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0:00
Hello and welcome to business as usual
0:02
brought to you by workday. I'm Matt
0:04
Kenyon and today we're going to be
0:05
talking about the chancellor John
0:07
Healey's big speech labor conference. He
0:09
has promised a new age of
0:10
industrialization. But is that going to
0:13
mean a new industrial revolution or
0:15
something a bit more British land? Well,
0:18
joining me to discuss we've got Alice
0:20
Denby, our comment and features editor,
0:22
and we've also got Simon Hunt, our city
0:24
editor.
0:24
>> Howdy.
0:25
>> Welcome both. Interesting speech. Uh,
0:28
Simon, do you think that John Healey
0:30
really is the the bringer of a new
0:32
industrial revolution as he seems to be
0:34
positioning himself?
0:35
>> I don't know if you he can achieve quite
0:36
that much by himself. Um, but one of the
0:38
things that was startling just listening
0:40
to the first few minutes of that speech
0:41
is he is orders of magnitude a better
0:44
speaker than his predecessor Rachel
0:46
Reeves. I mean, when when he said stuff,
0:48
he actually sounded authentic. He
0:49
sounded human. Uh, which admit he's
0:52
quite a low bar, but he did at least
0:53
exceed that bar in a way that his
0:54
predecessor didn't. Um so we can we can
0:57
at least um applaud him for that. He
0:59
stood uh under a banner which which read
1:03
hope again which seemed like a sort of
1:06
subtle not so subtle jbe at uh Rachel
1:09
Reeves um sort of arrival into
1:11
government where she said uh everything
1:13
is far far worse than we thought it
1:15
would be. We're going to have to put up
1:17
taxes. Things are going to get worse
1:18
before they get better. Um Healey's
1:20
message I think he realizes the the
1:22
political danger in having that sort of
1:24
message. So, he's opted for a a message
1:26
of hope, of getting Britain back on its
1:28
feet, of re-industrializing.
1:31
Um, he took pride in the fact that he
1:33
wore uh a tie once worn by Gordon Brown.
1:37
>> Yes, this was one that he'd given to
1:38
Gordon Brown because Gordon Brown needed
1:40
a red tie at the 1999 Labor Conference,
1:42
which he's then kept in storage and then
1:44
for 27 years
1:46
>> he's left it there and then worn it
1:48
today. Actually, I would say I I was
1:51
quite cynical when I tell the story. I
1:52
thought actually quite a good close to
1:53
that story.
1:54
>> Yeah. Well, I think we've we've said
1:56
enough nice things about
1:57
>> Should we should [laughter] we turn up
1:58
the heat? Alice,
1:59
>> Simon's absolutely right that he's
2:01
clearly learned lessons from his
2:02
predecessor about not talking down the
2:04
economy the minute you get in and also
2:05
not raising tax speculation ahead of the
2:07
budget. But I think that this tie thing
2:09
just to me it shows that his whole
2:11
agenda is just one of pure Labor
2:13
nostalgia. He's got a 20-year-old tie.
2:15
He talks about a miner's lamp. He
2:17
>> mentioned mining about 10 times, didn't
2:19
he, during Yeah. And that is not what
2:21
the future um of this economy is all
2:24
about. I also thought he made some
2:25
worrying noises about um his approach to
2:27
AI regulation. Um and and look, let's
2:30
not forget when he talks about Oh, and
2:32
he went on about austerity and Brexit
2:34
being the source of all our ills. Again,
2:35
a very backward-looking agenda.
2:37
>> I I find it bizarre that sort of
2:39
austerity is still I mean, I suppose
2:41
this is a speech which is pitched partly
2:43
to activists as well. the idea that
2:44
that's like a salient point, especially
2:46
at a time when they're trying to sell
2:47
the public and their own party on cuts
2:49
to welfare at least ostensibly.
2:51
>> Austerity was a relatively tiny
2:54
reduction in the size of the state. Uh
2:56
it's it's not the big, you know, the
2:58
real problem has come with state
2:59
spending and borrowing during co um so
3:03
yeah, it's a ridiculous talking point.
