Down the drain

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1:18We hit a brutal milestone this week. More than 1 million young people aren't in employment, education or training. That's according to new figures. It's the highest level in 12 years. The numbers came out on the same day the former minister, Alan Milburn, warned we're at risk of a lost generation. So we'll talk about why businesses aren't getting young people in and what that means for the economy. Also this morning, thousands of people in Kent have been hit with water outages during the heat wave. We'll hear from one salon owner about what it's meant for her business. And AIOK? With data centres popping up across the country, We've been behind the scenes at one in London to find out how AI ready the UK really is.

1:58Wake Up To Money with Felicity Hanna. Good morning. Welcome to Wake Up To Money on Friday the 29th of May. It is four minutes past five. Oh, it's been a really, really hot week, hasn't it? A very hot week coming off a bank holiday weekend. Half term for many of us in the UK, not everywhere, but a lot of the UK. So I want to hear from you this morning. has it been a spendy week have you spent money because of the heat wave if you've had children on half term did you spend more or less than usual did you hit the shops in the heat or did you stay home and just kind of sadly fan yourself while drinking iced water get in touch let me know I want to know the business of the heat wave whether you spent more you can text me on 85058 You can send me a WhatsApp message on 08085 909693.

2:49And if you're on social media, use the hashtag WakeUpToMoney and I will keep an eye on that. I will also be keeping an eye on my Friday panel this morning. I'm joined by Nick Greenan, Chief Executive of Tyneside Cinema in Newcastle, an independent cinema with its own bar and cafe. Morning, Nick. Good morning. Do you have air conditioning? Oh, we do. I feel like that's a real selling point in a heatwave. Was it a good week or bad week for cinema, do you think? Well, I have to say probably cinemas up and down the country. We'll be doing the rain dance right now. Yeah, it's kind of sort of, we don't welcome the hot sun because it just drives them out.

3:30But I guess, I mean, there was a, I think it was a few years ago when we had another heat wave. Actually, towards the end, I think people were kind of running in for the AC. So you never know, that might come in a few weeks. But yeah, it's been a tough few weeks for us. Okay, so not the weather you want at cinema. We'll talk more about sunshine spending. We're joined as well by Ovi Edukemi, Global Equities Fund Manager for Carmen Yak. Ovi, morning. Good morning, Fizz. What about you? Much sunshine spending? Has it been half-term in your household? It has been half-term, but amazingly, I've managed to keep the spending to a reasonable amount, mostly just ferrying the kids around to various different activities.

4:10and actually I've been at work in London for half the week as well. So it's been a bit mixed but nothing out of the ordinary for me. Actually, I think it's cheaper, it can be cheaper in the sun or at least it's just in the dry to keep the kids entertained because you don't have to kind of take them to the cinema, sorry Nick, or do something because it's raining and you've got to get them out of the house before they murder each other. I'm a bit old-fashioned. We haven't yet had the hosepipe bans yet and I'm sure there'll be somewhere down the road but a little sprinkler and the kids on the grass, That's all you need to keep them entertained.

4:41I've been in the paddling pool this week. So, yeah, it entertains me as well as the kids. Frances Huck, forgive me, is also with us, Chief Economist at Santander UK. Frances, good morning. Any extra half-time spending for you? Good morning. Maybe a bit more on ice creams, perhaps, than normal. That's always quite nice. But I'm quite jealous hearing about all these people with paddling pools. My children are too big for paddling pools these days. See, that's when it becomes your paddling pool, Frances. You don't need young children for that. Lots of people actually already getting in touch saying ice cream spending is up.

5:17Jane on Blue Sky says she's been spending money on a fan, some summer trousers and a box of mini magnums. And somebody else says a VAC Master floor fan and a four pack of cold Stella. So you're all doing the heat wave pretty well, I think. 85058, though, get in touch and let me know if you are. But let's start off, Obi, by talking about oil price. Before we get back into our look back at the week, it's been another pretty rollercoaster 24 hours for oil prices. There was this talk of a possible US-Iran peace deal that would extend the ceasefire for 60 days and begin talks on the future of Iran's nuclear programme.

