Meeting People
Amul Pandya converses with independent, adventurous and sometimes courteous free spirits. Creativity is an act of rebellion. Whether they are entrepreneurs, artists, athletes, investors, chefs, or corporate antagonists, Amul's guests all share a common disposition of not just pushing boundaries but re-drawing landscapes.
Meeting People
Shoaib Akhtar: The Battle for Britain's Financial Soul
It took the humiliation of enemy ships raiding the Medway River in Kent to shake the political establishment into urgency in June 1667.
During the Second Anglo-Dutch War, Britain* realised that in order stand a chance against its enemy it had to replicate the Dutch ability to source low cost financing. Ship building was expensive and time consuming after all. Thus the City of London was born.
Do we need another Medway humiliation to shake us out of our stupor or can that be avoided?
For my latest episode, I sat down with Shoaib Akhtar to discuss his recently published book The Great British Disconnect: A Nation That Stood By as the City Sold Its Soul.
He examines multiple causes ranging from the cultural - for instance the loss of civic duty and an entrenched fear of risk taking - to the institutional - a wholesale abandonment of the UK economy from our fiduciary overlords.
I got a taste of some of the practical solutions that Shoaib thankfully has thought through and outlined in detail in his book. If followed, they could instigate a mindset shift to revive the City’s soul which was born out of necessity, urgency, and an embrace with risk.
We also discussed his writing process and what drove him to not only put pen to paper but to see it through.His passion on this issue was the key driving force and it permeated our conversation.
You can buy a copy here: https://www.amazon.co.uk/Great-British-Disconnect-Nation-Stood/dp/B0FC5XNXWC
This podcast was produced by https://www.thisismattcooper.com/ with music composed by Loverman.
Hello and welcome to Meeting People with me, amol Pandey. Meeting People is a podcast where I have long conversations with rebellious, adventurous and sometimes courteous free spirits. Shoa nice to see you. Thanks for sparing the time.
Speaker 2:Very welcome. My pleasure, Amol. Thank you for the opportunity and it's great to meet you in person after such a long time. I know it's been a while.
Speaker 1:Well, look, I want to talk to you about your book that's just come out and I'm going to hold it up for the camera, for people watching and for people listening. It's called the Great British Disconnect the Nation that Stood by as the City Sold Its Soul. Nation that stood by as the city sold its soul, by shahab akhtar. I mean, that is quite a powerful title and it's got lots of powerful ideas and concepts in it, and some of it is, um, frustrating in many ways. So why don't you just just start off with what made you want to write this book?
Speaker 2:Sure, I didn't write this because I like shouting into the void. This has been written due to growing frustration, having worked in the industry for almost a decade seeing the decline, and it never stops. So I just increasingly grew frustrated with the decline, with the delistings, with the way things are being handled, and hardly anybody seems to have noticed and by delistings you mean UK companies coming off the UK stock market so I thought this is something worth writing for and something worth fighting for.
Speaker 2:And it's just the way things are at the moment. I think we we just shrug our shoulders when our key institutions are divesting from the domestic economy, like pensions. It just it doesn't send a very good signal to the international investors or even the domestic investors. So, in a nutshell, the book was written out of growing frustration and it took me a good few months. Most of it was written on the train between London and Manchester.
Speaker 1:Some of the best things are written on the train. I imagine Exactly.
Speaker 2:So yeah, and that's it really.
Speaker 1:So by institutions you mean UK-based big professional investment pools of capital, not putting money into UK companies. Yeah, Now, most of the audience will be not in our industry, so why should they care? What's the importance to them? Listening what? Is this a symptom of for you, or a sign of that you know has prompted you to spend your train journeys not watching YouTube but putting pen to paper.
Speaker 2:Absolutely the key is the de-equitization, which means the shrinking size of our public stock market. At the moment, there's a disconnect between the general public and the stock market. In other countries, mainly in the developed countries, people are connected with the market. They have greater affinity with their stocks. People talk about NVIDIA, the People talk about Nvidia. The way people talk about Nvidia in the US they don't talk about Next here in the UK and the disconnect has been growing and, as a result, people because and part of that is financial literacy at school People have not been taught what it means to own a part of the economy you are going to retire into and what it means to own domestic company shares and what it means to support the domestic economy, because if we don't support these companies, nobody else will. And most of the time, what the trend which we've seen over the last few years is? The overseas buyers have been very active, just picking off excellent British companies at a discount. It's like a bargain sale and that's the bit which worries me.
