WEBVTT
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This is a City AM Studios production.
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Hello and welcome to Business as Usual brought to you by Workday.
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I'm Matt Kenyon.
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Today we're going to be talking about two men with a combined age of 153 years old who between them have the power to stop AI from killing us all or not.
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To do so, we'll be talking to Alice Denby, our opinion meister, our opinion features editor, who joins me in the hot seat today.
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Oh, I think if anyone's gonna kill us all, it's these two, right?
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Throw Putin in the mix.
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That's the real threat to humanity, isn't it?
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Well we can get it stuck into this anyway.
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Luckily, I think Russia's a bit further behind on its own sovereign AI.
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True.
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I think it's unless unless they're doing some very But I mean on nuclear weapons.
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Oh, of course.
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Yeah.
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Well we'll we'll we'll discuss all about this.
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Uh we are gonna get to some good news.
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I've been reading some of our comments, so I always do, and someone said, uh, I think Simon surfaced this, that we never report on any good news.
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We have some good news today, uh, some very rare good news in London's IPO market, uh, that rarest thing.
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Uh we'll be talking about that.
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We're also gonna have Christian May, our editor-in-chief, joining us later in the program to talk about the pernicious uh creeping impact of tax thresholds.
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Um, but Simon, who's already made an early appearance, joins us now to help uh decode the market's matrix.
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Welcome, Simon.
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Thank you for having me.
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Simon, let's let's talk first about this this AI picture.
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So we've got this bilateral between Trump and Sheer today.
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Could they save us all?
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Um we've been talking about this for a while, but like could this be a moment where proper global regulation falls into place?
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Well, essentially, I was I was uh talking to a friend recently who works at one of the big um AI firms, and they said, you know, this is a moment where a big new uh powerful technology is being is being developed that has ramifications for global security.
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This would be a great time to have a set of global leaders who are really in favor of global cooperation and agreements.
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Uh and we do not have that set of global leaders.
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We have the the complete wrong set of global leaders for that kind of cooperation.
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However, uh, there is going to be a meeting between Trump and Xi.
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Uh, they are the front runners in what's being described as an AI arms race.
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Uh, you know, the two countries with the most powerful tech.
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Um so if some kind of um cooperation can be established, that would be a huge step forward.
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Although I'm not gonna go bet on it personally.
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I mean, look, I raised nuclear weapons for a serious reason because the last time we were in a similar kind of existential situation, if you believe what people say about the threat of AI, was the Cold War, when actually the assurance of mutually assured destruction did mean that a global regulatory framework was put in place which so far has prevented another nuclear attack.
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Um do you think there is a possibility, even though you know we are essentially in a sort of cold war with China, that we could find ground here where our mutual interests align?
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I mean, there's certainly opportunity.
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Uh whether someone like Trump would embrace it is a separate question.
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I think there is um room for cautious optimism as to the timeline uh or the sort of horizon for when a serious threat um is posed by AI.
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Um, you know, people I I speak to at AI firms say actually, you know, the next five years will be, you know, the kind of threats will be individual incidents, they won't be, you know, civilizational threats.
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It'll be things like, you know, um a bank gets hacked and it has to suspend withdrawals for a week or something like that, or an energy grid gets hacked and suddenly there's a you know 48-hour-long power cut.
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Those will be the kind of threats, you know, I don't think we're going to see in the next three or four years, the kind of you know, world-destroying threats.
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So what you're saying is maybe we could have a framework for misuse of AI by state actors, but if it's malign or rogue actors, surely that's much harder to police.
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Um but I guess that you know the hope is that um by that point, by the point when um something becomes really serious, uh, we'll be long past uh the Trump presidency, and there might be someone in his stud that takes this a bit more seriously.
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I do think it it'll take more than just world leaders meeting it, it'll take some kind of serious incident to properly focus minds on cooperation.
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I do worry as well that the debate about AI, particularly here in the UK, and fine, it can sound a bit parochial here in the UK, but that it's dividing along political lines.
