280. Should the government set food prices?

Summary

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Podcast Summary: "The Rest Is Money"

Episode 280: Should the government set food prices?

Date: May 20, 2026
Hosts: Robert Peston & Steph McGovern

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Overview

This episode dives into Rachel Reeves's proposal to cap supermarket food prices, the ongoing cost of living crisis, inflation's trajectory, rapidly rising mortgage costs, and Andy Burnham’s vision of "Manchesterism." The hosts offer an in-depth look at government intervention in critical sectors, weighing the effectiveness and potential downsides, and discuss whether local models like Manchester's bus system could guide national policy on utilities. The tone is engaged, skeptical, and frequently laced with wit.

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Key Discussion Points & Insights

1. Rachel Reeves's Plan to Cap Supermarket Food Prices

[03:11 – 10:54]

• Context: Reeves has floated the idea that supermarkets could voluntarily cap prices on essentials like milk and eggs, in exchange for the government waiving certain regulations.
• Comparison with France: Robert highlights France’s prior deal with supermarkets to cap essentials during price shocks.
• Supermarket Response:
  • Peston: "Having talked to the supermarket bosses, they almost all say this is completely and utterly barking mad." [04:40]
• Complexity & Bureaucracy: Steph questions who bears the cost—retailers or suppliers—given the complexity of defining what is capped (own-brand vs. branded) and the administrative burden:
  • "First of all it's massively bureaucratic... Is this every loaf of bread or is it the own version of their bread?" [05:57]
  • "I think it's wrong to just keep hitting businesses and asking businesses to take the hit..." [06:51]
• Profit Margins & Competition:
  • Robert notes UK supermarket profit margins are lower than in many countries, suggesting high competition. If there’s real price gouging, he recommends taxing excess profits and recycling the money to targeted help rather than direct price controls. [07:56]
• Unintended Consequences: Worries that capping prices in big stores would disadvantage small shops through distorted customer flows. [09:38]
• Conclusion: Both hosts see the cap as more about political messaging than practical help:
  • Steph: "It feels like a desperate. It's, you know, it's a clear message to people, isn't it? The government is going to make your shopping bill not get any bigger. But the reality is it probably would put it up now." [10:41]

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2. Inflation, Energy Caps, and the Effects of Global Events

[10:54 – 14:32]

• Energy Price Cap’s Real Impact:
  • The only reason for recent lower inflation (now at 2.8%, still above the Bank of England’s target) is the energy price cap and removal of some green levies—not food price action. [11:08]
• Global Shocks Looming:
  • Peston warns another price shock is coming due to "Trump's war in Iran" (“You can see that big wave on the horizon…” [11:36]), not as bad as the Ukraine war, but significant.
• Government Eases Sanctions:
  • As a sign of the government’s nervousness, British firms can now buy jet fuel/diesel refined from Russian oil—"really quite surprising, some would say really shocking." [12:39]
  • Steph: "Which is sort of letting the bullies..." [13:35]
• Inflation Outlook:
  • Energy cap changes expected in July will likely bump bills £200–£300 for many; no sign of real cost of living relief. [14:01]

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3. Interest Rates, Mortgage Costs & The Housing Market

[14:32 – 19:29]

• Uncertainty in Economic Data:
  • IMF's modest forecast upgrades are offset by rising unemployment. The path for rates is unclear; the Bank of England is likely to “stay put” rather than raise or cut. [14:32, 15:56]
• Mortgage Costs Rising Sharply:
  • Steph: "The average rate on a two year fixed mortgage with 75% loan to value ratio has increased from 3.97 in February to 5.1% in April." [17:08]
  • Despite expectations of forthcoming rate cuts, lenders are hiking rates due to global instability.
• Comparison: US Market:
  • US 30-year mortgage rates are back at pre-rate cut levels (6.36%), despite several Fed rate cuts. [17:50]
• Renting Sector Shakeup:
  • The new Renters Right Act: abolishes "no fault" evictions and fixed-term contracts; restricts rent increases; has triggered landlords to exit, potentially squeezing the rental supply. [18:55]

