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- [00:01]
A
Fundamentally, whether the vetting was passed or not. Mandelson had a shady past. We all knew that. We talked about it when he got appointed as U.S. ambassador.
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B
I mean, we knew it was going to end in tears. So why didn't the Prime Minister. We are running out of fuel for airplanes. Diesel could go on for weeks and months. Markets are behaving as they are literally putting everything on red at the moment.
- [00:29]
A
So the question everyone's asking is, is Starmer going to survive? What's your take on it?
- [00:33]
B
That it's a question of when he goes, not if he goes.
- [00:47]
A
Hello, and welcome to the Rest Is Money with me, Steph McGovern and with me, Robert Peston. Now, after more vetting scandal drama in the government, Robert's going to be telling us what's been going on behind the scenes. Plus, we'll be looking at the high profile cases in business when vetting has gone wrong with disastrous consequences. Will obviously bring you up to speed as well on what's happening globally, economically, in terms of the US and oil prices and all the drama with the Straits of Hormuz and how that's feeding through into inflation here. Plus, Miliband is adamant. He doesn't want us to open up the North Sea to get more oil, but he has a plan instead to tax his way to cheaper energy. So, Robert, let's start with the madness of the week. In terms of what's been happening with Mandelson and the vetting process. You've been fully immersed in it, what's been going on behind the scenes, because it's been wild watching it unfold.
- [01:40]
B
It's been absolutely extraordinary. I mean, we started with an amazing leak, frankly, to the Guardian of some of the most confidential, secret information. You know, the. The details of UK security vettings, investigations of individual people, in this case Peter Mandelson. There's within government, there's hardly a more secret kind of bunch of data or bunch of documents than those vetting documents. And so the Guardian got hold of the information that UK security vetting had put a red flag on the appointment of Peter Mandelson, that they said he was. That they recommended against him being appointed as U.S. ambassador. In itself, in terms of the sort of leakiness of government, that is pretty extraordinary. And we might get back to, you know, why the leak in itself is causing such concern within Whitehall. So that disclosure was dynamite. And then we had this extraordinary event or extraordinary drama where the Prime Minister absolutely saw, read, couldn't understand why the Permanent Under Secretary at the Foreign Office, Ollie Robbins had never told him that UK security vetting had said Mandelson shouldn't be appointed. And so he sacks Ollie Robbins and he sacks Ollie Robbins pretty much against the advice of. Of, you know, pretty much everybody around him. And. But he. He did feel incredibly badly let down. He felt humiliated that in public, in Parliament, he implied, he insists, he never lied about the circumstances of Mandelson's appointment because lying to Parliament is, you know, the. The kind of misdemeanor or crime within Parliament that loses you your job. He did nonetheless not convey the whole truth to the British people about the appointment of Mandelson. And he blames Ollie Robbins for not telling him. But in sacking him, he made his own position so much worse for two reasons. One is because pretty much the entire Civil Service didn't believe that Robbins merited sacking, that what Robbins had done was a sackable offense. And secondly, it led to Ollie Robbins giving evidence to the House of Commons Foreign Affairs Committee. And that evidence itself was absolute dynamite and more, I mean, you know, seen as essentially more evidence of quite how amateurish the appointment of Mandelson was in the first place. And. And that amateurishness very much laid at the Prime Minister's door.
- [05:03]
A
So the question everyone's asking is, is Starmer going to survive it? What's your take on it? Everyone's given their opinion. What do you think?
- [05:09]
B
There is a sort of consensus that it's a question of when he goes, not if he goes. That is what I hear from Labour MPs, it's what I hear from Labour ministers. But just because it's a matter of when, I think it probably is a matter of when. It's very hard to say whether it's days, weeks or months. And the reason, the main reason for that is because it's not obvious who the successor will be. I mean, if you go back to when Theresa May was forced out by her MPs, one of the big reasons why those MPs had the confidence to force her out was they thought that Boris Johnson was the Messiah. Right, I know, I know. It seems extraordinary now how much Tory MPs loved him then, but they absolutely loved him. They thought he was a vote winner, they thought he connected with the public and that's all they felt they needed. And so, given that he was, in their minds, the obvious replacement, they therefore had the courage and the confidence to force her out.