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So you have uh Ed Davy making his big speech at the Liberal Democrat conference about how he thinks that we need to slow it down, that we need to regulate it, and so on.
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And then you have much more sort of boosterish people on the right saying, no, we need to take advantage and we need to go for it in the UK.
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And I worry that that is going to get in the way of actually what needs to happen, which is a sensible non-partisan debate on how we benefit from it, but also protect ourselves from it.
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And I think there has to be a realization of the the relative role that the UK can play in that.
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Uh, the UK is not a world leader, and so the bigger danger to the UK is actually losing access to some of this frontier technology rather than having some kind of threat posed by it.
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Purely for the interest of time, Simon, let's talk about something more positive: the IPO news we've had this week.
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Yes.
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An actual IPO, I mean, I almost had to go back to the dictionary and check what it stood for, uh, because uh we have are potentially about to have the biggest London IPO uh in around five years.
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Um there was this you know big flurry of IPOs at the tail end of COVID when there was a lot of pent-up capital um being deployed.
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Uh and then we've had a quite long lull for the last two or three years now, but it looks like that might finally be coming to an end uh with the float of a company called um Airtel Money, which uh provides uh fintech services in Africa.
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It's the sister company of Airtel Africa, which is the telecoms firm.
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Um, and they could be worth as much as nine billion dollars.
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Uh, and they this week have filed their application to float in London.
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I mean, we should celebrate that, but I should introduce a note of pessimism, which is it does come off the back of RAC putting the brakes on it.
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So, literally 24 hours later, after RAC said uh that their uh that talks had broken down, as it were, on their on their roadside uh floats.
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Um it's a fascinating company, Ertel Money.
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I mean, they have more than um 50 million customers in Africa, so they're actually huge.
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I mean, I mean, uh, Revolut is is you know our biggest fintech, and that has about 100.
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So they're not massively far away from Revolut in terms of size.
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Um their corporate structure is utterly bizarre.
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Uh so they're listing in London, but their um actual headquarters is in Dubai, their legal headquarters in Amsterdam, and their operational headquarters in Kenya.
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So how quite how they piece that together, I don't know.
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If it works, it works.
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But the guy running it is a Brit guy called Ian Ferrer Ferrell, I think, uh, who's a Warwick grad who used to work at Vodafone.
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Very good.
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Oh good stuff.
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And is is there a glimmer of hope for the the fintech revival that sometimes we we've been hoping for?
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We've seen Revolute have surprised us a bit with a potential dual listing which could be happening.
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Obviously, they're abandoning us a bit for New York, but they are also at least going to have some presence in the UK.
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Are there others in the pipeline?
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I think I think I think they could well be.
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I mean, I was chatting to the CEO, Ian, earlier.
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Um, he told me they spent the best part of a year trying to decide where they wanted to float and when.
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And they looked at various other options.
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They looked at Amsterdam, they looked at the Middle East for a float, and they settled on London because he said, A, there is a deep pool of capital that is available here that they can get access to, and they valued it for its fintech expertise.
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That there are so many big fintechs in London that there is a pool of uh you know very um well-educated uh investors and analysts that understand this market that know uh what the what the opportunities are.
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Speaking of a sophisticated market, um we we need to talk now about uh all of our favorite websites, uh Pornhub, which is now being subject to a probe by regulators.
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What's going on here?
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Yeah, this story is riddled with innuendo, isn't it?
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But yes, uh Ofcom are uh looking at Pornhub.
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I mean, they're looking into Pornhub, they're not you know doing something inappropriate at their desks.
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Um and the reason for that is because of the new age verification rules that were introduced a few months ago um by uh the or in accordance with the uh Online Safety Act.
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Uh and Ofcom are concerned about the efficacy of Pornhub's uh checks.
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Uh they say they may not have sufficient due diligence, they may not have conducted sufficient due diligence when implementing their new age verification system, which they said may not be highly effective.
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Um so I don't know quite how they've established that, but presumably there was a lot of trial and error involved.