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4. Manchesterism: Andy Burnham’s Policy Model

[22:06 – 32:46]

• Burnham’s Slogan: “Manchesterism is the end of neoliberalism.” [19:29]
• Bus Franchising Model:
  • Burnham’s control of Manchester’s buses stops short of nationalization: "These are the networks. These are the prices...but they don't actually own the buses. The buses are still owned by private operators. Control is with Manchester." [22:09]
  • The policy improved punctuality (on-time services jumped from 69% to 80%) but cost £134m to implement, mostly from local taxes and borrowing. [28:57]
• Expansion to Other Public Utilities?
  • Hosts debate if this ‘control without ownership’ can apply to energy or water:
    • Robert: "Energy is just an intrinsically much more complex industry with multi tiers of ownership." [24:40]
    • The complexities of expropriating assets or rewriting regulatory regimes risk legal challenges and capital flight.
  • Steph: The “shit show” of water privatization demands action; maybe risking lawsuits and investor wrath is worth it to deal with pollution and underinvestment. [29:58–30:54]
• Local Finance and Accountability:
  • Local approaches may bring accountability, but scaling up is tough due to the massive asset base in energy and water, versus buses. [31:31]
  • Robert: "Buses, relatively speaking, are cheap, ...these other incredibly important services...are incredibly asset heavy..." [31:31]

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5. Political Tidbits & Future Outlook

[32:46 – 34:31]

• Labour Leadership Speculation: Peston suggests even though party consensus is Starmer could be gone by year's end, he shouldn't be discounted due to his resilience. [33:42]
• Burnham’s Hurdles: He may not even secure his parliamentary seat; a “plumber from Reform” is also contesting. [33:30]
• Humorous Sports Parallels: Football jokes and analogies keep the exchange lively and familiar. [34:31–35:03]

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Notable Quotes & Memorable Moments

• On Government Food Price Intervention:

  • Robert: "If the government thinks that there is price gouging ...the way to deal with that is to properly assess...then tax those excess profits and...into grants to people on low incomes..." [09:38]
  • Steph: "You can't keep hitting businesses all the time." [06:51]

• On Inflation:

  • Robert: "You can see that big wave on the horizon...Not as devastating, I think, as Putin's war in Ukraine was...but it will be significant." [11:36]

• On Manchesterism:

  • Robert: "Control is with Manchester. Right. And so...he is not proposing conventional nationalization, that he is proposing a...translation of the model that he used for buses to other public services." [22:09]
  • Steph: "[Water] is a shit show, quite literally. And so something absolutely has to change..." [29:58]

• On Prospects for Burnham/Starmer:

  • Robert: "He is literally, Starmer is the most resilient politician I've ever come across. And...the idea that Starmer could survive all this is not impossible." [33:42]
  • Steph (on political underdogs): "A plumber might be helpful when dealing with all the water companies." [33:30]

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Timestamps for Important Segments

• 03:11 – Discussion begins on food price caps
• 04:40 – Supermarket bosses' blunt feedback on the proposal
• 07:56 – Robert’s alternative: tax excess profits, rather than set prices
• 10:41 – Steph calls the proposal “gimmicky”
• 11:36 – Inflation, energy price caps, and geopolitical shocks
• 14:32 – Uncertainty in data: unemployment, IMF upgrades, and interest rates
• 17:08 – Latest mortgage rate figures in UK & US
• 18:55 – Renters Right Act and its housing market impact
• 22:09 – Explaining "Manchesterism" and the bus model
• 28:57 – Local costs and benefits of Manchester's bus transition
• 29:58 – Water sector and the challenge of scaling regional models
• 31:31 – Inherent differences between buses and national utilities
• 33:30 – Burnham’s election challenge; leadership speculation

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Tone & Style

The hosts maintain a lively, jargon-free, and skeptical approach, clarify complexities with analogies, and inject wit throughout. Their deep-dive analytical style appeals to listeners who want clarity on serious financial and policy issues, without losing touch with real-world implications or the broader political theatre.