5:58And then the BBC understands that Iran and the US have agreed the framework of a deal, but that of course relies on the approval of Iran and the US's leaders. Obi, what has that done to oil price? What have we seen? Well, I think first of all, I mean, the anxiety around the oil price, certainly in the last three to four weeks has calmed down somewhat. I think if we look back to the first quarter of the year when the sort of the conflict broke out, you know, that we had estimates of the oil price going up to$200 from some forecasters. But we really peaked out at about 110. And now we've seen for the first time the oil price is dropping below the$90 mark.

6:40So it's good news, as in I think the anxiety has sort of shifted away. There's some hope about some sort of agreement being done. And I think that's what the market needs, a little bit more certainty about a pathway to remove some of the heat and the stress from the rising oil prices that we saw in the first quarter. Nick, what does that kind of high oil price mean for a business like yours? Do you think that as well as the sunshine, some people have just been trying to keep their money a bit closer to home? Yeah, I mean, I think, you know, we're kind of nervous of what happens really over the next 12 to 18 months.

7:15And what we found, interestingly, is numbers are OK. People are coming out still and then our figures are doing well, but they're spending less. They're definitely thinking about more about what they spend when they do come out. so we're kind of sort of keeping a really close eye on that at the minute and you know we looked out with a very good chief of finance who locked us in on our utility deals for a few years so that's kind of given us a little bit of a kind of confidence around that but yeah we've definitely seen a change in the spending power of our audiences. So what they're still coming through the door but perhaps then they're spending less in your bar and your cafe on popcorn what's the the old saying about cinema that you're not the film business you're in the popcorn selling business exactly yeah so that so that is worrying um but actually interestingly enough because we sat yesterday looking at it is um may this year for the first time and i think in our history as far as we can go back um looking at figures is actually the cinema the box office made a profit which has never happened before so the concessions has gone down but the actual cinema and box office has gone up, which is very strange.

8:28I suppose we've had some absolutely fantastic films, which has definitely, definitely helped. Frances, do you think that people, when they sort of see the potential for more disruption, they respond, they do change their habits. It's not perhaps just because they're already seeing the price of the pump go up or, you know, some certain prices go up. Or we heard this week that the energy price cap is going to rise quite considerably. Do you think that people are sort of looking at that? Yes, but also thinking, I wonder what more disruption might be coming, what more price rises? Yes. I mean, if you look back over the last few years, it's been a bumpy ride for everyone, whether you're a business or a household.

9:11Prices have been going up and I'm sure that people are concerned about this. I mean, we see it with savings rates. I mean, savings rates have been high over the last sort of few years since, I mean, obviously you had the COVID bump, but, you know, since then, and I think that is partly because people are concerned about what's coming next, because all the shocks have been negative so far. Maybe we could get a positive one at some point soon. I would like that. I would really like a positive shock for us all to digest. Well, we will obviously stay across that US-Iran news throughout the day here on Five Live.

9:47But Speaking on Thursday evening, J.D. Vance, the vice president, said negotiators were going back and forth on a couple of language points, which include the question of enrichment. He told reporters, we're not there yet, but we're very close and we're going to keep working at it. So we will be keeping an eye on that all day on Five Live. Now, let's look back at the week that was. There was a huge amount of talk this week about how to get young people into work. This is ahead of the, well, that was ahead of the latest figures being published on how many young people were not in education, employment or training.

10:20They're known more generally as NEATs, aren't they? And earlier in the week, Lord Wolfson, the chief executive of the retail giant Next, warned there had been a dramatic fall in the number of entry level opportunities in the UK. Youth unemployment is really a symptom of wider problem with employment in the economy. And of course, if you've got fewer jobs, the people who suffer most are the people with the least experienced, and that is the youngest. Now, Alan Milburn, who served as health secretary under Tony Blair, has been tasked by the current Labour government with investigating the rise. This week, you probably can't have missed it, he published an interim report saying the education, health and welfare systems are no longer fit for purpose in preparing young people for adult life.

11:03For every£25 that we spend keeping young people on benefits, we spend only a pound helping them get into work through employment support. What we're doing is we're not prioritising getting young people into a situation where they can be learning or earning. And instead, we're transporting them into the world of benefits with incalculable costs for their life chances. Now, the rest of that report will come out in autumn. That's when it's expected. But those latest figures from the Office for National Statistics show that more than one million people are now classed as NEATs, which is a really, really bleak milestone, isn't it?