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So it's if we were to tread undelicately around this, we're suggesting that there are people who are managing to get onto Pornhub's site and access its material without necessarily proving that they are over 18.
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Yeah.
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And that there might even be a suggestion that that Pornhub haven't done enough to properly enforce the rules.
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I mean, clearly it can't be great for their business model.
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Because it would have relied before on a lot of people just casually coming across things.
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It's quite a big behavioral change to then actually give them your data.
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There must be quite a lot of for those who do use it, there must be quite a lot of pent-up guilt about actually handing over email address, presumably like a scan of your ID.
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Yeah, credit cards, that kind of thing.
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Credit cards or something you would have just been able to just idle onto before, hypothetically.
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Yeah.
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I I think this is always going to have been the problem with the Online Safety Act in that, you know, it 'twas ever thus that, you know, teenagers try to get access to things they're not allowed to do.
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I mean, you know, I was playing 18 plus video games when I was 10, you know, because I got mum or dad to buy it in the shop and then create an account for the state.
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Well, yeah, I mean, and um I I suspect it's the same thing with this, that there people are always going to find ways around it.
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And if it's as easy as just being able to get mum or dad's credit card and put the details in, then you know I think we should be serious about um protecting children from seeing uh adult content.
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But uh well, but from a business perspective, isn't the problem here that that Pornhub um decided just to pull out of the UK um because it said it's it's no longer possible for us to operate.
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We we cannot do these checks.
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And we can't continue to operate because the Online Safety Act is going to encompass all users, not just those we're trying to protect from this content.
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And it's not just this website, there are many other smaller websites such as community forums and so on that have to go through all of these rigorous checks um and so can no longer operate.
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So, you know, it's it's bad for business, isn't it?
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Yeah, I mean this is the biggest problem with a lot of UK tech regulation, uh, which is that most tech companies, tech platforms are global in their nature, they have you know a global market, a global customer base, but they can't regulate uh for different markets separately.
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And so effectively their regulation globally is the sum total of every national regulation.
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And so if one country makes it too hard for them to regulate the rest of their customer base, they just have to cut them off.
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Right, purely for time and also so I can go and clutch my pearls uh as the ads uh read.
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We'll we'll go to a break now.
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Simon, thank you very much for joining us.
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Thank you.
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Viewers, listeners, you don't go anywhere though.
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Uh, we're gonna be talking about tax thresholds, how they've been very pernicious, and how they amount to a stealth tax.
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After the break, don't go anywhere.
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Guessing is for game shows, not your business, especially when your margin for error is zero.
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Welcome back to Business as Usual.
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Now, the British public has been subject to all kinds of tax hikes over the last few years, but one that really doesn't get enough attention is Frozen Thresholds.
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Now, to talk about this, we are joined by our editor-in-chief, Christian May.
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And I'm here, you have some things to get off your chest about this.
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That's what I'm here for.
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This show is very successful and it's been running now for a while.
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And this is the first time I've exercised my authority to say, I want to come on your show and talk about something.
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You asked in a very restrained way.
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I did.
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What if we'd said no?
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Well, then I would have just burst in and commandeered the microphone because I'm mad as hell and I'm not going to take it anymore.
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Um, I wanted to talk about frozen thresholds because we all of us spend so much of our time looking at possible future tax changes and what went up at the last budget and how they're going to get through this time, and where does the headroom stand?
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And this is all very important and interesting, but there's a sort of foundational sin, if you like, that I think we do need to spend a bit more time considering.
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And I think it accounts for a lot.
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Um, and I'll have to put this into context, I suppose.
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It was 2021, Chancellor Rishi Sunak, obviously at the height of the pandemic, pandemic that was going to end up leaving us with a bill of 300 billion quid.
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Uh, said that he was going to, this was March 2021, he was going to freeze the personal allowance and the thresholds, the the income you're on, at which you start paying different rates of income tax.
