This is a City AM Studios production.
SPEAKER_04Hello and welcome back to Business as Usual with me, Martin Kimber. And me, Matt Kenyon. Coming up on the podcast today, it is likely Rachel Reeves last week in number 11 Downing Street. And we ask, what is her legacy as Chancellor?
SPEAKER_02The world's most influential banker, JP Morgan boss Jamie Diamond, comes under pressure to answer whether he lobbied the UK government on tax on the advice of convicted sex offender Jeffrey Epstein.
SPEAKER_04Plus, we'll talk about the eye-watering tax bill awaiting the winners of Wimbledon. Welcome back to the podcast. So this week marks the end of an era. It's not just the end of the uh the illustrious Starmer era. Uh he'll be bowing out just after the World Cup final, which I think is quite nicely, uh nicely tactical. But also it is the the end of the Rachel Reeves era. And and she's been she's been a big topic for us. Um she's been a big traffic driver. Big traffic driver on our website. Uh, but more importantly, she's been a real political lightning rod for the square mile, almost always not for the right reasons. So luckily, we have our resident Rachel Reeves writer and city editor Simon Hunt. Simon, you've been chronicling a turbulent tenure in the Treasury uh these last uh just over two years. How do you think history will remember Rachel Reeves?
SPEAKER_00Well, I I think one of the defining things will be about how rapidly optimism for the Labour government waned in the space of just a year. I want us to sort of cast our minds back to 2023, the year before the general election, when I think it's fair to say there was genuine optimism in the city for the idea of an incoming Labour government. I remember a uh cover story that the uh Evening Standard ran in 2023 by my former uh colleague Simon English, now financial correspondent of the Independent. And the front page said How Labor wooed the city. And it went through a long list of senior people in the city that at the time were subjected to a Labour charm offensive, and they they found it pretty persuasive. Scrambled eggs, salmon. Yeah, yeah, yeah. A prawn cocktail offensive of the kind that we saw in the in the new Labour era in the late 90s. At the time, Labour had lots of big donations from big uh city companies. They had more than 30,000 from PWC, 29,000 from EY, 25,000 from the former chairman of Lloyd's. In 2024, they had the endorsement of the Financial Times, which the first time in decades that they had endorsed a Labour Party. In their first party conference uh after the election in September 2024, they ran uh a business event at which they charged uh 3,000 a ticket. I remember that. And they had and more than 500 people from the city signed up for it. They made over a million pounds just from one event at party conference. That is a sign of the scale of optimism enthusiasm there was for the Labour Party at the time.
SPEAKER_02I was working in TV and I remember seeing them do the morning media round from the building site that was the HSBC office being built in the city, and it was this amazing view over the city that they did from essentially like it's just scaffolding everywhere and stuff. And they were Starmer and Reeves in sort of hard hats in the city, and it very much looked like build growth bank with those sorts of themes going on.
SPEAKER_04It's interesting to go back to go back a few years because I suppose I wonder if there was a certain amount of just optimism by default. Because if you looked at the last the last Shadow Chancellors before Rachel Reeves, well, Annalise Dodds, who to my mind was a bit of a non-entity, and then before that, John McDonnell, who people under Corbyn, who I uh the city really struggled to get behind because there was very little read across and some acts of sort of hostility in various policies. So I imagine that by the time that Rachel Reeves came around, you're looking at her and thinking, okay, this is the most credible Labour Shadow Chancellor we've seen. But again, probably since Ed Balls. Exactly. And then the drop of the mini budget. Exactly. So you've got Liz Trust, you've got Jeremy Hunt coming in being a stabilizing Chancellor, but not one who I think people were looking at as a serious um post-election chancellor. So I wonder whether there was a certain atmosphere within the Labor within the uh the square mile of wishful thinking, of we know this is inevitable, she sounds relatively sensible, but then we get to the Halloween budget in 2024.
SPEAKER_02Yeah, they boxed themselves in at the election, they say we're not gonna raise all these taxes, and now they're at the Halloween budget, as you say, they are they face this question of how do we raise cash.
