Where do we go from Keir?

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1:51Hello, welcome. It is Wake Up To Money. And so another Prime Minister is on the way. Could that well mean a new Chancellor, a different relationship with businesses, a different approach to the cost of living, a different plan for the building, the homes we need? We'll have a look at which direction those issues and plenty more will be heading next. What the different candidates for all these positions of power might mean and what the priorities need to be for the new people in charge. Wake Up To Money with Sean Farrington. Hello. So it is Wake Up To Money and not for the first time in recent years.

2:27We're sat here wondering who the next Prime Minister might be, who the next Chancellor of the Exchequer might be, what rules might they be setting for themselves, how that might impact, how the economy grows, how much we borrow, where spending is, all of this stuff and more. you're well versed in it we're well versed in it in wake up to money but it means there's a lot up for grabs that can change the way we set out our household budgets for the year ahead think about what next parts of our career might be the next steps we take how stable the job we have at the moment is and all of that besides and so to recap yesterday after what has been a fair bit of time, hasn't it, of intense pressure from inside the Labour Party.

3:14The Prime Minister announced his resignation. This was less than two years after Sir Keir Starmer arrived in Downing Street, celebrating that landslide, general election victory. He stood on the very same spot in a very different situation. Every decision I've taken has been about putting the country I love first. That is why I will resign as leader of the Labour Party. I have spoken to His Majesty the King this morning to inform him of my decision. Plenty of reflections from Sir Keir Starmer on his record. He thanked his team, confirmed he would remain in the job until the Labour Party has chosen a new leader.

3:54When I leave the biggest job in the country, I shall spend more time on the most important job. being the best husband I can to my fantastic wife, Vic, who has been a rock by my side through good times and bad, and being the best dad I can to my beautiful children who are my pride and my joy. I'm just hearing the emotion in Sir Keir Starmer's voice, an indication of how fast all this has been moving. Things do pick up a pace, don't they, when there have been question marks over the leadership in this country in recent years. And the same thing has been happening again in some senses, where the headlines just immediately move on to who's in charge next.

4:45Not so much time for reflection, as we heard in those words from the Prime Minister, Sir Keir Starmer, there. But who's up next? Well, it'd be no surprise to you. Andy Burnham, the former mayor of Greater Manchester, he's been talked about a fair bit he's taken his seat now in the House of Commons after winning that by-election and he's already confirmed that he will stand in a leadership race and there's something we've chatted about in recent months on Wake Up To Money when there have been questions about who might be next and who might be challenging the Prime Minister Wes Streeting, the former Health Secretary of course who stood down and many wondered if he was going to be one of those leading the battle to be the next leader of the Labour Party and to be the next Prime Minister.

5:32Well, West Streeting has backed Andy Burnham. Many had pegged him to be the biggest rival for the top job. So lots of changes across government. Pick up a newspaper today, have a flick through the headlines online and there'll be talk of, is it West Streeting? Is it going to be Ed Miliband? Could it be Yvette Cooper? but who might be the person who the next Prime Minister of the UK appoints to be Chancellor, or at least makes a decision amongst the Labour Party about who should be the Chancellor in charge of the nation's budgets day to day and the money around long-term investments, long-term spending plans, borrowing plans, how we're going to grow, all of that.

6:13Potential changes right across the top of government. How might things play out then? Here is our political correspondent Jack Fenwick, just explaining a little bit more. Andy Burnham's allies are increasingly confident that he could become the Prime Minister as soon as the 17th of July. That is the day after nominations close in the Labour leadership contest. There are hints of nervousness among some people in Labour about the idea of a Prime Minister whose programme for government hasn't been tested, hasn't even really been laid out. Some of the people around Sir Keir Starmer think that Andy Burnham struggled with some of the more difficult questions about what he wants to do in the job during the Makerfield by-election campaign.