3:05
Um, and look, when he talks about
3:06
re-industrialization, again, this is a
3:08
very Labour talking point, but Oxford
3:10
Economics has warned that Britain is in
3:11
the worst possible place to
3:13
re-industrialize our economy. We have
3:15
incredibly high energy costs. Uh, we
3:17
don't have the skills base. We do not
3:18
have an industrial skills base and
3:20
planning is impossible. Um, so I don't
3:23
see how he's going to achieve these
3:24
plans that he talks about.
3:25
>> Yeah. It also goes, I think it harks
3:27
back to the thing um Andy Bernham said
3:29
during the summer which was that you
3:30
know a AI might take services jobs but
3:34
you know it can't take the job of a
3:35
welder or or a plumber or or something
3:37
like that and and that might be true in
3:40
the near term but actually um jobs
3:42
relate that relate to manufacturing are
3:44
just as susceptible to automate to being
3:47
automated you know via robotics etc as
3:50
service sector jobs. So it's a bit of a
3:52
there is this already this kind of
3:53
mythology about trying to uh build some
3:56
kind of economy around AI that still
3:59
keeps employment levels high for which
4:01
there really isn't much evidence at the
4:03
moment.
4:03
>> And let's talk about the actual policy
4:05
announcements that we did have. They
4:06
were very minor. Something about
4:07
apprentices. You're going to have
4:08
football scouts in local areas for
4:10
apprentices. It's going to be 100
4:12
million quid. Okay. So that's nothing.
4:14
Uh and a massive bung to trade unions in
4:17
restoring uh this trade union education.
4:20
um skills training thing and indeed he's
4:23
put uh union representation on the board
4:24
of the Bank of England. Uh what do we
4:26
think private business is going to make
4:27
of that?
4:28
>> Well, he he said the money Labour had in
4:31
the '9s is not there now. That's perhaps
4:34
his again not very subtle attempt to try
4:36
and reassure bond markets that he's not
4:39
planning some huge uh spending splurge
4:41
in next month's budget. Um but I mean so
4:45
to that to the extent there weren't lots
4:47
of heavy spending announcements uh that
4:49
is probably a good thing from the
4:50
business perspective but once again as
4:52
was true at his previous uh setpiece
4:55
speech a few weeks ago uh there was no
4:58
uh attempt to try and rule out tax hikes
5:02
>> uh in October. So to that extent
5:04
businesses will not be reassured
5:05
>> and this comes just a day after the big
5:07
announcement on social care. So they
5:09
they might be very koi in the treasury
5:11
at the moment about not trying to trail
5:12
anything about the budget, about any tax
5:14
speculation, but major policy
5:16
announcements which are going to cost
5:17
presumably tens of billions of pounds
5:19
are being actively rolled out. And it
5:21
strikes me that he is trying to have the
5:23
slightly cake approach of Andy Bernham
5:26
of simultaneously saying we know that
5:28
benefits uh the benefits bill rising is
5:30
not progressive. We know we need to be
5:32
fiscally prudent, but also we're going
5:34
to spend vast amounts of money. is how
5:36
long can they carry on with this sort of
5:38
narrative and that and that sort of
5:39
arithmetic?
5:40
>> Well, I I don't think they have much
5:42
choice because um you know they are
5:44
aware of the fact that there really
5:46
isn't very much more scope to increase
5:48
borrowing. Um you know government bond
5:50
yields i.e. borrowing costs are the
5:53
highest they have been in decades now.
5:55
Um so the only argument they can make
5:57
that that they have the sort of um
5:58
fiscal firepower to do is to tell people
6:01
within the Labor Party uh that there is
6:03
nothing socialist and having a a high
6:06
set of you know high levels of borrowing
6:08
in having to pay so much of of of taxes
6:11
on servicing debt.