- [06:28]
A
Loads more to discuss, but let's go to a quick break. This episode is brought to you by Octopus Energy. Now, you know, we love talking to entrepreneurs on this show. So with us is the founder of Octopus Energy, Greg Jackson. Right, I'm going to start with this. If you could change one thing to help Britain's economy grow, what would it be? I'd love to see pension funds putting more money into British businesses. Over the last 25 years, they've fallen from 40% of their investments going to British businesses to 4%. That's bad for business here, it's bad for our stock market, but it's also bad for pensioners. In fact, a Canadian pensioner will get
- [07:10]
B
almost double the pension from the same
- [07:12]
A
amount invested as a British pensioner.
- [07:14]
B
We need to sort that.
- [07:15]
A
Nice one, Greg. Well, thanks to Octopus Energy for powering this episode of the Rest Is Money.
- [07:21]
B
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A
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B
In Starmer's case, the problem is just that although there are, you know, a bunch of candidates who some MPs, you know, individual, you know, or some groups of MPs, like whether it's, you know, Wes Streeting, whether it's Angela Rayner, you know, or, or indeed Andy Burnham, the mayor of Manchester. There are definitely not enough labor mps at the moment who would back either Streeting or Rainer to to. To, you know, essentially mean that tomorrow Starmer's on his way out and Andy Burnham, who I think has probably wider support than those two, is not an mp because Starmer did this from his point of view, very smart thing of, you know, blocking his attempt to become an mp. Very recently I wonder if, if he
- [09:26]
A
had let him stand as an MP and then he'd won it, whether things would be different now and Starmer would be gone.
- [09:32]
B
Yeah, I think if Burnham was in Parliament now, I think Truthfully, I think that Starmer would be in much, much more immediate trouble, but I'm not. But let's be absolutely clear, you know, when there is a consensus that a Prime minister cannot turn a government around, cannot revive the popularity of the Labour Party, and, you know, to be clear, the labor, you know, for the Labour Party to be polling or to be, you know, registering in many opinion polls, you know, less than 20% of, you know, electoral support for the Labour Party, which is sort of used to be you know, over, you know, it's certainly all modern history. Polling anything between mid-30s and mid-40s, right? To be on, you know, sub 20%, that's a catastrophe. Right? And there are some MPs who think that the. I mean, you know, one particular MP said to me that he feared that the local elections and the elections in Wales and Scotland will create a picture of the Labour Party facing extinction. And certainly were that to be the consensus among MPs, and at that point, I suspect they will panic and, you know, a way will be found to get rid of Starmer. I mean, you know, I spent, as, you know, a few days in the Gulf. I was the only journalist with him on a very recent trip to the Gulf only a couple of weeks ago. And, you know, he reminded me when I was there because I saw a fair amount. You know, he's a very personable individual when you see him. One to one, he's bright. Almost everybody thinks that what he suffers from is a. A lack of real knowledge of politics. In fact, you know, many people would say he's contemptuous of politics, but, you know, the lack of political nous leads him to make some very unwise decisions, like sacking Ollie Robbins, which politically was absolutely catastrophic for him. You know, we've talked before about how what we really needed was economic leadership over the last couple of years, and economics is definitely not something that is his strong point. But the other thing is, for reasons, as I say, when you meet him, honestly, he comes across as a perfectly decent, likable individual. But Labour MPs tell me he is hated on the doorstep when they go camp, you know, campaigning.
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A
That's so interesting.
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B
It's very, very hard to turn that reputation round. You know, Corbyn was hated towards the end of his time in office, on the doorstep. But Corbyn had one. One quality which Starmer lacks is for all the people who hated Corbyn, there were zealots who absolutely loved Jeremy Corbyn. Poor old Keir Starmer. You know, there's no you know, we had the Corbyn Easters who were literally, you know, the. The most, you know, sort of almost unthinking, emotional fans, like fans of a sort of pop, as it were. There are. There are no star Maristas. Right. They don't exist. You're going to call them a star Marama. All right, whoever. Maybe you're the first star mama.
- [13:21]
A
But anyway, so just on that, before we move on to look at some of the bigger economic stuff, just on that point about the, you know, Mandelson and this appointment and whatever happened, happened fundamentally whether the vetting was passed or not. Mandelson had a shady past. We all knew that. We talked about it when he got appointed as U.S. ambassador.
- [13:44]
B
Yeah, we said on this podcast it was going to end in tears. I mean, we knew it was going to end in tears. So why didn't the Prime Minister.