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And he said that he was very clear and he knows this is this is going to basically take money away from people, but this is a national crisis and it's the fair thing to do, and that's what he did.
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So he froze those thresholds, the um the uh income level at which you start paying 20% tax, 40%, 45% tax.
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Um and then the following year, a new Chancellor, Jeremy Hunt, said that um he was going to do the same, and in fact, he had to extend it because it was the right thing to do.
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Um and then in Rachel Ree's first budget, amidst all the horror of the 40 billion pounds worth of tax risers that she imposed, she said she was going to end this.
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She said it was appalling, and she was right.
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She said this fiscal drag, as it's known, not only pulls millions of people into higher rates of tax each year because their salaries might go up with inflation, but the thresholds triggering new tax bans have not been going up with inflation.
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And she said it was an outrage, and I applauded it.
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And then 12 months later, uh in November 2025, she realized that she needed even more money and therefore she wasn't able to do this, and she extended it through to 2031.
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So you will have had 10 years of those thresholds being frozen, and that will have uh pulled in over that decade about an extra 50-60 billion quid for the Treasury.
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Which, by the way, accounts for just under a third of the amount by which the benefits and welfare bill will have risen over that 10 years.
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And I was looking at all this yesterday, and I wrote a small column about it, and I wanted to get it off my chest, and I thought we should come in here and talk about it.
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I probably used up all my time just setting the scene, but the scene is egregious, it's appalling.
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You know, I I guess what I wanted to say was of all the reasons, and there are many why people might feel like they're stuck, why we don't feel as a country like we're moving forwards, why people individually don't feel like anything's getting easier, this is the foundational problem.
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They are paying tax to a degree that they really ought not to have been paying.
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And I'll just end by pointing out that if you are on a relatively modest salary of, say, 65 grand, you are now paying three and a half thousand pounds more in tax than you would have been had those tax thresholds risen in line with inflation.
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So I just wanted to put it out there that we shouldn't overlook it as we think about all the other ways in which taxes might rise or should be cut.
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This has been a will be by the time it concludes, assuming it's not extended beyond 2031, a decade-long sin.
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When um I think it was, I can't remember which Labour front bencher it was.
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There was one who confronted Jeremy Hunt about this in Parliament, probably back in 2022, and accused him of being a fiscal drag queen at the time, which I think he's he took actually quite a lot of offense to, and I think probably could have could have taken in in better humour at the time.
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But that was a Labour front bencher saying that to him.
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Now it's presumably we'll flip the other way.
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Quite depressing that there's a bipartisan level of complicity in this.
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It must be very tempting if you are a Chancellor or a Treasury official simply to let this just drift on and on.
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How do you break the deadlock on this?
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But the politics are interesting as well, because I think now both Lib Dems and Reform are saying that they would unfreeze the threshold.
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So it is a pol it is a policy that has some level of bipartisan agreement the other way.
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I suppose it's quite easy if if if you're that bit further away from the prospects of government.
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Not the reform, but actually that far.
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I mean, look, one of the things that's happened here is that it's, and this is precisely what Rachel Reeves did uh in 2025.
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She had to make the numbers add up towards the end of a certain forecast period in order to be able to say that she's going to get through with her fiscal rules.
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Um and one of the ways you can do that is to just say is to point to future, as yet unrealised, technically hypothetical tax arrangements that will on paper mean that you can add it all up.
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But the consequence of that is that if this does stay in place until 2031, and by the way, it could be extended even further, but I think you get it should get people out on the streets at that point.
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But you've got a decade in which people uh are not only uh paying uh more tax than than is reasonable, well out of kilter with inflation, and also you've also got more and more people pulled into those rates of tax that was designed never to catch them.
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And it's it's this sort of foundational sin now that I think accounts for a lot of the feeling that people have of an unfairness, of a certain kind of uh low-level persistent hardship that they're not getting on in the l in in life in the way they thought, in the way they feel they ought to.
