262. Does the Chancellor have a growth plan at last?

We can't go back and change history. part of the EU single market is in services. It is also by a wide margin, the biggest share For both the EU's economy and our economy. And if you are wanting to get the growth rate up in the UK, all of that, if you really want to achieve that, is another argument for trying to get back inside the EU.

Yeah. Right. But there is a massive pot of gold at the end of that particular rainbow if you could get back inside and start playing a leading influential role in shaping the future of Europe's single market.

Hello and welcome to the rest is money with me, Robert Perston. And with me, Steph McGovern. And today we uh we referenced this in the last podcast that Rachel Reeves uh was doing her Maze lecture. Yn yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n

Telling us about what her plans are with growth. W you and I, Robert, have talked a lot about the fact that we haven't really had a growth plan. We we have there's been nothing to suggest there of any ideas when it comes to how they're going to grow the economy. Um, so that is what we're gonna talk about in this episode. There were three big areas she hit on, which was the AI.

our relationship with Europe and devolution. So we want to talk through them. Also coming up today, we're going to be taking a closer look at some of history's greatest economic shifts. This is in partnership with our sponsor.

Hargreaves lands down. But Robert, first of all, give us your your take on it from the top. Well just two b big things to start with and we're gonna drill down. Uh one is quite a lot of what she announced today is perfectly sensible, but you know, frankly it's

all of it could have been announced a year and a half ago and started a year and a half ago. It's another manifestation of how much time they've wasted. And the second thing, you know, I spent as you know, spending uh a very unhealthy proportion of my life talking to Uh people who work in tech, people who invest in tech, and they keep talking to me about how they are now taking uh have you come across this expression, the red pill? Do you know about the red pill? Yes, I do. The manosphere. God.

So so well so well the red pill is, you know, um from the matrix, it's the pill which allows you to see the world as it is. The blue pill, you know, is the sort of comforting world of that's been manufactured by other people and uh uh but the red pill Is the truth. Right. And I keep being talked to people who say they've been red pilled. By Claude's co-worker launch, plus the latest version of AI. And they all say, My God, on the basis of this, millions of jobs are being lost. 發

And you know, this is a speech given by our Chancellor talking about the potential of AI, where she doesn't even refer to any of the really big stuff that is happening in that world right now. And so one of the things that just makes me sort of uneasy about this speech, and I felt uneasy about this You know, w you know, with a whole succession of governments, but this is certainly a manifesto

Government is so behind the curve in a w in a world that is moving so fast. And it's this is yet another speech. We'll get on to the detail of this towards the end of the podcast, but it is just how the government always pays catch-up.

With the big trends that are reshaping our world, not leading but following and and too far behind. But I wanted to start because your one of your big passions, how we have not addressed the income and wealth inequalities between North Midlands and the very rich London and South. is a speech where she says one of her absolutely biggest growth planks of the three growth planks are is to raise up living standards, increase investment

uh in the north devolve tax spending powers. So give us your take. Do you think makes you more confident that where you live and work in the northeast?

you know, things are gonna really move forward in terms of growth and living standards. Yeah, so so just to explain, this this is a plan which she says is going to be announced in this year's budget, which will give regional leaders Control of a share of some national taxes. Now, she hasn't said how that will be worked out because one of my concerns would be. os yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r yw'r

difference between uh what you know people are paying an income tax in the north versus the south p because they earn more money in the south. So that would be a concern for me. Spell out what you mean by that. What you're saying is If in Middlesbrough you only get the share of income taxes paid in Middlesbrough, whereas in you know you know, Manchester or Birmingham

you get your share. Basically people's incomes in Manchester and Birmingham are higher. Yeah. And therefore it just reinforces inequalities if you all you get. Is the tax that your local people pay. Is that is that what you're saying? That is what I'm saying. But let's assume, because she hasn't said that, but let's assume it will be divided more felly mae'n ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r hynny.