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Transcript

[Robert Peston]

Somehow the supermarkets would limit those prices in return for the government waiving certain restrictions. Having talked to the supermarket bosses, they almost all say this is completely and utterly barking mad.

[Steph McGovern]

Clear message to people, isn't it? The government is going to make your shopping bill not get any bigger. The reality is it probably would put it up.

[Robert Peston]

Andy Burnham is the messiah. He's going to solve everything. And this has been a problem with water privatizations, why it should never have been privatized in the first place.

[Steph McGovern]

The process, this, this kind of essentially deregulation has cost £134 million. Will it reap the rewards that you want? It's a show, quite literally. Support for this episode comes from Octopus Energy and the founder and CEO Greg Jackson is with us now. And I want to ask about oil prices. Obviously they're very high at the moment. What's your advice for a company worried about them?

[Robert Peston]

First of all, if you use a lot of electricity, it may be possible to get electricity tariffs where you get charged less at certain times of day. And a lot of businesses have been able to better benefit by shifting their electricity consumption. They still use as much energy, they just pay less for it. Of course, things like heating space can be very expensive and finding ways to do that more efficiently by heating to maybe 18 degrees rather than 21 can make a very big difference. But of course, look, the real solution is that Britain needs to escape from this dependence on the global fossil fuel price and that means more electrification, disconnect our electricity price from the gas price and ultimately get more of electricity from British resources.

[Steph McGovern]

Nice one, Greg. Thanks for explaining that. Right, we're going to go to the episode. Hello and welcome to the Rest Is Money with me, Steph McGovern and with me Robert Peston. So, loads to talk about today. We want to bring you up to speed on Reeves's plan to cap food prices in the supermarket markets. We've got the latest on inflation. What does this all mean for rates and mortgages? And what is going on with Andy Burnham and Manchesterism? You're going to explain it to us, aren't you, Robert?

[Robert Peston]

Well, I'm going to try. I mean, there's some very interesting ideas that are floating around about what a Burnham government, if that comes to pass, would mean for how you manage the economy. So I'm going to look at one particular bit of it, which is when he talks about controlling energy, water, our most important public services, utilities, what does he actually mean by that? Are we talking about old fashioned nationalization and an enormous bill, you know, Billions and billions, well, hundreds, you know, potentially well over 100 billion of taxpayers money being used to buy these businesses. Or are we talking about something else? So that's what I'm going to look at.

[Steph McGovern]

Okie doke. So should we start first of all with this plan then, to try and cap prices in the supermarkets? So this is a reeves idea, isn't it, to try and control what is effectively the cost of living going up so much at the moment?

[Robert Peston]

Yeah. I mean, I don't know if you remember, but we talked on this podcast when we saw the astonishing price shock from Putin's war in Ukraine, about how other governments around the place were, you know, putting the lid on the costs of essentials. You know, and in particular, if you look at a country like France, you know, there was a sort of deal with the supermarkets there to limit the prices or to cap the prices of some essentials, because obviously, you know, as when you have these price shocks, the impact, particularly on those on lower incomes is really severe. And so one of the things that the government has been looking at, and just to be clear, you know, we are recording this before the Chancellor makes her announcement about what she's doing in terms of trying to help those on lowest incomes as a result of the price shock from Trump's Iran war. But what is going on, I've talked to supermarket bosses about this. Is this idea that somehow the supermarkets would volunteer to limit the price of a number of essentials like milk and eggs.

[Steph McGovern]

Yeah.

[Robert Peston]

And those products that we regard as absolutely core to nutrition limit those prices in return for the government waiving certain restrictions. So, you know, some of the things the supermarkets, as you know, complain about is that the regulations on packaging or the regulations on promoting, well, not promoting unhealthy foods, they find quite expensive and restrictive. And so the treasury has been floating this idea of a sort of voluntary pact between supermarkets and the government that on the one hand, the government would reduce some of these burdens in return for supermarkets, essentially saying they will try and help try and ease the price pressures in these important food categories and help therefore those on lowest incomes. And before we get onto it in detail, I should just say, having talked to the supermarket bosses, they almost all say this is completely and utterly barking mad. And, you know, I mean, first of all, let me just ask you what you think of this as an idea and then let's drill down a little bit.