6:54It's understood that some MPs have urged Darren Jones, the Prime Minister's Chief Secretary, to throw his hat into the ring in order to force some sort of contest to test Mr Burnham and his policy platform. Al Karnes, the former Defence Minister, has also indicated that he may be willing to challenge for this leadership race as well. Andy Burnham is expected to give a speech next week on the economy in which he will pledge economic growth while also saying that he would stick by the government's fiscal rules. His allies say that he has not yet decided who would be his chancellor. People like the Energy Secretary Ed Miliband and the former Health Secretary of West Streeting have been speculated about.

7:34But one source close to Mr Burnham said that no jobs have been given and no deals have been made. So, of course, no confirmation of appointments in any of those positions yet, including as Prime Minister, but a lot to take in and a lot to consider about where things go next. We've got Shanti Kellerman with us, Co-Chief Investment Officer at Seven Investment Management. Shanti, very good morning to you. Here we are again, wondering what direction the economy might take next. Is that a question investors are asking as well? I don't think anyone's expecting a drastic change in direction. And you didn't really see markets move at all yesterday.

8:18I think people are hopeful that we'll have maybe a bit more decisiveness in making decisions, sticking to them, even when they might be a little bit unpopular. So, you know, always try to be optimistic going into these things. Why not? Quite, and many will be thinking, you know, why not? Whatever part of the political spectrum you might be on, it's always interesting to hear debates being had, Shanti, which feels like what might well be happening at the top of the Labour Party now, about if there's not going to be a drastic change in direction, maybe there is in decision making, as you say, a few tweaks here or there.

9:00What are the kind of things that are up for grabs, do you think? Because people might wonder, oh, who's going to be the next Chancellor? If there is going to be a change in Chancellor, of course, Rachel Reeves, very much in position at the moment. And many might think she's the person to continue to be Chancellor under a new Prime Minister or the array of names that are mentioned there. What are the things, if investors haven't particularly changed their views in the last day or so with these major news headline grabbing moments, what are the things that could sort of raise an eyebrow here or there in any direction, in a direction that might make people think this is worth investing more in the UK or might scare others off from doing that?

9:47Yeah. So I think the big things to watch for, it's going to be, you know, first of all, anything Andy says. You know, people are going to be hanging on those words. So we're calling him Andy already. Is there that assumption, Ashanti, that have investors just assumed, you know, as many headlines have, that that is what is going to happen next? Yeah, I think that is the assumption. so I think people will be hanging on those words because we we know a little bit about you know past and policies but you know we haven't had a whole manifesto with you know we're going to do this this and this so I think people will be very attuned to you know what those words are you even saw before the election you know the interest rates on UK government debt were kind of going up and up and up and then he said I never said I could ignore the bond markets and they went down, you know, so that's already been happening.

10:41So I think it's, you know, he needs to consider carefully what he says, because we're going to be hanging on those words. And I think the second one will be the announcement of who's the chancellor, because there are a few candidates out there could stay with, you know, Rachel Ralebeves, Ed Miliband, Yvette Cooper, West Streeting. I think if that's announced, that will probably, you know, could move the markets either way. I think Rachel Reeves is quite well liked by investors because she has kept the ship steady. And, you know, if we'll say what you will about Carol Starmer, UK GDP has been positive and UK public debt has gone up slightly, but not massively.

11:22You know, so arguably it's been held steady in a quite difficult time. So I think those would be the big things that kind of move the markets. I think the biggest thing that I'd hope maybe will change is recognizing that incentives matter. You know, nothing lives in a vacuum. If you change a tax rate or change a law, it changes all the incentives for what people are doing. So you can't just assume you move things around and everything stays the same. People will react. And I think a bit more consideration of that when you set policy and a bit more understanding that things need time to work. You know, it's money, time, uncertainty every time you go through and change a bunch of laws.