Speaker 1:Okay, so you believe that there are. I guess some people say, well, you're confusing cause and effect. There just aren't that many. There aren't any NVIDIAs here. So why should the UK stock market be thriving until we produce good companies? But I mean in the book you allude to companies like Arm and Inmarsat, deepmind as well, getting you know, which are obviously in the private market but still, you know, still not even getting to be available to buy for UK public investors. So you don't see there an issue of not being good quality companies in the UK. It's a broader issue of savers not being involved in that growth.
Speaker 2:Absolutely. There is no dearth of quality companies in the UK. Look at the balance sheet robustness and look at the valuation and look at the income generation capability of these businesses. I think overall it's excellent. It's just we've just turned our back on on our own domestic businesses and it's like a domino effect and it's getting worse.
Speaker 2:If you look at the outflows from UK equity funds, in 2024 alone there were outflows to the tune of $9.6 billion from UK equity funds, followed by another $1 billion outflow in January this year, and the bleeding hasn't stopped yet. Where that money has been going? Over 27 billion of that went into international equity funds by international. We both know that is mainly US passive trackers. So there is plenty of capital to go around, but there's nothing for British companies, and that's the bit which I find concerning and a little sad.
Speaker 2:In all honesty, the country which laid the foundation of the current or the modern financial system is now struggling to have a single company worth over a million. So far this year, not a single company not one has floated on London Stock Exchange over a million and so far this year there's been more than 30 companies which have received takeover bids. Half of those are from overseas buyers. When I checked last, there were still 15 companies with live bids for about 10 billion. So that is the deacquitization. So to put it simply, for every firm, every new company which floats on a London Stock Exchange, that is matched by three takeover bids. So there's no comparison. At some point there'll be nothing left. Exactly, yeah.
Speaker 1:And the cause of that, just so people are clear, is that because UK pension funds and UK savers are not buying shares in these UK companies, their prices are low, which means lower than they should be relative to the same company, let's say, somewhere else in the world, and so that company goes well, it makes sense for me to buy this because it's not valued properly compared to the same money that I'm making here. Absolutely.
Speaker 2:It's not that they have stopped buying it. Why don't we talk about the elephant in the room which is the pension funds? There's 3 trillion currently trapped or held within the pension funds. 3 trillion is about the same as the market cap of NVIDIA or slightly more than the market cap of the UK the entire UK stock market. So we can't say there's not enough capital. There is plenty of capital. And it's not the pension funds have stopped buying. They've been aggressively selling British stocks over the last couple of decades.
Speaker 2:Back in the day, in the 90s, an average UK pension would hold about 50% in UK equities. That has now sort of staggeringly declined to about 4%, and it's a bit like a parent saving for their child, for their future, but won't feed them overnight. Yeah, that is the way it is, because if the pensioners are saying we are saving for the future but they won't feed the current lot of companies which are craving for capital, there's no dearth of quality. These are excellent companies. Whenever a foreign buyer takes, or whenever the companies go list abroad, they do all right, and so there is potential in the companies.
Speaker 1:But there is no domestic backing, yeah, and we're in this kind of vicious cycle where, because all the other companies have gone to list abroad, you're more likely to do the same thing and follow them. You talked about the elephant in the room in terms of pension funds. Can you talk about some baby elephants maybe in terms of saver? Just your average UK of saver uk. Just your average uk. You know wealthy saver, um, a friend of mine, does what you do. He's a wealth manager and um, he said he recently pitched to a client who um, or potential client, who's a successful businessman. So every time I get liquidity out of my business, all I do is buy property and then I have the rest in cash.
Speaker 1:I don't see the value of putting it into the market. Is that quite common? Is that? You know, are UK savers individual savers, pension funds aside also not involved in buying UK shares also not involved in buying UK shares.
Speaker 2:Absolutely, and that is embedded in the culture. So when I say it's a strategic abandonment, by that I mean it's now over the last decade or so. It's being embedded in the British culture that they don't have the same affinity they used to have for British shares. We used to see the share certificates come through the doors.
Speaker 1:So you've lost that kind of tangible piece of paper that you own a bit of Marks Spencer or ICI or something. Yeah absolutely.
Speaker 2:And the other thing, the opportunity cost is huge. Duncan Lamont of Schroeder recently did a research and he saw that there is about 300 billion held in cash choices. Had we utilized that, that would have sort of returned about 500 billion over the last two decades. That's a massive opportunity, yeah, cost.
Speaker 1:And that's so. That was just sat in cash, probably losing money because of inflation, exactly, yeah, okay, and why can we just double click on why people should care what? Why does it matter if uk investors won't invest? As you said, foreign investors are coming in and doing it for them, so the companies are getting money. Um, the disconnect that you talk about and the soul that's been lost or being sold, is that where it comes in. It's in the kind of the meaning of being a british citizen and having value. The stake in the system. Is that what you're pointing to?