- [13:50]
A
So, yeah, so that's the big thing that, that gets me here. But I. It's interesting when you look at, obviously this is a massive deal in politics, but there's also been loads of examples in business where this has happened too. And, you know, it's quite interesting when you look at some of these. So I just wanted to tell you. I know you'll know them, but just tell us, tell people a bit about them because it's worth, you know, these vetting process problems are happening all the time. So for example, you've got J.P. morgan. You know, we talk about them a lot, really. Huge institution in the financial sector.
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B
The biggest bank in the world.
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A
Yes, exactly. So a problem they've had with vetting, which has only just been resolved recently actually, is a few years ago now. Back in 2021, they bought a student loan startup called Frank. They paid over 130 million for it, but when they bought it, they didn't verify. So their vet in didn't check that the founder's claim that the platform had over 4 million users was actually right. And then it turned out they only had 300,000 users. So this woman who founded it, this Charlie Javis, paid, apparently just basically made up this list. She paid allegedly somebody to fabricate a list of millions of fake names and emails and JP Morgan only really realized after they bought it and then sent obviously this marketing blast out to everyone and started getting all these emails bouncing back. You know, that. I mean, it was a hugely humiliating case for the bank that the, understandably, the Frank founder as well, this Charlie woman, she ended up in prison. She got sentenced just before Christmas to seven years for fraud. But that's another one of those cases where you go, hang on a minute, did no one think to just check that this person, and I don't know how charismatic this woman was when she did the pitch for the sale, this due diligence, diligent. Surely that goes on where you'd go, let's just check the numbers.
- [15:51]
B
I mean, obviously these sorts of debacles happen in the private sector as well as the public sector. Although I have been struck by the number of people in the private sector who have said to me, why on earth would they announce the appointment of somebody before they've done the vetting? And indeed, the Cabinet Secretary at the time, Simon Case, did tell the Prime Minister to conduct the vetting before he announced the appointment. Prime Minister ignored him, announced the appointment just before Christmas in 2024, and it was another four weeks before the vetting was completed. But to, you know, to be clear, you know, even if the Prime Minister did what he now claims he would have done, he insists that if the Foreign Office had told him that UK security vetting had recommended against appointing Mandelson, he insists he would have reversed the appointment. But, you know, I mean, that's quite a. You know, I mean, you know, it's what he says. So who are we to know for sure, one way or another? But all I can tell you is it was a mega announcement when he was appointed. It had the King's name at the top of the press release saying King Charles had appointed him. In the. In the following weeks, they. They put an enormous pressure on the American administration to appoint Mandelson. And at the time, which is just before Trump took up office, Trump didn't like Mandelson, but he got up. But Mansell got appointed anyway just before Trump's inauguration. The furore there would have been if Starmer had canceled the appointment, it would have damaged relations with America and the. And, you know, can you imagine the media reaction here? You know, the press would have gone absolutely bonkers saying, another U turn, the most humiliating of all. I mean, would Starmer really have done that? Particularly since. And this is why, partly, the Civil Service says it's mad to have sacked Donnie Robbins. UK security vetting is not the deciding body in terms of whether somebody passes the vetting. The deciding body is actually the Foreign Office. UK security vetting makes a recommendation to the Foreign Office. The Foreign Office, basically. Golly. Robbins had two thoughts. One is he thought the Prime Minister wanted Mandelson appointed. And secondly, when he was told about the nature of why Mandelson had been blocked. He believed those risks could be managed with mitigations which were put in place. Anyway, the interesting thing, though, because you mentioned JP Morgan and it's actually just. There is a funny. It's sort of funny coincidence you mentioned them because JP Morgan in an Epstein court case, did put in the public domain all manner of very gripp facts about the relationship between Epstein and Peter Mandelson, which, if the Prime Minister had taken seriously, he wouldn't have appointed Mandelson in the first place. And this is the other bit which actually, when you talk to the private sector bosses about the appointment, they can't understand because there are two phases to vetting somebody. There's what's known as the straight. The first due diligence, which the Cabinet Office does, and then there is the deep vetting, which was carried out by UK Security vetting. Now, the Cabinet Office's due diligence process did take place before the appointment of Peter Mandelson. The Prime Minister did see what the Cabinet Office had said about Mandelson. And if you read its report, and that's been published now, it's sort of unbelievable that the Prime Minister still went ahead with the appointment because it talks about the relationship with Epstein, even after Epstein has been imprisoned for paedophile offenses. It talks about the conflicts of interests of his business, a global council. It talks about his proximity to Chinese and Russian interests. And as I understand it, even though the ultimate vetting document is more detailed on all of this, and it builds on all of this, the substance of why UK security vetting said he shouldn't be appointed was pretty much all the stuff that was in the Cabinet Office due diligence document in particular, as it happens, as I understand it, the relationship with Chinese and Russian interest. So, you know, the question for the poor Prime Minister is, you know, if UK security vetting thought he shouldn't be appointed, why on earth did you, given that you were furnished with all the reasons not to appoint him?
