Defining Success as Business Secretary

This episode of the Business is sponsored by PWC. Markets are shifting. teechnology and AI are reshaping industries. Druption is unavoidable Staying ahead and finding new opportunities for growth demands bold moves. This is where PWC makes things happen Working with you, combining the industry expertise, data insights, AI capabilities and business change experience. to help you reinvent and lead from the front PWC accelerates what's possible so you can turn vision into value. Discover more at pwc. co. uk This week, the business secretary, Peter Kyle joins us. Before the election, Labour said would be the most pro growth pro business government ever So why is the business community from top chief executives all the way down to small companies so very unimpressed Peter Carl tells us why he's still certain the UK is the best place. to start and to run a business too often companies are leaving this country they get to a need for a certain size of investment, then they're going to go and find that in America with a higher risk threshold. and they're going to find a boldness and a urgency of getting capital into businesses. We have to have an environment here. where that is met Welcome to the businessusiness. I'm Hannah Previtz, the associate Business editor of The Sunday Times. And I'm Dominic Oo' Conell Times, columnist and business correspondent at Times Radio On the show today, Peter Kyle, MP for Hove and Portsload and Business Secretary. thank you, Peter so much for joining us today. It's amazing to be with you. Thank you for having me Thank you. And of course, it's London Tech Week right now, an annual gathering of global technology leaders here in London and the celebration of British tech. You've been there this week, I believe, Peter. What do you think is the current state of UK tech? I think we're in a really good place at the moment. and if I could just make an observation from I've been to three consecutive London Tch weeks now And over those three years I've noticed a really profound change in the businesses I'm meeting that are exhibiting there A couple of years ago and last year as well, there are a lot of conceptual companies they were early stage looking for seed funding, a lot of them. high concept highigh risk, high reward, but they're all going for it. This time, I was so struck by how many products are now in deployment stage And I was going from stand to stand to stand And it wasn't high concepts anymore, it was products that they are actually deploying and selling and they're now looking for scale up funding. it created around the floor space a real sense of energy because there was so much that was tangible. It's impecable timing this year, of course, Given SpaceX is gearing up for a float in the US, perhaps taking billions of pounds from British investors to fund It's plans for, let's say, a colony on Mars, amongst other things. And of course, open AI and Anthropic are gearing up to do something similar. You just mentioned there that British technology is moving on, right? It's scaling up. But still there are no British companies anywhere near the scale of those that we're seeing in the US out there. So what's going wrong Well you'll see from the comments I've made in the Times that I have an aggressive ambition for Britain because I think you need a government that will meet the scale of ambition that entrepreneurs have for themselves and the potential that we have as a country I hope that the plus c for Britain when it comes to these big American IPOs is that it will create a sense of excitement about IPOing itself becausecause then under the stock exchange is now youre doing a regular drum breat of IPOs. it's now back in the business of more listings here in London. So I hope and there is a domestic, really attractive market for IPO. So I hope also that it will drive much more business towards the on the stock exchange. Certainly I've been doing a lot of work with them to make sure that's more of a possibility. And you've spoken before about your hopes for the first trillion dollar company in the UK. Can you put a timecale on that? when do you think we'll see? Yes, I'd like it for next week if I can get it. But let's just try and create the circumstances through which one can emerge. Why is it important for me I've noticed the pushback in the editorials and some of the other columnist responses in a variety of papers And my response to the criticisms of this is I am not doing nineteen seventy style interventionism, which is which in those days was a response to a conservatism in industry where people were fighting against change and they wanted state subsidies to prevent modernisation, which ultimately ended to a vast we of industry going under I'm just recognizing that right around the world We have the potential to scale fast But too often companies are leaving this country when they get to a need for a certain size of investment, thenen they're going to go and find that in America with a higher risk threshold And they're going to find a boldness and a urgency of getting capital into businesses We have to have an environment here where that is met We can't meet it fully and government should not be stepping in and replacing private capital But what I found in the series of equity investments that the government has made, the British Business Bank, I don't make these decisions myself, but I do set the criteria for