SPEAKER_00And then suddenly they end up raising tens of billions of pounds, way more than anyone expected. Um, and that relationship they had with the city unwound incredibly quickly. I mean, there are so many sort of examples of companies we've interviewed over the past year I could cite. But I, you know, to name just two examples, one was the um interview that our retail reporter Felix Armstrong did with the uh billionaire Labour backer John Caldwell last month, where he said he was misled by the disastrous Starmer. This is someone who actually gave quite a lot of money to the Labour Party uh only a few months ago. Another example, a company I report on today, um, the biggest pub chain in Hertfordshire called McMullens, in their annual report, describe uh the government's tax hikes as a brutal onslaught. They said, we are pincered between the government's insatiable hunger for increased taxation coupled with a regulatory cost creation instinct, and they also say it has become clear over the course of the past financial year how damaging and at times irrational government intervention in our sector has become. Normally, chief executives are quite polite about the way they talk about politicians, not anymore.
SPEAKER_04It strikes me that when people come to think of and remember the Roach Reeves era, it might be that there was this one great political miscalculation, which was raising taxes on wealth creators and businesses rather than just U-turning when political capital was high and saying we're going to raise some big headline taxes. I think people within Labour will be looking back now and sort of and kicking themselves a bit for maybe not just raising income tax or obviously more obviously, maybe just cutting spending at some point when they have the opportunity to.
SPEAKER_02Oh, and they and they learn all the wrong lessons from it.
SPEAKER_00Yeah, yeah. And I th and I think what the other sort of defining legacy is how um this is was was a government or administration that tried as far as possible to be friends with everyone. They they promised every you know everything to everyone, and they very quickly disappointed virtually every conceivable constituency. Uh and now they're left without a base. That there is no Starmer base, as has been you know talked about widely a lot.
SPEAKER_04Yeah, if you're friends with everyone, you're loyal to no one.
SPEAKER_02Just before we move on, Simon, marks out of ten for Rachel Reeves's tenure as Chancellor.
SPEAKER_00I mean, I I don't wish to be harsh, but I I can't see how anyone give her more than a three. I mean, we don't have we haven't had a sort of financial disaster of the of the kind that you know might have happened, but um I think you'll find fewer people in the city give her a higher than a five.
SPEAKER_04And yet every time it looks like she's gonna go, the bond markets wobble. And and then next Ad Miliband, we presume.
SPEAKER_02So, I mean, we can't let you go uh before talking about an actual business story. Why is one listed firm barking up the right tree?
SPEAKER_00Yes, so this is a company called ME Group, listed on the London Stock Exchange. We mentioned them on a previous podcast because um they operate thousands of photo booths, and they said they'd seen a sharp drop-off in the number of people taking photos in the booths uh since the outbreak of war in Iran, and they thought that was because people are taking fewer holidays, therefore they're not renewing passports, etc. Well, you now discovered what they're trying to replace that lost income with, and the answer is dog washing machines. Naturally.
SPEAKER_04Dog washing machines.
SPEAKER_00Yes. So I'd say that sounds dangerous.
SPEAKER_02As if we just put one in the washing machine.
SPEAKER_00No, apparently, this is actually a serious thing. They've now rolled out hundreds of these across uh France and Ireland, and they are proving very popular with customers. Can you describe the machine? It's like a sort of mechanical bath. So you you plonk the dog in the bath, and there are these various like shower sprays and things you can use. It also, I think, protects them from parasitic uh it has it has an antiparasitic treatment as well that you spray on the dog and uh and shampoo and conditioner. Um so yeah, it's sort of like a like an outdoor bath, I guess you'd call it. Um tricked out bath. Yes. I I'm told the washes are priced at 10 euros for a small dog and 15 for a big dog. So there you there you are. But no, that's apparently doing really well from that. And they now see that as a major growth driver. So out with the selfies in photo booths, in with the dog washing machines.
SPEAKER_04Yeah, I think alongside the experience economy, the uh the pet pampering economy is enduring and very resilient. Simon, I think that's all we have time for.