6:13
>> One other big announcement was made in
6:14
the sort of return of help to buy. So uh
6:17
they're going to have very small
6:18
deposits um for people to get on the
6:20
housing ladder. Um, housing developers
6:23
uh have responded strongly to this. Um,
6:26
you know, stock prices uh going through
6:28
the roof. But isn't this just going to
6:29
pump up demand uh and ultimately house
6:32
prices?
6:32
>> Well, I mean, this is always the trouble
6:34
uh with any government, and it's been
6:36
true for the past decade or so that
6:38
tries to look at the problem of housing
6:40
shortages um or housing affordability
6:43
and decides it's much easier to sort the
6:46
demand side than sort the supply side.
6:48
Um, so it's pretty obvious now that
6:50
Labour's 1.5 million uh housing uh
6:53
construction target is not going to be
6:55
met by the end of this parliament. Uh,
6:57
so instead they're they're going back to
6:59
the usual um thing of of trying to um
7:02
boost demand by uh lowering the um level
7:06
of deposit that someone needs to for a
7:08
first for their first home, i.e.
7:10
saddling them with even more debt than
7:12
they would normally be able to to be
7:14
saddled with. Um but the the slight
7:16
twist in this one is that it's only um
7:18
it only applies to new build homes. So
7:20
you only get to borrow more if you want
7:22
to borrow more to build a new build. And
7:24
that has helped the house builders a lot
7:26
uh on the stock market. Uh to give you a
7:29
flavor of a few permanent was up 15%
7:32
last time I checked. Bar Red row was up
7:35
13%. Uh Bellway up 13%. Taylor Wimpy up
7:39
12%. So clearly the house builders
7:41
responding well to this. Um but as I say
7:44
it it's it does mean lots more uh
7:47
firsttime buyers end up settled with
7:49
even more debt than they would normally
7:50
be.
7:51
>> And if you dig down into it, is it not
7:52
the case that um building materials
7:54
manufacturers are actually down which
7:56
again suggests that the prospects for
7:58
increasing the supply of housing are
8:00
actually being damaged by this policy?
8:02
>> Yeah. And uh um the materials firms have
8:05
been really up against it the past few
8:07
months because uh energy costs which is
8:10
their single biggest cost have gone up
8:11
hugely. Um, some of them are at least
8:14
some of the smaller ones have been sort
8:16
of teetering on the brink of collapse as
8:17
a as a result.
8:18
>> One more thing to talk to you about,
8:19
Simon, and this is taking us from the
8:20
national picture that's being talked
8:22
about in Liverpool all the way back to
8:24
our very own backyard in the square
8:26
mile. And you've got a story about a guy
8:28
who could have been the next Lord Mayor,
8:30
but now it looks like he won't be.
8:32
>> Yes. Quite a lot of drama uh for the
8:34
square mile, which is normally a pretty
8:36
uh quiet place politically. Uh but the
8:39
the man who was set to be elected uh the
8:42
next uh Lord Mayor uh as soon as um
8:45
Tuesday evening I think uh decided on
8:48
Sunday night to suddenly withdraw from
8:51
withdraw his candidacy. Uh and he said
8:54
it was because uh someone closely
8:56
connected to him uh is involved in
8:59
criminal proceedings and he did not want
9:02
to damage the city's reputation by uh
9:05
running as Lord Mayor. Uh what I don't
9:07
know at this stage is who this person is
9:09
who is connected uh with this uh former
9:12
mayoral candidate. Uh what precisely
9:14
they are being prosecuted for u but
9:17
presumably it is a serious enough thing
9:19
for him to decide to withdraw.
9:20
>> I imagine it's very unusual for I
9:23
suppose this level of drama to happen 24
9:25
hours out from the selection of new lord
9:26
mayor which
9:27
>> very much so. I mean I'm not aware of
9:29
anything um like this that's happened
9:31
recently. I think the only sort of
9:33
slightly similar thing was um that we
9:35
had a uh mayor a few years back who
9:38
unusually served two terms consecutively
9:41
and that was because of the pandemic and
9:44
it was decided it was inappropriate to
9:46
try and switch over to a new person you
9:48
know in the middle of a lockdown. Uh but
9:50
but this is the most drama I've seen in
9:53
uh I don't know about in 800 years
9:55
because I've not gone through the the
9:56
entire list of um Lord Mayers in over
9:59
the last last eight centuries but
10:00
certainly in recent years this is the
10:01
most dramatic moment.