Speaker 2:absolutely very much, because if we don't know who controls the economy or who controls our water companies or our airports is all in the book, then we, you know, if something goes wrong, we can't really blame the government, because even government sometime can be limited in its response because somebody else is managing it or running it from overseas.
Speaker 2:So it is very important, I think, for the British public to own the British stock market and to have this sense of pride in that ownership, because, in a nutshell, it's a civic duty to have this national pride, because these are the buddy companies which are providing fuel to the economy and if you don't take care of them, somebody else will, mostly at a discount. And then some of those companies, some of these have been strategic assets, defense stocks, infrastructure. So that is what. When I say that disconnect has been growing, that is exactly what it means. We need to revive that sense of pride in backing British businesses. Other countries do that. There is a Buy American Act, so many other countries the golden visas, and every country has this backing and to me Britain appears to be an outlier in this. We are just too polite and I think it's getting out of hands frankly speaking.
Speaker 1:But I mean, I agree with you and it all resonates. I think you mentioned two very interesting words civic duty, which I've on this podcast before talked about, how the fact that words like duty and loyalty have become very old-fashioned and people sort of either take a very rationalistic or almost pseudo-scientific approach to life. And so the rational thing is, you know, if a company wants to buy you from overseas, they want to buy you. Well, who are you to stop it? What's the um, um, what's what's the benefit of preventing you know, in inverted commas market forces from from moving? Um, why do you think, do you sorry, so it's just. Do you think this, this british disconnect with the city, is resemblant or emblematic of a broader problem with Britain outside of the city and this is just another symptom of it? Or do you think this is more of actually a prime cause of that? Because if you lose the financial capital, then you therefore subsequently lose the kind of civic capital?
Speaker 2:Absolutely. I think London is integral to everything that revolves around the city, in my view, and the financial services industry is the backbone of our economy, the thousands of jobs it supports, and it is also one of those symbolic, I would say national monuments which we have One of the oldest stock exchanges in the world. So it would be a great loss, if you know, because we will just simply become a thing of the past, or like a relic, or a peripheral of international markets a peripheral of international markets, if British businesses keep getting delisted or they've stopped getting IPered in the London. We need to make it a bit more attractive for our domestic companies. At the moment, any budding investor, when they think about quoting or getting quoted or listing on the London Stock Exchange, at the back of their mind is how many times will probably? How much premium do you think we can get to get off it? They don't want to stay forever or to thrive or to graduate into the FTSE 100 or 250. So that is the bit which is worrying for us. And when I say it will be a great loss, it's not just for everybody, even for us in our industry as well.
Speaker 2:I'm a fund research analyst. A UK fund manager would probably lose his job. So there are so many jobs connected to this particular sector which are currently at stake, in my view, and it is our civic duty to do everything in our power to revive it. I have, since writing my book, I have come across certain people who are looking to monetize it or just looking to self-promote it. I am not in favor of that. I think there has to be a genuine effort to get things going and there are people in the power, because most of the proposal in the book it is something to do with people in the power, politics or regulatory things. We need to make those changes to get it moving. So, instead of just blaming people or pinpointing, I think we need a unified national effort, Sure, and you do a very thorough list of solutions.
Speaker 1:I think 10, was it 10? Suggestions which we'll come on to in a bit.
Speaker 1:And I just want to make sure I'm clear on the causes first, and the kind of backdrop. So we've covered the big people who look after our savings and retirement, the kind of professional fiduciaries backdrop. So we've covered that the big people who look after our savings and retirement, the kind of professional fiduciaries, have tapped out. The savers are more interested in cash and property, which we'll come on to. And you said something else that was very interesting in the book, which is a system that punishes volatility but forgets that volatility is often the price of progress. So we are and I've talked about this a lot in the podcast. Just to name one example, simon Evan Cook, who's a fellow fund researcher like yourself, we're afraid of downside impacts of our actions. So if the easier thing to do is to buy an international US stock, you're less likely to lose your job. You're not rewarded for taking the risk of buying a UK stock, so you get that kind of death spiral.
Speaker 2:So are we just too?
Speaker 1:afraid of taking risk now as a society.
Speaker 2:Absolutely, absolutely, and there is a designated chapter in the book the cost of risk aversion.
Speaker 1:Yeah.
Speaker 2:And the Duncan Lemont's research I alluded to earlier. This is exactly what encapsulates this whole phenomenon that the public is too timid, especially since the GFC People. They don't mind the US markets or other international markets, but they don't seem to back the British businesses, and that is what worries me. Yeah, it's just. I think it's embedded in the British culture. We need to revive that and one of the solutions is financial literacy at school age what it means to own a share in your national economy and how you can relate to that. We have lost that touch. Other countries still do have that.
