more costs and then we've got the obviously the issue with the future home standards and other building safety levers coming our way uh which is always going to add more money to a new house yeah we haven't heard about the um those input costs the kind of raw materials chris for a bit what is going on?

17:15We've probably seen a 50 % to 100 % increase over the last three or four years. We know this has been held back at the moment. The merchants and the manufacturers can't put the prices up at the moment and they're desperate to, I mean, the builders merchants are going bust quite often. We just need this. We think they're going to go up again. And that's why, you know, if you're looking at buying a property now, it's the best time. So I think as soon as the market picks up i think our prices will go up again and then our price our prices to buy materials will go up but obviously our sales prices go up so what's driving that is there a shortage of something a tightness of something it's like everyone else it's ni affecting people it's the energy prices you know a lot of the products we use bricks blocks insulation a high energy usage to produce them uh and they're suffering like everybody else's with the household bills and uh you know the ni's not say it's not really helped you know the increase in wages uh it's just a knock-on effect you know if you look at the manufacturer's results profit-wise they're not making any more than they were four or five years ago so it's not profiteering it's literally just the energy cost and everything else going up as well and what about if um you know you've talked about the conditions perhaps not being there but let's put park that for one second as well and say that perhaps it does turn around and the conditions do improve as you were you were saying perhaps optimistically they might later in the year, Chris.

18:39Is there the firepower in terms of, we've been talking a little bit about jobs already on the programme, the people to come and do building on this kind of scale of the projects clearly that would be needed to hit this target? It's going to be difficult. I mean, the labour is the biggest issue we've got and skills, upskilling and the existing workforce. You know, we've been very quiet now for probably 18 months. A lot of people have drifted out of the industry, have gone to other jobs. They have mortgages to pay. You can't blame them for leaving. Trying to get those people back again, I think it's going to be very difficult.

19:14And training a quality tradesman is three to five years. So you're looking more at modern methods of construction, modular, using more tech for the homes. We build traditional homes, I've done for over 100 years. We're looking at alternatives now because we do feel there is an issue. The SMEs train all the apprentices. The volume house builders don't tend to do that. They pass it on to their supply chain. But we train the young people. And our guys from the FNB especially are saying, we're really struggling now to take people on. The work's not there. Right. So it's that, is it? The work's not there.

19:49And as a result, you don't have the budgets or the projects to train these people on. It's the projects. It's not particularly the budget. The budget, if you're taking a young apprentice on, there is a cost to it. But no, that's just not the projects. We need continuation of work is what we need. And the other one that we used to talk about quite a bit when the government was talking about it a lot, Chris, as well as around planning, they used lots of... I can hear your sigh already. I heard they used lots of phrases, didn't they, about sort of bulldozing regulations and making that easier. Has there been any sign of that in reality on the ground?

20:21I have got to be honest, and I'm nonpolitical, but I think this government's probably engaged more with the housing sector, especially the SMEs, than any other government. I think the housing planning system the policy is the same all over the country it's how it's delivered by local authorities so some local authorities are exceptionally good we're very fortunate, North East Lincolnshire to have one of the top five rated planning departments but they were rated one of the bottom five ten years ago so the policy still remains the same it's how it's delivered on site and you can't blame government for that sometimes we need to look closer to home to our local authorities and our elected members And I suppose they would say, wouldn't they, that also money tight in local government at the moment.

21:03It's not easy to just find more planning officers and things like that as well. Go on, Chris. Yeah, just to throw you quickly on that. It's not the amount of planning officers. It's the ability of the planning officers and the work content. We work with the local authority to improve their planning service. Did it by improving the officers' output rather than increasing the officers on the floor. So about kind of productivity and efficiency rather than actually pure numbers. Communication was the biggest thing. Interesting. Take those in the round then, Chris, as well. What would give you and the wider industry confidence then going forward?

21:40What do you need to hear about? Well, I think we can deliver the properties. I don't think that's an issue at the moment. I mean, we talk to the SME sector and they say they can double the output. Remember, if you're looking for growth, it's got to be from the SME sector. in the 1980s, we were building 40 % new homes, we're down to 9%. So if you're looking for growth, it's between the 9 % and the 40%. So we just need access to finance when the market picks up again. And availability materials, and I think we should kick on from there. Chris, thanks so much for your time. Really appreciate it. Thanks, Will.

22:12Chris Carr, Managing Director at Carr and Carr Builders there in Lincolnshire, as he mentioned. Sophie, you were talking about the interest rate outlook. look, there's an industry at both kind of ends of it, I suppose, that would really benefit from lower rates, not just the companies themselves, obviously, for these projects, but in terms of what it might do for mortgage rates, borrowing rates for people trying to buy these homes. Yes, definitely. And the fact that you start to have more mortgage deals below 4%, but also the fact that rate growth is currently outbasing price inflation, which is an indicator that affordability is improving.

22:52I think it's definitely going in the right direction for improving UK real estate markets this year. Max, how much of an issue perhaps for staff, just anecdotally, is it the kind of squeeze on housing? Well, we're certainly finding as a London-based business that more of our staff are making decisions to live outside London for affordability purposes, which we have a hybrid working model So it's not affecting us too dramatically, but it's definitely something I've observed since, you know, earlier in my career, I would have expected, you know, 90 % of our team to be living and working around central London.