Um now the interesting thing about this for me is I do think this is potentially a good idea because there is a serious problem with. Mae'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud â'n ymwneud.

still very much money that is going to one particular area and I think it's hard to see how that will extend out other than in supply chain businesses. And still that will be weighted to the ones closest to the area. Um so th you know, and I'm already seeing on a daily basis, for example, where I am, I I often take the view of where I live in the North East, where our mayor is uh our northeast mayor is Kim McGuinness and she's been out

uh several times in the last few months, just talking about the money coming into the area. Even today she's just announced another hundred and twenty million pounds is being Allocated from the Treasury to speed up stalled city regeneration plans. I don't know what any of this means yet, but she's saying it's going to mean better housing and

uh better infrastructure and all of these things. And that is going to be really tangible to people. So if we see in our local area money raised nationally but being put into projects that have a really tangible outcome, then I think that will make a difference to how people... feel about where they live.

and feel about what is it what is there and and and hopefully help with job opportunities and everything else. And you were telling me earlier what you were telling me what this fund is called. Tell me what it's remind or tell our vo viewers what it's got because it's got the it's got the most bizarre. This is called the Treasury City Densification Fund. Um, which is such a weird name, isn't it? Densification. You know, as I said, when when you said densification to me, I just thought.

Why would you be paying money to make people thicker and denser? But that can't be what the money's for. No, I think it's about regenerating city areas so that they will become more dense.

We're proud to say that the rest is money is powered by Octopus Energy this year. Uh Greg Jackson is back to answer another question. Now, this is something that we see a lot. that I wanted to ask you about. When you're building a business from scratch, like what's the most important thing early on and what do people get wrong?

Yeah. Look early on, the most important thing is to start building a customer base. Until you've got customers, you have no idea whether the products and services you're offering. are gonna be the ones that people want. So a lot of people spend far too much time, you know, building out uh pages and pages of business plans, uh thinking too hard about what they're gonna do rather than just doing it. What surprised you most when you were launching Kraken?

You know, the great fun of launching Kraken was uh it was the engine that powered Octopus to grow, you know, ultimately it's the biggest energy supplier in the UK with I think the best service. But we were able to license it to our rivals as well.

So uh the interesting thing is uh the world is more complicated than you think, and your competit competitors will work with you if it's in their interests. Cheers, Greg. Right, well you'll be hearing more from Greg throughout the year, but now let's get on with this episode. It's not just something you made. It's the privilege that you get to work with your hands.

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So on my wall is j uh just because it's you know, w it's on my wall because this is where all my family came from. There's a map. uh extraordinary density of Jewish immigrants. Turn at the turn of the century it's And it's absolutely terrifying how many Jews lived in a tiny space. Yeah. And so and des all all the desification makes me think about is cramming too many people into a small area.

But that can't be what they're talking about. But it is about it is about house building in those areas. So i again, I know I always talk about the north east, but it's the easiest place for me to give examples of. But But that there have been quite a few delays to city centre house building. So there's the stalled development of something called the New Castle Helix site, which is one where I was planning to open the fitness business.

but haven't been able to because it's so far behind on everything. Um and then there's other parts of Newcastle again where they've got plans for regeneration, but they've just been massively stalled. So What the mayor, Kim McGuinness, is saying is that's what it's gonna go into is just getting those moving. And and and if you look at how the Treasury have described it, they say they wanna bulldoze through the roadblock.

Rydyn ni'n cael ei wneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud. an example of that, I think, in terms of what they want to happen. So for me, I think that what Rachel Reeves has said about evolution, I think is really important. But

The like you said right at the start, it feels very s very slow. You could have announced this two years well, you know, a year and a half ago whenever they came in. And and and all she's done now is a statement of intent rather than giving us the detail. But I want to ask you, given that You know, she has said yes, more money to May's.