12:03And so I think you've got to make decisions and stick with them long enough for them to work. Shanti, when you mentioned in there, you know, some of the GDP numbers, when we look at the size of the economy and the direction that's been happening and some of the headline numbers about our economy, perhaps heading in a better direction than they had been before. If you break that down into different sort of sectors people listening to this the jobs they have in the areas they work in have they been winners and losers within that um you know i'd say i think you know areas like hospitality you know and i think consumer facing areas have been challenging just because you know those are places where the fact that labor labor costs you know wages have gone up has had the biggest impact.

12:52I think the financial services sector has certainly held its own. You know, it hasn't grown massively, but we had that, you know, that fear that it was Brexit was going to be the end of things for financial services. And that really hasn't been the case. And I think manufacturing and, you know, industry is quite mixed. You know, you have instances where the government's come in and support it. You still have some really strong businesses, but, But, you know, probably on the whole, you know, that's fading, which isn't just the UK. You know, that's kind of the wider developed markets as well. Right.

13:24So, yeah. Well, yeah, don't go anywhere, Shanti. I have plenty more questions for you. But on that point, I just, it was a timely moment to bring in a couple of people in from the hospitality trade. I've got Jonathan Lawson with us, who's chief executive of Buckham Group, which has over 120 pubs from London down to the Channel Islands, a brewery in Bristol as well. Jonathan, good morning. Welcome to Wake Up To Money. Good morning, Sean. How are you? Great to be here this morning. I'm okay, thanks, Jonathan. And I've got Vic Stewart as well, Chief Finance Officer at the Alchemist chain of cocktail bars and restaurants, and very much, well, not just Manchester-based, but with big insights into what has been going on in Manchester, amongst other areas that Vic runs those chain of bars.

14:14So she'll be quite familiar with the man many are expecting to be Keir Starmer's successor, Andy Burnham. Vic, good morning. Good morning, Sean. Just first reflections, Jonathan. And what sort of Shanti was describing there as what's gone on in the economy. And what that therefore means is a priority for who's next in charge now. Have you felt there have been some rays of light within the economy amidst the difficult times that so many in the hospitality sector have had? I think the key point from my perspective, Sean, would be any rays of light are entirely due to what businesses have been able to deliver during a period of substantial uncertainty, lack of stability, with policies that have driven substantial increases in the cost of doing business, added to the cost of living crisis and a youth unemployment crisis.

15:11We've done that on our own back without the government. Buckham is a UK success story. Over the last five or six years, we've invested substantially into our business. We employ well over twice as many people now as we did five or six years ago with substantial increases of revenue and profitability. But the key point you started with at the start of this programme is this will be our seventh prime minister in the last 10 years. I've been doing this job as a CEO for nearly eight years, which enables me to take decisions for the long-term benefit of the group and the business, the people we employ, our investors, et cetera.

15:49And this government came in promising stability. They haven't delivered that. They promised an economic growth strategy. We haven't seen any sign of that. What we've seen instead is measures that have been inflationary, have made it harder and more difficult for us to invest into our business and harder and more difficult for us to employ younger people. And you now have over a million people, young people classifying as what we would call NEETs, which I think is a genuine crisis for this country. Shanti, when Shanti Kellerman is with us from Seven Investment Management, When you talk about some of those better points of you looking at how the economy has grown, what is it that you're looking at there?

16:33I mean, I didn't say it was amazing. I just said. No, no, quite. I'm not saying, definitely not saying you said that. But I just wonder within it, because you're not the only person to have sort of laid out that actually some of this stuff has been, you know, not necessarily as bad as others might think. Yeah. So I think that it goes as far as a positive, but the not negatives are we've had very moderate GDP growth, you know, some limited rises in unemployment. But I think you could also say that's maybe artificial intelligence. And then you look at things like we managed through tariffs. I thought Starmer did a decent job handling Trump, you know, the Iran crisis.

17:16I think some of the stuff that was started on rolling back some of the regulations around planning to get people building more, you know, that's very long term. So I think there's some positives in there. I don't think it's not all positive and it certainly could have been better. But, you know, as a tendency, we always go for the negative and it's a good idea to say the positives as well. Yeah. And, you know, Jonathan, in the hospitality industry, which you are very much at the heart of, it is clearly, we've heard it repeatedly on this programme, been a very, very, well, I was going to say a tough few years, but you could go back sort of longer than that.