11:41Work and Pensions Secretary Pat McFadden said this was a national cause. From next month, for example, there'll be a hiring bonus in place of£3 ,000 for employers to take on a young person who's been out of work for six months. Later in the year, we will be changing the apprenticeship system to put more of an emphasis on youth starts, because one of the things that's contributed to this problem is a big decline in youth apprenticeship starts. And we'll also be taking action on long term young unemployed people who've been out of work for 18 months or more, with the government in that case directly stepping in and paying for subsidised work at 25 hours a week at national minimum wage rates.

12:26Well, the Prime Minister also said the UK cannot afford and will not allow a lost generation of young people out of work. Francis, Lord Wolfson says this is a symptom of a wider employment problem in the economy. Do you think that this is a young person problem or an employment problem? Well, I mean, it's certainly an employment problem in the sense that, you know, there just aren't enough jobs out there now. You know, there's two things here. There's number of jobs and there's obviously quality of jobs. And I would say that from the point of view of quality of jobs, I think this has been an issue for some time.

13:03And that's not just necessarily for younger people. That's across the board. because economic growth hasn't been strong enough. We've just not been creating those types of jobs that, you know, graduates, et cetera, need. And obviously that filters down, particularly at the younger level. So, yes, I mean, I would say it's a bit of a combination of things. And I also think, you know, it's quite interesting when you talk about mental health, because there's a chicken and egg situation here. Is that actually mental health that's causing them a problem in getting a job? Or is that something, you know, is that partly caused because of COVID and all the issues that came out of obviously, you know, being at home and all the rest of it?

13:45Or is it because they can't get jobs that is causing them mental health issues? Because, you know, that is that that's another issue here that you've got a lot of. We've had a big increase in in in that particular area as well. But it's not 100 percent clear which which comes first on that. But I would certainly agree. You know, the economy is not creating enough jobs and are not creating enough quality jobs, given the number of graduates that we have as well. Obi, it starts to look like a particularly unlucky generation, doesn't it? We've heard from businesses this week about the cost of employing young people, saying that's a real challenge when it comes to creating these jobs.

14:27Are you seeing that kind of impact companies hiring plans? Yeah, I think so. And I think this is also not a new problem. I mean, obviously, the report is quite headline hitting and we're all sort of concerned about it. But I think this is something that's been entrenched in the UK economy for some time. And we need to figure out ways to resolve it. I mean, I will give a shout out to my former school, Ellsbury Grammar School, who were very, very good at getting people like myself back to the school to help some of the kids with career advice. And they do that at a very early point of their education.

15:02And I think that's one of the areas where we can help prepare younger people for the workforce. Because at the age of 16, I think the reality is what you need to do is to get work experience. And the quality of work is less important. it's more about getting that sort of handshake or that experience of working with other people and these are the skills that I think employers are finding that are missing when kids are coming out of school at 16 and so that's one of the areas of focus I think the government is rightly focusing on but from a corporate perspective you know it's expensive to hire people it is one of the biggest costs for most companies people and therefore they have to be quite careful about the risks that they are taking and hiring young people is a risk for a company and I think that needs to be reflected in the way that companies are taxed and the way companies are looked at when it comes to hiring people and maybe that some of the the government's additional plans will help address that because that's a key important factor.

15:58Nick this is a really important point Obi's making isn't it a lot of young people even if they don't end up working in hospitality Those early jobs, working in hospitality, allow them to build a CV, which allows them to then move into other fields of work later on. I imagine that certainly perhaps historically, you've had a lot of young people applying for jobs at Tyneside Cinema thinking, right, I could go along and shovel some popcorn or work in the cafe and that would be a really good starting job. Are you still able to employ young people? I mean we are I'd say about 80 % of our workforce is under the age of 30 and interestingly we've recently just been out to recruit for new front of house staff because obviously you get students that go home over the summer and then we do a whole new recruitment going up to sort of the end of the season and we had over 500 applications for three roles and I'd say the majority of them were under the age of 25 so you know that that that just shows you the the demand that's there um we because we operate as a charity take our role seriously in terms of young people and professional development and how we support the next generation so we as much as we can we try and bring young people into the organization that start like you say in the front of house but we spend a lot of time actually trying to develop them through the organization and a large percentage of our workforce have come through the front of house and cinema and the cultural sector is actually a really good example of doing that and the thing that we found through that which was great but then the other barrier because we're a cinema because we show film because we're a charity we also looked at the difficulty of young people getting into the screen sector and film sector itself so we set up the talent unit which was to help young working class filmmakers have the resources and the expertise and the networks between 17 and 25 so we run that alongside a kind of sort of an employment program we've got a training program as well it's it francis it's important kind of hearing nick's perspective 500 applications for three roles.