the funds when they are designed. If you take the stakes that have gone into Kraken twenty five million pounds, it' gone into WV, the autonomous vehicle company, twenty five million then We're hearing from these companies that is when the British government enters the round it inflates the overall round because of the certainty comes from having a government and all of the due diligence that goes into it and the statement of having a government investment into a company. Now in those two cases, it was twenty five million do in a round, which went well over a billion. So it was a small stake. But what I've also done is up the risk threshold. And I think this is where we move into territory which is more debatable because in the latest investment that's been announced into quantum out of quantum circuits That is a one hundred million pound investment, but the overall round was two hundred sixty million So we're taking about a forty percent stake in that round overall. So it's much higher risk and it's much higher volume when it comes to quantum And the innovation that's coming out of our universities being commercialized in its early stages, we need it to scale And we are right at the moment where quantum technology in sensing and other areas is going to become is going to scale ery, very fast and I want Britain to be there. What do you get for that investment? You talked about Kraken and Wave. Both of those companies are much more likely to float in the US than they are here. and also they don't have any problem at all in attracting private sector investment What's the point of investing if you don't get something out of it? Shing like a guarantee of a float to London. This is a statement from government. Now in all of those cases, it has been a welcome statement and the companies have said that it is brought additional benefits to them But I want to go much further We have also announced the Global Tanant task Force. I'm wearing the t shirt for it myself because I like to walk to talk and celebrate what government is doing The Global Tanant Task Force. will work with those scale up companies to make sure that they have the best talent and access to the best talent that they need. So should there be skills that they can't find domestically thenen the task force will assist them in locating the talent and bring the talant here to the UK. And I have an allocation of visas that's been taken away from the home office, thanks to Shabana because she's been brilliant And we can now align talent with visas in an expedited way. We've also got the concierge service that I've launched this week as well, because these companies need government not just to invest, not just to support them with talent. So we need an advocate within government and I've set up a unit within my department. where we will be the internal government advocate what they do. You didn't really answer the question. what are we getting in return for that equity? All those things you talked about neabboring the concept that it's great Why should the government be investing minority stakes in companies? It's not feel that's not being filled elsewhere So as I said, it needs to be seen in a suite of offerings that this government is offering. We've got Global Tanant Task force You know, we have the concierge service, We're also taking a series of equity stakes. This is a statement that is a government on their side Now these and it's signaling, it's not real. These are all very, very real benefits And if we take, for example, Wave, Wave was created by Alex Kendall, who is a research student at Oxford He got an innovate UK grant from the Department of Science Innovation Technology, where I used to be Secretary of state to get his product off the ground and start turning his research into something that's workable and commer to commercialise. And now the most latest thing from government is we've taken an equity stake. So we've been with him at every s every step of the way Now for him, when you hear him talking about this, and I hesitate to put words in his mouth, but these are the things I've heard him say independently when I'm not in the room and I listen to him speak and do interviews He says that he has been made offers from so many different countries But he now has a sense of loyalty To the point where he came over here as a New Zealand citizen because he was born and raised in New Zealand, He came here to study at Oxford, but he's now has British citizenship The sense of a country on his side and helping him along the way has generated a loyalty to our country that has gone all the way to him taking citizenship Now why can't we as a government celebrate that and recognize that, yes, we are able to generate that sense of loyalty. And I am not interested I not trying to take a controlling stake in anything I'm trying to send a message that we are there. Now When the government comes in with all the due diligence and the statement that it makes when the government invests in a company It inflates the round as well. It gives a sense of confidence to private investors who might be on the edge. They might be making a decision or they might need an incentive to just go a bit faster In every case we have taken one I've been told about tangible benefits that they have felt as a result of it, and I want to go further I want to look at the procurement system for the UK, which we are modernising. We are looking at how we make