Speeches & breaches

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1:07Wake Up To Money from BBC5 Live. Hello, welcome. It is Wake Up To Money. So that triple lock for state pension increases will be no more. The state pension will continue to rise every year at least by prices or 2.5%. So is it a bit more of a double lock? We're going to have a look at the Prime Minister's plans for that, for the National Care Service, for landlords, for water companies. It was a big speech, lots in it. We'll go through it and see what the impacts might well be. Just as we're told this morning, the energy bills will be going up this winter by the biggest amount for four years. Elsewhere might have been the main story in another day.

1:50What next for Manchester City? Now it's official, found guilty of manipulating its finances by an independent panel. and... Ube on Ube, yes please. It's the purple yam, it's been sweeping across social media. Can a food go too viral? Possibly so, according to the largest producing country. Wake Up To Money with Sean Farrington. Good morning to you, Wake Up To Money on BBC 5 Live. On this Wednesday morning, it's the 30th of September. It's just after five o 'clock and if you were to have a glance at the front pages of the papers today, you would have a feeling that the speech from Andy Burnham yesterday is one that will have a ripple effect in many ways, potentially for many years.

2:37Certainly the debates that will be had about how we go about doing things, it feels like some of that may well be hotting up. What do we want a national care service to look like? How do we want to fund it? Is the changes to the state pension a way that we want to be contributing to the cost of that. Are the changes that might be happening to the way our water companies are run, the way our energy supplies are all sorted out. There's so much around all of this. It has had a lot of reaction. We're going to get plenty more on Wake Up To Money with Frances Hark, who's with us, Chief Economist at Santander, UK.

3:18Good morning, Frances. Good morning, Sean. Thanks for being with us. We've got Freddie Cahoon as well, Investment Director at JM Finn. Hi, Freddie. Morning, Sean. And Thea Green, founder and director of the beauty brand Nails Inc. Hi, Thea. Good morning. Now, Thea, what did you make of it? I don't know if you listened to it, watched it, just digested it in the aftermath as it's been everywhere. You know, many of the pictures on the front page of the paper tried to capture the emotion of Andy Burnham as he was delivering it. What did you think? I think, you know, I think it was definitely a very human speech.

3:53So I think probably a lot of people in the UK very touched by that. But I think from a business point of view, just still huge questions of how certain elements are going to be paid for. National care system is due to be fully funded. But I think there is, you know, for businesses growing concerns in terms of there will be tax implications as we move towards budget time. Well, and we have a budget in now less than a month's time, which is where we might get, well, we should get plenty more detail on the finances behind some of these plans. When you listen to the speech, dear, because there'll be a lot of people, probably a lot of regular listeners to wake up to money, who will be, we're all a bit more skilled than we once were in listening to speeches and sort of looking at what the impacts of that might be next.

4:41Where is that money coming from? What might be the benefits of some of these policies that you're announcing? What were you trying to keep an ear out for, as Andy Burnham was talking about, the array of changes that he wants to put in place? Yes. I mean, I think one positive element for business is this sort of move back to a pre-Brexit relationship with Europe, which would only be beneficial for businesses that have been tied up in huge red tape since Brexit in terms of working together in every which way. So I think, you know, that definitely interesting. But, you know, when you come to, you know, all other elements, you know, the social care policy, obviously, absolutely fantastic, but just general concerns on how we're going to pay for it and how, you know, if people's money feels pinched, they will potentially not then be spending, albeit Burnham's whole plan is to put more money in people's pockets.

5:33But I think just, you know, waiting with bated breath for what will happen in the upcoming budget in terms of really will people have that extra money in their pockets? Francis, we're going to go through some of the numbers in a moment and test some of those questions that Thea's asking there about, you know, is there enough money for this and that? I just wonder, you know, as an economist looking at how the UK performs and you will have seen many a speech over recent years from prime ministers, Francis, from chancellors as well, laying out this stuff. What to you, Francis, how would you sum up what this speech was about?