17:53But there's been particular changes in the hospitality industry, as Shanti mentioned before, labour cost changes and the like. So given that you have talked about, Jonathan, investors backing your business and you being able to grow in the last few years, where has that investment come from? What type of investors? Where's the money flowing there that has worked for you? Well, we have a long-term investor that we've been working for that period of time who supports us and enables us to make longer-term investments decisions. But I think the key point here, Sean, is for further investors like ours to come into the sector, what they require is conditions to be able to see how that investment will grow over time.

18:40They are in that business for a reason. and you haven't got conditions at the moment that are favourable to investment and growth. We have had a more proactive government taking better decisions for business if they had actually truly delivered their reform on business rates. If we didn't have a VAT rate that is double the European average for hospitality, we as a business would have employed more people over the last two or three years. we would have invested more money into our public state and we would have acquired more businesses and driven more growth. And I think Shanti's point earlier on is we're almost being pleased that it hasn't been worse.

19:23And I think that's a really poor indictment of the potential of this economy. And what we should be actually challenging is what could it have been, actually, if the government had genuinely delivered on a strategy for growth into this country and seeing real term investment go into the businesses. Vic, Vic Stewart, who's with us, boss at the Alchemist chain of cocktail bars and restaurants and with some of those in Manchester as well. What has happened in Manchester over, not just, Andy Burnham has clearly been, you know, mayor of Greater Manchester over the last decade. What is it, but there's been a build up to that as well.

20:04But what is it that has pointed so many to talk about Manchesterism, whatever that might be, looking at some of the policies that have taken place under Andy Burnham's time in charge across Greater Manchester? And how has that played out? I think there's a couple of different things I'd mention. One is he understands the importance of transport infrastructure to an economy. And I think he has supported investment into the transport infrastructure in Manchester. And that's helped us in terms of our customer base, but also in terms of our staff being able to manoeuvre themselves around Manchester.

20:42I think he understands that the vibrancy of a city is also very important and hospitality is an important, has an important role to play in that vibrancy. and he has been supportive of hospitality as a sector. And I think the other thing is that he has done a lot of work to improve Manchester's image, I think, as somewhere to invest both nationally but also internationally. So when you look at what he's done there, is that because he's had Manchester and Greater Manchester? I mean, has that big impact been across Greater Manchester? There might be many in certain regions hearing the word city or those in the northwest of england hearing the word manchester thinking yeah but it's not just manchester here you know there's plenty of towns and villages and other cities around manchester um and are they necessarily seeing the the benefits of all that so has has it been a bit a wider ripple effect do you think that's a difficult question and certainly whether that can translate from a city to a whole country is a different matter.

21:53I think there are rumblings that a lot of that growth has been concentrated in the centre of Manchester rather than in the outside. But I actually think that that's probably a sensible strategy economically to do that and people then live in the suburbs and can work in Manchester and as long as they can get there, then that will spread that wealth around. Interesting concept, Jonathan. The idea of backing that devolved power in some of the bigger places and allowing those regions to make more decisions themselves, for that to actually filter through into not just the largest city in a given region, but those around it.

22:36Can you see some of that being a benefit for the areas that you're running the businesses? Yeah, absolutely. I would completely endorse that. I mean, we are Bristol-based and Bristol-born is a business. Bristol is an incredibly vibrant city, a fantastic place for doing business. And I think empowering local governments and authorities to invest, as Vic said, into infrastructure, to encourage local businesses, small businesses to grow and invest and recruit local people. Great. Absolutely great. I think businesses would say in general that governments, successive governments over the last number of years have not understood business.

