Gridlocked?

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1:06Wake Up To Money with Sean Farrington. Good morning, welcome. It is Wake Up To Money. It's Tuesday morning, the 29th of September. Thank you for being with us as ever. Your thoughts as ever. 85058 on all to be discussed today. And you get the feeling it's going to rumble on a fair bit longer past today, particularly when you have a glance at the front page of the headlines in the run-up to Andy Burnham's first address of a Labour Party conference as Prime Minister. And you see the front pages. We'll go through a few of them now, shall we? The front of the Times says Labour is split on the prospect of ending the triple lock, those protections that are given to the increases in the state pension every year.

1:50Does it go up by the which one, whichever is the highest of how much wages are going up on average, how much prices are going up on average or two and a half percent? That triple protection that those increases have been given over the years and much discussion of late over whether that is too expensive or not. Has that cost more than many thought? Is it going to cost a lot more than many thought in the future? and is that something that needs to end? The front of the Telegraph says Burnham signals end of triple lock. The Prime Minister to review the policy as he seeks money for the NHS-style social care service.

2:26And then you go to the I, end of UK state pension triple lock, moves a step closer. The Express scrap triple lock and you will face voter revolt. The Mail and the Mirror focusing a little bit more on these utilities announcements that we'll get into as well. the Prime Minister to vow public control of energy, water and housing. So all that and more to get into with Randeep Somel, Fund Manager at M &G Investments. Randeep, good morning. Good morning, Sean. Just first up then, what does it mean for the nation? How much, you know, we talk about investors like yourself around the world, view the UK economy, view how we're looking after our finances.

3:07if we are a step closer to a triple lock being not the policy for how state pensions are increased in the years to come? It's incredibly important. We can see that the debt that we are taking on as a nation is becoming unsustainable. We can see it in our bond yields, which keep going up and up and up, and we don't have an answer for it yet. So there's indecision at the government level on how we balance our finances, and businesses are not as sure. They don't know whether we're going to see increased tax rises. Once the government has a plan in order to do this, it makes it a much better environment to invest.

3:45And we are an open economy that needs investment. And what do you make alongside that, Randy? So we'll maybe hear more details from Andy Burnham today about where the conversation goes next about social care, about how it's paid for, about how the state pension changes. And also we're going to hear a bit more about how the UK will approach its key utilities. So we haven't got the full details on this yet, but this GB grid, the Great British Grid, this sort of rival to other companies that are out there like National Grid or SSE and Scottish Power, who are investing and enabling companies, the country to get involved in electricity transmission connections.

4:33be connected to the grid. Does this one move the dial at all for you? There are projects out there today that are still waiting connection that could potentially bring electricity costs down. So if it stimulates that, that is good news, but the devil will be in the detail here just how much capital the government has to spend because they have so many other draws on what is a vastly shrinking pool of government money available. Well, let's bring in Sam Dimitri, who may have a bit of an idea of where this might be going next as we get more detail. He's head of policy at Britain Remade, which is a campaign group that's called for reforms to things like planning and regulation, making it easier to build clean energy infrastructure.

5:19Sam, good morning. Good morning. Is this a part of what you've been looking for? Well, look, Britain's grid has become a serious barrier to growth. You see factories, data centers, even housing developments, they can face up to 5, 10, 15 year waits for a grid connection. And that queue is growing, so something needs to be done. And I think what was really interesting in the proposals is the headlines have become, are about GB grid, but one of the things that they've mentioned is the idea that businesses would have greater freedom to build their own connections and compete with the privatized monopoly.

5:59strikes me as a sensible reform. Where it's been tried overseas, it seems to work quite well. Now, you know, the detail is what matters, you know. What can be done privately? There are obviously some things that you need to be a big natural monopoly to do these things. It's not necessarily everything they can do, but things like building your own substations, building sort of low voltage wires and paying for some of your initial connection that could be done faster and GB Grid I think if it can boost that competition by either delivering those projects themselves or helping businesses do that then I think that could be a really really positive change but one of the things I find quite funny is you hear Burnham talk a lot about public control But the reality is the state already has a really big say in what does and doesn't get built on the grid.

7:02National grid operates within these five-year regulatory settlements. They produce sort of endless PowerPoints to persuade regulators to let them build this or that and ultimately charge us bill payers the money. So why would this be any different? Many will be thinking, hang on, almost your instinct is, the state has quite a lot of influence on how the electricity grid works. So where would this move the dial? When Andy Burnham looks like he's going to be talking about trying to get our energy prices in line with Europe's within 10 years, given the amount of the waiting list that you and Randeep have talked about for people to get onto the grid can often be longer than that.