[Steph McGovern]

Yeah, well, I mean, it's interesting, isn't it? Because I think a lot of the cost pressure for retailers has been obviously We've talked a lot about employment costs and things like that. So the costs for running supermarkets have gone up quite a lot because of labor policies. So to then ask them to essentially potentially make a loss on some of their key products feels like again, it's businesses being told they've got to be the ones that have to pay for the crisis we're in and for the pressure on families when actually that just. You can't keep hitting businesses all the time. And I know we talk about supermarkets, you know, making great profits and we've had times when we've talked about like the Tescopoly and you know, one in every five quid being spent in Tesco and, and all of these other things. But I think it's wrong to just keep hitting businesses and asking businesses to, to take the hit because first of all it's massively bureaucratic in terms of doing all this price st. What are we talking about? Is this every loaf of bread or is it the own version of their bread? Is it the branded versions of bread? And then what. How is that going to pass down to the supplier? Or do they take the hit? Does the supplier take the hit? Where does that happen? And then, you know, the, even just the price structuring in terms of payments on the system and okay, it's much easier because it's digital now, but still there's a lot of things that need to happen in order to reduce the prices or cap the prices in the way they want and a lot of questions that need answering and essentially who was going to take that hit? And so I think it's just a bit rich to keep going at businesses to be the ones that have to try and make the cost of living better for people when, let's face it, a lot of the reasons why we've had, you know, unemployment rising and businesses not investing as much is because of the hit they've taken already on the £40 billion worth of taxes they all got in Rachel Reeves first budget. And so therefore, I guess my answer is no, I don't agree with it.

[Robert Peston]

So certainly the boss of a very big supermarket chain agrees with you. I'm going to read what he texted me this morning. He said my advice to government would be to go back and look at all the regulatory burdens that customers are already paying for and the Trade Union rights bill, which will lead to a boom in human resources bureaucracy across Britain. So he definitely agrees with you. I mean, I suppose my take would be this. There are issues around quite how competitive the supermarket Sector is, I have to say, on one measure it looks pretty competitive because the margin, that's the profit that supermarkets make as a percentage of sales is lower than in many other countries. And that's normally some kind of measure of how competitive they are. But actually my view is simply this, really, that if they, you know, the government thinks that there is price gouging going on or that prices are being too high and that profits are too high, the way to deal with that is to properly assess whether essentially super normal excess profits are being made and then tax those excess profits and then plow the money that you raise from those excess profits into either grants to people on low incomes or simply into subsidies for the foods that you think are important. The problem with what has been discussed and look, if I'm honest with you, I think it's very unlikely it'll see the light of day in the end because it seems really very messy and complicated. But let's. Let's wait and see. Is definitely bureaucratic. There are all sorts of issues like, well, are you saying that it will only apply to. To Asda and Tesco and, you know, Ms. And Sainsbury's, but if you're a small shop, you can charge what you like. If it became widely known, which it would do if this happened, that prices of these real essentials were way lower in Tesco and Sainsbury's, then if you're a smaller shop, actually, you're sort of in trouble at that point because you think there's going to be massive traffic away from you to the supermarkets. I mean, so for all, for all points of view, it feels to me like a sort of government intervention that could distort and actually have unforeseen consequences of a negative sort. So, as I say, if the government genuinely believes that there is excess profits, then just tax the excess profits and put the money back into lowering prices.

[Steph McGovern]

Yeah, yeah. And it just feels a bit gimmicky, doesn't it? It feels like a desperate. It's, you know, it's a clear message to people, isn't it? The government is going to make your shopping bill not get any bigger. But the reality is it probably would put it up now.

[Robert Peston]

It comes, of course, against the backdrop where today we actually saw a fall in inflation at a time when everybody's been warning inflation is about to go through the roof. What did you make of the figures?