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I don't know quite how you get out of it, although I would reiterate once again that the 50 billion quid raised by the policy over a decade really is a tiny little rounding error in the grand scheme of government expenditure, and only a third of the amount by which the welfare bill will increase over the same period.
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Obviously, you're right that it's it's hardest for people in the lower tax brackets, but we are CTM, so we should we should uh you know raise the question of I think it also confuses our whole perception of wealth.
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So a figure that I found really striking.
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If it had gone up in line with inflation, the top rate taxpayers should be earning£191,000.
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Um, instead it's something like£160,000.
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And that's can that's uh that's skewing our whole attitude to wealth and all the conversation we often have about Henry's and so on.
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Yeah, look at the I mean let's look at the figures, and I'll try I'll try and remember them as best I can.
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At the moment, the personal allowance is about£12,500, I think.
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That's the amount you can earn before you pay any tax at all.
00:17:56.400 --> 00:18:05.200
Had it risen in line with the inflation, i.e., had we not been uh suffering under these frozen thresholds, it would be about 16 quid, which is quite a generous allowance by European standards.
00:18:05.359 --> 00:18:13.599
Uh the 40p rate at which you start paying 40p in the pound um is um about what is it, Alice, 45 grand?
00:18:14.799 --> 00:18:16.319
Should should be should be 64 grand.
00:18:16.640 --> 00:18:19.119
Maybe it's 50 grand, I think, and it should be 64 grand.
00:18:19.440 --> 00:18:32.559
Um, and as for the additional rate of 45p, I mean Jeremy Hunt's got a double whammy here because first of all, he uh lowered uh the um threshold uh on salaries down from 150 to 125,000.
00:18:32.720 --> 00:18:38.799
That puts you in that disastrous 100 grand cliff edge withdrawal of personal allowance childcare nightmare zone.
00:18:38.880 --> 00:18:40.559
Uh, and of course he's extended the freeze.
00:18:40.640 --> 00:18:41.440
So, yes, you're right.
00:18:41.599 --> 00:18:48.319
You the 45p rate should only really be applied to income over 190 grand if all was fair, but life's not fair.
00:18:48.720 --> 00:18:50.720
Life's not fair, and that's probably a good note to leave on.
00:18:51.039 --> 00:18:57.599
A sombre note, but we should rename this podcast Life's Life's Not Fair and galvanize the public towards towards rage.
00:18:57.759 --> 00:19:00.559
Uh, Christian, thank you so much for coming in for your your eight minutes rage.
00:19:00.720 --> 00:19:03.119
Uh, it's so important that we do this uh every once in a while.
00:19:03.359 --> 00:19:05.039
And always let us know when you'd like to.
00:19:05.279 --> 00:19:06.240
It's healthy for me, you're right.
00:19:06.880 --> 00:19:09.200
I think it's important, but we'll we'll figure out a good schedule for it.
00:19:09.279 --> 00:19:11.440
And that is all we have time for on the podcast today.
00:19:11.599 --> 00:19:16.960
So thank you all, viewers, listeners at home, for listening to Business as Usual brought to you by Workday.
00:19:17.119 --> 00:19:17.759
Thank you very much.
00:19:17.920 --> 00:19:21.359
This podcast was produced by Jolie, and we'll be back tomorrow at 6am.
00:19:21.759 --> 00:19:22.799
Goodbye.
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This is a City AM Studios production.
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Hello and welcome to Business as Usual brought to you by Workday.
00:00:08.800 --> 00:00:09.839
I'm Matt Kenyon.
00:00:09.919 --> 00:00:19.039
Today we're going to be talking about two men with a combined age of 153 years old who between them have the power to stop AI from killing us all or not.
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To do so, we'll be talking to Alice Denby, our opinion meister, our opinion features editor, who joins me in the hot seat today.
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Oh, I think if anyone's gonna kill us all, it's these two, right?
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Throw Putin in the mix.
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That's the real threat to humanity, isn't it?
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Well we can get it stuck into this anyway.
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Luckily, I think Russia's a bit further behind on its own sovereign AI.
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True.