7:49What can be actually different here? So I think part of the issue is within these five-year regulatory settlements, there isn't a lot of wiggle room to respond to demand. So when things change, and things are changing far faster than we thought, you know, when the last settlement was done, I don't think people had as clear an idea of how much power AI would want, that they're very slow to respond and there's not really that incentive to say, look, the failure to give me a grid connection is costing me tens of millions of pounds a year, if not more, in the case of data centers where they can make a lot of revenue from getting that grid connection.

8:36And so if you can respond more nimbly, that's really good. But I think we need to look more deeply. So he also talked about, well, the press really suggests that he's going to talk about reforming the market too. And I think one of the things the previous government did, which was wrong, was they essentially gave up on this idea of locational pricing. So one of the reasons why we need so much grid connection infrastructure is we don't have really good signals to tell people where to build. So a lot of generation is built behind grid constraints. So built in Scotland, but we don't have all of the wires and all of the different aspects to get that power down to where it's consumed, which is broadly speaking in the south-east of England where most of the people in the UK live on average.

9:32Right. So the regional pricing debate may well be back. We might have to gear ourselves up for more of that discussion because it's been one that's dominated a little bit over recent years. Sam, we're going to have to leave it there for now. No doubt we'll talk again as more detail comes out on this and we see how the progress is made. Sam Dimitriou from Britain remade there.

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10:43Visit your online broker and get started. See what adding futures can do for you at cmegroup.com forward slash podcast. Derivatives are not suitable for all investors and involve the risk of losing more than the amount originally deposited and any profit you might have made. This is not a recommendation or offer to buy, sell or attain any specific investment or service. Wake up to money with Sean Farrington. Maybe a little more urgently for many people, an issue at the moment is the cost of fueling up their cars. Andy Burnham talks about wider energy prices and the desire to bring those down over a 10-year period, the energy costs to bring them in line with how much, say, those around Europe pay for their energies.

11:29What about the price of diesel in particular? It reached an all-time high again yesterday. The Chancellor John Healy has told the BBC that the UK is in talks with America over its potential stoppage of diesel exports, which America has been talking about. So the UK is starting to prepare for a ban there, which, of course, would influence things even more. Average diesel prices rose to more than 199 pence a litre yesterday, according to the RAC. That's above the previous record we had back in June 2022. Only two petrol prices continuing to move up as well. In response, it looks like drivers are changing their habits now as well.

12:09The average volume of diesel that customers fill up at each individual visit to the pump, down more than 10 % since August, according to the fuel analysts' edge petrol. Here's what drivers in Salford told Wake Up To Money's Megan Ballantyne on how they've changed their habits in response to these rising costs. I literally only drive to work and back now because there's no point in me driving anywhere else because it's so expensive. I can't do it. It's too much. We've on the weekends thought about where we're going. Yeah, we've stopped basically going out on the weekends. This weekend we decided to do our food shopping.

12:40We warped, you know, just to save a day. Now when I'm at home, because I live in York, I cycle much more frequently now. A lot of places I cycle because it is ridiculously expensive and I have a stupid car that just eats up diesel, so it's costing a hell of a lot more. But I have a family that live out in the villages around York. It means that I'm not visiting family as frequently because the only way to get there is to drive. I can only fill up V-Power and the prices for that has gone really high because I used to do like, I think, 90 to 95 a full tank and now I'm paying almost 110. It is like, I really love road trips and I love driving to like different cities, France, Amsterdam.

13:19And this time round, I had to consider driving and I had to take a flight. So that is, yeah, downside. Very interesting to hear some of the habits there. And the reminder as well that, you know, not everybody's average fuel price is necessarily what we're talking about. If there are certain types of fuel you need to be putting into your vehicles. I've got Tom Buckley with us, who's director and general manager of Tap Retail, which has five forecourts in the southeast of England. Tom, good morning. Morning, Sean. How are you? I'm okay. How have the last few days been? What's been happening on your forecourts?

13:52It's definitely getting quieter. I mean, our volumes are about 30 % down. and then obviously, despite what people think are margins, significantly down as well. That's about 40 % down on what it would have been this time a year ago, give or take. Explain that a bit because when you say despite what people think, what happens with the margins? How much money you're making on your sales? There's a great website, petrolprices.com. It's actually released a calculator on there so anyone can go on and have a look. It's completely independent and that will give you an idea of, you put in the price that you're paying at your local petrol station, it will tell you how much of that is taxed, how much of that is going to the actual raw product itself and how much is going to the retailer.

