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, celebrity chef Tom Kerrige slams tax expert Dan Needle on a tax cut for pubs and restaurants.
SPEAKER_02No successful business ever has ever been built on the accountant. It's been built on the operator.
SPEAKER_04So would a 10% cut on VAT hospitality really be enough to save the struggling sector?
SPEAKER_05Is there such a thing as a good wealth tax? The unlikely proponent Simon Hunt tells us what he thinks.
SPEAKER_04Plus, how is the UK trading relationship with France faring 10 years after the Brexit vote?
SPEAKER_05But before we get started, we need to talk about the CTAM Toast Awards. This is the awards due celebrating the best and brightest of hospitality here in the Square Mile. We've received over 2,000 entries and nominations, and our judges have narrowed down the list of best restaurants, bars, coffee shops, and green spaces in the city.
SPEAKER_04So now it's up to you, yes, you, the public, to vote for the finalists.
SPEAKER_05Who do you think has the best casual dining experience? Or where is the best boozer in the square mile? With 15 categories to vote for, we need your help narrowing down the winner. So vote at www.cityamevents.co.uk forward slash toast-2026. Now, onward show.
SPEAKER_04So the celebrity chef Tom Carridge has told City AM that the benefits of a 10% cut in VAT on hospitality would far outweigh the negatives. He spoke to our retail reporter Felix Armstrong and took aim at the tax expert Dan Needle. So Dan Needle has criticized the proposed VAT scheme for indiscriminately cutting taxes for both small and large businesses. Felix asked him what he made of the criticism.
SPEAKER_02I mean, there's a couple of things on that. First of all, he's a tax expert, not a hospitality expert and an owner or an operator. So what happens is then no successful business ever has ever been built on the accountant. It's been built on the operator. It's been built on the person that knows it, whether it's a mechanics firm, whether it's a whether it's a care home, whether it's a hospitality business, whether it doesn't matter whether it's an AI company or a tech firm, it's built on the person that understands the business and knows what's going on. The accountants are there to be able to help provide information that then goes, actually, this is about this is how you grow. So, yes, on a straight-level PL that's been driven by a tax expert, great. Okay, but businesses are not built on that. We don't operate that. Communities don't operate on tax experts. Tax experts are there, and that's a title, and that's not a even a pleasant title. That shows you what that sort of person is, and they're looking for numbers and they're looking for issues and a problem as opposed to growth. Growth prospect. Growth happens with investment understanding. Um, and then we have 21 businesses shutting per week. Well, if you don't do something about that, I mean the tax expert there is that there's 21 businesses that are closing, and those when those businesses close, that's unemployment. And the last people they get paid is the exchequer. The VAT doesn't get paid, the NI doesn't get paid, those sort of things. Those are the people that when 21 businesses shut, the exchequer isn't getting paid. So there is also then the growth prospect. Now there's paperwork being done by Oxford University and UK finance that are showing that actually an investment in hospitality and giving them the opportunity to grow is actually more about a growth prospect. So, short term, if you look at just a dead PL that's been written by a tax expert, yeah, it's going to cost them 10 billion. There you go. But that's not looking at the further and bigger picture. So, I mean, those are the two points that I'd raise to that, you know, and it's it's all very well that Dan says that, but Dan's not out there and operating. And then in terms of it being the big guys that will make more money by being well, yeah, they're the big guys, they're the guys that have worked really hard to get to that point. If you look at a company like Gales, for example, 15, 20 years ago, there was a small bakery called the Bread Factory that operated selling bread to mission-style restaurants and has built a business that's then floated on the high street, and then works very well and then does what like, but without allowing small businesses to grow, you're never going to get to that point. So, yes, their profit margins, of course, will be bigger, but it isn't about them. Like, it's fine, they can make more money. It's about the survival of your local pub, and it's about the survival of the neighborhood restaurant, it's about the coffee shop that you go to, or the lunchtime as I was talking to your colleague earlier about a place where he goes to for a beer after work just round the corner. And the other day there was a there was only a few people there, you know. It's about the survival of these places, communities, and spaces. So, yeah, okay, the big guys will make more money. The big guys are always making more money. Like, they're always making more money. If you tax them more, that's fine on corporation tax. If there's, you know, if there's a profit-related tax that comes through the other end, great. But it's about the survival of the little guys. And this way it means that small operators are able to operate.