- [20:52]
A
But this is a classic example of people being blinded by a personality and by somebody who they are kind of blinkered about because they just look at their successes and not their failures. You know, even when we interviewed Peter Kyle, he was talking about him in a way which was, you know, he said, yes, he's flawed, but he was also amazing at all of these, you know, strategy things, these relationships, and you're like, yes, but they were all built on allegedly, you know, corruption here. They were all built on things which don't stand up. It wasn't. He wasn't A great master of, you know, winning people over. He was doing shady deals, allegedly behind the scenes. But this is, I do think this is that classic example of people just being blinded by the, you know, all the good stuff that they see and they just go, it doesn't matter that they might have done that in the past. They'll. They'll do so much good. Like, there's another. I'm going to throw in another business example for you, which is, is Uber. So, you know, Uber hired this brilliant engineer from, from Google. He'd worked at Google for years and was one of the, the brains behind the algorithm, the search engine at Google, obviously the key to it. And he'd left Google, so he joined them in 2017. And then month after he joined, it came out that actually he'd been asked to leave Google over a credible allegation of sexual harassment, which I should say he denies. But then Uber had to boot him out. You know, and again, this was a. Whether it was a vetting process that didn't work or something was ignored. It then led to, you know, further chaos through because they were already in a crisis over their workplace culture at the time. And that eventually ended up with the co founder, Trav Service having to go. But this was also just added more damage to the company. But, you know, this was before its valuation for the IPO as well, before it was sold off. But this, you know, I think people just think, right, it doesn't matter because they'll, they'll do more good than bad. And then it just comes and bites you on the bum because people these days always find out and there'll always be someone digging to get the, you know, to either because they don't like the person, or it's a journalist looking for stuff to get to the truth of things. So it'll always come out. And that's the thing, that it was always inevitable that, yes, okay, there might have been drama if he hadn't have done the appointment and the media might have kicked off. But look at the drama now and the potential that he might lose his job over all of this. It just feels like, why? When are people going to learn not to just take things at face value?
- [23:39]
B
And, you know, as you say, we've seen this in business so often. I mean, you'll remember Sir Philip Green, the buyout billionaire who, you know, bought bhs, bought, you know, all manner of retail businesses, Topshop perhaps most famously.
- [24:03]
A
Yeah.
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B
But he was also notoriously somebody who was a bully who shouted at people. So, I mean, and I remember, you know, for a period, you know, he acquired this reputation of being an absolute genius. So banks would pour money at him. I mean, bank of Scotland, Goldman Sachs worked with him for a quite, you know, for a period and, you know, he was regarded, you know, as a sort of genius. Whereas actually what he was doing was really pretty simple. He would just, you know, buy companies with debt, strip out the cost, try and extract dividends in the short term. But if you looked at the history of capitalism, you know, there's a long, long and sorry history of that kind of. I mean, many would call it asset stripping ending in tears and indeed it did end in a lot of tears. And you know, his, his reputation for being a genius then was transformed into, you know, being, you know, for a period, almost the most hated person in Britain. But he got away with it for quite a long time because, you know, not unlike Peter Mandelson who was regarded as this political genius, you know, he was widely regarded as somebody who was just intrinsically, you know, way better than anybody else at that particular thing of buying undervalued assets and people just didn't want to look under the bonnet.