6:11What pathway does Andy Burnham want the country to be on? Yeah, I mean, it was interesting from an economics perspective. I mean, we obviously had some heads up that there might be a question around him bringing up, obviously, the triple lock, which has been talked about for, you know, well, quite some time now. So that that in itself was very interesting. But I mean, it was it when you sort of read the newspapers afterwards and the comments and things like that, It was more around the sort of tone of the speech, which I think I was talking about, which was a definite departure from, you know, Starmer.

6:51So, I mean, in terms of actually the content and all the rest of it, I mean, obviously, you know, we as economists, if you're thinking of the fiscal position and all the rest of it, are very concerned about do the numbers add up and all the rest of it? how are the markets going to react and things like that, to which, as far as I could see, the markets didn't react particularly one way or the other, interestingly, to the dual lock. So question mark over that. But, I mean, obviously, from our point of view, what we're interested in is the 28th of October and budget time. So, Freddie, how did, when you look at the screens, maybe it was more about the chats behind or in front of the screens rather than the actual actions that people were taking yesterday.

7:36How did the investment world react to this? Because we often watch whether interest rates move on the back of big announcements from our governments. Yeah, well, it was quite a muted response, as Francis said. I mean, ultimately, the FTSE 250, which is the more domestically focused stock market, was reasonably flat. that actually bond yields or gilt yields had been going up a lot over the last week or so. Actually, they fell back a little bit yesterday and the currency sterling was flat against the basket of global currencies. So I think all in all, Downing Street would be pretty happy with the market response.

8:14Yesterday, I think it was very much focused on the announcement on the triple lock changing to a double lock. Right. So we had Francis calling it a dual lock. We've had Freddie calling it a double lock. Let's have a listen to what Andy Burnham was talking about in his speech yesterday when he looks to change this triple lock that we've had, this policy that since it was introduced 15 or so years ago that has seen the state pension rise by the highest of whatever average earning increases at the rate at which prices are rising, or 2.5%, if that was the biggest. But the Prime Minister now looking to change this.

8:53We promised in our manifesto to keep the triple lock unchanged throughout this parliament. I will honour that promise. I will honour that promise. And I'll do more. I'll do more. That promise will take the state pension to a record high. From there, in April 2030, we will adjust it. the state pension will continue to rise every year at least by prices or 2.5%. And it will hold its value relative to earnings over time so that pensioners will always share in the rising prosperity of the nation. OK, Francis, explain what's going on here then, because he talks there about rising prices and the pension increasing in line with those with inflation, the two and a half percent.

9:58But then he says over time it will be in line with wages as well. So what changes here?

10:08Well, yes, that was quite an interesting point when I mean, so it sounds to me like it is a double lock. You're going either after sort of inflation price rises or you're saying two and a half percent. But I think what they're also trying to say is, you know, if there was a big increase in wages, then they would need to consider making sure that the pension wasn't completely out of line with that. Was how it sounded will be interesting to see, obviously, once this policy into place, exactly how that looks. But that's certainly what it sounded like. I mean, in terms of obviously numbers saved, they talked a bit about I think it was around 15 billion, according to the government, saved by about 2040 from this.

10:58I mean, interestingly, if you look look back at the cost of the triple lock, there was some work done by the OBR in their recent sort of fiscal sustainability reports. And it talks in there that, you know, the cost of the triple lock is was projected to be about well, is projected to be 15.5 billion by 2930. But if you go back to 2012, when the triple lock came in, it was projected to be 5.2 billion by 2030. So, you know, that is a big difference. And this is obviously one of the reasons why they were looking at the triple lock in the first place. But certainly very interesting from that perspective.

11:42Thea, you sort of mentioned a few concerns you might have about the numbers. When you listened to that and that came alongside the announcement effectively of a plan for a national care service, what were you thinking? Well, the positive potentially for a national care service is having run a beauty business, particularly having employed hundreds, if not thousands of women over the years since Nails Inc. started, is there are many people that do have to leave their positions to go and care for their family members. and have obviously a very reduced standard of living because of that. So I think from a positive point of view, if there are opportunities, particularly for females, to stay in the workforce longer because there is more support with the national care system, that is one positive to the British economy.