SPEAKER_05On the topic of Britain's tax burden, especially with all the uncertainty around the next Chancellor, one voice who's been very opinionated on how to even the odds between the rich and poor is Gary Stevenson, otherwise known as Gary's Economics on YouTube, who is pushing hard for a wealth tax. But someone who is pushing for a different kind of taxing wealth is our very own markets Minx, Simon Hunt. Simon, given that you are the city editor of uh City AM, you were the last person I was expecting to welcome into the studio to uh propose a type of wealth tax.
SPEAKER_03Yes, so um, as you say, uh as Andy Burnham rides into Downing Street on his horse, or in his case in his Avanti West Coast train, uh suddenly the prospect of a wealth tax has once again reared its head. I think there are two reasons why the idea of it is popular, uh, one slightly less legitimate than the other. Uh the first being that most people think that if this tax were implemented, they wouldn't have to pay it. In other words, it's a tax on other people, and taxes on other people are usually more popular than taxes people have to pay themselves. That's in Count Binface's manifesto. Well, exactly, exactly. Um, and I think the other one, arguably more legitimate, is you know, people's wider concerns about degrees of inequality and you know, will that have an effect on our society and how do we how do we deal with that? And you know, you can debate the merits and demerits of that, but it's a little bit more of a serious debate. Um and I think as you say, this has been popularized by Gary Stevenson, the city trader turned YouTuber, who's a big advocate for it. And he makes a powerful case based largely just on intuition, on people's sort of innate sense of fairness or whatever. Uh, he doesn't spend very much time thinking about the massive practical challenges associated with a wealth tax, of which the most obvious are uh A, capital flight, because tax rich people too much and they'll just pack their bags and go and bring all their assets with them. And you know, not only does that make uh the UK a less attractive place for investment, it will damage the UK's economy uh in the long run. And and the obvious and the obvious other challenge with with this policy um is the valuation and collection difficulty. Um, you know, it's how do you value a piece of art? Exactly. And the idea of asking people to annually value every single asset that they own uh is just insane. And also, you know, HMRC's dark task of actually having to corroborate that and having to check people and and you know try and stop avoidance and evasion. Uh the upshot is it just wouldn't make very much money.
SPEAKER_05How how would Matt Kenyon assess the value of his collection of Victorian dolls? Yeah, you know.
SPEAKER_04And I suppose there's that other problem as well, is that every time you start to ask practical questions about a wealth tax, you run into two problems. One of which is, as you say, it's very abstract. The other one is we just don't have very much precedent to draw on. Yeah. And what precedent there is tends to be a lot of countries who've tried it and binned it. Pretty much, yeah. And and that makes it a very difficult thing, I suppose, to advocate coherently for. But it also makes it quite a difficult thing to argue against because people then go back to the very Gary Stevenson first principles of don't you want really rich, awful people to pay their pay their fair share. Quite difficult to come up with a counter-argument, but you have a bit of an idea for what you would do if you were the Chancellor.
SPEAKER_03So I think there is one quite specific type of wealth tax that I would be in favour on, and this is a particular policy that actually has a fair bit of support across the political spectrum from policymakers, from think tanks, from economists, and that is what's what's been known as a land value tax. So this would be a tax on the value of the land that people owe. Not necessarily the property, themselves the property itself that sits on that land, but just the land. Um and I think there are several reasons why that this particular narrower policy could be successful. Uh, and by the way, this would be something that would replace council tax and stamp duty, which are two taxes uh that are not particularly popular. Uh so the first is you swerve all of those valuation and collection issues because you're not having to value hundreds of different assets, it's just land. And land is pretty easy to value and that the data is pretty abundant. You know, just go on Zoopla and you can get a pretty good idea of how much different neighborhoods uh are worth. Uh second, you can't just take it away, unlike other assets. You can't just pick up your land and move it somewhere else.
SPEAKER_05It's also pretty illiquid. Yes. Like if you want to sell it, it's going to take ages to sell. Yes.
SPEAKER_03Yeah, so you don't have that kind of capital flight issue. Um the third is it uh would support a more vibrant property market and a more efficient allocation of resources. At the moment, with stamp duty tax, uh, you are effectively disincentivized from buying a house. You're also disincentivized from moving house because you get charged by the taxman for moving house. And that would include downsizing. So we have this bizarre situation at the moment in places like London, where you have people in their 20s and 30s trying to start a family in a small flat, and at the same time, older people living by themselves or in couples in these massive houses.