[Steph McGovern]

Yeah, well, it's because we're seeing this energy cap come in. So we've just been talking about not doing a food Cap, because it'll make no difference. But what genuinely has made a difference in terms of how much the cost of living is going up by is this energy cap. So we saw the price of energy for not. Well, this is where it gets complicated, isn't it? We're not saying people's bills have necessarily come down, it's that the fact that they're not paying as much as they could have been had they not have been the cap.

[Robert Peston]

I mean, what happened, as you know, is that the government removed certain, essentially green levies from the bills that we all pay, and that then allowed the benchmark for the price that we pay to be lower than it would otherwise have been. And as you say, that is reflected in today's inflation figures. But the rising price of energy in wholesale markets, the expected rise in food prices, we haven't yet seen what you might call the shock, the genuine shock of Trump's war in Iran. And that shock is undoubtedly coming, I'm afraid. You know, it's like you can sort of see it's not quite a tsunami, but I'm gonna use it as a metaphor. You can see that big wave on the horizon and, you know, you're looking out to sea and it's coming towards you and, you know, it's. And that is, as I said, it's not gonna be a tsunami. It's gonna be a worrying for many people, rise in prices. Not as devastating, I think, as Putin's war in Ukraine was to our standards, but it will be significant. And one of the ways you can see how worried the government is, because I must say I regarded this as really quite surprising, some would say really shocking, is, you know, how worried they are when, as they've done today, they have announced that they are easing sanctions on Russian oil, which is, I mean, just sort of mind boggling. I mean, Putin is regarded as, you know, the great enemy. But because they are worried that airplanes are going to run out of jet fuel, and because they're worried that, you know, we're going to run out of diesel, they are now allowing British businesses to buy diesel and jet fuel that has been refined out of Russian oil,

[Steph McGovern]

which is sort of letting the bullies.

[Robert Peston]

But it shows you how terrified they are.

[Steph McGovern]

Yeah, yeah, it really does. And I think so. Yeah. So even though you might have seen this week headlines suggesting, you know, things are easing on the cost of living front, they're not. For a start, inflation's still going up above the bank of England's target of 2%. It came out at 2.8%, but it still means the cost of living is going up. And as you said, as soon as this energy price cap changes again in July, it's going to go up two

[Robert Peston]

or three hundred quid at least.

[Steph McGovern]

And so there's going to be a lot of pressure. So that's still. Because, you know, there's a lot of conversation around this, again about what happens with interest rates, what are the bank of England going to do? And I've been looking at mortgage costs recently, which it's really fascinating what's happening with mortgage costs, because obviously, as things stand, no one has changed, no central banks have changed their interest rates yet, but people are pricing it in, the lenders are trying to price it in. So if you look at what is happening with mortgage costs, it is across Europe and North America, they have risen sharply.

[Robert Peston]

Could I just. Before. Because I think this mortgage cost issue is really. Can I just make one other just very quick, important point about where we are economically. And I have to say where I am is just a bit confused. Right. Because on the one hand, we saw something that was positive, which was the IMF upgrading a little bit, the growth forecast for this year, and yet we also saw unemployment figures, which were worse already than we were fearing. So it is quite difficult to judge whether the economy is sort of weaker because of what we're seeing on unemployment than we hoped it would be, or a bit stronger than we thought it would be. And that, of course, feeds into what you want to talk about, which is what's going to happen to interest rates and mortgage costs. Because right now, it is really quite difficult to see whether the biggest overwhelming impact of Trump's war is to damage our confidence economy slowing down, in which case the bank of England would be barking mad to put up interest rates from where they are now. So my current view remains what it has been recently, which is interest rates are just going to stay where they are for quite some time, rather than being increased or lowered, because the picture is just so uncertain.

[Steph McGovern]

Yeah, yeah. And your point being that if it's about confidence, if that's our biggest hit, that'll stop people spending and that will bring inflation down.

[Robert Peston]

But it also means that people will not have the negotiating power to demand higher wages. Right. And we've seen a little bit of softening in. In wage settlements in the figure. So, as I say, it's a very confusing and mixed picture.