12:36You know, if women are staying in business longer and not having to leave their positions for those sorts of reasons and struggle financially to share their money, potentially with elderly parents. So I think that's positive. But yeah, for me, everything is just sort of, you know, based on what's coming up in the budget and how will we really fund all of these elements. I don't think we really saw the answers. I think, you know, a lot of these things are long term costs that we don't have plans and answers for as yet. Francis, part of Andy Burnham's pitch seemed to be a little bit of what Thea's describing there, an announcement of something that could have a ripple effect and an impact on the economy.

13:15So if you have a national care service fully up and running and working efficiently, there'd be economic benefits of that for health, for people's ability to be in work longer because they're not necessarily taking on those caring responsibilities themselves. When you do the maths, Francis, of how policies impact a nation, do you take that stuff into account? Do you think, oh, the economy is going to grow in a different way because of this policy? And that instead of us just always looking at how much something costs and how much taxes rise being risen?

13:53and I'm sure the treasury and the OBR and people like that will will be doing this the same I think that the problem that many people have is when you tend to to look at a forecast you you look at it maybe for a year or two and often these sorts of changes are changes that build up over time and therefore you know have a much longer outlook so you know looking at the sort of the the OBR, obviously, they tend to do that sort of five year period, where really, you probably want to be looking at the sort of, you know, 10 year horizon, in order to get a lot of these benefits coming through. But absolutely, I mean, you know, it's not just about necessarily, you know, what comes through, you know, in terms of GDP, or tax, or things like that, you're looking at, well, what does the labour market, how does that react, you know, given that we know, we've got a demographic problem, and we've known this obviously for a long time, the fact that you are taking people who could work out of the workforce in order to be able to care for people is not good, you know, when we're struggling to find workers.

15:02So, you know, from that perspective, absolutely. So it hits when you're, as an economist, looking at forecasts and things like that, you're obviously thinking, well, how does that affect the labour market? Therefore, or how might that then affect the fiscal position? So, you know, as with all things economics, it all ties together. Francis, we just had a message come in saying, how can Andy Byrne be bragging, saying the state pension will be at a record high? It's always at a record high every year because it never goes down. Was he talking about it being at a record high relative to something else?

15:38I think we might have just lost it. That is a very interesting question. I mean, yes, you're absolutely right. it would be at a record high. I'll tell you what, Francis, we're going to give your line a reboot for a second just because you're just crackling a little bit more there, but we'll come back to Francis in a moment. In the meantime, let's have a listen. I think we'll dig out the answer to that question who got in touch about that, about record high. I think it's as a proportion of average wages or whatever that might be in comparison to something because, yeah, indeed, it goes up pretty much every year, doesn't it?

16:17That is what we've been talking about for quite some time. Let's have a listen to somebody from the care sector now because the pitch from the Prime Minister was that all of this would free up funds, the changes in the triple lock to create a social care system that is free at the point of access and to which, to quote, everyone contributes, everyone is covered. What's included in that cover is unclear at this point. That's another one of the questions that people want to answer. And here's the reaction of Mike Padgham, who's the executive chair of the social care provider Celia's Care Group. I'm really pleased we've at last got a prime minister who gets it.

16:54But there is a big but, and that is I'm concerned that changes won't come into effect until the next general election or after the next general election. I'm worried that they might not actually happen. I'm also concerned that whilst care costs might be paid, then there is the accommodation costs to stay in a care home, for example, and that might add to extremely high cost to people who need that type of care. So we've got to go further. I agree we're free at the point of need, but we need more detail. And I urge the Prime Minister to act quicker. The£2.7 billion currently wasted by people being in hospital who are admitted for discharge could be transferred to local authorities to enable people to get care packages to be cared for at home straight away.