Speaker 1:Yeah, I think that the US administration at the moment is talking about every citizen that's born will get a thousand dollars in the s&p 500 when they're born and that will just, you know, be go straight into an account and they can watch it and see what happens to it and get an understanding of what, what it means to have skin in the system. Um, and to the, to the. To the issue. Another example of the kind of issue I think the London Stock Exchange Group is a small part of an overseas business which is not particularly incentivized to innovate or make it easier or better exchange or find new ways of attracting companies or make their life easier as public companies companies or make their life easier as public companies.
Speaker 1:But one, I guess, challenge is isn't this de-equitization trend actually a global one? I think similar stats exist in the US, where companies are just choosing not to go public because of the regulatory burden that comes with it or the public scrutiny, and so it's not just the UK. This is a global theme. Is that something that's the case, but even more so in the UK, or is there something special going on here?
Speaker 2:I think in the UK, I think, as I mentioned earlier, we are, we have become an outlier. Yeah, it has got to a chronic stage. I mean it never stops. I mean look at the outflows and the de-equitization trend can be seen all around the world. But here it has got to a stage where, if it doesn't get stopped now or if it doesn't get reversed, we may not as well have a stock market in a few years, in about 10 years.
Speaker 2:So Charles Hall of Peel Hunt has said you know about the UK's smaller companies, so we may not have, you know, smaller companies segment in a few years' time. So which is quite a damning portrait of how things are at the moment. And when you compare the stats, there is just no comparison. Like, every one pound put up by a domestic British investor is matched by six quid by a foreign bidder if you look at the stats, which is just a staggering difference. So that's why, when I say British is an outlierlier, it has become an outlier. And part of the reason is one of the proposals in the book is we don't have a strategic body which keeps an eye on overseas takeovers of strategic assets. Yes, we have recently got the Act, but that's a very narrow in its domain, so every other country will if if I mean, I know India has this and the US has it.
Speaker 1:I'm sure China probably has an extreme version of this, but like, if, let's say, a company, overseas company, wants to take over Lockheed Martin or something, or NVIDIA or whatever, something that was strategic to the future of the US, there is a body that will assess that and go. Maybe this one, you know, if it was an ice cream company, fine. But maybe this one it'd probably be better even if it's less well managed potentially that it stays in American hands and we don't have that here, absolutely.
Speaker 2:And we need to do something about it. So I propose SAPA Strategic Asset Protection Authority which will track everything and would intervene as necessary, especially if the stock is of strategic importance and of national interest, and that's only fair. It's not xenophobia or abandoning the international capital, far from it. We need the international capital but we need to draw a line, we need to have our own national self-respect. At the moment, excellent British companies are being gobbled up left, right and centre and nobody seems too bothered. Yeah, it's centre.
Speaker 1:And nobody seems to bother. Yeah, it's frustrating.
Speaker 1:I mean you look at a company like Rolls-Royce which is, you know, we know we've got an energy transition problem. We know we've got a kind of multipolarity in terms of global strategic balances happening, where Britain is sort of very weak at the moment in kind of being responsive. And we've got this company that's kind of solved nuclear at the kind of modular small level, but they've not been allowed to roll it out for years and years and you know we could. I remember Nick Clegg saying in 2010, why bother worrying about nuclear? It's only going to come online in 2022 or something.
Speaker 1:And look here we are three years later, shout out to James Baxter-Darrenson who brought that up in the last episode. But you mentioned something really interesting which I just want to have a rant on. Really interesting, which I just want to have a rant on, about the timidity of the British public in general when it comes to taking risk and also kind of being invested metaphorically as well as literally in their country and also the kind of the innovation and strength of the UK institutions, that kind of founded provided, provided the modern foundation of finance and capitalism. And I was reading recently I mean it's really powerful I was reading a book. It reminded me of when I was, um, I was recently reading about the anglo-dutch wars in the 17th century which I'm sure you came across in researching this book, and there was an occasion, um, what was one of the interesting things about the anglo-dutch wars occasion?
Speaker 1:One of the interesting things about the Anglo-Dutch wars was one of the first wars that was very naval, heavy, where naval technology was kind of ramping up and getting more and more expensive, and so Britain or England was heavily reliant on goldsmiths and gold lenders at high interest short duration loans very expensive to kind of fund their war effort and gold back lenders at high interest short duration loans, very expensive, to kind of fund their war effort. Whereas the Dutch had this, you know, stock exchange, and it had a sophisticated credit lines and I don't know if it had a bond market, but it had kind of the ability to underwrite long term financing. And this kind of climaxed at the end of the first Dutch war, which was a raid on the River.