[Steph McGovern]

Yes. So in terms of what lenders are thinking around all of this, because, you know, you get an interesting take from looking at what is happening with the prices being offered for mortgages, the rates being offered. So across the world, so Europe and North America, the mortgage costs have risen sharply. It's been steepest in the uk. We've talked about this before. We always seem to be the country that everyone assumes is going to be hardest hit by, you know, geopolitics, by, you know, big hits on the global economy. So just looking at some specifics for you. The average rate on a two year fixed mortgage with 75% loan to value ratio has increased from 3.97 in February to 5.1% in April.

[Robert Peston]

So that is a huge February to now.

[Steph McGovern]

Yeah, that is a huge jump in terms of what you will get offered for a mortgage that you are taking out now, if you're remortgaging or you know, you're buying a new home and getting, getting a mortgage on it, that's a big jump on the basis of rates not changing in that time. This is an assumption that things are going to get tougher. A lot of the lenders had priced in rate cuts that they thought were going to happen.

[Robert Peston]

Well, that was the point. In February, before Trump bombed Iran, the presumption was that interest rates were falling. This is just another manifestation of how much damage Trump has done to us. Right. A war that we've stayed out of,

[Steph McGovern]

but also to himself as well. Because in the us, if you look at what's happening with mortgage rates there, a 30 year mortgage rate is 6.36% there. And that is back where it was before the Fed started cutting rates. So, you know, back in September 2025. So they've had rate cuts in there and I think they've had three, haven't they, quarter point rate cuts. And yet the rate now for a mortgage there is back where it was before all those rate cuts come in. So that's going to be interesting how it plays out for. Because that is a tangible cost for American people going up. Yeah, we've talked about oil and fuel prices and things, but that is another biggie is the cost of homes and bringing us back to the uk. The other thing that's been going on in the housing market, which hasn't had that much coverage because of all the other drama, is the change in renting. So the Renters Right act came in in May and this is huge for the housing market. So this is the legislation in England that means, well, it overhauls the private rented sector and it fundamentally shifts power to tenants. You know, getting rid of the section 21, no fault evictions ending fixed term contracts, you know, restricting rent increases to only once a year and a whole host of other things. And in, in that time, landlords have been selling up. So you've got concerns there about the supply of rental properties. So all of this together is mean it's going to be tough for homeowners, potentially off the back of this legislation that's come in, but also what's happening in America and again putting more pressure on the cost of living. So, yeah, I mean, this is all just adding more pressure on Labour as well in terms of the cost of living and things getting tough for people.

[Robert Peston]

But don't fear anyone out there because it turns out that Andy Burnham is Brian. Or what do I mean when I say Brian? I mean the Messiah. He's gonna solve everything. Maybe after the break we could explore one of the most interesting and intriguing slogans I've ever heard from a politician. He put out what was, I thought, actually quite a compelling initial campaign video a couple of days ago. But the punchline is Manchesterism is the end of neoliberalism. I mean, my God, they're gonna be talking about that in the pubs of the Red Wall every night from now till the by election actually takes place. But we might want to examine after the. What we mean, what he means certainly by Manchesterism and whether Manchesterism is the solution to all the UK's problems.

[Steph McGovern]

Yes, we'll do that after the break.

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[Steph McGovern]

welcome back to the Rest Is Money, with me, Steph McGovern and

[Robert Peston]

with me, Robert Peston.

[Steph McGovern]

So, Manchesterism, talk me through it.

[Robert Peston]