23:32But generally, just I think, you know, the certainty, you know, in the outlook for people's jobs and careers just plays a massive part in things, doesn't it? So, yeah, well, both of us take us there because I mean, the papers this morning, I've got them to the right of me here. Big stack of them. The front of it again is this is this U-turn, isn't it? Really on on not deciding now not to delay local government elections. You've had all the storm around Lord Mandelson and his appointment and the prime minister's nearest allies leaving as well. Just sort of another period. And we talked about the budget there with Chris and and you guys earlier as well.

24:06I feel so we're sort of in a cycle that it seems to be very difficult to break in terms of political uncertainty. Does that really have, Max, on the ground impacts straight away for companies? Yeah, well, I think it boils down to economic kind of uncertainty. So I think, you know, the budget was such a massive point in time that, you know, that it seemed to be dragged out forever, as we know. and then obviously moving past it just does give us a relative degree of certainty for the kind of the medium to short to medium term. I think now it's probably, you know, going back to the job market, you know, where people feel like their careers are stable, where they don't see some big disruption from something like AI coming down the road.

24:49I mean, if you're going to, you know, buy a house, it's probably the biggest financial commitment you can make in your life. And, you know, at the moment you read every week around industries, jobs, and how they're being disrupted in a very short period of time. That, I think, is what's driving people to make slightly different decisions or possibly delay, you know, those big purchases. Yeah, Sophie, are you seeing that in the kind of big picture, do you think? No, definitely big picture. This AI and the launch of the Anthropic Cloud, it's been taking the market by storm. And what you see is how much it's going to impact sectors after sectors.

25:32So what we've seen over the past two weeks is so much volatility on the equity market where sector after sector, it's like this domino effect where you just needed one headline for one entire sector to be impacted. So it was the wealth management and then the freight. So it was really one sector after one sector. So really trying to understand how AI is really going to affect our day to day, as well as the job outlook in the future. Yeah, I think that's a really important point, isn't it? Political uncertainty, geopolitical uncertainty, but also just uncertainty, full stop about what careers, what your career progression is, how much of an impact AI is having around your sector, I suppose, as well.

26:23Got an interesting text in here too from Stephen in Epping. Thanks for your text on 85058, Stephen. Really, the government's house building target, the issue here is it's not the government building or paying for the construction of these homes. So they have no control on the number and type built separately. The builders and suppliers I know say things are starting to slow down. So I can see negative growth coming in this quarter. Stephen pretty much on the front line, isn't he, as a plumber there as well. If you want to join the conversation, 85058 is the text number to do so, where we will be chatting in the second half of the program about chocolate prices, the return of Chop Shop in physical form to fence spending and the Chinese Lunar New Year.

27:06Hi, I'm Frances Fry. And I'm Anne Morris. And we are the hosts of a new TED podcast called Fixable. We've helped leaders at some of the world's most competitive companies solve all kinds of problems. On our show, we'll pull back the curtain and give you the type of honest, unfiltered advice we usually reserve for top executives. Maybe you have a coworker with boundary issues or you want to know how to inspire and motivate your team. No problem is too big or too small. Give us a call and we'll help you solve the problems you're stuck on. Find Fixable wherever you listen to podcasts.

27:43Wake Up To Money from BBC Radio 5 Live. Morning, welcome back to Wake Up To Money on Tuesday the 17th of February. Our panel this morning are Max Rees, co-founder of the high-protein snacking brand The Curators, and Sophie Hune, portfolio manager and strategist at BNP Paribas Asset Management. Do keep your texts coming in on anything you hear through the programme as well. 0808 5058 is the number to do that. 08085 909693 is the WhatsApp if you'd prefer to get in touch that way. Perhaps you'd like to give us your thoughts about what you're seeing on this next item as well. Talked a lot, haven't we, over the past, well, probably year or so about the price of cocoa.

28:21Well, this week, the price has dropped almost 70 percent. Oh, sorry, that's over the last year. And in the last week alone, futures are down 15 percent. And while climate change and poor harvests had led to a spike in demand, cocoa now facing the opposite issue. oversupply. One estimate suggests there is now 400 ,000 ton global surplus in cocoa beans, which would be the largest since the International Cocoa Organization began recording that data in the 1980s. Claire Burnett joins us. Claire's the co-founder of Chococo, a premium chocolate company based in Dorset. Claire, morning. Good morning, Will.

28:55What's that doing to prices then? Well, it's interesting times. There's an understatement. After the last couple of years where prices have obviously rocketed, they peaked. It was in December 2024, over$12 ,000 a tonne. And here we are now with the prices going back down again due to basically a number of factors. The higher price did obviously suppress demand. For us, we haven't changed our prices. Our prices are the same this Easter as they were last Easter. But it does mean that we have been buying chocolate at a higher price in our contracts. We were hedging on an assumption of a higher average price per kilo or per tonne.

29:42than has actually transpired. So for us and all the other chocolate companies out there, we're all probably working through stocks of chocolate that were purchased at a higher price. Right, yeah, just explain that through for people. And presumably the really big companies have an advantage when it comes to that, right, like the sort of mega multinationals compared to guys your kind of size. Yes, well, you know, we're still an SME, so we hedge where we can and we buy small forward contracts. But even that level, you know, the chocolate that we're working with at the moment was bought and was paid, you know, was hedged a couple of months ago.