Speaker 1:Medway, where a Dutch ship went all the way up through Kent and made it all the way into kind of inland and started raiding towns and cities in Kent and the fear just permeated through the British political, English political establishment that we have to do something about this.
Speaker 1:We need to reform, otherwise we're going to be taken over. And so the Bank of England itself was founded on military safety, defence purposes, to find long-term low-interest borrowing to fund the state. And if you marry that with today, with uh trump going around telling nato, european nato partners, you need to spend five percent of your gdp on defense, otherwise america is not going to defend you anymore. And the spanish prime minister or someone in the senior in the spanish government saying, well, we can't do that, I'm afraid, because it misaligns with our welfare program. I find that the timidity comes from us not being scared. We've outsourced our innovation, our safety to America, we've outsourced our manufacturing to China and we're here to kind of have avocado on toast and flat whites and go on nice holidays and you know, and sadly to a large extent, have one in five households uh living on welfare and not in the workforce, absolutely so.
Speaker 1:Get it gets a big, a sense of paranoia and a sense of fear that america is not going to look after us forever may help us. Um, so maybe your your your be well-timed. Did you find that when you were researching the book? It's a long-winded question, but the fear of survival often creates necessity.
Speaker 2:Yeah, absolutely. I think sometimes you have to fend for yourself, and I think now is the time and we are entering a multipolar world. Yeah, I'm not an economist, so I should probably stick to my investment research, but looking at the macro forces at the moment, there's a reshoring phenomenon which is going on at the moment. So every country is worrying about themselves.
Speaker 1:So what's reshoring? Can you just explain that for people?
Speaker 2:Well with the emergence of BRICS, and so there is now a polarisation of power.
Speaker 2:In my view, a few years down the road, the centre of power may not primarily rest with the West China is emerging and there are other countries as well primarily rests with the West. China is emerging and there are other countries as well. So in this upcoming world of reshoring, we obviously need to fend for ourselves. We need to make sure our strategic assets are protected, and I don't want to go into too many proposals of the book then nobody's going to read it, because if I discuss everything here but I think at the moment we are too British to say no to an overseas buyer, regardless of what type of asset is being acquired, and we need to think about that. We need to reconsider our approach and there is no shortage of capital or talent. Chunks and chunks of millionaires are leaving the UK. I was reading yesterday 16,000 millionaires are due to leave the UK in 2025 alone the highest number on earth, pretty much across the board, even higher than China 16,000 millionaires leaving the UK In 2025, and 7,800 from China are expected to leave in 2025.
Speaker 2:Look at the population of China.
Speaker 1:Yeah.
Speaker 2:And then compare yeah, sorry, what was the number?
Speaker 1:again 16,000. 16,000. Yeah, which of a population of 60 or a million, is quite a large part of the tax base. Exactly, I mean my take on that and I'm sympathetic to the arguments of the sort of tax system, the regulatory system, the culture, the British culture of. Like you know, it's the worst side of the aristocratic inheritance, oh look how vulgar to try and make money or how kind of crass.
Speaker 1:And then all, then you've got the kind of aristocratic paternalism married to the sort of socialistic, um, that's not your effort, that's not your reward, that's for us, you've done that off the back of other people and so we're going to take that from you. You've got this kind of marriage, the kind of worst kind of marriage, and, um, I'm sympathetic to the kind of millionaire exodus argument because of the regulatory and tax burden, but part of me thinks it's actually a kind of collective action problem in many ways. So if you've read Taleb at all, one of his books, skin in the Game, it talks about the fact that he will a very wealthy person in america who is, you know, taxed very heavily he will never, he never has a pa um.
Speaker 1:He'll never go offshore because he's a, you know a foreigner who's become a us citizen domestic, you know, um, and he's part of the system, so he's going to use his money to influence and debate and promote good tax systems, good regulatory systems that encourage innovation and risk-taking and allow people to kind of keep the fruits of their labor. And so I think if I was to have a pledge to these millionaires, I'd say look, rather than leave, why don't you stay? Get together, fund a think tank, speak to your MP, talk to people, get out on the street, get campaigning and use the new media channels that we have to encourage people to get back in the system and believe that their success is something that's open to everyone.
Speaker 1:And it feels like they've lost their skin in the system because maybe they don't have the kind of civic pride anymore because they've been beaten up by aggressive tax systems and all the rest. But if we can, if they're not going to do it, who is?
Speaker 2:Absolutely, I think. I don't like demonizing the system. We all know what the problems are, but instead of just pointing fingers at the issues, we need to offer solutions. So we need to stay within the system. We should stay within the system and refine it, revise it and make it better, instead of just turning back on it or giving up or just leaving. I came to this country 20 years ago and this country has given me more than an opportunity, and that's part of the reason the book was written out of frustration, where did you come from?