Right. But she hasn't actually specified what they'll be able to spend that money on if you were advising her about what additional powers to give to mayors so that they can spend this money in a way that has the optimal impact on growth in the region, on incomes in the region. What would you recommend? That she allows Andy Burnham in Manchester, Kim again is where you live and the various other mayors

What what should they be able to spend money on that they can't now? On what they want to spend it on and what they've worked out is the need in the area. Yes, because

I don't I can't answer for Manchester. I mean, I used to live there for quite a while, but I can't tell you now what the issues are there. I can talk about what's going on here. And I think But the you know, the whole point of having a mayor is they're constantly talking to people in the i across all organisations to find out where the need is, what is our local economy needs.

what are our jobs needs, what are our uh where are our pressure points in terms of social services and things like that. I can't answer that question because I'm not talking to these I mean, I have an overview from work I do with a food bank and having a business here and stuff like that. But

That's why I think it that you know, it's good to let those as long as they're held to account, you've got to hold people like Kim McGuinness to c to account. But I know her and I she'd be well up for being held to account. She wants to make a difference to this area.

And so I think, you know, Andy Burnham knows that area, the North West, better than most. So i I think they should be, with a proper advice, be able to decide themselves what they do with that money. And then we all hold them to account to make sure they do it well enough. So you would be in favour of what you might call variable geometry. So you would say what, in one area

You know, if if Andy Burnham wants to have way more money for skills, he should have that. And if Kim McGinnis thinks it's more about social housing Then she should have that. But with a view to growth. So I think growth has got to be the aim. So it can't be just um about how it it's really important, what the aim is. And the aim of this is for me, it's about economic prosperity and growth. And that has to be the target.

So if to get that, social housing is one of the biggest things you need to solve, then then you do that. But it can't be just solving it for solving its sake. It's got to be with a target of driving economic growth because then everything else will follow from that. It's a bit like when we talk about diversity in business, often social mobility gets

you know, discussed as a a last thing. It's normally about ethnicity and gender, uh, and sexual orientation or whatever else. But actually if you focus on social mobility, you get a lot of that diversity anyway by by proxy, because often you'll find those minorities are the ones who are at least socially mobile. So for me it's about

what the a the aim should be economic prosperity for the area, for growth, and then work it out based on that. I completely agree with you on one of my um long running critiques, as you know, of this government has been it talked the talk of growth and then did so many took so many actions that were anti growth. Um and and so I completely agree with you.

that, you know, this is a moment where anything that is gonna add grit in the wheel and is gonna slow growth down has to be avoided and and everything uh should be uh concentrated on or resources should be deployed almost exclusively on um those initiatives that are going to get the growth rate. Up are gonna create

really decent paying jobs.'Cause growth for growth's sake isn't isn't the be all and end all. It's actually got to be about raising people's living standards and so it has to be the kind of growth that is uh diffused throughout the maximum number of Um and so one of the things that that you know Mariana would always say is you know, actually do refine what it is by your mission in a way that is a practical guide.

I mean many people would say, you know, you need growth to do almost anything. Um so let's let's let's let you know, obviously we've got to we we we we've gotta get the growth rate up, but then let's say what are the what are the outcomes that we need? um that growth can can deliver. To to get back to your point though, it is quite interesting to me. So housing definitely, you know, improved housing is definitely an engine of

of growth, no question about it. Uh uh um'cause apart from anything else it will uh mean that in an area which is losing highly skilled and talented people'cause they can't get anywhere decent to live, they're more likely to stay in

in an area. Um your your your skills plainly me uh very correlated with uh improved growth. I mean the interesting thing for me is should you devolve more control over health budgets because there will be parts of the country where, you know, there are way too many people who've signed off work for all sorts of reasons to do with both mental and physical ill health.

Again, you could argue, uh, you know, even though, you know, th there is um uh uh some within the extraordinarily s you know huge national health service with its massive employment, some devolution of decision making, you could argue there's nowhere near enough. devolution of decision making when it comes to um, you know, health provision, health resources. There is a big question about how radical you want to go when it when it comes to devolving powers.

to these locally elected mayors. Yeah, there is. And and you know it's interesting the point you make about healthcare because I was thinking in my head there, what do I think on this. It it should that be devolved. But you're seeing really interesting things going on with with healthcare in some particular trusts. Like for example, um I'm good friends with the author Anne Cleve. And she's been heavily involved in this reading for wellness. So people being prescribed reading where People will

read to them and there'll be community groups where people will be prescribed to go and have books read to them, which sounds totally hippie. I totally get that. People will be like, oh, our health service sh shouldn't be doing that. But