14:33And that will give you an idea that on about£2 or just under£2 of diesel, the retailer is making about 6p. Why have the margins gone down? Because the price is going up so quickly. Most retailers are having to absorb it because nobody really wants to go over that£2 mark. There should be a lot more petrol stations over£2 for diesel, but most people don't want to do it. Some of the supermarkets are holding the price down because they're still operating on what we call a lag. So they're operating on prices from two or three weeks ago, whereas most of your independent forecourts are operating on live prices or prices from last week.

15:11So everyone's fuel in petrol stations is priced differently depending on the contracts they have for their suppliers. So, and the fact you talk about it being a lot quieter on your forecourts then, so you're not selling as much as you were before. Is that effectively contributing to why you're not putting the prices up further because you actually want to just encourage people to still be buying this stuff as much as you can? Yes and no. I think we've still got... The biggest challenge for us is that regardless of how much fuel we sell, our overheads stay the same, so the wages still need to be paid, the utility bills still need to be paid.

15:50And when your foot falls down significantly, that affects your shop. And a lot of our, well, most of our petrol stations rely quite heavily on people purchasing things in the shop as well. We're seeing that people are buying a little bit less when they are in there, but obviously you've got significantly less people walking through the door. So you've got less opportunities to sell things. So what does that mean for your business? Well, I mean, we've just got to ride it out for now. I mean, this has been going on now for, what, a year? It's been quite unstable. It's shot up. It slowly dips back down again.

16:26So we just have to look out and hope that this price comes down. There's no benefit to us for this price to be this high. It doesn't benefit anybody, least of all the retailers. Probably when the price is this high, it's the worst time for us. So we have to look at other revenue streams, diversifying, so jet washes, laundry machines, all other. If you go to a petrol foreport now, most of them have got parcel lockers, laundry machines, jet washes, any other sort of ancillary equipment that brings an income in. And has that been working? When you see that diversification, does it actually make up for a little bit of the traditional way of doing business?

17:06Jet washes are good. Although we have seen a decline in those reasons, less people on the road, less people are, you know, the luxury of washing your car, so to speak. things like parcel lockers and things like that they're just to bring people to the forecourt these companies pay you sort of a small rent but it's nothing to shout about you know a parcel locker might be paying you£80 a month to be there but you've still got to pay for the electricity to run it so they don't make any money but they bring people to your forecourt they offer a service to sort of set you aside from somebody else Tom thanks for the insights there are you expecting prices to get higher today, tomorrow again?

17:47I don't think in the next couple of days, but it all depends on what happens in the global news. I looked at our wholesale price that came through yesterday morning and it hasn't gone up, but we check it every day. I'm as much in the dark as you are. Well, Tom, appreciate it. Thank you. Tom Buckley, Director and General Manager of Tap Retail there. He's got his five forecourts in the South East. Do keep letting us know what you're seeing, what you're spending, how those habits change. I mean, it's a huge one, isn't it? Randeep, just briefly on that. At what point does this yet again start to change your thinking and others' thinking on how much the cost of borrowing might be, where interest rates might go next, what it does to the economy if these prices are so eye-wateringly high?

18:34Yes. I mean, thankfully, the oil price has started to come down. We're at$99 now. On the 18th of September, we were at$111. So these pressures are coming off, and hopefully that will start to feed through. But the point you make is the best one. We do need to see inflation to come down unless we get another interest rate rise, which will then put another dampener on the economy. So it is a cause for concern. Right. You may well have heard just before Wake Up To Money today, you can catch it on BBC Sounds, our most recent Big Boss interview. I was chatting to the chief executive of Aviva, Britain's biggest insurer, massive investor in the country as well.

19:12and among other things, Dame Amanda Blanc was telling us about a recent trip to a local coffee shop in a hometown of the Rhonda Valley of South Wales, in the Rhonda Valley in South Wales. She was in the newly opened Cloud Nine Cafe in Treorchy, was Dame Amanda. Let's have a listen. I was sitting in a cafe in Treorchy on Saturday and it was a brand new cafe and I thought I'd go and try it out, have a cup of coffee, have something to eat and the lady who had started up the cafe, she'd only started up two months ago and she came out and she goes, oh, where are you from? I said, well, I'm from here, but you know, I live in London.