Speaker 2:Pakistan. I came here as a student, so what makes me sad is there is so much talent, so much capital. We've got everything here. We just don't have the conviction to back British companies Buy British. Or don't have the conviction to back British companies, buy British. If America can have Buy American Act, why can't we have Buy British? Why can't we have a UK equity champion or some sort of an independent person whose job is to promote the British equities and reinvigorate this sense of national civic duty to back domestic businesses? This is not protectionist or protectionism or saying no to international. I think it's only fair. Every other country does it. We are the outliers, as I've said before, and just talking about show of the person.
Speaker 1:Do you feel as someone who's sort of come here 20 years ago and emotionally invested in the, emotionally invested in the country, that sort of um, you've very much thrived in? Is it a sense of sort of? I mean, there's a kipling quote that comes because of his time living in in the subcontinent you know what does he of england know?
Speaker 1:who? Only something along the lines. What does he of england know? Who only knows england because they don't get, having been here their whole life, how special it is. And so do you get frustrated with people going no, no, this is. I. Better do this and tell you, because if you're not going to tell yourself, then someone from the outside I'm not saying from the outside, but you know, I mean kind of things come here. Do you know what I mean? Kind of who's come here. Do you get a sense that it's almost incumbent on you?
Speaker 1:I'm feeling talking about myself as much as you in many ways, yeah.
Speaker 2:Yeah, no, I think it's everyone's duty. I think I was listening to Arnold Schwarzenegger, you know, recently and he was talking about and he was talking about it. He said I was once a foreigner, I'm still a foreigner in the US.
Speaker 1:He was on the View, wasn't he Exactly?
Speaker 2:And he said it's our civic duty because we should think of ourselves as guests in the country and try your best to do your bit for the betterment of the country which has given you all these opportunities. And that is exactly the whole point of this book. This is my way of contributing to a growing conversation, and this is a much needed conversation we all need to have. We just need to be honest with ourselves.
Speaker 1:I think Things are not looking to create at the moment, before we go down your solution set, which we'll do in a moment one of the things you mentioned in the book which we talked about earlier, which was about property and cash I feel like you were kind enough to watch the Fred Harrison episode I did about the taxation system and how it favors effectively owning property or land.
Speaker 2:Isn't that?
Speaker 1:the economically rational thing to do. Because house prices. People will work hard, people will innovate and the benefits of that will be captured by landowners, and so the bank will lend you cheap capital to buy land in a way that it wouldn't ever lend you to start a business. So until we deal with that economic rent problem, you know the people will always measure their wealth and their house price not in their ISA. So obviously this is a really complex problem and there's multiple solutions, but that is one that maybe is outside the scope of this book that maybe would help. The solution set is to kind of reduce the tax burden on capital and income and increase it on landowning.
Speaker 2:Yeah, absolutely. Anything which can revive this British stock market, that would be welcomed. And even when you look at the name ISA Individual Savings Account, not Investment Savings Account.
Speaker 1:Yeah, Individual Savings.
Speaker 2:Account. So that's the cultural thing. We need to change that. So even when people are thinking of IS, Pfizer, they think of cash savings, they are not thinking of investing. So that's the cultural aspect which I have sort of alluded to in the book which we need to shift, I think, and financial literacy would be very, very helpful.
Speaker 1:Conversations like this, for me, are very helpful, because I'll have a very extreme or purist view and I'll be like well, we should, you know, scrap all taxes on income and capital and just fund the state through land value or rent taxation. But obviously the reality is that's such a long, impractical. The Overton window is, you know, too narrow for that to be a reality anytime soon, sadly, working on it. But in the meantime you can do lots of small things which may look like gimmicks and you talk about this in your solution set. These things may seem like optics, but even small things like changing it from an individual savings account to an individual investment account or something like that, would have a mindset impact. So let's talk about some of your solutions that you kind of. We don't have to do all of them, but maybe pick two or three that you think we could start with, because what you've done is very helpfully set out the problem and now what do we do about it?
Speaker 2:Yeah, absolutely. I think one of the key ones that I would probably highlight is having a UK equity exposure being mandated. I'm not in favour of mandating allocation to British equities by the pension providers. I am in favour of mandating exposure. Make it transparent so how much they own Exactly. Any pension account holder logs onto the platform. They should see clearly how much their money is backing Britain, how much of their total assets are invested in British stocks, out of total assets and also out of equity in pounds and pence. I think this would be very helpful because you can't back something if you don't know how much you are currently invested in. And at the moment, the nation doesn't feel like that is connected. There's this disconnect. They don't even know that they are part of the story and they are related to these companies and these are our companies. They don't know that. Look at any newspaper. You see property pages and all of those, but hardly any 50-100. It didn't used to be like this in the 1980s Telsit and all those.