Mae'n ymwneud â phobl sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n sy'n

health stuff, you can do more of that and trial stuff, you know, like where we are, we've got an amazing coastline. So maybe think that could be used more where you whereas you're not going to get that in the centre of London, but you've got lots of other resources in the centre of London. That would be great in other ways to help with healthcare. I don't know because it all sounds a bit wacky, doesn't it, when you start talking about

um wellness prescriptions and I know it's been in the news a bit this week as well about all that, but I don't think I don't think it sounds I don't think it sounds wacky. I mean it's it I mean You know, th there's an enormous amount of science behind, you know, what kind of therapies work. So um but but and and and I think the point that we're making is simply If you want to do that.

to really regenerate and get optimism and hope going in an area, you need the big decisions by people who are not sitting in Westminster but who live and work locally and know their communities best and can respond. to the revealed needs of the community. Yeah, because I often say I would love

um, the kind of politicians in Westminster that are there all the time to just sit on a bus in Newcastle and see what life is really like for lots of people. And that's what obviously regional mayors and and devolution is all about, is they know what life's like on a bus in

a remote part of Northumberland or going through the city centre, what the challenges are for the people who are sitting sitting on it. That's where I learn the most about what's going on in society, sitting on the Metro in Newcastle. And you see some of the biggest as you pass through the different areas at which are some more deprived than others, you get a real sense of what the issues are for people.

Um, and that I guess that's what comes from hopefully devolution is people understanding more about those areas' needs. So what's interesting to me is that in the second big area, uh, which she is counting on to generate growth. She's actually going I mean she's giving away potentially powers again from Westminster, but rather than devolving it down to a smaller area. You know, like Greater Manchester, uh or the North East.

She's actually now saying we should allow more decision making again by Brussels. Because her second her second big area w which she's talking about in terms of generating growth is to improve access. For British exporters to Europe's single market. And probably the most politically controversial thing that her May's lecture says is that she wants us to go back. So w this is a one of those horrible

phrases to dynamic rules alignment with the European Union single market. And what that means is that if you are an exporter, and the example that Hitchy has historically used uh in recent well, the the the example she's used in recent weeks is the chemicals industry, right? Because um the chemicals industry um has made it clear that they have no problem with their safety rules, um, the regulations they have to follow being set by

The European Union rather than the British government. And the reason for that is because that would, they hope. um, allow them to buy and sell from the EU with far less friction, less paperwork, less bureaucracy, be faster. Um and the advantage uh for them w it would be the equivalent of a big tax

right? Uh,'cause'cause the burden on them, the administrative burden, would be significantly less. In general, she now thinks that for the prosperity of the UK, She is now prepared to allow dynamic rules alignment between Britain and the EU in pretty much every sector you can think of. other than those where she gets representations from people in that industry that it would be damaging for them. But if

You know, whether it's pharmaceuticals or chemicals or steel or whatever it turns out to be, they say to her collectively, it would be much better for us if we follow Brussels' rules. Her instinct will be henceforth to say, okay, w we in Westminster will simply endorse what Brussels wants to do. We will no longer be a rule maker, to use that s you know, resonant phrase, Britain will be a rule. Taker. So that is that and that is a big two fingers up, frankly, at those who uh promoted the Brexit.

case, right? Because a lot of the Brexit case was um Parliament has to be sovereign, we have to make our own uh rules affecting all industry.

Um and so this really is a big two fingers up to Nigel Farage and to Kemi Badenot. But the issue for me is is twofold really. One is Um yes, uh th that there's an argument for it, but it is a conditional argument because it will only work. If the EU plays ball, if the EU says, right, on the basis that you are following rules for chemicals, we will now allow seamless single market access.

for chemicals. Well it's by no means certain that the EU will allow that. And secondly, this is w th the other point about it is this. And what she really wants is the kind of a market we had when w the kind of access British companies had when we were members of the single market. But All members of the single market have, for example, to pay money to the to the to the into the EU's budget, right? There is nobody who gets this access.

for free. And one of the things again that is absent from her speech today is would she prepare be prepared to spend British taxpayers' money on getting access? Um now. Truthfully, the cost benefit analysis of of sp of providing that kind of money to the EU may well make it, you know, v you know, a sensible thing to do.

