Business as usual?

0:00Wake Up To Money from BBC 5 Live Hello, welcome. It is Wake Up To Money. It's been a whirlwind start to the week for Sir Keir Starmer. Yesterday, he looked to be on a bit of shaky ground after the Scottish Labour leader, Anasawa, called for him to resign. Have there been good things? Of course there have. Many of them. But no one knows them and no one can hear them because they're being drowned out. That's why it cannot continue. But continue he does. He's got support from his cabinet. And the investment world reacted to this throughout the day yesterday. We'll go through what those are thinking, who lend money to our government, who invest in our country, and see what they make of what's going on.

0:41Now, with Manchester growing faster than the rest of the country, we're going to be hearing from three business leaders in the city to explain why that has been the case. And the Winter Olympics, we're all well into it now, well underway. We're going to have a closer look at one essential piece of equipment. It has an industry, the only one of its kind in the world. The Ailsa Rock. That's the beginning of all the world's curling stones. The crucial curling stones will speak with the Scottish business that crafts the stones used for those curling matches at every Winter Olympics and Paralympics.

1:16Wake Up To Money with Sean Farrington. Good morning to you. It is Wake Up To Money on this Tuesday morning, the 10th of February. We are just at five past five this morning. And as you will notice as you wake up and you flick through the front pages of the papers online, if you go to that page on the BBC website to see what the papers are saying, if you pop into the shop this morning to buy one, you'll be passing through one of your garages and seeing the display outside. Much of it will be to do with the state of Sir Keir Starmer's leadership as Prime Minister, as leader of the Labour Party at the moment.

1:54and it was a bit of a topsy-turvy day yesterday. There'll no doubt be plenty more to come as well as we look at the debates over how should the government be led? What should it be doing? Is Sir Keir Starmer the right person to lead all that? That's a question that seemingly some in the Labour Party are asking at the moment as well. We've seen that reflected in the investment world too. So many regular listeners to wake up to money will be familiar with the fact that in recent years, whenever there's been a question mark over the current government, the current prime minister, the current chancellor, whatever that might be, and their future, that there has been often some reaction in the investment world, those investors that are effectively setting those interest rates for the governments around the world who borrow, and if they get a bit nervous about the prospects for the country in the future, those interest rates can go up and if they get a bit calmer, those interest rates can come back down and a bit of both happened within the day yesterday as the news changed pretty quickly.

2:58We're going to talk about that after half past five this morning in a lot more depth as well. First though, I'd like you to get involved in this wherever you are across the UK, how it feels to you, your local economy is getting on. Now, you can have your own judgments on what growth in your local economy can mean to you. Sometimes it can be very specific local services and if they're improving, you might feel like things are growing, things are getting better. Jobs are easier to come by. You've got a better job than you had before. It may be that your high street is blooming a little better than it was once upon a time.

3:35All of these kind of things can represent growth. And I'd like to hear from you this morning how it feels your town, city, village, whatever it might be across the UK is doing. Because we're going to have a little bit of a more in-depth look at why Manchester has had a bit of a tension of late. When you look at the numbers, you can sort of see why, growing faster than the country as a whole over the last decade. We're told it has more foreign direct investment into it than any city around the UK, apart from London as well. And if, as many of us who work on the Wake Up To Money programme do, coming out of Salford Quays, as we do most of the time, the view over greater manchester the skyline has changed quite drastically as well in recent times has been uh whether it's the the super tall buildings the areas of the city in manchester that have changed so much in recent years so i'd like as you hear our conversation about this get in touch and tell us what sounds familiar to you what you'd like a bit of maybe wherever you are in the country what's worked for you not every city and town and village is the same and needs the same thing.

4:45I'm intrigued in the thoughts as well of Joanna Jensen, who's with us this morning, founder of the skincare brand Child's Farm, now an angel investor herself. Joanna, very good morning to you. Morning, Sean. How are you? Oh, you know, living the dream. Good. Yes, as we all are every single day. Good to hear, Joanna. Joanna, an angel investor, you could invest anywhere around the world, around the country. Is it all London-centric to you? Do you see different parts of the United Kingdom growing in different ways and maybe attracting money in different ways, needing to attract money in different ways?