Yeah, well, I was out on the streets of North London last night celebrating Arsenal's, yeah, well done return from the wilderness after 22 years. I'm not sure that Manchesterism is gonna play all that well in North London, given what you might call regional rivalries. But let's look at what that is supposed to be code for. What Andy Burnham talks just an enormous amount about, actually, weirdly, in the way that Boris Johnson used to talk an enormous amount about. And it tells you something about the powers that mayors actually have is buses. Right. The way that he has taken control of the bus network and what he has done, which is quite interesting, is it. He has control, but it is not conventional nationalization. What the Manchester does is it says, these are the networks. These are the prices that the bus operators have to charge. These are the timetables. But they don't actually own the buses. Right. The buses are still owned by private operators. Control is with Manchester. Right. And so when supporters of, you know, because one of the charges laid both from within the Labour Party from those who don't want Andy Burnham as leader, but also from outside the Labour Party about the great risks that Burnham represents is when he says he wants control, for example, of energy, transport, water, people immediately say, oh, my God. That would require the government to spend, I mean, well over £100 billion on nationalizing all these services. And if you just look at the. There are lots of people who would agree that the water industry has been an absolute disaster for the uk. High prices, you know, polluted rivers, you know, no proper, you know, investment for years and years and years. You know, what is it? We haven't had a new reservoir since the 1990s. And people say, yeah, we've got to take, we got to grip water, but we can't afford it. Because if that, you know, at the moment there is, there's already a perception that the public finances of the government are not robust enough. If you took all of that debt onto the balance sheet, lenders to the UK would have kittens and the interest rate that they would charge the government would get even higher. So, as I said, the critics of Andy Burnham would say, nice idea to nationalize all this stuff, but we can't afford it. What Burnham and those who advise him would say is he's not not proposing conventional nationalization, that he is proposing a sort of extension or translation of the model that he used for buses to other public services. Now, if you think about that, it sounds like a nice idea. So if you think about what it might mean for energy or indeed for water, what you're really talking about is much tougher regulation. What you're basically saying is you would impose on water companies just totally clear investment and pricing structures for every single one of them, totally uniform across the country, and you would do the same thing with energy and potentially other utilities too, and it would be essentially a massive extension of government control. Now, that may sound very appealing to people in principle, if it sounds to people as though you're going to get investment and lower prices. The problem is, of course, that first of all, when it comes to energy, you've got to ask yourself, which bit of the energy industry are you talking about? Because there are are companies that essentially have the relationship with you and me as customers. Then there are others who are generators. There is another massive business that controls the network. It is not just unlike buses, are just. They're basically bus owners and operators. And then there's the Manchester mayoralty. It's a simple structure. Energy is just an intrinsically much more complex industry with multi tiers of ownership. So where, which bits would you control is complicated. This has been a problem with water privatizations. Why it should never have been privatized in the first place is with energy. With buses, you can see how private operators are able to compete, right, to provide service. Right. Essentially, water is just the pipes, right? How do you. I mean, what are you going to do? You're just basically going to say to Thames Water, if it doesn't meet your performance statistics, that it can't actually own those pipes anymore. Right. At that point, you are basically internationalization. You are, you know, it's not the same thing as. Because we don't own the pipes, you can't just throw Thames Water out with no risk of court cases and claims for massive compensation, you know, investors who will basically say, well, if you screw us on this we'll never invest in Britain ever again. You know, it is incredibly difficult to see, frankly how the Manchesterism model of buses would apply to an absolutely palpable problem that needs fixing, which is water without, in some shape or other, the government facing a massive liability. And also with all of them, whether it is, as I say, energy or water or indeed other utilities. The other problem is when you get investment from the private sector, it is on the basis of a particular regulatory settlement. If you simply say, right, we're tearing all that up and starting again again, they will either, well, they will definitely sue for compensation, which again would bring quite a big bill, or. Or be. If they decided they weren't going to sue the government, they again would. There would be this risk that really quite important investors would just turn their back on investing in the uk. So it is complicated.

[Steph McGovern]

Well, let's just look at that from the perspective of the buses because if you look at how what he has done there, as you mentioned, so it's the process, this kind of essentially deregulation has cost 134 million pounds that has been raised mainly through local taxation and borrowing, been paying for things like the transition costs and the upfront capital purchases, the new staff, you know, the purchase, the depots and things like that. So the locally, the local leaders are saying, and Andy Burnham of course is saying this has actually improved things and it's been worth the money. So 80% of the services are now on time, compared to 69% when the network was deregulated. And then you've got mayors in other cities now looking at how they can replicate it. So you've got like Liverpool and West Yorkshire and they're using this previous legislation to, to essentially franchi their networks. But in all of these cases, the process is expected to cost hundreds of millions of pounds. And in terms of how it's got

[Robert Peston]

100 billion plus is what I'm saying.