19:47And she goes, oh, that's brilliant. She said, do you think this has got the London vibe? And I said, do you know what? I actually think it does. I said, I think it's brilliant. Good for you for setting it up, you know, for having the ambition, for taking the risk, for being an entrepreneur. And that's what we need, isn't it? But we need more encouragement for people like her who've sort of probably taken a bit of a loan, taking a bit of a risk on setting something up in the community. And I think, you know, really fair play to her. And I was really impressed with her. And I said, hey, good for you.

20:18And I really hope it succeeds. I'll be back. Well, after that interview, of course, there was then only one job for the Wake Up 20 team to do, track down the owners of that coffee shop. And we did. Mia and Daffod are the pair behind the shop. And here's Mia explaining what it's like to serve the boss of one of Britain's biggest companies. Yeah, crazy. like if I'm being totally honest I didn't know who she was um because all our customers I treat the same I get chatting with them and she told me she was from London and our past customers have said like oh this place is giving like a London vibe so someone who's from London I asked her like is this very similar to the coffee shop that you have in London and then we just got we just started to chat in and she was really nice then when I found out who she was I was like quite shocked that she chose to come to Cloud9 and especially originally from Trioghe which is just like a little valley um so yeah I was really pleased and I was really chuffed that she enjoyed being here and she had a nice time and she she was really lovely and down to earth yeah well she definitely had a nice time she very much got that point across and yeah she was saying that she's just you know really impressed with with what you're trying to do there what what has been the plan well it is my boyfriend's shop um he bought it about two years ago he won it in an auction and he came on one day from rugby training and he was like i've won a property on triokia street and i was like oh here we go then his dreams becoming a reality because rugby players they love their coffee and for a good few years he's said he always wants to run a coffee shop and and yeah we've started from from then and two years later his dreams become a reality and I started working here full-time with him amazing how's it been very very busy cooing around the sides um people just coming from like everywhere traveling like over an hour away to come here i think we personally underestimated how well it was actually going to go and how well it's still continuing to be absolutely phenomenal like we we didn't realize the response that we would actually have how amazing is that it just shows you doesn't it you build it and people will come Yeah, I think as well, like your social media got to be like really up to date as well.

22:55Love it. What's your speciality? I mean, if the chief executive of Aviva is saying she had a good time there, you might have a few more customers. So what's going to be the dish that we should be keeping an eye out for? I would probably say like a classic steak and eggs is really popular. But she had a Greek yogurt bowl and she loved it. So we must be doing something right with our Greek yoghurt bowls. Tremendous. And, you know, when you mentioned, you know, that you were asking her, like, is this like your cafes in London? What is that you're trying to create there? I just think we wanted to bring something that's really different.

23:37And when people walk in, make it look like they're not just in like a valley. They're like in like a city somewhere. Just give a very different vibe of where you actually are. Well, look, Mia, good luck to you. Good luck to your boyfriend. I mean, it sounds like you've got off to a great start. Hopefully that continues. And you're going to have chief executives, bosses from all over the world coming and joining you for a bit of Greek yogurt. Yeah, definitely. She'll have to come to one of our night events. So there you go. There is Mia there who runs that Cloud 9 cafe and plenty more besides in Triorchy with David, her boyfriend.

24:17That was on the back of Dame Amanda Blanc, the chief executive of Aviva, having a good old time when she was there at the weekend. You can, of course, hear that full interview with Dame Amanda. Have a search for Big Boss Interview on BBC Sounds. Thank you for all of your messages today about re-industrialisation. That came up in that chat with Dame Amanda. It's been spoken about a lot by those at the top of the Labour Party. We might hear more about it today. Might hear more about where diesel and petrol goes next as well. Thanks to Keith, who's been in touch, saying he's trying to cut down his travel.

24:50He's paying£2.20 for his diesel at the moment. So thanks for all of that. That is it from us on Wake Up To Money. Wake Up To Money from BBC Five Live. That's it from Wake Up To Money. You can download the podcast every Monday to Friday, so please make sure you subscribe. We'd also love it if you left us a review when you do. Get in touch. Keep the conversation going any time as well on social media. Use the hashtag WakeUpToMoney.

25:40ever. Then the Premier League dropped a bombshell. The Premier League has charged Manchester City with more than 100 breaches of its financial rules following a four-year investigation. Somebody turned up at the Etihad Stadium and effectively served papers. Hear in-depth analysis and explanation on Football on Triumph. The Manchester City charges. Listen on BBC Sounds.

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