5:21Well, I invest all around the UK. And for me, it's not about where it's located, it's what it is. So is it a keen, enthusiastic, determined, tenacious founder who wants to win and is ambitious? And does the brand, the product, the service make sense? Is there a place for it? It's irrelevant to me where it is. It can be frustrating for a founder trying to hire people because obviously people tend to go to cities and so the skill set tends to be around cities. But it's becoming less and less of an issue as people understand there are wonderful opportunities, certainly working for small to medium-sized enterprises, these SMEs that pop up, that grow quickly and are often in a position to sort of expand a lot more quickly than most because they're not harboured with these really, really expensive costs of maybe having offices in London.

6:17And so it might not matter to you as an investor, and that's what we'll often hear is, you know, you're looking for a good investment to make a good return over a good period of time, all of that. But for people living in those areas around the UK, it is important that investors like yourself are attracted. Have you noticed, as you've sort of got more and more into this investment world, rather than perhaps running the business, being a founder of the business, running the business that you had at Child's Farm, now you've got into the investor world a bit more, that there are certain parts of the UK, not that you're deliberately sort of looking for, but you find yourself being increasingly attracted to where those investment opportunities seem to be?

7:01Well, it's interesting that we're talking about Manchester today, because I was there in November. I'm an ambassador for the British Library and their BIPC abilities for founders and business owners to use their facilities in 19 hubs in the UK. And the one in Manchester is fantastic. And I was there in November talking to a bunch of potential entrepreneurs and entrepreneurs, and it just struck me that what an attractive city Manchester is now. It's clean, it's tidy, it's got a buzz about it. And that is attractive to an investor. You walk around, there are people that are busy, they're doing stuff.

7:40It looks as though it means business. Also got Geoffrey Ute with me this morning, Senior Market Strategist for BNY. Very good morning to you, Geoffrey. Good morning, thanks for having me. Thank you for being with us. Now, Geoffrey, in financial markets, clearly London will dominate. But in terms of the businesses, you know, Gerard has talked about that, investing in right around the country, how the UK economy is getting on, which you will look at the numbers behind that all the time. Where has Manchester sort of sat in the story of the British economy in recent years? Well, firstly, I can say Manchester is so important for the BNY story in the UK.

8:18We started off with 50 employees about 20 years ago. Now we're a top 10 employer in the city. We're actually moving. We had two sites. We're consolidating into our brand new offices, all our staff for this year. And as I see Robin Vince last year when he went to Manchester and said, we're just seeing just such positive effects. The city has such a great ecosystem. We felt lonely 20 years ago, but now people are coming in. The graduates are finding the place very attractive and then it feeds into itself. So for the country, it's just so important to identify these clusters. And we talk about the Oxbridge cluster as well, that area where productivity is the highest.

8:58and then it reinforces, right? So it really is incumbent upon government policy to allow these areas to develop. And often you'll hear the phrase, you really find the good universities there, make it attractive for graduates to stay, build the infrastructure, build it, and they will come, to quote that famous phrase. Interesting. Again, 85058. Do keep those messages coming. Actually, listen to this conversation that I've had with a few bosses that are based in Manchester. Their companies have been based there a while. They've grown pretty rapidly, ended up on stock markets and the like as well.

9:28if there are things in there that you think sound like you need where you are. You might have some of them, but not maybe seeing the fruits of it. Because a few weeks ago, if you were paying close attention to Wake Up To Money, subscribing to our Big Boss interview podcast, we spoke to Tom Behan, who's the chief executive and co-founder of the sportswear company Castor, about, among other things, Greater Manchester. There is a deep pool of talent in this part of the world, really well-educated, high-skilled, driven people, communities. There's an ambitious outlook on the world. Manchester is a destination for many of that talent group, which is brilliant, and that feeds off itself.

10:11That means more businesses want to launch here. That means there's better housing here. That means that the tax rate locally is higher. So when Tom Behan from Castor was talking about that, in those days and weeks afterwards, It was not necessarily just because of Tom's words, but there'd been an attention towards Manchester and how it had been growing, playing out in some of the stats. If we look at gross value added is one of the main ways the UK measures the size and growth of economies and regions around the country. And Manchester's GVA growth had been more than double the rate of the country as a whole over the last decade.

10:47So we thought we'd have a look in a bit more detail. I sat down with three people who run businesses in the region. Good morning, I'm Lawrence Newman. I'm the founder and CEO of a company called The Beauty Tech Group, recently floated on the London stock market, probably best known for one of our brands, Current Body, which you'll have seen all over the place with our LED mask, no doubt. Started and founded this business in the northwest of the UK and also now employ about 250 staff just outside of Manchester in a tech park called Orderly Park in a place called The Glass House. Well, Lawrence, thank you for being with us.