23:23And if that is the case, then actually devolving some power into local government and local areas that actually can be close to business and understand the needs of business. I think that would be a positive thing. Ever invest in something that seemed incredible at first, but didn't live up to the hype? Like those$5 roses at a gas station, or a second-hand piece of technology that breaks in the first 10 minutes. Marketers know that feeling. We optimize for the numbers that look great, impressions, reach, and reacts. But when they don't show revenue, well, that's a not-so-great conversation with the CFO.

24:02LinkedIn has a word for that. Bull spend. Now you can invest in what looks good to your CFO. LinkedIn ads generates the highest ROAS of all major ad networks. You'll reach the right buyers because you can target by company, industry, job title, and more. So cut the bull spend. Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a 250 credit for the next one. Just go to linkedin.com slash broadcast. That's linkedin.com slash broadcast. Terms and conditions apply. How did a boy called Jimmy become a billionaire from posting videos? On Good Bad Billionaire, we're going to find out how the world's most popular YouTuber, Mr Beast, made his fortune.

24:51He's buried himself in a coffin for days. Counted to 100 ,000 on camera. And even recreated Squid Games, all in an attempt to go viral on the internet. But it all started when he gave a homeless man$10 ,000. So is he a philanthropist reshaping capitalism? Or is he just the king of the attention economy? Find out on Good Bad Billionaire. Listen on BBC.com or wherever you get your podcasts. And it's been interesting. Let's have a little bit of a listen and a reflection, a look back on what some of the stuff that Sir Keir Starmer had been talking about in his time as Prime Minister. It was a year ago this week that we spoke to Sir Keir Starmer on Wake Up To Money.

25:32It was the day the Labour government launched its industrial strategy with plans to lower energy costs for thousands of businesses forming a major part of it. He reflected on what his first budget set out to achieve. The whole point of the budget was to stabilise the economy, to deal with the problem we had inherited, but to drive growth above all else and to make sure we get maximum investment back into our country, which in the end will help all businesses. But the business rate work that we're doing with hospitality is hugely important. And the important thing, in a sense here, is all of this is being done hand in hand with business.

26:11So there's that partnership going on. So you will see the fingerprints of businesses on all of the policies that we are announcing, whether that's energy bills coming down, which is hugely important. And we do hear that. Some of these industries that make a massive difference, because this is about competitiveness. They will say, well, they do say, you know, our prices are higher than other places in Europe. How can we compete? The answer is the measures we put in today, the British industrial competitiveness scheme is designed to meet the problem they've identified. But businesses who felt like they were the ones singled out to raise money last year, they're telling us every day that they are wondering if that might be the case later again.

26:53It's creating uncertainty. It's meaning they're not kicking on the way they would like to. Yeah, I mean, let me be clear. Our focus is on growth and you can't tax your way to growth. And we had to do hard but the right things in the budget last year. But now we can press on. If you look at the spending review, the amount of investment we've been able to put into various sectors. that is, as it were, the yield of the hard but right decisions we took in the last budget. But nobody, as you know, Sean, can ever say in advance they're going to write the next budget for the next five years. That's not wise, nor does any government do it.

27:33But I do want to be clear, you can't tax your way to growth and our focus is on growth. So that was Keir Starmer talking to us just a year ago. Jonathan, that last sentence, you can't tax your way to growth. Did the words play out in the actions? I think you just hit the nail on the head. I've heard the words and I've heard them prior to Labour being elected into government and then post that. What we saw in October 24 was a budget that put about£25 billion of cost and taxation into business. And from a hospitality point of view, increased substantially our cost of doing business. We have yet to see the promised reform of business rates.

28:14I note that Andy Burnham has already signalled an intention to reduce business rates by 20%. I await that with interest to see if he delivers on that. And he has, in addition, supported the campaign of That's the Problem, to see a reduction of the headline rate of VAT for hospitality from 20 % to 10%. All our appropriate actions to help us and encourage us to invest and grow as businesses. We've heard words before. What we really want to see is that endorsed. Everybody wants to be the friend of businesses. What we really look for is actually stability and continuity in decisions that actually back that up.