10:03
>> Let's not forget that the Lord Mayor
10:04
plays an incredibly important role as an
10:05
ambassador for the city all around the
10:07
world. So obviously they cannot be
10:09
involved in criminal proceedings and and
10:10
let's also not forget that you can read
10:11
the current lady May's uh column in city
10:14
every fortnight. That is a beautifully
10:16
executed pivot from multimedia uh into
10:19
print, tying it all together. Simon,
10:21
that's all we've got time for. Um Alice
10:23
and I will be staying on and talking to
10:25
our fintech supreo uh Sam Norman after
10:28
the break. We're going to be talking
10:30
about these reports coming out over the
10:31
weekend that Monzo uh could be snapped
10:33
up by the Brazilian neo bank New Bank.
10:36
So don't go anywhere cuz we'll be
10:37
talking about that in a moment. Guessing
10:39
is for game shows, not your business,
10:41
especially when your margin for error is
10:43
zero. Workday is the enterprise AI
10:45
platform for HR, finance, and IT with a
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>> So, every AI action is permission aware,
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10:59
>> It's a new workday.
11:01
>> Welcome back to business as usual. Now,
11:03
loyal listeners might remember that we
11:04
got pretty excited about the possibility
11:06
of fintech firm Airtel Money uh listing
11:09
on the London Stock Exchange. Well, bad
11:12
news for fintech fans could now be
11:14
brewing with reports from over the
11:16
weekend that the veteran digital
11:17
challenger Monzo, great British success
11:19
story, could be snapped up by a
11:21
Brazilian bank. Uh, our senior reporter
11:24
Sam Norman joins us to discuss this.
11:25
What's going on with Monzo?
11:26
>> It's it's devastating news. I think it
11:29
is. Monzo is in my books the definition
11:31
of UK fintech darling. Like it's
11:34
homegrown here. It's it's always been a
11:36
really domestic brand like of all the
11:38
fints.
11:38
>> Huge name recognition in the market.
11:40
It's it's it's the UK fintech. I mean,
11:42
Revolute is the global fintech. Monzo is
11:44
like the UK fintech. And um yeah, I
11:48
mean, they've had a bit of a tuk tough
11:49
last year. They've lost their CEO, then
11:51
he came back. They had a bit of a
11:52
boardroom bust up. They've now lost
11:54
their chair. Um there's a lot of moving
11:56
parts there, but we never thought this
11:58
would be the next wave. And as you said,
12:00
we saw reports over the weekend that New
12:02
Bank, which is uh yeah, the Brazilian
12:04
fintech, very big in um Latin America,
12:07
now trying to crack North America.
12:09
little to no presence in Europe and
12:11
especially no presence in the UK has is
12:13
in very early discussions with Monzo
12:15
regarding a takeover which would be
12:18
massive for Monzo but also for new bank
12:20
in entering the UK. Well,
12:21
>> it's been very difficult for any bank uh
12:24
of that ilk, that challenger bank ilk to
12:26
try and break the US. Monzo famously
12:28
tried to
12:30
>> slightly botch that. Had real trouble
12:32
getting in. I suppose would if if they
12:35
did take if New Bank took over Monzo,
12:37
would they be looking at using Monzo as
12:39
a way into the British market and just
12:40
saying actually we're going to white
12:41
label some of our our own products and
12:43
use this?
12:43
>> Absolutely. Absolutely.