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I think it's unless unless they're doing some very But I mean on nuclear weapons.
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Oh, of course.
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Yeah.
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Well we'll we'll we'll discuss all about this.
00:00:45.439 --> 00:00:47.280
Uh we are gonna get to some good news.
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I've been reading some of our comments, so I always do, and someone said, uh, I think Simon surfaced this, that we never report on any good news.
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We have some good news today, uh, some very rare good news in London's IPO market, uh, that rarest thing.
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Uh we'll be talking about that.
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We're also gonna have Christian May, our editor-in-chief, joining us later in the program to talk about the pernicious uh creeping impact of tax thresholds.
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Um, but Simon, who's already made an early appearance, joins us now to help uh decode the market's matrix.
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Welcome, Simon.
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Thank you for having me.
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Simon, let's let's talk first about this this AI picture.
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So we've got this bilateral between Trump and Sheer today.
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Could they save us all?
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Um we've been talking about this for a while, but like could this be a moment where proper global regulation falls into place?
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Well, essentially, I was I was uh talking to a friend recently who works at one of the big um AI firms, and they said, you know, this is a moment where a big new uh powerful technology is being is being developed that has ramifications for global security.
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This would be a great time to have a set of global leaders who are really in favor of global cooperation and agreements.
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Uh and we do not have that set of global leaders.
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We have the the complete wrong set of global leaders for that kind of cooperation.
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However, uh, there is going to be a meeting between Trump and Xi.
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Uh, they are the front runners in what's being described as an AI arms race.
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Uh, you know, the two countries with the most powerful tech.
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Um so if some kind of um cooperation can be established, that would be a huge step forward.
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Although I'm not gonna go bet on it personally.
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I mean, look, I raised nuclear weapons for a serious reason because the last time we were in a similar kind of existential situation, if you believe what people say about the threat of AI, was the Cold War, when actually the assurance of mutually assured destruction did mean that a global regulatory framework was put in place which so far has prevented another nuclear attack.
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Um do you think there is a possibility, even though you know we are essentially in a sort of cold war with China, that we could find ground here where our mutual interests align?
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I mean, there's certainly opportunity.
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Uh whether someone like Trump would embrace it is a separate question.
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I think there is um room for cautious optimism as to the timeline uh or the sort of horizon for when a serious threat um is posed by AI.
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Um, you know, people I I speak to at AI firms say actually, you know, the next five years will be, you know, the kind of threats will be individual incidents, they won't be, you know, civilizational threats.
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It'll be things like, you know, um a bank gets hacked and it has to suspend withdrawals for a week or something like that, or an energy grid gets hacked and suddenly there's a you know 48-hour-long power cut.
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Those will be the kind of threats, you know, I don't think we're going to see in the next three or four years, the kind of you know, world-destroying threats.
00:03:37.360 --> 00:03:46.000
So what you're saying is maybe we could have a framework for misuse of AI by state actors, but if it's malign or rogue actors, surely that's much harder to police.
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Um but I guess that you know the hope is that um by that point, by the point when um something becomes really serious, uh, we'll be long past uh the Trump presidency, and there might be someone in his stud that takes this a bit more seriously.
00:03:59.520 --> 00:04:07.680
I do think it it'll take more than just world leaders meeting it, it'll take some kind of serious incident to properly focus minds on cooperation.
00:04:08.000 --> 00:04:16.319
I do worry as well that the debate about AI, particularly here in the UK, and fine, it can sound a bit parochial here in the UK, but that it's dividing along political lines.
00:04:16.480 --> 00:04:24.560
So you have uh Ed Davy making his big speech at the Liberal Democrat conference about how he thinks that we need to slow it down, that we need to regulate it, and so on.
00:04:24.639 --> 00:04:31.360
And then you have much more sort of boosterish people on the right saying, no, we need to take advantage and we need to go for it in the UK.
00:04:31.519 --> 00:04:39.120
And I worry that that is going to get in the way of actually what needs to happen, which is a sensible non-partisan debate on how we benefit from it, but also protect ourselves from it.