But again, just think back to that Brexit referendum. It was massively con contentious, all that money that we pay over to Brussels. And now we would be paying money to Brussels for access to the European single market, but no voice.

in the decision making process. In the old days when we were a member of the EU, you paid money into the budget and you could help shape the rules. Now we're just saying, you know, we will take the rules and we're gonna have to pay money to take the rules. I mean, she cites

Um, the analysis that shows that as a result of Brexit being out of the single market, the country is, you know, eight percent poorer than it would otherwise have been. Right. That's true. We are poorer for for leaving the EU. But I'm not sure actually how the argument politically with the British people will play. if we sort of, you know, essentially become supplicants.

uh to the to the EU on a permanent basis, pay money to them, but don't have a voice. It it you know, in a way, uh the logic of her position is we gotta rejoin the EU, right? We've got to get a voice back. Um but that's not what she's arguing. She's actually arguing for something that I think are many, many people, even those who

would would want us to join the EU, I think many people would feel quite uncomfortable with. But but what what's your take on it? Yeah. Yeah. So so she's insisting, isn't she? We're not rejoining the single market, the customs union or the the free m free movement of people. But

But is this our only i is this better than nothing, though? I know you're saying we we'll you know It might not happen. Yeah, well there's that'cause they might not agree. The EU might not let us Yes. So so let's for argument's sake say the EU do let us. And we do have to contribute but we don't have a voice. Is that still better than where we are now? Yes, it's not as good as what before Brexit as when we were part of the EU fully and we had a voice.

But is this better than being totally left out? Because we can't go back and change history. But we may as well try and make the best of it we can now. And is that is that our only option? If an industry like chemicals says

actually this is collectively in our interest to do this, then I think there is an argument for British government trying to negotiate it on their behalf. And if there are other industries uh you know, again that are saying we've been really badly damaged by it being outside of the the

uh single market. Um, you know, if if there's an absolutely overwhelming desire from that industry, then uh yeah, I do think it's a perfectly reasonable thing for the government to start negotiate, trying to negotiate. Better access on the on on that rule taking basis. I I suppose my other concern, however, is this. And this is much more complic this is going to be much more complicated uh for the medium term.

The the the underdeveloped part of the EU single market is in services, right? It is also, by a wide margin, the biggest share of both the EU's economy and our economy. Right. And if you are f wanting to get the growth rate up in the UK, the thing you most want is way better access for our service industries.

All of that, if you really want to achieve that, is another argument for trying to get back inside. Yeah. Yeah. Right. Um, because it's, you know, tr trying to get access for our service companies to a market. in services which it isn't even fully completed yet. Right. Is is is uh quite a tall order. But there is a massive pot of gold at the end of that particular rainbow if you could get back inside and start playing a leading influential role.

um in in shaping the future of Europe's single market. Um uh uh uh uh uh uh and so you know if this is the start of a journey where essentially you get a government that becomes progressively more confident about making the case not only for being closer to Europe, but actually being part of the European project again.

then actually at at that point you do, in my view, get into a what could be a very virtuous circle of of, you know, investors being more confident in the UK's future interest rates coming down a as a result of that increased confidence as because the price of assets including

Um, you know, government bonds would rise. You know, you you you get it you you know, cost of cost of borrowing uh for investment, cost of raising capital for investment would fall for businesses. So you get into that virtuous circle. But it requires Again, this this being the beginning of a journey and a bit more confidence by her and the Prime Minister when it comes to making the case for Europe. Yeah.