11:24Next up. Hi, I'm Emma Zachary. I'm co-founder of Hip Hop. So we are a soft drinks brand based in Manchester. We make better soft drinks with gut-friendly ingredients, but without compromising on taste or flavour. We are stocked right the way across Manchester and Greater Manchester in restaurants, bars, coffee shops, independents. but we're also stocked nationally so you can find us in Sainsbury's, Morrisons, Waitrose, Ocado, Co-op and also internationally so we're available across Europe. And finally. Hi, I'm Sean Morton, I'm the CEO of On The Beach. We are an online travel agent, we organise Atoll and Abta protected package holidays for people to go away to beach and city breaks both in Europe and further afield.

12:17We send around 2 million people on their holidays every year. We were founded 20 years ago and are still headquartered in Manchester. Sean, you mentioned they're founded in Manchester. So has there been a point in the history, whether when you've been there or maybe when the founder was making decisions in the past, where there was a decision to make of, are we going all in on Manchester or might we need to move to another city? Yeah, I think there will have been a few moments where that's been considered. So the business, I think, was founded in Macclesfield and had homes in Didsbury and Cheadle before we moved to the city centre.

13:00In the south of Greater Manchester. In the south of Greater Manchester. In 2015, the business listed on the London Stock Exchange. And obviously, a lot of our institutional investors are based there. So I split my time between Manchester and London. but the obvious choice I think has always been to stay in Manchester. We did, the biggest move I think we made was from Cheadle into the centre of Manchester and that was to make sure that we could access the best possible talent, particularly digital talent and we see Manchester, well we saw Manchester back then in 2018 as a real draw for tech talent and I would say that's still the case.

13:44and so that living in Manchester and where people are as we sort of have a look there's been a lot of interest in why Manchester has seen this growth of late and there's loads of stats about all of this one that jumps out that people might have heard before is that back in the 1990s there were literally just a few hundred residents in the city centre of Manchester now it's clocking on more than 100 ,000 people you may well have seen that change over the years being from the area yourself. What is it that's gone on there? Well, I think you can only look as far as the universities. There's five universities in Manchester and the stickiness of people wanting to live here post-university, I think it's obvious to see.

14:27You've probably seen the statistics from that. I think it's value for money compared to living in London. It's a great place to travel from. And there's some incredible businesses in the north-west of England which has continued to evolve over the last 10, 15 years. So there's a lot going for it. Is that needed? Do you need a bit of a critical mass, a number of businesses, to keep people in the area? You might have the great unis, but if they decide to advance their career somewhere else? Well, look, fundamentally, they've got to be great businesses as well. You know, if you think about the area, it's not just about the area, it's about are those businesses ones that people want to be part of?

15:04And if you look at the Beauty Tech Group, we're in beauty, which is a robust industry to be in that a lot of people are interested in. We were in technology, which again, I think people see as part of the future. There's so many technology businesses. I think Manchester's becoming known as a tech hub, isn't it? And there's a very good reason for that. Sean, you've mentioned there's a few overlapping themes here, but in terms of that talent, what is it that you've found about Manchester and Greater Manchester that has enabled you to have confidence that you're in the right place, that you can grow your business and continue to?

15:43Well, obviously the talent that's within Manchester is excellent. Manchester punches well above its weight in terms of quality of university and number of students versus most cities in the UK and probably internationally. So it's got a lot of really good talent that's both homegrown and is attracted into those big universities. but you know even if we're looking for talent that may not necessarily exist within Manchester Greater Manchester it's a big draw for people to come and work for a business that's based in Manchester because it has that I guess that international reputation so we have people who are based across the country who will come and work for us the transport links into Manchester are very very good from most places in the country and the accommodation in Manchester is you know abundant and good as well and people like spending some time here it's culturally very rich the entertainment and nightlife is very very good um so yeah it's a great great attraction for people who are both living here but also people who want to visit and work so we you know heard so much positivity around about manchester here emma but yet you know over the last 10 years or so the northern part of england and the economy across the north of england has been you know quite a a political hot potato.

17:03We hear about it a lot. There's many, many parts of the north of England that do not hear the story that we're talking about in Manchester. Why do you think that is? Is there anything that could now be done to take it up a level for those that are not that far from Manchester but are able to tap into some of the benefits you've talked about? I think in terms of Manchester's nearest neighbours, that will probably happen inevitably if the city continues to grow and scale like it has. You know, the only way to, you know, we've talked about apartments, so we're growing up, but we've got to grow outwards as well.