- [25:43]
A
Yeah, yeah. And that, that is like the common theme here, as you say. And we, you know, we could go on for hours listing all the different examples where it's happened in business. Can I tell you one more before we move on? It's another one that I. It's that classic people lying on their CV or enhancing it or doing a blog on their cv, which, you know, actually there's been politicians who've been guilty of that as well. But the former CEO of Samsonite, the fake luggage company, a guy, Ramesh, he often used doctor in his title and he did that on the basis that he said he had a doctorate in business administration. You all know what's coming. He didn't. And the Samsonite board didn't check his credentials on this. Now you might think, does it matter? But it did to an activist short seller who was, who basically, for whatever reason, wasn't happy with the Samsonite great boss. And so he just did his own digging. He rang the university that Ramesh would, said he went to and, and he had enrolled in the course, but he never finished it. And off the back of it, you know, he was forced to resign. The share price dropped in a matter of days, you know, knocking as we talk about, you know, lots of money off the, the market valuation of the company and, and, and it was another disgrace. And so these things. And again, that's, you know the world's biggest luggage company. I'm sure a man who'd been there for many years at Samsonite Way to the top. And then just that one stupid thing of putting Dr. In his title was his downfall.
- [27:20]
B
We've only just got started, but let's go to a quick break.
- [27:28]
A
This episode is sponsored by Starling, the bank that helps you organize your money, build great habits and stay in control of your spending. Now I talk a lot about financial literacy and its importance in our economy. You know, giving people knowledge but also confidence with money too. And Starling reckons anyone can be good with money. And you can start simply by checking your balance daily. It gets easier every day and it takes the mystery out of it. And then the real value comes from digging into the details with tools like Starling Spending Intelligence. So this is an AI powered search bar within Starling Current Accounts where you can ask a question about your spending habits and get an instant answer in app. It helps deepen your knowledge and make more informed money decisions. It's a little like having a financial co pilot in your pocket, mapping out exactly where your money goes. Search Starling bank to find out more Good with Money starts here. Starting a business can seem like a daunting task unless you have a partner like Shopify. They have the tools you need to start and grow your business. From designing a website to marketing to selling and beyond, Shopify can help with everything you need. There's a reason millions of companies like Mattel, Heinz and Allbirds continue to trust and use them. With Shopify on your side, turn your big business idea into sign up for your $1 per month trial@shopify.com specialoffer when you need to build up your team to handle the growing chaos at work, use Indeed sponsor jobs.
- [29:02]
B
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- [29:04]
A
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- [29:31]
B
Hello and welcome back to the Rest is Money with me, Robert Peston and me, Steph McGovern.
- [29:36]
A
Should we talk global economics now? It's nearly two months on now, isn't it? From the US Israel attack on Iran, the Strait of Hormuz. No matter what the leaders of Iran or the US are saying, there's still not much getting through there. If anything, it's. It's chaos still, despite ceasefires and everything else. And that is so. I mean, it's just been a very volatile time on the markets, Robert, hasn't it?
- [30:03]
B
Yes, it's been volatile, but I am staggered that both the stock markets are as high as they are breaking new records in America, which is astonishing. And the oil price itself isn't higher because the Strait of Hormuz is still blocked. You know, fifth of the world's oil still not getting out, fertilizer not getting out, or the feedstocks of fertilizer not getting out. So, you know, that this shock to energy prices will get, I mean, will inevitably get worse because, you know, we are running out of, in much of the west, fuel for airplanes, diesel fertilizer, which is going to be a huge problem, particularly in poorer countries, Africa in particular, where there's a real risk of starvation if we cannot somehow get the fertilizer to them. And enough time has elapsed for now, stocks of all this stuff to really start becoming way more visible. So it just sort of blows my mind, actually, that all markets want to do at the moment is focus on quite a lot of the nonsense that Trump says. Iran desperate to do a deal, he keeps saying. Well, that seems to be one of the most absurd things that I've ever heard, because it's quite clear that the irgc, the militia that's in charge now, totally thanks to Trump's war. I mean, he has organized regime change, he's made sure that the regime is even worse than it was before the war because any moderate voices have now been marginalized. Iran has proved that it can absorb an awful lot of pain and they don't like the terms for a peace that Trump is trying to impose on them. So this thing could go on for weeks and months now. You know, you never know in these situations, there could suddenly be a breakthrough. But the thing that I just find odd is the overwhelming evidence is that there will not be a really serious breakthrough anytime soon. And yet markets are behaving as, you know, they are literally putting everything on red at the moment, whereas there is a very, very high probability that that is not where the roulette wheel is going to end up. I mean, as I say, I am staggered that, as I say, stock markets aren't lower than they currently are and stagger that the oil and gas price isn't higher. And I fear it's only a matter of time.