sure British businesses benefit I want these procurement contracts that we're asssuing, it's in the hundreds of billions of pounds that we spend on procuring services And I want to see how we can align these things. So for example If we've done all the due diligence independently of ministers and and the political side of government and we're taking an equity stake in a scale up company then surely they should be automatically down to the the shortlist for any procurement if it's in the area for which they are doing products and services. So these are the sorts of tangible benefits. Bearing in mind, you talked aboutace SpaceX earlier SpaceX got to where it is through procurement You know, it had it had the United States government Do grant funding Procurement pointed, precise scale procurement all the way along with its development path and it's got to a trillion dollar company. There are welders in that company that will become millionaires the day they IPO That's the kind of wealth creation that comes from these journeys. and I want British companies to be able to scale to that proportion That trillion dollar company that which SpaceX is going to be one of we might have three of in short order in the states. Just to compare that to UK capital markets, what's the value of the number one in the Fotsy one hundred at the minute? So in the UK We're talking a pharmaceutical company And but if you take the example of arm what is the what's the number one of the at the minute? So the minute, it's going be AstrazZenea I think it's say yeah it's number two, but But that's about a fifth of the size of Space. Yes. The difference in the capital markets required is it's light year. So this trillion dollar company is not going to be in the UK. I disagree No, I totally disagree. But another example. What's the biggest UK arrise from retail in the past ten years? No, no, fifty million doll let me put these examples to you. the ArM has obviously been acquired by Soft Bank and has gone offshore, but still doing its headquarters here If I'm had stayed in the UK and stayed as a British company it would be valued now at about three hundred billion. It is it is about or even more It is it is forty percent of the way becoming the trillion dollar company and it is still growing and it is growing at pace So that is one example Overom Wh did I choose to list Isn't sorry. Where did I choose to list No O course, this is my point. It is exactly my point. So you can't say we don't have the potential when you have British companies which are, of course, choosing to list elsewhere and be acquired by other companies to find the capital. U you can't make the case that we don't have the talent The IP I'm talking about the capital markets chose. it was bought by SoftBink, then chose to list in the U.S. And when it could have come to the UK. I agree Look what what I'm saying is, I'm trying to create the circumstances where we can have an ecosystem where we can have enough scale up companies where the pool of capital pool of talent is magnetic enough to bring more capital into our country, and we'll have the loyalty to our country. that people can remain here. So I believe we have the skills. I believe we have the capital I believe we have the talent. We've got the language, we've got four of the top ten universities in the world. And we have the interconnectedness and the openness as a free trading nation And we have the city of London, which is a magnet for people from around the world. But we're not coordinating. all of these assets in a way that it has managed to happen in Silicon Valley and in other places. So will this happen on its own But it's not happening on its own Could it happen if government was a bit more active in an appropriate way for the times we're in I think it can P, so you just gave the example of Alex Kendzall from Wave and you how he feels this kind of sense of loyalty, I guess to the UK. and clearly you have a good relationship with him. But let's talk more broadly about this administration's relationship business community and there's of all of the changes that this government has made, one of them the Workers' Rights Act, which is of course you know still in consultation, but employers are worried and we've spoken to lots of them on this show. This is what a publican called Brian Whiting had to say about it when he came on this podcast in April. Well I believe and you can correct me if I'm wrong here, what can happen is Fred can be down as a shift on Sunday. quoted him he can have nine hours on Sunday or eight hours. Fred has one too many drinks on Saturday night, decides not to come in. I've now got to pay him because he's phoned in ill and I've got to pay someone else to cover his shift Who's going to pay customers going to pay, aren't? Just to give a bit of pushback on this, the business seecretary, Peter Carl actually gave us a statement for this program. One of the things he said about the Employment Rights Act? is that it would boost employment, improve job security, and this bit deliver stronger and higher living standards for over eighteen million workers So what would you say to that in response to Peter Carl? impmproving the lot of workers? I'm going to use an old term poppycoop. There you go. That's an old term, isn't it? Yeah What a nonsense. The f's got no idea, is he? He's no idea. We can all say wonderful things. He wants to come He wants to come and pour some pints with me