I I've become a bit obsessed with how well Ireland's doing things and obviously they are still in the EU. And if you look at what has been happening there in terms of their like growth and everything. You know, last year it was something like eight percent, which was a lot to do with exports and stuff. And it's not going to be as much as that this year, but they've got employment at record highs.

unemployment at you know a low, they've got inflation below two percent, they've got a budget surplus. Mae'n ymwneud â'r cymdeithasol cymdeithasol. Mae'n ymwneud â'r cymdeithasol o'r cymdeithasol o'r cymdeithasol. Mae'n ymwneud â'r cymdeithasol o'r cymdeithasol o'r cymdeithasol.

But you know, that it just shows the difference of what we could have been if we'd stayed in the E EU and then maybe r you know, reduced corporation tax like Ireland did and became this attractive place to to do business and really said, Yes, we are business friendly instead of the kind of the way things have gone. It I I i I find that fascinating because I don't think Ireland's that dissimilar from Rose in terms of

what they have to offer in terms of skills and everything else, but the big difference is they are part of the EU and we are not. So tons more for us to talk about when it comes to the Chancellor's growth plans. We'll do that after the break. This episode is brought to you by Hargreaves Lansdown. Now, if the last four decades have shown us anything, it's that change keeps coming. There have been so many huge economic events that have shaped

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Now, on the rest is money, a quick look back at some of the biggest economic changes of our time, brought to you by Hargrees Lansdowne. And now for something slightly different. We've got a special segment for you looking at the defining points in modern investing history. It's called The Moment That Changed Everything. It's brought to you by Hargrees Lansdowne. So we're gonna be, I guess.

Pulling out the magnifying glass and analysing eras of great economic shift, looking at what was actually happening and why it all felt so uncertain. And so Robert, I wanted to kick things off I think with one that um ties us together but also was such a defining moment for the world economy, which is the two thousand and eight credit crunch. And

Just to set the scene, obviously this was huge for you, Robert. You know, you were on the telly every night. I was behind the scenes with you. But also for me personally, I was in my early twenties. I'd just bought my first house on a track and mortgage. I just started investing in stocks and shares, ICEs, and you know, things like the housing market that I thought were a totally solid bet.

all kind of, you know, went a bit shaky, didn't they, because of this subprime mortgage problem and, you know, this global financial disaster triggered by the collapse of a a huge housing bubble.

in the US. So that I mean that for me felt like really uncertain. And then also for the global economy, this was such a big moment, wasn't it, this credit crunch? It was a an absolute defining moment, quite a lot of the stagnation of living standards that we've suffered in this country, you know, begins really then we d saw a collapse in investment in this period. Actually some of it was government response, George Osborne's austerity, which again had a negative impact on on productivity.

And therefore the growth of of of of living standards. So absolutely def a a defining moment. But this was one of those recoveries. whether we're talking about markets recovery or economic recovery that was relatively slow. I mean, for me, the incident that certainly in recent history is absolutely Screaming at me in my head was was COVID. Because When the global economy was being shut down, when businesses couldn't trade, at that point stock market absolutely collapsed.

And over a period of really just a f a a tiny number of weeks the stock market lost I think it was more than a third in its of its of its value, right? That was a massive, massive fall. But then we saw in particular central bank creating the most astonishing amount of new money through quantitative easing. And we also saw obviously governments in Britain and America

supporting people who couldn't work with all sorts of enormously expensive payments in the fairlow scheme in the in the UK. And the bounce back in the stock market was Absolutely off the charts extraordinary. So again within literally just a few months. Share prices were above where they had been before COVID. Within that recovery we saw differentiations in terms of which shares recovered and which didn't. So

you'll remember everybody was watching Netflix'cause they couldn't leave the house. So shares you know so companies like Netflix went through the roof. Actually, if you were an airline or if you were a retailer it in some cases took years for their share prices to recover because we couldn't go to the shops and we couldn't fly. So it wasn't that every share price recovered, but just compare it with the nineteen twenty nine Wall Street shock, right? That took twenty five years.