12:45
>> I mean, you speak with anyone in the
12:46
city and it's no secret that I think the
12:48
UK regulatory uh system is seen as like
12:50
the gold standard. Like we saw it took
12:52
Revolute Revolute so long to get their
12:54
banking license in the UK and we saw
12:56
other central banks were waiting on the
12:57
sign off from the Bank of England before
12:59
they gave the clear ahead because they
13:00
know our regulation is very well
13:02
respected. But in the same side of that
13:04
we've also seen a bit of a flip where
13:07
the applications for new UK banking
13:09
licenses have just like sank. There was
13:11
zero. I think it was like last year. Um
13:13
so so it's a bit of a flip where now
13:15
people are looking to enter the market
13:16
potentially through an acquisition. I
13:18
know there's a lot of chatter from Latin
13:20
America and that whole landscape looking
13:22
at the UK, but not not as much entering
13:24
organically, but doing like a new bank
13:26
way of buying something. You inherit the
13:28
customers, you inherit the license. It
13:30
would be a great way to just stamp your
13:31
footprint in. And for a giant like New
13:32
Bank, it would be massive.
13:33
>> I suppose there's an argument that the
13:35
challenger banking market is now
13:37
saturated that basically everyone who
13:39
was going to get one of these accounts
13:40
already does. Monzo has something like
13:43
10 million customers, 15 million
13:45
customers. Revly has something like 20.
13:49
access. I suppose one question I have
13:50
for you, there were loads of suggestions
13:52
that MonzoP
13:57
did go ahead with it if this acquisition
13:59
didn't happen. Were they actually tipped
14:01
to do that IPO in London?
14:03
>> I would have been surprised if not. So,
14:05
like you said, Monzo this year confirmed
14:07
they were not going to um continue
14:09
pursuing operations in the US. They
14:11
tried. They were like, you know what,
14:12
we're going to redistribute and focus
14:13
back on back on Europe. If you're doing
14:15
that, it would be very surprising to see
14:17
seen them come gone to the US. Um, now
14:19
because of this boardroom drama of last
14:22
year, like I say, they
14:23
>> can you describe the boardroom?
14:24
>> So, the TS Neil, the chief executive,
14:27
um, he suspiciously resigned after so he
14:30
was recruiting for someone to take his
14:32
position as UK CEO and he was going to
14:34
become group CEO. He said in that
14:36
process he discovered Diana Layfield. um
14:38
she was I think she was on the Jmaker
14:41
board, a very big name across a lot of
14:42
these big companies and he was like she
14:44
should just do my job and and bowed out.
14:46
I remember at the time a lot of us were
14:47
like eyebrows raised. This is quite a
14:49
weird move. It would emerge months later
14:51
that he'd been in been a bit of a row
14:52
with the board. There's a lot of um I
14:55
guess different directions they had.
14:57
Then a rebellion at the board tried to
14:59
ou the chair. It just got really messy
15:01
for a long time. he has now come back as
15:03
vice chair and the chair has announced
15:05
his departure a year early um earlier
15:07
this year. So it's just a bit of a messy
15:09
story. That's not a messy story that you
15:11
want to take to market. You like
15:13
regardless if they were ready for an IPO
15:15
which the speculation was they were
15:16
speaking to bankers last year. If they
15:18
were ready
15:18
>> the start of this year they are not
15:20
going to go with that narrative. It's
15:21
just not a it's just not a safe
15:23
narrative to take to market. So the the
15:25
story was I guess they wait another
15:27
couple of years a few more fundraising
15:28
rounds strum up that valuation maybe
15:30
build the story in Europe a bit more and
15:32
yeah I think it I think it would have
15:34
been London and you know what it still
15:35
could be they might do another funding
15:37
round instead of a takeover but I don't
15:39
know it's a very strong direction of
15:41
travel if someone like New Bank is
15:42
looking at Monzo and I think it's the
15:44
sort of consolidation that we weren't
15:45
expecting quite yet you're expecting
15:47
more of those smaller companies to get
15:48
swept up not a name like Monzo which is
15:51
to really like to kick off this fintech
15:53
consolidation that would be a massive
15:54
one.
15:55
>> So, one firm, one fintech firm which did
15:57
end up um arguably betraying some of its
16:00
European roots and listing in the US um
16:03
a while back is Cler.
16:05
>> They've had some bad news this week.