SPEAKER_02Thank you very much for joining us. Coming up after the break, one of the most influential names in finance, Jamie Diamond, is under pressure from US politicians about whether he lobbied the UK government on advice of convicted sex offender Jeffrey Epstein. Don't go away. Welcome back. Uh, one of the most influential names in banking, Jamie Diamond, who's the chief executive of JP Morgan, uh, is facing a lot of scrutiny from US lawmakers at the moment on whether he lobbied the UK government on tax affairs on the advice of convicted sex offender Jeffrey Epstein. Now, JP Morgan's CEO had previously said under oath in 2023 that he had never met Epstein and rejected retaining him as a banking client following concerns around his sex crimes. However, documents in the Mandelson files potentially tell a slightly different story. Senior city reporter Sam Norman joins us now.
SPEAKER_03Oh, thank you very much. Um, yeah, so this is a real fawny one with obviously Jamie Diamond. It's well regarded, not just banking, one of the most influential figures in finance. I mean, one of the longest standing financial CEOs. He has kind of ruled Wall Street now for a good couple of decades. And he's obviously very outspoken on policy. I don't think he needs any steering in terms of um talking about policy. He's very outspoken. Um, but this really came out in the foot one of the drops of the Epstein files earlier this year. We saw, obviously, I mean it was implicating everybody because of so many different um interactions, but we saw an uh interaction between obviously Peter Mandelson, who we know about but famously about his connections with Epstein. Uh the two of them were discussing the tax on banker bonuses. And Mandelson asked Epstein whether uh Jimmy Diamond should mildly threaten uh the Chancellor of the time so that was Alistair Darling on a potential tax on banker bonuses. Now we know that tax did end up actually coming into fruition, but it's kind of brought Diamond under the, I guess, for scrutiny of any uh as of anyone now over who's tied and who might potentially get caught up, I guess, in this storm of the Epstein files.
SPEAKER_02So he's under the microscope from US politicians.
SPEAKER_03Is that Republican-Democrat, a mix of both parties? So it's the Senate Banking Committee. Now the top Democrat on that is Elizabeth Warren. And we've had reports out this morning that she's wrote to J uh JP Morgan and to Diamond, calling for uh just basically asking more questions, asking more press uh pressing questions to this. So obviously, the the the big revelation was Mandelson telling Epstein that he he should threaten him. And it's no direct implication on Jimmy Diamond, but as we know when your name's mentioned here, and if if the the what the big politician at the time, Mandelson, is telling Epstein what Jamie Diamond should be doing, it's a very implicative thing. Now, obviously, they've pushed back, they've they've continued with the line that Jimmy Diamond has never met Jeffrey Epstein, was not involved with the retailing of his account. And I mean, they've also got the account of I don't think Jamie Diamond particularly needs uh advice and permission when he should speak to finance ministers. He's obviously well regarded a well-regarded figure. He he introduced Rachel Reeves in Davos last year. He's very involved in the.
SPEAKER_04I mean, also this is a whole separate instance. This is back like 15, almost 20 years ago. But yeah, he does have like open channels of communication with the current Labour Chancellor. It's probably no coincidence that they didn't put a banking tax in the most recent budget that had been reporting they might, they didn't. Um Rachel Reeves sees her relationship with the banking sector as she has done as very important. So I suppose it's obviously there is a sort of there is an Epstein aspect to this, but I mean if you had to speculate, like what do you think this is going to become a massive row?
SPEAKER_03Or do you think this is just a mind for the moment? So it just depends how much we can push the way some of these, I mean we've got it over here with select committees. Um they they are really a scrutinous force. And I think we saw it in MFLs. Epstein was asking Mandelson whether Jamie Diamond should uh call the Chancellor one more time. It's really implicative, but uh because we don't have those connecting dots, and that's what Elizabeth Warren, the the senator who's pushing us now, is trying to, I guess, connect with dots here. I mean, it's it's coming at a bit of a bruising timing for uh JP Morgan because um today they're about to release their quarterly earnings. Well, revenue is expected to be, I think about 14%, a really good quarter on the back of some of the turmoil. Investment banking's doing really well, and this can easily cloud a lot of their momentum going on at the minute.