and let's get real So Peter, what would you say to employers like Brian who say that this legislation is only going to do one thing? It's going to push their costs up and also potentially tilt the balance too far in favour of the employee? F firstirst thing I say to Brian It is amazing you're running a great business I'd love for him passing any day to go and pull some pites to him and listen to him I represent a constituency in Brighton, Hove nighttime economy, it is a hospitality economy. I have lots of publicans down there who have my mobile number and I hear all the good things are happening in the economy and all the tough things as well. and I know that times have been tough for pubs and parts of hospitality for lots of different reasons. Firstly, I'm not changing the qualification for sick pay. People cannot just go on to sick leave without proving that they're sick and qualifying for sick pay. What I'm doing is making sure that sick pay is available from day one. Now when people have a genuine sickness The idea that they have to endure work or sacrifice pay if they are genuinely sick from the first day in the job rather than having to wait for quite a long time to qualify for it seemems perverse to me What I'm not saying, I mean, look, if somebody rang Brian and said, I'm sorry, I'm off for three weeks and they have been working there. for a period of time I don't think Brian would say, well, okay, fine, you're off. He would ask for a sick note and he'd ask for for doctorss, you know, certification This same is true. All the requirements for sick leave have come forward, as well as the rights. Now we learned a lot during COVID We learned a lot during COVID. and one of those things was that there were so many people in the care sector because they were in the front line who were getting ill repeatedly through COVID and they were not qualifying for sick pay, even though They were in the front line of COVID These are the sorts of things we have to respond to. When it comes to the overall package for the Workers' Rights Act We have just close lots of the challenges that have emerged in the economy over a period of time twentyw thirty years ago, there was no hire and reire, there was no app based employment The pathways are not there anymore for young people, for most young people those first steps If you're going into the workplace then it is likely you are not as a young person, able to earn enough to actually move forward in life. If you're lucky You're gonna earn enough to stay still And we have to have an economy where we all move forward and that young people can work their way into the future that they aspire to and that hard work is rewarded. And right now, hard work for most young people isn't rewarded But that failure is being subsidized through welfare for too many young people and that is replicating pockets of the economy and demographics. You know threw out And we have to correct it. I know we want to talk about young people in a moment, but what about the hard work of somebody like Brian, who all of his profits have been eroded by various measures that have been put into place by this government. And for businesses like his, the Employment Rights Act and the associated costs of implementing that, he says, you could be the final nail in the coffin. And I hear that all the time from hospitality owners I speak to, how would you describe the relationship currently that you have with businesses? and we've talked about tech, but perhaps thinking specifically about hospitality and retail businesses that have been hit hardest by some of this stuff? So I accept that When you look at the hard decisions we had to do to fix the situation when we came into office Because believe me, public services were on their knees and as somebody who came in, the only elected job I've ever had in government is as a seecretary state. And I will remember those first days and couple of weeks in this job for as long as I live, because what we uncovered was genuinely my God did it keep me awake at night, the state of the finances of the department and other things that we had discovered. But I accept the Nix is pre profit. I except that otherther aspects of the workers' rightights bills will put costs into the system, which are pre profit At the same time, we've tried to bring in relief for pubs specifically, but also there's a fundamental issue at the heart of this whole debate, and that's that that until we can get sustained sizable growth into our economy, then no business as a sector is going to be able to move forward at the pace at which I would like. What Brian needs is what every hoteler needs, what every visitor attraction needs is paying customers with money in their pockets and more money next year than they had this year and that can only come from a growing economy. Growth relies I think, on a good relationship with business because in the end it all comes from the private sector. We have quite a good gauge of the relationship between in the private sector we have the TimesEO suummit, which is actually next week. The one before the election, Kir Steimm and Rachel Reeves spokeet was like for them it was like being sliding into a warm bath Finally getting rid of the chaos of the last conservative government. This is where the line came out. They were going to be the most pro growth, most business friendly government. Everyone was very happy Go forward a year to the nextEO