16:07
>> Yeah. So, it's it's a bit of a a weird
16:09
one. So, Cler obviously they IPOed in uh
16:12
New York last September now down around
16:14
70%.
16:15
>> Wow. Yeah. It's been a bit of a bruising
16:17
time. Uh it's one of their investors,
16:19
Chrysler Investment Trust. It's one of
16:21
the UK listed investment trust and
16:23
they're very useful because they outline
16:25
all their portfolio for us and it's a
16:27
nice way of looking into some of these
16:28
private or now listed firms. So they've
16:30
um been a big shareholder in Cler.
16:33
Earlier this year they sold off for 6
16:34
million stake and then on Monday morning
16:36
they cons confirmed wiped out all of
16:38
their Cler stake 34 uh 34 million it
16:41
went for and they've just offloaded it.
16:43
>> It it was a bit of a surprising move but
16:45
also in the context of Cler's stock
16:47
price has not done very well over the
16:49
last year. So in one sense they might
16:50
have just wanted a total removal from
16:52
that but also it it still is a quite a
16:54
high growth fintech. I mean they swung
16:56
back into a profit earlier this year.
16:58
They they do have quite a strong
16:59
narrative with what they're trying to do
17:01
with banking as well as buy now pay
17:03
later. But yeah I guess it's it it on
17:05
paper it's probably not the most like
17:07
reassuring news for them. And weird with
17:09
Chrysler now is stalling is basically
17:11
60% of their portfolio. So um there kind
17:15
of keeping that fintech route but just
17:16
kind of going all in on Stalin which is
17:18
obviously another contender. Hopefully
17:19
we might be able to land as an IPO but
17:22
>> fingers crossed.
17:22
>> Fingers crossed.
17:23
>> I mean if we put look at these two
17:24
stories together is this part of a
17:26
broader trend of what you described as
17:28
fintech consolidation we're going to see
17:29
instead of the really exciting startup
17:31
economy we've had and which Britain has
17:32
been um very uh successful in
17:34
fermenting. We're going to see a few big
17:36
players really dominate this market.
17:38
>> Yeah I think but I think the fear with
17:39
that is are we going to see some of
17:40
these firms come together? So some of
17:42
the big banks maybe maybe buy them to
17:43
help beef up the tech some of the uh big
17:45
fintexs come together and consolidate or
17:48
are we going to see the likes of New
17:50
Bank coming in? Are we going to see some
17:51
of these private equities snapping them
17:52
up and stripping them out and then
17:54
disposing of them as they see fit?
17:55
That's the different angle. Obviously we
17:57
want to keep some of these UK firms UK
17:59
and we want them eventually to list.
18:00
It's how this consolidation happens. And
18:03
yeah, I mean, I think a firm like New
18:05
Bank coming in is very interesting and
18:07
it kind of just cements fintech as a
18:08
sort of a New Bank versus Revolute world
18:10
by by that by that thing. I mean, the
18:12
whole speculation is they're going to
18:13
face off in the US now. Revolute's got
18:15
their first approval for their US
18:17
banking license. New bank was working
18:18
there. So, it was all like, oh, they're
18:20
going to go toe-to-toe. Well, no, New
18:21
Bank's now coming over to the UK
18:22
potentially, so they're going to go
18:24
toe-to-toe over here as well. I mean,
18:25
that's it. They're dominating the two
18:26
biggest areas of the world now. Sam,
18:28
you've you've framed the next fintech
18:30
battle, the next war uh for us in a
18:32
multi-olar world of fintech banks. And
18:34
we'll have to leave that there for time,
18:35
but I'm sure we'll have you back
18:37
speaking to you guys
18:37
>> very soon. Right, that is all we have
18:39
time for today on Business as usual.
18:41
Thank you very much for listening. We've
18:43
been brought to you as ever by Workday.
18:44
>> And don't forget to subscribe to City
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18:49
>> This podcast was produced by Joey
18:51
Creatonada and we'll be back in your
18:52
feeds tomorrow at 6:00 a.m. But for now,
18:54
goodbye.
18:55
>> Goodbye.
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