For those losses to be recovered. Yeah, and I think one of the other th interesting things of it from it was just that point you've made about, you know, people weren't able to to travel and weren't able to go to the shops and things. So we've seen now that yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n

you know, how much they've been borrowing and if you look now at you know, household debt as a percentage of GDP, it's at its lowest since two thousand and two. And that's partly thanks to what went on in COVID and people having slightly more, I guess, disposable income and trying to shear up their their personal debt levels and similarly with businesses as well. So I think the thing that y I kind of have learnt from all of this is

Yeah you have to hold your water, don't you? And and whether that's with investments or whatever, but also just how you're feeling about the world, like don't panic because things tend to be all right in the end, don't they? There's that we always find a way through it. Hargoy's Landstone has been helping Britain and Fest through it all confidently for forty five years.

Uh with the advent of AI and other emerging technologies, more change is coming and Hargree's Landsdown has the tools and information to support your future investments. Visit Hl.co.uk to learn more about the UK's number one investment and savings platform. Investment returns vary. For claim verification, visit hl.co.uk slash platform.

So th the other bit of it that was eye catching was Rachel Reeves' uh recognition good good good good good for the Chancellor, uh that artificial intelligence is an important industrial

Revolution. We've been talking about this on this podcast for almost three years. Yeah. You know, I wrote a book about it three years ago about how it was changing everything. Again, one of the incredible frustrations. I mean, look, is is how again far behind the curve this this uh government is on this, but we should just say, you know, what what are the things that she has announced. So she is holding an AI adoption summit where she's convening

CEOs and tech firms to um accelerate the diffusion of AI across the economy. Um, you know, she is uh she's announced a sovereign AI unit, which launches next month where Um they're uh allocating half a billion to uh uh you s sort of core strategically important AI within the UK. Um

I mean, I think she has recognized that when it comes to data centers and hypercomputers, we are so far behind the curve that we've somewhat lost that that that that race. And they certainly aren't allocating any kind of m money on the scale that would require us to catch up on any of that. But broadly she has recognized, whether it's in AI itself, that we have amazing, and we talk about this a lot on the podcast, amazing young. uh growing businesses.

uh that could become world leaders with the right sort of, you know, financial infrastructure and regulatory uh imp imp infrastructure. They're setting up an AI economics institute. I want to ask about this. Wha which is an institute which is gonna qu quotes keep an eye on the jobs market and if AI is doing worrying things to the jobs market, it will presumably alert the Chancellor and maybe at that point they'll take some

uh action. And they're also uh they've also announced a an AI skills boost campaign where they w they have an ambition to upskill uh with AI uh the the the

uh skills of ten million workers. But as I said, infuriated actually was genuinely uh what I felt when I was reading this is honestly, if you talk to anybody in the industry about this. Do you remember when we interviewed very recently f you know, faculty AIs, Mark Warner just sold out to Accenture, you know. He he was talking then about the rapid growth.

Um, I mean I have to say he is not quite as alarmist as many of the people I'm talking to at the moment are, um, about the way in which recent AI developments are creating the potential very soon. for the elimination of really enormous numbers of jobs in uh services like the law, like counting. I mean, you know, the the number of people now that I know who are using Claude AI's uh co work worker to literally

simply make redundant so much of uh either people who work for them or who they hire as consultants in different kinds of ways. It is Transforming. So many basic Uh research. uh not not just research jobs, but also the thing about coworker is you can give it instructions to do things that people do for you? As you know, uh my mum died a few weeks ago and I'm the executor of her will. And the lawyers uh that, you know, would do all the probate work are um, you know

Basically, potentially charging really quite a lot of money. And having now talked to a couple of people, it is quite clear that. you know, if I invest a little bit of time in uh in essentially training up uh or creating um, you know, m you know, my own agents as it were, using uh

Claude's co-worker, a huge amount of what I would pay the lawyers to do can simply be eliminated. Yeah. Right. This is just one little example. You know, I was talking to an investor who says basic who invests in companies and you know i he he gets ha you know, just in the last few weeks, he has uh created agents that do all the due diligence.

Right. They you know, they you know, they go into the data rooms, they scrape all the data for him, they then provide a complete list of all the questions he needs to ask the company. Um at the end of the call, it then summarizes everything that he's learned. And actually at the end of it also makes an investment recommendation about whether he should go ahead or not. And this is all on the basis of essentially creating these agents.