summit. So's last year's CEO summit And I ask the question, who in this audience, and it's a very strong business audience believes that Rachel Reeese has followed through. Is it now a pro business sp pro growth government. Nobody put their hand up You came in a tide of goodwill How did you mess it up so comprehensively in a few short months Well, as I said, we had to do some difficult things at the beginning. and this is what was the rationale for national insurance? Despite what Rachel Rce says a tax on jobs? We had to invest in our public services and we had to deal with the black hole in our finances. When people hear us talking about our frustration about the impact the Iran war has had. because of the unnecessary nature of it happening in the first place In now the weeks leading up to the Iran warar, we now know the data because it's all been published We had a growth rate. If the growth rate was annualized, it would be two percent That was exceeding forecasts by fivefold We had inflation, which the OBR had said was heading towards target of two percent for the first time in a very, very long time We've had record investment, inward investment into the country, three hundred twenty billion pounds crowded in around the industrial strategy All of these key indicators were beating forecasts and going in the right direction So you can imagine the conversations that we were beginning to have behind the scenes because these are the kinds of things that we took the hard decisions for so that we could then get to the point where we're talking about the next wave of our project. Well, Iran has changed that I hope it is just a delay and we are working as hard as we can becausecause going into these challenging times with those indicators going into the right direction Believe me, if we hadn't taken those decisions If we hadn't created the fiscal headroom that Rachel did in the second budget, All of these sorts of things hadn't been done. then the markets would have reacted wildly differently. Peter, you mentioned before about young people and how important is that they're given pathways into work. On Wednesday, the bosses of some of our biggest retailers, so the likes of Sainsbury, Tesco, MMS all wrote, of course, to Sakkir Starmer, urging the governments to lower the cost of employing young people Is the government going to listen to them on this? Well we already actuallyed don't forget that National Asurance doesn't apply to young people So We were already trying to incentivize and eliminate any barriers to hiring young people Anam Milan's report that he just announced the analysis that he's undertaken has generated cross party but also cross ree support for the need and desire to tackle This issue And in the autumn He's going to release the findings in terms of recommendations I'm working very, very closely with Anna Milburnne, and I want every single tool I have at my disposal as businessiness secretary to be available in the mission to get those million kids into work and having their potential fully, fully explored in the digital age as well as the other pathways that people are going to be taking into the workplace. I want these kids to be fully equipp for the opportunities that lie before us. To draw those two things together, you talked about your struggle to get proper work and working hard to do it. and also spending on public services, roads and education and NHS Isn't that the political reality actually something quite different? I think this is what business actually thinks in those WhatsApp messages that came out in the latest Mandelson release. Pat McFadden really gave it away, didn't he? He said Every meeting I have is who can we tax in order to pay benefits to others Businesses do not believe that P persistence, pro striving pro reward thing that you've just put out and paying for public services. They believe Pat McFadden Well You will need to speak to Pat about the context of any message that that he has sent. But But they believe that thrust that actually labors is more from the political reality of maintaining the benefit system for votes that it brings. Lab Labour is always judged differently on these issues. so I accept that if it was a Tory that had written that note, people it wouldn't even be useds because people wouldn't think the Ti partarty thinks like that. These are the sorts of things that I am very aware are the stereotypes that are applied to my party So that this is Pat McFadden saying. it's not someone trying to blacken the Labour Party. No, but way the way that it is being sort of quoted back at me, I don't believe if a Tory had written that message McFedon wrot it Yeah, no, no no. But I don't believe that if a Tory had written that that it would be even quoted to Tory MPs in interviews like I'm doing because it's not it's not accepted as a There's a sort of representative of the party These are the things that the Labour Party has to earn the trust of people over again and again and again I'm not complaining, by the way, because I'm somebody that strives to earn that trust again and again and again, because people look to political parties and if they see that if they believe that there are challenges or things that they distrust about that party, then of course it's our job to meet voters where they are and not where we want them to be. We're getting close on timees. shhall we run through a few quick policy areas, see if we can get you to chance