SPEAKER_02Just finally, I also wonder if there's quite a lot of skepticism about big business all around the world at the moment. There's quite a lot of sort of left-wing populism talking about it. Especially if you're Elizabeth Warren. Exactly. Exactly. So in the in sort of the more left-wing quarters of the United States, certainly in the left-wing quarters of the of the United Kingdom, lots of calls for wealth taxes, lots of calls for higher corporation tax, capital gains tax, blah, blah, blah. And so as soon as you've got a very, very sort of rich, famous person like kind of Jamie Dimon, very powerful in the banking community, maybe there is this immediate instinct to kind of Absolutely.
SPEAKER_03And I mean, for anyone familiar with you will be mad, Elizabeth Warren's 2020 run for the democratic nominee, that is very much her base of uh rallying up the calls of like.
SPEAKER_04She was she was a Bernie-esque candidate. So I imagine Vicious. She was also calling at that point for breaking up uh tech companies in 2020. Uh like she was she's very much she is on the economic left of the uh and I'm I'm not saying that in any way affects her credibility in that sort of in that role on the ranking committee, but it is useful context.
SPEAKER_02Well, I think we got through this segment without libeling or defaming any of us. So well done us. That's uh fingers crossed. You'll hear from us again tomorrow with any love. Thank you very much, Sam.
SPEAKER_04And finally, Wimbledon wraps up this weekend, and Lyndon Oskova and Yannick Sinna lifted the respective women's and men's trophies. So big congrats to the pair of them. But and commiserations to Zverev, a German who came so close. And yet, so far, um but as the dust settles on both of those grand slam triumphs, uh, there's an unpleasant tax bill which is laying in wait for the champions. Our Deputy Sports Editor Matt Hardy has the full story. What what kind of uh tax bill are they going to be looking at?
SPEAKER_01Well, you think Yannick and Linda were having a nice time on Saturday and Sunday. Great time this morning, somewhere on Whitehall in in HMRC and the coffers. Uh Rachel Reeves would be getting a nice, a nice look at the fact that those two amazing players, you know, winning it one for the second time in a row, one becoming the ninth woman to win it in nine years. Pretty incredible. 3.6 million quid you get for winning Wimbledon. But because of our tax system, instantly 45% of that goes straight to the treasury. You get taxes if you were getting taxed anywhere else. And also, um, we had an amazing op-ed in in the paper about this, but HMRC are also able to tax a proportion of your global income based on your appearance rights and your endorsements and stuff. If they want to, it's it's up to them. So actually, it could end up being an awful lot. And and some of these guys who lose in the first round and get 60 grand might end up being taxed more than 60 grand, depending on if they were, I don't know, given a while. Or also you could end up in Wimbledon negative equity. Wimbledon debt. Yeah. It's crazy. Yeah, yeah. Double, double double faulting on your on your credit card. I don't know. Oh my god. It really is, it really is bad. And and obviously with Queens, you get a lot of players go and play their warm-up on the grass course in Germany because the way Queens and Wimbledon are so close together, they come under a period where these stars actually, Wimbledon counts as two weeks of work, even if you go out on day one, and and Queens is pretty similar. So we are doing a really good job at shafting the world's best tennis players. Really, really hurting people who want to come and earn good money here.
SPEAKER_02Does this apply to other sports? Like if I win the snooker, do I have or the darts, do I have to give half of it away to the taxman?
SPEAKER_01Maybe not, depending on how much you earn in the snooker. I'm not entirely sure it's 3.6 million. But but this is really bad. In London 2012, we had an exemption where people earned money on their endorsements, didn't have to pay tax, but obviously you don't get prize money for winning the Olympics. Well, you didn't then, you do now. So basically, we are shafting the world's best players. Luckily for Wimbledon, people still come and want to turn out, but there can't be a long, long way away Saudi of building a 30-court, amazing complex in a couple of years where you might go, oh well, we might host a tournament on the same time and we might pay you six million quid and no tax. Have people in the sport been getting upset about this? I I imagine you probably wouldn't have Yannick Sinner going, oh, I own I only won 1.6 million.