00:04:39.680 --> 00:04:45.279
And I think there has to be a realization of the the relative role that the UK can play in that.
00:04:45.600 --> 00:04:56.000
Uh, the UK is not a world leader, and so the bigger danger to the UK is actually losing access to some of this frontier technology rather than having some kind of threat posed by it.
00:04:56.319 --> 00:05:02.480
Purely for the interest of time, Simon, let's talk about something more positive: the IPO news we've had this week.
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Yes.
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An actual IPO, I mean, I almost had to go back to the dictionary and check what it stood for, uh, because uh we have are potentially about to have the biggest London IPO uh in around five years.
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Um there was this you know big flurry of IPOs at the tail end of COVID when there was a lot of pent-up capital um being deployed.
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Uh and then we've had a quite long lull for the last two or three years now, but it looks like that might finally be coming to an end uh with the float of a company called um Airtel Money, which uh provides uh fintech services in Africa.
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It's the sister company of Airtel Africa, which is the telecoms firm.
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Um, and they could be worth as much as nine billion dollars.
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Uh, and they this week have filed their application to float in London.
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I mean, we should celebrate that, but I should introduce a note of pessimism, which is it does come off the back of RAC putting the brakes on it.
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So, literally 24 hours later, after RAC said uh that their uh that talks had broken down, as it were, on their on their roadside uh floats.
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Um it's a fascinating company, Ertel Money.
00:06:09.759 --> 00:06:14.639
I mean, they have more than um 50 million customers in Africa, so they're actually huge.
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I mean, I mean, uh, Revolut is is you know our biggest fintech, and that has about 100.
00:06:19.360 --> 00:06:22.639
So they're not massively far away from Revolut in terms of size.
00:06:22.800 --> 00:06:25.360
Um their corporate structure is utterly bizarre.
00:06:25.519 --> 00:06:34.319
Uh so they're listing in London, but their um actual headquarters is in Dubai, their legal headquarters in Amsterdam, and their operational headquarters in Kenya.
00:06:34.399 --> 00:06:36.240
So how quite how they piece that together, I don't know.
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If it works, it works.
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But the guy running it is a Brit guy called Ian Ferrer Ferrell, I think, uh, who's a Warwick grad who used to work at Vodafone.
00:06:45.839 --> 00:06:46.240
Very good.
00:06:46.399 --> 00:06:46.879
Oh good stuff.
00:06:47.040 --> 00:06:52.240
And is is there a glimmer of hope for the the fintech revival that sometimes we we've been hoping for?
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We've seen Revolute have surprised us a bit with a potential dual listing which could be happening.
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Obviously, they're abandoning us a bit for New York, but they are also at least going to have some presence in the UK.
00:07:01.600 --> 00:07:02.560
Are there others in the pipeline?
00:07:02.800 --> 00:07:04.079
I think I think I think they could well be.
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I mean, I was chatting to the CEO, Ian, earlier.
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Um, he told me they spent the best part of a year trying to decide where they wanted to float and when.
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And they looked at various other options.
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They looked at Amsterdam, they looked at the Middle East for a float, and they settled on London because he said, A, there is a deep pool of capital that is available here that they can get access to, and they valued it for its fintech expertise.
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That there are so many big fintechs in London that there is a pool of uh you know very um well-educated uh investors and analysts that understand this market that know uh what the what the opportunities are.
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Speaking of a sophisticated market, um we we need to talk now about uh all of our favorite websites, uh Pornhub, which is now being subject to a probe by regulators.
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What's going on here?
00:07:51.920 --> 00:07:54.560
Yeah, this story is riddled with innuendo, isn't it?
00:07:54.639 --> 00:07:57.680
But yes, uh Ofcom are uh looking at Pornhub.
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I mean, they're looking into Pornhub, they're not you know doing something inappropriate at their desks.
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Um and the reason for that is because of the new age verification rules that were introduced a few months ago um by uh the or in accordance with the uh Online Safety Act.