your arm? Customs union rejoin the EU? What do you think? No we're not going to be engaging in the rejoining any of the institutions. But look, I was an arch Romainer You know, the amendment that would have delivered the confirmatory referendum was half in my name. So I really have people will understand where I approach these things from. But right now, there are huge benefits that we can deliver now in the short term And that's what people want from us If we engage in those sorts of discussions, and I'm happy to have this conversation, I'm not defensive about it that it will take years and years and years. It took four years for us to leave the customs Union and single market It took Turkey twenty years to join Customs union We need growth and opportunity for our businesses and its people now So we are doubling down on those things that we can deliver now. and by bringing the EU and the UK closer together in its commercial opportunities and the ability that people have to move and trade across the continent Th thenen of course it's going to create the kind of harmonious active professional delivering relationship for which people right across the country will want us to keep moving forward on. and that will keep all sorts of options open into the future, and that's what I'm hoping for. What about steel tariffs?? So you going to change the regime due to come in on july first We're negotiating with the EU and our partners on the tabate. When we have when you say when you say change the regime, I suspect you mean the EU, which have put Their first proposal, which was published mean very, very sizable steel tariffs against the UK. We have put and I have put measures in place that will go live at that point. I was out there in Brussels. I was in India on Tuesday for the day. I was in Brussels for the day on Friday with Mao Sesovich, the vice president and chief negotiator. We are negotiating U energetically on these issues and you know, we have some time to go before then This episode of the business is sponsored by PWC. Every leader is looking for that next opportunity for growth It requires bold action Forward. always clear This is where PWC comes in. transforming your operations and supercharging your workforce to building resilience and more Working with you side by side to bring the deep tech and AI expertise, strategic insight and industry knowledge empower you to reinvent create new value and lead from the front PWC accelerates what's possible so you can turn vision into value. Discover more at pwc. coot uk Peter just lastly, you went through a number of kind of things you've achieved in your time in office. What does success look like to you in this role? What will you be proud of if you achieve it Success for me looks like a growing economy because you're completely right. goovernment can create the foundations of growth because people need to travel to work, be educated and have the right skills and be healthy and all these things from the private sector And yes, of course, tax and investment and so forth is fundamental But so are the way that we do regulation So the thing the way that we focus on the investment but also in this day and age, having a government that's out there actively doing things to give you one example I'll go back to Alex Handle at Wave because this seems to be sort of I te to bring him up a lot in this interview But of course, we've supported WV a lot. But one of the things is we actually changed the law. to allow autonomous vehicles on the streets of London so that Wave could start piloting its products on the streets of London. I didn't want him to have to go to another city to do it But once you change to the law, We then required the city of London and then CFL to start implementing it all. And of course, it's a lot of risk, if you're in one of these organisations, it's all very well for Secretary of State to change the law. But if you're the person signing the certificate or doing the authorization You must feel the weight of that, so there's a lot of caution in the system. And it sort of wasn't happening So my department from the Secretary of State's office is calling up. L is actually actively engaged in making sure that actually it happened and it happened swiftly so that a British company with a great British product with the ability to go global is being piloted here first in the best the best and biggest city in the world. So this isn't in this day and age When I talk about being activistion interventionist. It means really rolling his sleeves up and acting in a way that I don't think any other seecretary of state in my job will have had to have done and particularly in the age of the disruption around the world, two conflicts going on that are directly impacting our economy The tariffs We're in post COVID world now. we know that this thing might happen again, that kind of thing. Also resilience. you know, I'm acting very, very stridently to maintain resilience in our economy Peter, I have to ask you just quickly because weve talked about Alex Kendall a lot during this interview. Are you going to be very upset if he goes and liistves in New York? Yes. Of course I am, but not just Alex, of them, any of them because I think Why should we should aspire for them to stay And we just strive as a country to create the environment where they stay. And we all have a role in this. Sometimes we don't celebrate entrepreneurship and entrepreneurialism