SPEAKER_04Yeah, because he's always having a reasonably good day. Do you get the impression that people are increasingly worried about damage to the reputation?
SPEAKER_01Yeah, look, there's a chance that you know you might be a very good player, obviously you earn loads of money anyway, but you get a wild card because of an injury or something, you go out on the first round in a shock and you're actually paying more than you than you than you got. It really is awful. Um, but this is this is modern the modern world, and this is another kind of example of Britain's ability to maybe shoot itself in the foot a little bit where we have so many sports, so many people want to play here, Premier League stars, and etc. And I know I know there'll be very little sympathy over those people who earn 100 grand a week in the Premier League. That's absolutely fine, but it's a point of principle. We're really not doing ourselves many favours here.
SPEAKER_02Well, I'm glad you mentioned the Premier League. Segues us perfectly into my final question. Wimbledon wasn't the only sporting event that took place over the weekend, was it?
SPEAKER_01No, it wasn't. England are through to a World Cup semi-final. They're second in three tournaments. We did this eight years ago in Russia. It did make me think about the the quality of host of World Cup. We've had Russia and Qatar, and now we're in Trump's dreamland.
SPEAKER_04Um then the next ones.
SPEAKER_01And then yeah, the next one, Morocco, Spain, Portugal, and South America, and then Saudi. So we're going all over the world. But yes, um, England are through. They play Argentina tomorrow night in Atlanta. Um, you'll be happy to know I came on here a few weeks ago to tell you that tickets for the Norway game were 8 million. They are down for this semifinal to a measly 250 grand. Um but you'll be pleased to know, they'll be pleased to know, you capitalists, that uh on Sunday there are tickets for the final at the MetLife Stadium, which is in New Jersey, but they're saying it's in New York because it sounds sexy. Uh, 11.5 million quid for a ticket for that final.
SPEAKER_04I can imagine that that one, maybe more than any other match in the whole tournament, is gonna have such a huge resale market in the in the in the later days of this week, as some of those huge, like seven-figure tickets just start to sell between French and English and anyone who anyone who may or may not get in anywhere. I'm not predicting anything, but it's um do you think we might yet see even higher numbers reached by the end of the week?
SPEAKER_01I think we could when when the Super Bowl comes round every year in America. You know, the the final games are played two weeks prior, and then suddenly everyone forgets that they don't have a ticket and suddenly want to be at the biggest event of the year in in American sport. This is bigger than a Super Bowl, and no matter what Americans want to tell you, more people will watch this, more money will be earned. It's bigger prize money, everything is on a live side. What is the prize money if we win? If we win less prize, there's more endorsements for players and and and bonuses and and stuff there. Um England, England players don't get a lot of money for playing for England, and most of it goes to charity. But um but yeah, there's huge, huge amounts of incentives here on the line. It's the it's very, very, very Americanized. The ticket market is kind of rogue. It's it's insane. It's one of the few things where the the resale second ticket platforms are actually, I say reasonably priced. You can get a ticket for 20 grand on there because FIFA's resale market is so interesting, and FIFA take uh a cut from the sale and from the buy. So they get a cut on both ends as well. So they are absolutely raking it in here. Well, uh, quick prediction for Wednesday. Um I don't make predictions, Martin. I think it's it's I I hate jinxing it. But um, what I would say is it's very interesting game given the political influence between the two countries. There is no segregation in the stadium on Wednesday, so hopefully we all get along. Yes.
SPEAKER_04Wow, well, that'll be interesting to see, and I'm sure this will not be the last time we talk to you about the World Cup. Bring me back. We'll have you back. Well, that's all we have time for today. Thank you very much for listening to Business as Usual. Two final points of housekeeping. Don't forget to subscribe to our various daily and weekly newsletters, and of course, don't forget to download our free app.
SPEAKER_02It's got everything the expensive news apps have, except ours is free. We'll be back in your podcast feeds tomorrow at 6 a.m. But for now, goodbye. Goodbye.