17:45I do think, you know, there's still a dearth of investment in the wider region in the north. You know, we probably don't want to open up a chat about rail links to London. No, but please do. Why would you say that? Of course, it can become a cliche, but it doesn't mean it's still not a very important issue. Why would that spring to mind? well obviously HS2 and the faster rail link to London I mean I've I get the train to London at least once a week and and it's okay but it often is late or you can't and you cannot get decent wi-fi on the train so please can you sort that out because you can't do any work um I think there's an issue with connectivity in the wider region actually so I'm from Leeds it's actually a bit painful to get over to Leeds sometimes and it's 40 miles away whereas when I go to London sometimes I can I'll drive down to West London and jump on the Elizabeth line and I can be at the other side of it in 30 minutes so I think there's something about connectivity with transport that will really really help us get the benefits of Manchester out to the wider region to the north.

18:55Sean I was detecting you might have been in a extreme minority in the north of you talking so positively about transport out of Manchester a little bit earlier. But I wonder if, moving away from transport, is there something else that you feel could electrify the region even further, whether it's learning from Manchester or just not resting on the laurels of the success of recent times? I mean, I will touch on the transport a little bit. I mean, I think it's OK, but for sure it would make a big difference if it was a lot better. not just down to London actually but I agree across the country I think the cross country, Liverpool across to Newcastle I think if that could be much faster and more regular I think that would be a big help Emma, for those in other cities around the UK who might be listening to this and seeing the attention Manchester has got of late and thinking what is it that's different there?

19:53I think Manchester has some really interesting and really effective governmental aspects of it that really have supported us as a business. So I think the Greater Manchester Combined Authority, devolution, that sort of coordinated leadership of all 10 local authorities in the area has had a real big beneficial impact on the city in lots of ways. As a business, it's actually just last week, we received some financial support from the Combined Authority, a loan from their, I think it's the GM Advance Fund that's going to help our innovation and manufacturing capability under the arches in Manchester Piccadilly and what that is going to do is going to help us progress a lot faster with a piece of ingredient and manufacturing innovation than we would have been able to do if we didn't have the money.

20:48So I think that's a really good example of how as a local government, I guess, Manchester is investing in businesses and supporting businesses. I think the banks can get a bit of a hard time sometimes about how they support scaling or startup businesses. But we've received a lot of support from the regional branch of HSBC in terms of really supporting us to grow. You know, they've spent a lot of time getting to know us. Interesting. When, Lawrence, you talk about being listed on a stock market, was it last year that you listed on the London Stock Exchange? So you're obviously getting a very big glimpse at how financial services, banking services, legal services, all of that might be in London.

21:37How does that compare to what you have in Manchester? Well, it's interesting to listen to Emma talk about support. I think when I look at my journey and I started the business back in 2009, I don't think there was too much support. So it's good to hear that there's, you know, there's upcoming help for maybe newer businesses. And actually, we struggled to raise capital in the early days. I think everybody talked about growth, but what I learned was really they wanted profitability quite early on, which is very, very challenging for startup businesses. So I think it's good to hear that you're receiving the sort of support that I think businesses in the North West should receive from local institutions to back startups in this area.

22:24And, you know, Sean just talked about splitting his life between London and Manchester. All of the institutions that backed the Beauty Tech group on floats, pretty much 99 % were London based. Does that change at all? Has it changed? Or are you still having to be in London and make that trip with finance? Yeah, absolutely. And I think, you know, that's certainly enlisted life. I don't think that's about to change. Sean, why might that be? We talk about many of the positive aspects of Manchester's growth, but it sort of feels like there isn't that large investment scene or as big as it needs to be for the likes of yourself and Lawrence to be thinking right now, we don't need to get on the train down south to have these conversations or to get the money from those investors who are based there.

23:20Yeah, I mean, increasingly you can have those conversations over video, but there's still quite a big draw into London for these big institutions and they do want to meet the people at the top of the corporate they're investing in face-to-face and they want to do that regularly. So, I mean, fortunately the transport down there is pretty straightforward. Would it make a difference if there was, I don't even know what this would look like, But when you go to London and you're then in this sort of infrastructure of financial support and investment, it's there. What isn't here in Manchester? What is a bit different?