[Steph McGovern]

No, no, but, but I think it's worth looking at it though the local level to see whether it can be replicated on the bigger level. Because then you, you're asking how are they raising this money? So, you know, I mentioned it was through, for, for Manchester, it was through taxation and various things. What they're looking at in these other areas is, you know, whether it's tolls, so bridge tolls or local tunnel tolls, and that through borrowing and in other ways. But the point is the finances can be hard to stack up even regionally on all of this, especially the kind of beginning cost to this. So how Much is it worth that initial investment? Will it reap the rewards that you want? But something has to change, doesn't it? And your point on water is? Water is. Well, it's a shit show, quite literally. And so something absolutely has to change. And maybe it is worth the risk of, of being sued, having the investors say they're going to take their money out and all of these other things to actually make a difference, because it is terrible. The fact we have that, like my local beach has now got the worst environmental pollution in the area because of the sewerage going into it. That's terrible. And you know, it's. And on top of this, bills and everything else, can the devolution method work there as well? So there's more accountability locally and it is controlled more from a level. And if that, if the buses works, because this is, you know, the mayor's essentially in control of it, could it work for other utilities as well, where it becomes more regional?

[Robert Peston]

It all comes back to my fundamental concern, which is the big difference between buses and energy or water or any of the other really important public services is, you know, energy and water are incredibly asset heavy services, right? Whether they are wind farms or power stations or the grid or gas pipes or whatever, these are enormously expensive networks that are currently mostly not owned in the public sector. You know, buses, relatively speaking, are cheap, right? Franchising a service that is not dependent on massive assets, massive investments, that is buses. I just, in the end, struggle with the idea of how much of a model that can be for these other incredibly important services. And that is the fundamental issue which Andy Burnham, I'm sure in the course of the next few weeks will elucidate for us.

[Steph McGovern]

Okay, that's probably a good point to wrap things up. Do you think you've got out all your Manchesterism views now?

[Robert Peston]

No, not at all. I mean, I mean, there are lots of other aspects of all of this that we need to look at. I mean, it's, you know, he talks this talk of essentially being a socialist that is also wants to have really constructive relationships with business. We need to drill down, we need to find out what that really will amount to. He's a massive believer in transferring more powers to mayors and to local authorities. You and I think that's a very good thing. Let's just see if he becomes Prime Minister, whether he's altogether relaxed about making himself less powerful in that sense. Anyway, there's a lot there and a lot of it is very interesting.

[Steph McGovern]

And also, let's not forget, he might not even get the seat because we've got a plumber called Robert Kenyon from Reform who might well win the seat. A plumber might be helpful when dealing with all the water companies.

[Robert Peston]

And the other thing, which one shouldn't forget, I mean, even though we haven't really talked about this today, I would still say the consensus within the Labour Party and among neighbor MPs is that Starmer will be gone, you know, maybe by the end of the year. Nonetheless, Keir Starmer, like me, is celebrating what many thought was impossible. Arsenal's first Premier League in 22 years. And I can tell you, as somebody who knows Keir Starmer, he will be assuming that if Arteta can do it, he can do it and that he will survive. I mean, I'm just. You know what I would say about. He is literally, Starmer is the most resilient politician I've ever come across. And, you know, I'm not saying it's my central scenario, but the idea that Starmer could survive all this is not impossible.

[Steph McGovern]

And miracles do happen because to stick with the football references, Middlesbrough going to Wembley on Saturday because of some lad who was hiding in a bush spying on our team plane. So thank you very much for that.

[Robert Peston]

How much did he pay the lad?

[Steph McGovern]

No, he was a terrible spy, though, because actually I know the training ground well and they. He. There's loads of places to hide and he just didn't. So there we are. Middlesbrough may well be playing Arsenal next year in the Premier League. Let's hope so.

[Robert Peston]

Ronald, you can come as my guest.

[Steph McGovern]

Oh, thanks. I don't want to go as your guest. I want to go with my fans. Right, we're going, baby. Bye. Bye.

[Robert Peston]

Bye, bye.