Speaker 1:There's a classic headline in any newspaper it didn't used to be like this in the 1980s. You know Telsit and all those. You know sort of days. There's a classic headline in any newspaper bad news as property prices set to fall and it's like hang on.
Speaker 1:that's good news For most people in this country. That's an excellent thing, because high property prices is not good for risk-taking. If they keep going up forever, why would you invest money? You'd have less money to spend on people's goods and services and you'd be spending all of it on rent. And, I suspect, the labeling thing is a very good idea, because I suspect most people don't even know how little they own.
Speaker 2:Exactly they would be surprised to know that.
Speaker 1:What would you say on average 2%, 3%, something? Like that of their portfolio is exposed to companies that employ you know their family and their community. So that's one, so you. It's almost like a calorie or a kind of salt disclosure for a for a consumer food brand that you would have to kind of disclose how much of your domestic.
Speaker 2:And obviously if it was 90%.
Speaker 1:that's too much, so you'd probably kind of get okay, might be worth bringing that down a bit what else? Have you thought about?
Speaker 2:I think the other, I've already mentioned SEPA, strategic Asset Protection Authority just to keep a track of what is being bought, what is under consideration, what has already been bought. So we need some sort of a tracker, a monitoring body which can activate the parliament with some real powers to so, so at least we know what is being sold, because at the moment it's it's, you know, it's not very efficient in my personal view. Right so? And the? The third one I would probably mention is the british growth isa. So I proposed having an additional 10k annual allowance, uh, separate to the the existing 20k, and this 10k would only be eligible for those who are backing British businesses. When I say British businesses, if you invest it all in FTSE 100, ftse 100 generates more than 70% of the company generate their revenues from overseas. So any stocks which generate at least 50% of their earnings from the UK, that would sort of qualify for that. Obviously, we can go through the weeds and nuts and bolts, but that is one of the proposals. I think that would be really helpful.
Speaker 1:Yes, so you don't try and change existing incentives, you create a new one and it's cleaner, just as an add-on have you tried to talk? I mean, I have you. I know the book has come out recently, but are you? Going to try and get this in front of some policymakers or in front of some people who can amplify these ideas yeah, absolutely that's idea.
Speaker 2:I have made contact with certain people. Few people in the regulatory department are currently reading the book. I am trying to make contact with some people you know on the politics side as well. So, and also you know, so we need both people from regulation and the policy side to to get these implemented, and all of these are very simple, actionable, practical ideas which will be, in my view, very, very helpful yeah, because it's tempting to say we just need a cultural shift for people.
Speaker 1:But this can help it's kind of it's a virtuous circle, you know if you make some small incentive changes and maybe that will promote a cultural shift which then will create more demand for incentives to kind of invest. So it's certainly good to see some practical ideas. What do you think some of the pushbacks will be to some of your ideas? What do you expect some of the kind of criticisms that will come your way might end up being?
Speaker 2:Yeah, I think some of the pushbacks would be that, oh, this is political or this is too protectionist. But in my view, none of what I have proposed is protectionist or something which is going to alienate Britain or which is going to make us less open. At the moment, I think we are too open and we just need to step in, intervene, reassess what's going on at the moment and just put some guardrails around it.
Speaker 1:Really, and how have you found the process of writing a book? Have you enjoyed it? Has it been challenging? Has it been well, it's like learning to run a marathon or something like that was what did you want to give up a few times, kind of, um, yeah, talk us through the idea. You know, when did you get the idea to write a book? I know you said you were frustrated, but how did that frustration germinate into I'm going to write a book about it and how is the process thereafter an execution? Because lots of us want to write a book or we think we've got a book in us, but most people have always, you know, never got past page three.
Speaker 2:So you've done it, uh, yeah, so talk us through that process, yeah, I felt relieved as I was going through it, because frustration has been building for years. You look at the Calliston data. It's more like an obituary. Every month there are outflows the bleeding never stops and I was getting almost depressing watching everything, especially when you look at the legacy how good it used to be and how much capital we still have in the system.
Speaker 1:but it's just not for Britain. It's a coordination problem. It's there, the ingredients are there, it's just putting it in the right order.
Speaker 2:And people in the industry they want to say say these things, but they just don't want to say it publicly because there's a risk around it. When I was writing the book, obviously at the back of my mind I was thinking about compliance. I was thinking about my personal reputation. There are certain things in the book which may make other people uncomfortable, but I think that needed to be said. Somebody had to say it and I've said it and I back everything I've said in the book and I've enjoyed the journey. I've really enjoyed it in the sense that I was able to get all that frustration out and I didn't want to come across as a guy just shouting from the corner. I wanted to propose some actionable solutions as well. So this is exactly what I've done. So I've thoroughly enjoyed the process. It's been challenging at times, especially with family commitment three children, small children at home. So I would like to say thanks to my missus as well for her support and yeah as I said, most of it was written on the train between London and Manchester.