- [33:10]
A
But you're already seeing how it is t tangibly impacting the cost of living here. So, like petrol and diesel, that's already gone up straight away because of it. And, you know, if you look at the latest inflation figures, that's now pushing inflation up when everyone was talking about it coming down a bit before the, the Middle east all kicked off, and food prices as well, you know, if you look at how much food's going up by every year, it's something like nearly 4% year on year, the increase in food costs. And as you say, with all these fertilizer things going to come through, that is inevitably going to hit. But it's, it's. I feel like it's already. Then this is why it feels even crazier that the stock markets aren't reacting more. It's already being felt by people, especially when it comes to travel and, you know, paying to fill their car up.
- [33:57]
B
Yes. I mean, and as you say, it's early days, things are going to get worse. I mean, one of the things, I've talked to people in the travel industry and, you know, they were telling me that people are not booking flights and holidays because they are worried. They've heard about the fuel shortage and some consumers are worried their flights aren't going to take off. So it's already having a material impact on some businesses in that sense, and you can only expect it to ripple through the economy more. More broadly. The good news is that the bank of England has been signaling that when the markets were pricing in three interest rate rises as a result of Trump's war in Iran, the markets were overreacting because. And bank of England obviously takes seriously what we are worried about, which is when the cost of living goes up in that way, people spend less, companies invest less, and the economy slows down and you head towards recession and higher unemployment. And so the bank of England is at least as much concerned with the deflationary impact of this shock as the inflationary impact. And it's too early to say which of those effects of Trump's war will turn out to be the strongest in the short to medium term. But, you know, nonetheless, the bank of England, I think, is signaling that there will no longer be cuts this year in interest rates. And before Trump's war, we were expecting interest rate cuts of anything between a half percent, a half of a percent or three quarters of a percent. So, you know, even when it comes to the cost of borrowing, the cost of money, Trump's war has, has significantly damaged us. And actually, as I've said on this podcast before, one of the really annoying, shocking infuriating thing about Trump's war is that the American economy is still, actually, I'm going to use a phrase, it's still basically powering ahead partly because of the AI investment boom. And whereas because if you look for example at the imf, the IMF thinks that British growth will fall at least half a percentage point and probably rather more than that. This could end up being a year of zero growth in the uk, whereas American growth looks as though it's going to be well over 2% and hasn't been, you know, has been knocked only the tiniest amount by, you know, Trump's war. And that's because America is self sufficient in energy. Now it is true that politically it's very unpopular, this war because, you know, petrol prices, what they call gasoline over there, has gone up very sharply. But nonetheless the momentum in the American economy, so much greater than ours, you know, they have, they are paying a much lesser price than we are.
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A
Yeah. And interestingly, of course, Rachel Reeves was in the States, wasn't she? Essentially trying to show that the UK is ripe for investment for America. So she was in Washington as part of these IMF World bank spring meetings and she hosted this investors roundtable there and had like key players in the investment world like Citigroup and BNY Mellon and also, you know, big names in business like Lockheed Martin. You're the world's largest defense contractor. And what, but what struck me about that trip is obviously we see politicians do this all the time. They go and try and, you know, show our wares and get people to buy into us. But, and you'll understand why I found this so interesting in my next sentence, which is from a Northeast perspective, the, the only regional mayor she took with her was our local mayor, Kim McGuinness. Now that I have found really interesting because Kim McGuiness is on a mission to try and get more foreign investment into this area and she's been Japan and doing all these, you know, different visits and things. And there are already some, you know, really strong relationships between the northeast and the U.S. you know, I mentioned Lockheed Locked Martin and they're actually, they, they're involved with the skills, a space skills center at Northumbria University here. But I just found it interesting that that is the only mayor that Rachel Reeves took with her because another in parallel to that, there was an event I was at number 11 recently which was for female founders or women who set up businesses. And it was a Northeast based one and apparently nothing like that had ever happened at the number 11 before. So there'd never been so many women, business women in number 11 at that point. I think it was about 50, 60 of us in total. And again, but it was interesting that it was the Northeast who, which is the first one to get this, you know, exclusive visit of networking and everything else. And this big promise from Rachel that she's going to do all these things to, to help the Northeast, whether they happen or not, I don't know. But there does, it does feel, I feel, feel way more optimistic than I have in the past about this sense of we are open for business because that is how we're going to solve these problems. That's how, you know, we're going to get growth in the region, as if we get that investment to do business.