18:19And we had a text in from Paul in Lincoln, who says, hi, Fless. Hi, Paul. It doesn't help the youngsters with the retirement age being pushed higher. That's just a sort of a whole other part of the kind of employment landscape. But for instance, are we seeing people who perhaps traditionally would have retired or gone for different jobs, kind of applying for those jobs and sort of having that push down effect until it's really, really difficult for a 16, 17, 18 year old to get a job because there's a maybe a graduate or 25 year old after it? Yes, I mean, it's very difficult in terms of actually looking at the data on this.

18:54I mean, we do know that obviously in COVID there was a swing for early retirement and we saw a lot of the old generation leave the workforce. They have subsequently come back in. So yes, I mean, they may be, you know, that may be in effect. But I think to be honest, this is a lot of this is just more about job creation within within an economy that's really not I mean, let's face it, growth last year. Yeah, I mean, it was about average in terms of economic growth. But, you know, households are actually not spending as much either. So, you know, with just the underlying factors that, you know, you need for for a strong economy, you know, they're not quite there yet.

19:37Obviously, you know, things like the Iran conflict don't help either, you know, creating more inflation, et cetera, and uncertainty. And, you know, there, and there, of course, there's AI. And the question mark, and I get asked this a lot is, you know, is AI playing a factor in hiring? It's difficult to know, because the data is just not there. But one wonders, simply because, you know, our business is starting to think, well, do we need to change the way that we're using the, you know, the younger workforce, because it's a lot of those sorts of, you know, the jobs that they do, the tasks that they're required could be affected by AI.

20:14So it's businesses also need to start thinking about, well, how do you get around that problem? Because at the end of the day, you know, you can't have a generation that's not working. I mean, it's absolutely awful for the economy, not to mention, obviously, for them themselves. But equally, you're going to then run out of people. At some point, those people need to come through to replace the next generation, because that's how it works. So So I think there is an element, there's a lot of uncertainty anyway from geopolitical events. And I think that there is quite a bit uncertainty around AI and how to use that to complement jobs rather than substitute.

20:50Obi, I'm looking at the front page of the Telegraph this morning. Lots of the newspapers, of course, covering that interim report from Alan Milburn. But the Telegraph has pulled out the headline, one in seven graduates has no job in workless Britain. Excuse me. And that's kind of one of the issues, isn't it, Obi, that we're seeing all sorts of different young people struggling. It's not necessarily people who struggled in school and then can't get their first job. It's people who you might think would be a shoe in for some sort of work. Yeah. And it's a combination of a few factors. I think, you know, first of all, the opportunity for permanent work is one of the areas which seems to be problematic.

21:30So, you know, there's part-time work, which we know is affected by cyclical factors. But certainly the more, let's say, permanent work, the type of jobs that the graduate would get coming out of university, at the moment, vacancies are at relatively low levels. And this is something that I remember when I graduated, I'll show my age here, graduated over 20 years ago during the dot-com bubble. So young, that's so young. It catches up with me when I see my kids. I remember graduating from the dot-com bubble and we had a very, very similar outlook back then. There were many of us that graduated in software engineering and technology jobs, but they simply weren't jobs around.

22:07And I remember the story back then was making sure you had all the skill sets to be able to do other things. And I think that's one of the areas, if there are kids or younger people that certainly listen to the show, and I listen to the show when I was there age and graduating, it's really important to focus on your broader skill set. That's your communication skills. and that's one of the things that will also defend and help you in this sort of AI race where some of these graduate jobs are essentially under pressure because computers can do some of them a little bit better. I think if you've got a broader skill set, then you'll certainly be more relevant in the next sort of 10 years and beyond.

22:44Yes, it's an ongoing issue that I'm sure we'll be covering much more on Wake Up To Money. Some of you getting in touch with suggestions for just sort of transforming the whole market for young people. Nick in Wokingham says, bring back the idea of later teen service for those not continuing education. The care sector, public space, maintenance, gardening, etc. could provide a start to working life for two to three years and benefit public service. Thank you for that. Keep your thoughts coming.