23:58Just think that the institutions that are deploying this capital into the city, into the stock exchange, they are in London. But I don't think that's a barrier for businesses based in Manchester accessing that capital at all. yeah and i think look we're talking about listed life which might be different to a route that another business may go down so you look at private equity about raising money with high net worths might be i think there is opportunities in manchester for that and i probably should have said in my early days we ended up raising money with nvm which is a northern base vct fund when we listed i remember lots of the northwest base funds saying oh i wish i wish i'd backed you now looking at it of course because it's been hugely successful and they came in high risk at the time and have done incredibly well being part of the journey so we were backed eventually in the early days by a northern fund so the opportunities are there I just think that they should be a little bit more aggressively looking at specifically backing Manchester based businesses if they're a northern fund.

25:05So that was those three bosses we were chatting to on Wake Up To Money from the beauty tech company, from hip-hop and from On The Beach as well, the travel agents there. You can hear, you'll be able to hear the full longer conversation if you want to really delve into the detail of it. We're going to put the whole thing up on BBC Sound, so keep subscribing to Wake Up To Money for that. Joanna Jensen, founder of Child's Farm, the skincare brand is with us this morning, angel investor as well. We had a few people get in touch through that conversation, Gino about where they are. Nigel in Cheltenham's been in touch saying it feels like a two-speed economy here.

25:42On the one hand, employment's good. We have major investments in cyber and tech alongside GCHQ. But he says, on the other hand, every week another cafe or restaurant shuts due to cost pressures, which have been going on for many years. A lot of people might not feel or see it in their day-to-day lives necessarily, even if they're getting some of that major investment. I think that's the problem. It's a bit of a game of two halves here because hospitality, as we know, has been under the cosh forever and a day. People are struggling to make ends meet in their hospitality businesses because of the cost of goods.

26:18And if we were the consumer paying what they really need us to pay, we wouldn't be going out for a cup of coffee and a sticky bun. That's the reality of the situation. And so I feel his pain. Cheltenham is a sort of, again, a game of two halves. There are areas which are really buoyant and there are areas that aren't. But it is up to all of us to support our local town, our local village, our local city by shopping there. We have no reason now. There are so many surveys out at the moment about loneliness. Don't sit at home and do your shopping. Go out to the high street and do it because without our pennies, these businesses won't continue to survive.

26:56So I think we need to change our COVID habits and get much more as consumers into that high street. That's what this British business really desperately needs now, because a lot of the stuff that you're buying from Amazon, other platforms are available, is not from the UK. These are international businesses that in no way benefit people who are living and working in this country. So think how you spend your cash. Geoffrey Hughes with us from BNY. why somebody else getting in touch, they haven't said where, probably because they don't want to give where they're from necessarily this reputation, but they've said everywhere outside London and Manchester has this environment.

27:39Vape shops, candy shops, mobile phone shops, Debenhams, BHS, Woolworths all closing in recent years and still empty. Those clowns are clueless, oblivious, they say, expensive, inconvenient parking. Why would it be that, you know, we've heard the very best of Manchester there in that conversation, but when you look at what's going on right across the country, how can the benefits of maybe some cities spread out to high streets around the wider areas? And this really brings up to the uncomfortable truth in terms of spending power or tax intake. London, the south-east, account for close to half of all of them, the tax intake, and the UK, these are the only two regions that run a surplus.

28:17So we're very positive on Manchester, of the factors that northwest as a region runs a deficit as well so uh when your income power you know on the ground uh that's limited you know that of course you know translates into you know what your high street you know could look like you know what you're able to spend on but having said that uh from from central government's point of view is there a stronger case um for you know for local authorities you know they know their constituents best you know they know where demand can um surface so um will they be you know given greater allowance a greater fiscal powers to control that.

28:50So I often think about this in Europe, for example. For example, France is Paris dominated, right? UK, London, Southeast are dominated. But Germany actually has quite a few centres, you know, so that federal approach and it gives them more discretionary power on a regional basis. They take more of the taxiness. Switzerland's a more extreme example with the Cantons, for example. So that requires longer term thinking, may or may not fit within certain, I'd say, plans. but I think from a local point of view they are the best position to really redirect resources and that's something that just needs to be looked at.

29:2685058, do keep your messages coming in your business guest champions the university situation in Manchester one of those we were just talking about somebody saying aren't we approaching peak university the attraction of a degree appears to be waning when it means being burdened with the increase in degree tax something talked about a lot in recent days the emphasis now on apprenticeships What are the ramifications for Manchester? Don't apprenticeships favour the more manual forms of employment? Joanna, just on that, because it doesn't mean you can't have both very good universities producing the talent that's required from those, but also very good apprenticeship schemes, more vocational earlier on in the qualification schemes and places for people to be able to attend.