- [39:39]
B
I'll give you the counterargument, though. I mean, look, we've talked at length about how successive governments have utterly failed in their regional policies. And you know, truthfully, the, the income and wealth gap between the Northeast and London and the Southeast is still way, way, way too great. And so certainly, I suppose in a, you know, a public relations sense, it's definitely a good thing that the Chancellor is favoring entrepreneurs like yourself and other business people from the Northeast. But I've called it PR because I was with a group of, of very, well, the bosses of very big British businesses just the other day, and what they all said is that she's wonderful in terms of wanting to see them and she always talks a good talk. But then they all said we are literally at our wits end with this government because they pretend to be listening to us and then they do precisely the opposite of what we suggest to them and they say they're going to do. And honestly, I was genuinely shocked. And if Labor MPs are listening and if ministers are listening, you need to hear this, because I have never been actually, for years and years and years in a room with business leaders where there was such a, such uniformity of disillusionment with a government. I mean, obviously in those few weeks when Truss was doing her best to wreck the British economy, there was sort of terror and panic in the business community and enormous relief when she resigned, an enormous relief when she sat quasiquatic and then she was forced out. But in conditions where there isn't a crisis, and there isn't a crisis at the moment other than the Trump crisis, but there's obviously a problem with the British economy that the government has taught this talk of growth and not delivered it. But we're not going through a fiscal crisis at the moment, I mean, that may come as a result of Trump. Let's see. But the. It was just within this particular, slightly more stable period for the just degree of anger with the government. I mean, I was genuinely shocked by. So I'm pleased for all of you that you had a very nice time. I'm pleased with you. You had a nice time in number 11. But let's just see what Rachel Reeves ends up doing for all of you.
- [42:37]
A
You and, and I, I, you know, I'm not stupid. I obviously know that, like, there has to be more than, you know, some canopies in number 11. But it, it's. It, it. But it, it does feel like there's, you know, I remember the Northern powerhouse and all the plans for that, which just that, you know, and again, that was lots of us being told, even when the BBC moved north. I remember this whole thing where I met with, with the DG of the. Then DG of the BBC for these breakfasts and there was all stuff around that. But I just. It. I don't know, this has just felt like, for the first time in ages, just a bit of optimism about this genuine collaboration. However, I think you're right. I get why business is mad, because everything that so far the government's done to try and bring in more money has been at the expense of business. You know, we constantly talk about employment costs, employment rights, about the, the business rates, about the national insurance contributions. All of these different things are really hammering the businesses that give all these young people their first jobs that, you know, it all feeds into itself. So. And we still haven't got on top of skills and we. So, yes, I'm not. But I just. Yeah, I just. I felt like for the first time in ages that there was a sense of we are going to bring tangible things and it's not just going to be. I've said the word tangible too much in this episode and it's not just going to be hot air on the Love of the Northeast. Obviously Keir Starmer's been here as well, less bothered about that. But not Nigel Farage has practically moved in. I mean, he's here all the flipping time.
- [44:10]
B
Is he your lodger?
- [44:12]
A
Yes. So, yes, he has been staying nearby with a local business person. But it's interesting because every time Farage goes to, you know, a venue around here, the. The division is unbelievable. So there was a local business that had posted that Farage had been in and they got absolutely annihilated by people then saying, we're not going to come and buy stuff from you anymore where, you know, like the local restaurants and you're like, oh my God, this. And what they saw the business was, oh, this is a chance for a bit of publicity, you know. And then they ended up having to come out and say, we don't have any political views. And it's, it's quite unbelievable. But yes, he is spending a lot of time because there are lots of
- [44:55]
B
people in the northeast who presumably love him, given that reform is doing quite well in the Northeast.
- [45:01]
A
At the arena, I think it was in Sunderland, the queues were insane. It was like people absolutely desperate to get a glimpse of him. So, yeah, there's a. But that division is really palpable.