SPEAKER_04Well, often older couples who would say actually stamp duty is really holding them back. Yeah. It also this strikes me, I mean, I I suppose to the credit of this idea, it strikes me as quite a good counterbalance to a lot of the way that tax and spend currently works, in that it is a counterweight to a very heavy state pension uh burden, which people who are often not property owners are paying. And it is something which takes into account for the first time some of the kind of generational inequalities. So on that level, it does have some quite interesting answers.
SPEAKER_03Yes, and there are even more benefits to it because it would also support greater construction and densification because this is a tax on the land, not on the property that sits on it. Oh, yes, you have to do something with that land. Yes, so there is an incentive to develop more rather than less because you would thereby reduce your tax bill.
SPEAKER_05And more properties uh changing hands means you buy a house, you don't like the bathroom, you get a white van man in to rip it out and build your new one. Yeah. That gets the economy going that way.
SPEAKER_03Yeah, and you could and you're encouraged to build more flats or more houses in the land that you own. And finally, which I think is this is the reason that Andy Burnham is most interested in, is because it would be redistributive. Uh, unlike you know, a sort of council tax system we have at the moment, it would mean that the wealthier people, the wealthier landowners do end up paying more than the less wealthy ones. And invariably that will mean people in the south pay a bit more than people in the north.
SPEAKER_05This is where I come in because Dan Needle has quite helpfully done a whole Twitter thread on this idea uh to try and um push the benefits of this. And I do see the benefits of this. But as someone who bought a modest flat about five years ago in South London, I mean, you know, I'm a journalist, I'm not a kind of I'm not like a black rock banker. Uh, you know, I live in an area that's not too expensive. But on this heat map, my area's in red. And red means I'm gonna be paying a lot more. And I don't think that's particularly fair when other uh houses, according to Dan Needle, in this scheme would be paying council tax essentially of one pound. Meanwhile, you know, I'm doing a pretty average paid job in a pretty average kind of area, but because I would live in the south, this colour is red. So that's not fair. I know I could actually I could actually see a huge number of South Londoners and and sort of and South of Englanders j just going on a sort of council tax boycott.
SPEAKER_03Well, I think there are two two possible responses to that. The what the more sort of practical one is um that if you're in a flat, I mean let's say there's what, seven, eight flats in your block, then that land value tax would be divided eightfold because so because it's again it's a tax on the land, not on the the buildings. Uh and so being in a flat, you would you would face a lower tax burden than someone living in a house that occupied the same size of land in that area. Um and of course the second one would be the sort of debate about unearned income or unearned wealth, because you know, if if let's say two families bought the same size house 50 years ago, one in for the same amount of money, one in the north, one in London, uh, one has appreciated an awful lot more than the other for reasons that have nothing to do with you know how hard they worked or you know whether it was a good investment or whatever else. Um, and so this would to extent be a counteract that to some degree. And so there'll be less of the sort of property lottery that we've seen up and down the UK over the last few decades.
SPEAKER_05Anyway, thank you very much for coming in, Simon. Thank you. Um, city editor of the New Statesman. Now, as I'm sure all our listeners know, the 14th of July is Bastille Day in France. It's the annual celebration that commemorates the pivotal storming of the Bastille in 1789, which helped spark the French Revolution. It's also a big day for Anglo-French relations and a good reason to discuss how Britain's economic relationship with France is faring. So, joining us to help with that today is the UK and Ireland director of Business France, Henri Baisas. Thank you very much for coming in.
SPEAKER_01Thank you, Martin.
SPEAKER_05And we are recording this on Bastille Day, um, the day before this goes out, so happy Bastille Day. Yeah, many thanks. So why don't you just start by talking to us a little bit about how you see the economic relationship at the moment between the UK and France?
SPEAKER_01I mean, there are huge ties between UK and France. Uh, you know that more than 5,000 uh companies operate in the UK. Uh we're involved with the nuclear program with EDF, we're involved with Grid with NG, we've got many corporates. And of course, uh when you look at uh UK with France, now the fact is to be part of the European market and to fully benefit from the European market, you've got to be there, you got to land. And we are uh strategic getaway for UK company for growth. And we have the record of uh uh companies, UK companies establishing in France. It's not going out of the UK, it's benefiting from European markets, and I really believe that we have a strong win-win relationship.
SPEAKER_04So what are the biggest uh individual companies that are forging strong ties between the UK and France at the moment?
SPEAKER_01I mean, if you're looking at French companies, obviously you've got EDF energy that is a huge player for the nuclear industry, and it's very important because it's strategic, it's it's the ability to uh uh relaunch uh uh nuclear to capabilities, productivity, uh, and it's gonna benefit UK and it's gonna benefit France uh also. And if you can we we in the uh uh uh part of finance there, if you look at uh the franchise, Revolute, for example, uh in France, it's quite big. It's the largest market outside the UK with eight million uh customers, and they've decided to have their uh Western European headquarters in France.