17:34So it's not about more money, it's about spending more wisely. And I think we should put those into effect now because I'm not sure that we know who's going to win the next election. We don't want to go back to square one where we start all over again if it's a fresh government. Mike Padgham there, social care boss, making another point about where there can be other consequences and savings made, money to be spent from one system into another because of the improvements that people might hope to have in place. But will it play out that way? Joe in South York has been in touch saying, let's not forget the contribution the pensions make to the nation, free childcare, accommodation, the bank of grandpa and grandma, to name just three, give us wrinklies a break, says Joe.

18:15One of the biggest cheers of the speech, bearing in mind is the Labour Party conference, so Labour Party delegates and members who were there, it was reserved for a statement of intent on water. Today I can confirm Angela Eagle will present a strengthened water bill to Parliament. The centrepiece of that bill will be this. The repeal of Margaret Thatcher's ideological ban on public ownership of water companies. Now here's Dr Heather Smith of the Cranfield Water Science Institute reacting to that opening of the door to public ownership of our water companies. Many of the sewer overflows that the public are quite justifiably concerned about were built long before the system was privatized, often in the 1960s and 70s.

19:13So they were essentially built under a publicly owned system. And so there's no real reason to think that switching back to a publicly owned system would necessarily deliver a pathway to fixing those issues. Fixing that problem requires real time and investment, and there's a risk that the bill for fixing that problem will simply land squarely with the taxpayer if we switch back to a publicly owned system. It's all well and good to talk about a 10-year plan to revitalize the sector, but we have some really urgent needs for the delivery of infrastructure to build resilience in the system to deal, for instance, with the effects of climate change.

19:54So there is a risk here that in adding a lot of uncertainty and a lot of complexity into the evolving regulation for the system, that actually a lot of that planned investment in necessary infrastructure just slows right down. Freddie Kahuna is with us this morning, Investor Investment Director at JM Finn. What do you make of those announcements? Because at the minute, it's mostly private companies that are running the water system with a lot of regulation around it. Did that move the dial, do you think, on investors around the world thinking they would back companies to do this stuff here in the UK?

20:35Yeah, well, it was definitely a statement of intent more than a sort of we're going to nationalize the industry over the next couple of years. Ultimately, investors again provided a fairly muted response to the announcement of the share prices in Seven Trends and United Utilities, which are the publicly listed companies in the FTSE 100 were flat on the day. And ultimately, you know, we've got evidence of the initial of the early discussions with Thames Water and Andy Burnham was quite keen to take more of a proactive response with regards to trying to take over that business. But obviously, having looked into the detail further, there is a high level of complication with regards to government ownership in these public utilities.

21:25And whilst I'm not saying necessarily that it's a bad idea, I think it's definitely going to form a 10-year plan rather than an immediate plan to nationalise these companies. I've had messages coming in, somebody saying yet to get morning, Sean. Again, another government talking tough about managing public finances, but yet then kicking the problem down the road. The government should be asking about the cost of care. Care companies make millions in profit, but yet the employees delivering the care of our loved ones are usually on minimum wage. 85058. Do keep your messages coming on this. We're going to keep talking a little later in the show about some of the energy announcements that came from the government, some of the energy price forecasts that we're hearing about today as well.

22:12Some grim reading and listening for where energy bills are going to go over this winter. Of course, you know, we're well aware that energy costs and everything feeding into that have gone up with the war in Iran. So we'll talk about that a little bit later we'll talk about the consequences for leaseholds as well what landlords may be forced to do if they're seen to not be providing a good enough service to those to those renting from them as well changes to the leasehold sector will be on the way to so much going on in the property world let's turn our attention though for a little bit let's step away well step away from Andy Burnham's speech yesterday, but Andy Burnham, of course, was mayor of Greater Manchester for the best part of a decade and Manchester City's actions in the run-up to that time, a little bit of overlap as well.

23:09They had a huge footprint on the east of Manchester in particular. They've had a huge footprint on what's gone on in the Premier League over the last couple of decades. And we now have got confirmation, haven't we, that the Premier League has said that Manchester City arranged sham contracts with a number of commercial partners as part of this scheme to disguise secret funding of more than£830 million. Man City said the club was innocent of the accusations made by the Premier League that, quote, the opinion contains clear material errors of law, principle and fact and is unsafe. The club said it would pursue the appeal avenues open to it and be relentless amongst other things you get a sense of where city are going with all of this stephan borson is head of sport at the law firm mccarthy dennings he did previously advise man city before the period of these charges stephan morning morning so what did you make of the the words of the sort of official announcement compared to everything you amongst others on Five Live were discussing last Friday when the news broke that this official announcement was on its way.