- [45:12]
B
Yeah, no, he divides opinion everywhere. Look, just very briefly because we've obviously focused on the cost of living impact of Trump's Iran war. The other big sort of economic business issue that the government is grappling with is this whole issue of how far to exploit the remaining gas and oil in the North Sea. You mentioned Farage. Farage's position is every last drop has to come out. Strikingly, Donald Trump keeps telling the Prime Minister to exploit every last drop. So there is this halfway house which is this looming decision about whether to exploit the Rose bank and Jackdaw fields for oil and gas. And they are at an advanced state of development. They just need Miliband's approval. And I have to say, Miliband does seem to me to be unbelievably isolated. Even when I talk to green leaning energy bosses, they just take the view in today's world not to exploit it is absolutely mad. Not because actually if you were to exploit it, it would bring the oil and gas price down in the uk, because it almost certainly wouldn't, because obviously these things are priced on global markets. The main reasons for exploiting Jackdaw and Rosebank are one, if we don't, we will be importing oil and gas from other parts of the world that are further away from us, where the climate costs of chipping it and actually many of the practices of exploitation in these countries are way more damaging to the environment than the practices we force on those who extract oil and gas from the North Sea. So even on an environmental basis there's an argument for exploiting it. But the main point is they'll generate very large amounts of tax revenue. This is a government that doesn't really have enough tax revenue. Every last bit of tax revenue will be quite useful and secondly, it'll support
- [47:26]
A
jobs skills is the biggest problem around A lot of the energy stuff is when we're not bringing through enough people who can do all the jobs that we need and we haven't got enough coming through. Learning all the, the, the clean energy things as well. But just on the point of Miller Band, the, you know, this, this idea of delinking the, you know, the cost of electricity from gas. So, you know, this is the sense that currently the price of electricity is, is dragged up by the price of gas because that's what they use to work out the price. Even if that electricity comes from cheaper sources like wind or nuclear. Whatever it is, the price it's sold at is dictated by the wholesale gas world price. And so this plan to, you know, his suggestion to try and delink that through, you know, these different contracts he's going to offer these fixed term contracts which will hopefully bring a bit more stability for people making energy. There's, there's that argument as well, isn't there, about. But that's, that feels like it's, you know, it's hard to quantify whether it would work. It depends how many of these energy providers sign up for these fixed term contracts contracts. So there's nothing yet which feels like a sustainable answer to the energy crisis, is there?
- [48:40]
B
Well, even if his plan works to essentially lessen the frequency with which the clearing price for energy is set by a very high world gas price by essentially forcing down, down the renewables price, by getting these older renewables providers, older wind farms, for example, onto these fixed price contracts. And he's sort of basically threatening them if they don't, they're going to lose their super profits anyway because he's putting up the super tax that they generate. He put up the rate. Even if this works to an extent which it may, none of that's going to feed through to our bills for, I mean, certainly not anytime soon enough to counteract the impact of Trump's war. We're looking at sort of a year plus away for, you know, maybe longer for it to have any impact in a positive sense on our bills. And then secondly, there are some in the industry who worry that the impact of all of this will actually decrease investment in renewables, which would not be a great result. So, you know, so, I mean, look, his heart's in the right place. It is literally mad that with all these renewables we, you know, the price that we all paid is basically dictated by, you know, it was being dictated by Vladimir Putin and his mad and appalling and, you know, criminal war, war in Ukraine and now it's being dictated by Donald Trump and his totally insane war in Iran. So, you know, obviously it's good if we can somehow get ourselves off our exposure to the world gas price. This is at best a small, useful step in that direction. But it's still only a small, useful step.
- [50:56]
A
But no matter what you do to solve the energy crisis, it's got to be long term anyway. It's inevitably going to be long term. You're not going to be able from a skills perspective, you're not going to suddenly train up everyone to be able to do all the jobs.
- [51:06]
B
And also with our still appalling planning restrictions, it's still going to take way too long to build all this stuff. And even though I've talked about it before, John Pickleton's brilliant plan to speed up development, for example, of nuclear power stations. And it's great that the government is implementing it even. So these nuclear projects, they just take forever.
- [51:26]
A
Okay, let's wrap things up then. We've got some excellent episodes coming up for you, a Brexit special, which will be very interesting. It's one of the things we get a lot of messages about Brexit, isn't it? That's the blame for everything. And also we're looking at debt as well. What is really going on in terms of people in debt in this country and how we're going to solve it. So that's all to come and the rest is money. Bye bye.
- [51:50]
B
Goodbye from me. You can't reason with the sun. Trust us, we've tried. This summer, it's time to put that angry ball of fire on mute. Columbia's Omnishade technology is engineered to protect you from the sun's harsh rays that can burn and damage your skin. The sun is relentless, but so is our guest gear. Level up your summer@columbia.com to spend more time outside and less time slathering on aloe lotion. You're welcome. Columbia engineered for whatever.