Speaker 2:So, yeah, it's been hugely emotionally hugely rewarding experience. I would say yeah and the plan next is to publicise it.
Speaker 1:Try and get it out there. Obviously do things like this, but do you have another project in mind?
Speaker 2:not at the moment. No so, because when I was talking about this one, I had a chat with my missus. That is it worth. You know I'm thinking of it and she said you've just done a CFA, give yourself a break, don't even think about it, Because I was also thinking about doing a PhD in artificial intelligence.
Speaker 2:Sorry, we're just slightly digressing, but this one was too close to my heart to be sort of pushed back to the back burner. So at the moment, I think this project is big enough and close enough to my heart that I want to stay focused. Obviously, I've got a full time job and a family and I need some genuine support. People, selfless people, you know who, with utmost sincerity, who can get behind it and get it all sort of moving in the right direction. That's all. This book has not been written for any approval or any institutional approval or self-promotion. It has been written with utmost sincerity because I think what we have in this country is worth fighting for and if you don't fight for it now, it's probably going to be too late if you don't do it now.
Speaker 1:Wow, hard to argue with that. So the kind of the mission or the zeal made it easy I'm not saying it was easy, but it made the journey of writing the book and getting it done and getting it out there easier versus a lot of people who like the idea of writing a book because it's sort of they can tell people I'm writing a book and they look yeah, they can imagine the publicity. Like you said, you're not doing this for self promotion, it's.
Speaker 1:It comes from a place of duty and purpose and I would suspect that um, you've done a better turn for the world by doing that than doing another. You know, does the world need another phd? Maybe, you know, could be helpful. You never know, but there's enough of those going around and uh, um, you know, might. It's easier to macro bullshit than to micro bullshit and you've, you've, you've given some micro analysis and solutions.
Speaker 1:So as you know, I like to kind of wrap the conversations up with something I call the long bet, where I ask every guest the same question at the end, which is that you have a 10 year time frame to make a prediction something that you think will happen over the next 10 years, or something that you would like to happen, or both and we can see how you get on as time passes, because, as two people with small children, we know that time flies for 10 years is actually nothing, whereas a few years ago it felt like a long time.
Speaker 2:Absolutely, and I think I would say something along the lines of the themes of the book In 10 years' time this is my prediction and my hope as well that we will remember 2025 as the lowest point in the history of our stock market. We will be turning the corner and we will look back, having learned the lesson that it is worth backing your domestic economy, it is worth having a sense of pride in ownership, in owning domestic shares, and we will look back at this and we will say that, yeah, that was the low point in the history of British stock exchange, because in 2025, if the outflows continue, we will be completing a whole decade of outflows from UK equity funds, ten years in a row. When I say we have become an outlier, this is exactly what I mean by that. So no serious economy should tolerate anything like this. We need to turn this around and I think we will turn it around.
Speaker 1:I like the use of the word serious. There's a great moment in the TV series Succession I don't know if you've seen that where Logan Roy, towards the end, is looking at his children and they're all ganging up on him and he says look, I love you all, but you're not serious people. And I feel like much of Europe has lost its seriousness, but maybe owing to multipolarity that we talked about, you know, china, russia, the Iranian regime and all the rest coming up, we will have no choice but to become serious and in that seriousness, you know, these institutions will have to find their meaning or purpose and flourish again. We'll have to find new ones. Because, if, because, if you made that long bet in 2015 and said I predict over the next 10 years that every year we'll see an outflow of money from UK companies going over, going into international companies, people would have gone. God, you must be a very depressed person, surely not. Go and have a coffee or a beer or something. And cheer up.
Speaker 1:Nothing can be that bad, but it came true, and so it cannot go on forever. So the book is called the Great British Disconnect, the Nation that Stood by as the City Sold Its Soul. Available on Amazon.
Speaker 2:It is.
Speaker 1:Yeah, and where can people find you show up? Where's where? We'll link to it. But what? Where, where do you mostly post? Is it linkedin? Twitter, uh, instagram, tiktok, where can? Where can people find you? It's on linkedin. Linkedin, okay, um, and I'm sure that this book will have a decent impact on the state of direction that we're going in. So thank you for sparing the time.
Speaker 2:We really appreciate it thanks, very much thanks for the opportunity, absolute pleasure this has been Meeting People.
Speaker 1:I've been your host. This is a podcast produced by Matt Cooper, with music composed by Loverman.