24:23Yeah, I think when we had the overall picture just before the weekend, we clearly knew that we had received seismic news that was going to really change football, I think, forever. And I think as we get the details yesterday in that Premier League announcement and the details that followed in what's known as the core decision. You don't shy away from that. You've got terms used around sham contracts, around dishonest evidence given, effectively a confirmation, according to the Independent Commission, that Manchester City have misled auditors. It goes on and on. And part of the problem for Manchester City is that we only have the edited highlights in the core decision.

25:17And over time, the rest of that document that has presumably detailed, scathing assertions is going to drip out. So City will appeal, of course, but the written decisions of the Independent Commission are really quite scathing. And the words that you've used from the report there, sham and the like, these are used in an official report. This isn't just somebody just coming up with these words off the top of their head. They're very deliberate in what they intend to get across by this. Does that change for you the seriousness of how the Premier League might well view this and the other clubs in the Premier League might well view this?

26:10Yeah, I mean, in fairness, when the original charges were laid in February of 2023, it was clear to, I think, everybody that the seriousness of the charges meant that should this day arrive, where the Independent Commission is confirmed to have found against Manchester City that the consequences would be severe. And that's where we are. The Independent Commission will not have gone lightly into the zones of calling people that stood in front of it and gave it evidence liars and that Manchester City had misled auditors, created sham contracts, etc. That is not something a tribunal of this nature does routinely.

26:58And it's done it after 12 weeks of a hearing and many, many thousands of documents. So it creates a very, very difficult picture for Manchester City in terms of its ability to overturn the independent commission's decision at appeal. But furthermore, clearly to the outside world, it's going to cause Manchester City huge issues of credibility going forward. And the consequences within a sanction hearing, if Manchester City are unable to overturn those findings of the Independent Commission at appeal, the consequences within sanction will be severe. And what does that mean? If we make that assumption that they won't be able to overturn these judgments with an appeal, what would fit just from what you've seen in the world of sport, but also what you see, you know, a law firm that will be looking at an array of things, what you see in the world of business, what is appropriate for this level of wrongdoing if they're not able to overturn it?

28:10Yeah, I mean, it's quite a unique level of false accounting that's been alleged here. What would happen in a parallel industry, as we often do on this show, if we were talking about some business in financial services or in the entertainment sector or the retail sector? What would happen if there were these kind of issues? Well, you would be looking at restating of accounts over a very long period, but I'm not aware of any British company that has had to restate 10 years of accounts. It is a fairly unique situation. And we are talking about, according to this independent commission decision, we are talking about around about£830 million of sponsor revenue over the period that they say are in excess of the amount that it should be, and then a further£70 million of costs that have been redistributed effectively and suppressed.

29:17So we are talking about an enormous amount of money over 10 years. Now, do those accounts need to be restated? Is that a task that's even practical? Probably not. the sanctions available within the Premier League rules are wide-ranging so they give a lot of leeway to a independent commission to decide on punishment. That can be anything from financial right through to sporting. This is clearly going to lead, if City are unsuccessful at appeal, clearly going to lead to substantial sporting sanction and by sporting sanction that tends to mean points deductions or potentially here, although it's quite difficult practically, expulsion from the Premier League.

30:08And that's just the first stage because, of course, there are many, many questions that will need to be asked about how, for such a long period, these numbers were wrong. Well, when you said it's almost a unique situation to have to restate your accounts over a 10-year period in many other sectors. There'd be auditors, there'd be regulators keeping an eye on this stuff sooner rather than later. And we've had many a moment when we've talked about businesses with serious financial issues and questions where the auditors themselves then get questioned. Are there still plenty more involved in this, aside from Manchester City, who have big questions to answer?