23:17we can't look back on this week without talking about it can we and on wake up to money all week we've been finding out what it's meant for businesses helping us cool off during the heat wave so one of the uk's biggest online retailers buy it direct told us it sold one air conditioning unit every six seconds on its website on Tuesday. AO said total sales of fans and aircon units on its site were more than 13 times higher than the week before. What about more permanent solutions though? Sophie Davenport is Managing Director of SFE Services based in High Wycombe. She told Sean inquiries were up this week.

23:56I mean, in terms of installation, sort of on a day-to-day basis, we've probably seen about 25, 30 % uplift in inquiries. It's quite a lot to sort of deal with. And then predominantly, we're sort of seeing a lot of breakdowns as well. We probably see about a 50 % increase in call-outs where the weather gets really, really hot like this. So they install air conditioning. And we also heard from David Thomas, the boss of the UK's biggest house builder, Barrett Redrow, for this week's Big Boss interview, available on BBC Sounds. Don't miss it. Why not subscribe? Here he was speaking to Sean about the idea of installing air conditioning as standard in new build homes.

24:30There is the opportunity to introduce with heat pumps air conditioning now that's unlikely to be brought in as a standard but that can be brought in as a modification i saw the conservatives announce something yesterday or today about air conditioning being a standard in the future but i think do you think it should be a standard in the future not at this point no because i i think that we're not designing as a rule i think you're not designing for extremes and therefore the utilisation of that relative to the cost may not be a good proposition for a lot of customers. So the heatwave, good for some, less good for others.

25:13Nick, we've certainly been hearing from you that it doesn't encourage people through the door. Have you thought about adapting to this kind of weather? I mean, I don't know how this would work. Could we see maybe more outdoor cinema screenings? Is that something that could happen? I mean you do get kind of sort of over the summer months certain kind of organizations up and down the country they have the capability and the resource to do outdoor screening and they're usually quite popular but you know that's a big investment especially for somebody like us the things that we're trying to look at how do we mitigate is we do have some outdoor area and we're looking at a kind of fundraising plan at the minute to look at building a terrace on the rooftop it's unlikely we'd put a screen up there but it's about still trying to create dwell areas around the cinema that encourages that kind of outdoor activity that people come and still use as a community and hospitality space but we just kind of sort of take it as it is take the hit that we realise that that's what just happens but if you've got the capability and the resource and the site to be able to do outdoor screenings you do see that they can be really popular.

26:26Hobie, we heard those big numbers when it comes to demand for air conditioners and fans from AO and Buy It Direct. Presumably, when you do get a kind of perhaps unexpected swing in the weather, that can be a welcome boost for different sectors. It certainly can be a welcome boost for retailers. And I actually do wonder whether some of this is also to do with the changing sort of work environment. I mean, at Carminac, we are very much a be-together-in-the-office company. So, you know, we're all in our office enjoying the air conditioning. But I guess if lots of people are working from home, then all of a sudden you have this demand to make your home environment or your home office as comfortable as your work office.

27:06So there may be some pent up demand, which I think is kicking in there. But I think overall, I mean, it's about productivity. And it's very, very difficult to produce productive work in an environment where you're extremely uncomfortable. and we're not really geared up in the UK for that kind of environment. So this suggests that people are finally sort of throwing in the towel. We had a heat wave last summer as well, so people are finally giving up and saying, you know, the fans aren't enough. Let's go out and make a real serious investment and make ourselves a bit more productive if we are working from home or working away from the office.

27:40Frances, are we geared up for these kinds of hot weather swings? I mean, does it affect the economy? Because we see, I suppose, things like transport being disrupted, changes in work patterns that Ovi was kind of chatting about what what kind of impact does that have yeah I mean certainly transport and I I know from from experience on on Tuesday that transport in London was was not good you know there were problems on the the tubes and the trains all to do with you know the heat and the fact that you know we just we just weren't built for this type of environment or at least the the railways weren't when they were built I mean The other issue, of course, is things like, you know, food production.

28:23You know, farmers are starting to get concerned about, you know, both livestock and obviously, you know, the arable side of things. You know, what does that mean? Is there going to be an issue, an issue there? And that's particularly given, you know, obviously food is a global supply and we're seeing these issues elsewhere too. It's not just the UK that obviously suffers from heat waves. So that, you know, that's a bit of a concern from an economic perspective in terms of, you know, we're already facing the possibility of increased prices in food anyway this year due to, you know, fertilizer cost increasing and things like that.