Using co-worker in just the last three weeks. Yeah, I've got, I mean, can I give you some of my examples recently? My 80-year-old neighbour is now using Claude. Rydyn ni'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio, mae'n gweithio.

So me and a couple of the other neighbours got her on to using AI and she started with basic stuff, like, you know, getting whatever perplexity to explain things to her. But now she shouted across the door when I saw her yesterday, I've got a claude in my life, Steph.

I've got it booking the catery for me and it's just lifted all these things I was worried about. So it's not even like it's a generational thing either. I think, you know, people have Fat and she that she might have been someone who would have employed an assistant or whatever, or you know, found that off had to go

get other people to do things for her in order to be able to do it all. But she's now using, you know, a gentic AI to help her. And'cause you can use nat because when you're coding now, you use natural language. Right. And that is the big breakthrough.

Yes, because now you you know, everyone's been saying, Oh, it what should your kids do at school? They should do coding. Well that's becoming redundant because of AI as well. Like I've got a friend who's got a business which is a'u'w'w'w'w'w'w'w'w'w'w'w And um one day they came into the office and and Theodore had said, Hey guys, I've you know, we don't need to use Whisper anymore to to transcribe our meetings. I've created one overnight while you were all out. So here's a a free version of

Um, I've coded this, it's a free version of transcribing all of our meetings, and then that saved them the subscription of that they did have for Whisper. So there's this really you know, as you say, it it's it's making jobs that even in the last two two or three or four years ago we were talking about as being crucial, it's making them redundant as well. And and that's not what's being considered in what Rachel Reeves is saying, I don't think. And it's

so far behind where we should be. But it's not in the speech at all. And that's the point. The point is if you were if you were doing what you might call a cutting edge political speech at this stage you would say, Yes, all of this stuff will massively improve the productivity of service companies and actually if you look at the developments in it in robotics, I don't know if you saw did you see the Chinese New Year, New Year? It was sort of everywhere. The Chinese New Year

Dancing robots. Did you see that? No, I didn't actually. I must look these up. Sorry. It again, it's not just in the intangible world of you know essentially you know one computer basically accessing your bank statements and downloading all you know all your balances.

uh and then making some calculations for you, which is obviously w but it's also increasingly in the physical world. So, you know, the the the advances here are enormous. Obviously If you are an owner of a business, the returns that you can make from deploying this are off the charts huge. But the other side of it is you will be able to to make these returns with very few human beings. Right. And at that point, the challenge for any government is

Those human beings who are no longer be u being used in these businesses, what are they doing? Yeah. Right? What are they going to do with their lives? How are their lives going to be fulfilling? Uh you know, and and and how are we gonna make sure that the super we we've talked about this before. W you know, when you've got these businesses deploying AI with no people and making these unbelievably enormous profits, they gotta pay tax back to the

that they've got to be pay a tax back to the government. So the government can still provide all these public services. And actually provide income to people who've lost their jobs so that they can retrain, right? Yeah. So there's a whole you know, those are the challenges for any government out of AI at the moment. And again, not even a whisper of it in any speech that any minister makes at the moment. And not a whisper in this in this supposedly, you know, path breaking speech.

that the Chancellor has just given. Uh i uh uh uh you know, it is you know i it it drives me slightly mad as you can tell. And we should probably wrap things up. I think it's a can we conclude by saying it's a mixed bag though, because uh you know, w we're we're quick to

Uh, you know, I guess. I'm not criticizing it's sort of better late than never, but it is late. Yeah, yeah, fair enough. So um maybe s you know, and I'm sure there's lots of this we'll talk about. Uh again, but also we should point ahead to an interview we've got coming up. a guy called Alex Stephanie, who was doing, who was using AI to help improve productivity in public services. So his business is used by around two thirds of councils to his tech is used.

To help um document really important notes and things and and for case workers on the front line and people dealing with housing, unemployment and stuff like that. And it's it's interesting to hear the battle he's had with the government on getting them to adopt. Is tech. So that's in the next episode of The Rest is Money. But that's it from us for now. Bye bye. Bye-bye.