SPEAKER_04So that's quite interesting because it's I mean, I suppose it's Europe, it's one of Europe's biggest startups, it's certainly our biggest uh startup we have at the moment. Why was it they went for uh an office in France?
SPEAKER_01Basically, uh you've got the market, and uh the facts and figures show that, because 8 million countries grew, I mean, with an incredible pace, and uh you've got also the talents. And another thing that is very important is if they've got also a regulator. And the French regulator, and we've got um uh many uh testimonials from uh UK companies that have told us that uh they were quicker with the French regulator than in fact we were in the UK. For example, DBlock, uh a UK company, managed to develop their operation in France before developing in the in the in the UK. So uh yeah, they benefit from the market, they benefit from um uh regulation. And of course, if you're looking at other companies like then, the data center, there is a huge advantage with energy. Energy is key. If you look at the future, you've got intelligence artificial that needs a lot of energy. And France exports one, I mean, it's 100 tetra water tetra watts. Yeah, yeah, tetra watts. I didn't know they'd go up. It's it's it's it's enormous. It is and it's it's uh renewable energy.
SPEAKER_05And it's uh so the lack of Britain's kind of energy resilience does benefit uh France's energy uh industry.
SPEAKER_01And it's why you have the link because France is helping UK to build that resilience with energy, with the nuclear uh industry programme. So you you you see that we are really intertwined. And uh and we we we are a business trans for that. I mean to to help uh UK companies to um establish in um in France and uh to help uh French companies trade in the UK.
SPEAKER_05Now it's Bastille Day, so it's a very convivial spirit today. But you mentioned uh Revolut and sort of the financial um sort of uh uh hub that is Paris. Uh there is a little bit of competition between London and Paris. Yeah. Um we in London like to think we're still kind of the financial capital of Europe, but do you think Paris stands a chance of sort of catching up or overtaking?
SPEAKER_01No, but London is is still and it has a huge uh advance. So so it's not a question of uh trying to reach the same, I mean you but but the what we're talking is about the European market. And our our uh I mean advantage is to to be a getaway and and to be a strategic getaway for the European market. For example, the London Stock Exchange, they've uh um developed their uh footprint in in Paris because for uh a special EU index they have to be part.
SPEAKER_04And and do you think obviously, because there were lots of conversations 10 years ago when Britain voted to leave the EU, that this could be a quite difficult moment for Anglo-French relations. Do you think those business relationships have healed a little bit since then?
SPEAKER_01Yeah, it's it's it's true that uh we have to rebuild uh that relationship to uh uh to a new context with with uh with uh Brexit. Uh and uh uh now I think we we we've demonstrated, and that's the the very important thing, that we are, and it's fascinating figures. If you look at the EY report regarding in what investments, we are uh the main launchpad for the European market for uh UK companies. Uh and it's a good thing to adapt. You have to adapt because the world is moving, and uh with if we can be the strongest partner for uh UK growth and UK companies, uh, UK and the growth in the in the European market is great.
SPEAKER_05We've talked about uh fintechs and nuclear energy. Um but just finally, how are how how are you seeing demand for those classic French staples like cheese, wine, those sorts of exports from France to Britain? Are they holding up?
SPEAKER_01Are they Yeah, it's very important. I mean, in value, uh uh French wine is the first uh uh on the uh UK market. So so uh I mean the the diversity of the offer of France. I mean uh I mean we we have so many UK tourists in France and and uh appreciating and and enjoying the quality of life and the product that uh is great to be able to bring those products uh here. We we had uh an incredible day, it's called Baker's Day. It's uh to celebrate you know bakery. And uh in fact, beyond bakery, it's not just bread. I mean, it's all the ingredients, all the the meals and everything. And uh we are a great player, and if if we can bring that uh here, it's uh I think it's part of a job, yeah.
SPEAKER_05Well, we will continue to um uh uh back up and and support any kind of demand for French wine and cheese for certain on this show. In any way we can. Yeah. Henri, thank you very much for coming in. Thank you so much, Martin and Matt. Well, that's all we have time for today. Thank you very much for listening to Business as Usu.
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SPEAKER_05And of course, don't forget to vote for your favourite hospitality business in the square mile. We'll be back in your podcast feeds tomorrow at 6 a.m. But for now, goodbye. Goodbye.