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Uh and Ofcom are concerned about the efficacy of Pornhub's uh checks.
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Uh they say they may not have sufficient due diligence, they may not have conducted sufficient due diligence when implementing their new age verification system, which they said may not be highly effective.
00:08:32.240 --> 00:08:36.639
Um so I don't know quite how they've established that, but presumably there was a lot of trial and error involved.
00:08:36.879 --> 00:08:48.320
So it's if we were to tread undelicately around this, we're suggesting that there are people who are managing to get onto Pornhub's site and access its material without necessarily proving that they are over 18.
00:08:48.639 --> 00:08:48.799
Yeah.
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And that there might even be a suggestion that that Pornhub haven't done enough to properly enforce the rules.
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I mean, clearly it can't be great for their business model.
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Because it would have relied before on a lot of people just casually coming across things.
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It's quite a big behavioral change to then actually give them your data.
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There must be quite a lot of for those who do use it, there must be quite a lot of pent-up guilt about actually handing over email address, presumably like a scan of your ID.
00:09:11.840 --> 00:09:13.120
Yeah, credit cards, that kind of thing.
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Credit cards or something you would have just been able to just idle onto before, hypothetically.
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Yeah.
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I I think this is always going to have been the problem with the Online Safety Act in that, you know, it 'twas ever thus that, you know, teenagers try to get access to things they're not allowed to do.
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I mean, you know, I was playing 18 plus video games when I was 10, you know, because I got mum or dad to buy it in the shop and then create an account for the state.
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Well, yeah, I mean, and um I I suspect it's the same thing with this, that there people are always going to find ways around it.
00:09:42.399 --> 00:09:53.919
And if it's as easy as just being able to get mum or dad's credit card and put the details in, then you know I think we should be serious about um protecting children from seeing uh adult content.
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But uh well, but from a business perspective, isn't the problem here that that Pornhub um decided just to pull out of the UK um because it said it's it's no longer possible for us to operate.
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We we cannot do these checks.
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And we can't continue to operate because the Online Safety Act is going to encompass all users, not just those we're trying to protect from this content.
00:10:10.799 --> 00:10:20.000
And it's not just this website, there are many other smaller websites such as community forums and so on that have to go through all of these rigorous checks um and so can no longer operate.
00:10:20.399 --> 00:10:22.399
So, you know, it's it's bad for business, isn't it?
00:10:22.720 --> 00:10:36.799
Yeah, I mean this is the biggest problem with a lot of UK tech regulation, uh, which is that most tech companies, tech platforms are global in their nature, they have you know a global market, a global customer base, but they can't regulate uh for different markets separately.
00:10:36.879 --> 00:10:42.000
And so effectively their regulation globally is the sum total of every national regulation.
00:10:42.080 --> 00:10:48.000
And so if one country makes it too hard for them to regulate the rest of their customer base, they just have to cut them off.
00:10:48.320 --> 00:10:53.519
Right, purely for time and also so I can go and clutch my pearls uh as the ads uh read.
00:10:53.679 --> 00:10:54.879
We'll we'll go to a break now.
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Simon, thank you very much for joining us.
00:10:56.799 --> 00:10:57.039
Thank you.
00:10:57.279 --> 00:10:59.440
Viewers, listeners, you don't go anywhere though.
00:10:59.519 --> 00:11:04.879
Uh, we're gonna be talking about tax thresholds, how they've been very pernicious, and how they amount to a stealth tax.
00:11:05.039 --> 00:11:07.519
After the break, don't go anywhere.
00:11:07.679 --> 00:11:12.399
Guessing is for game shows, not your business, especially when your margin for error is zero.
00:11:12.639 --> 00:11:20.480
Workday is the enterprise AI platform for HR, finance, and IT with a deep understanding of your organization's context and guardrails.
00:11:20.799 --> 00:11:28.799
So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right.
00:11:28.960 --> 00:11:30.080
It's a new workday.
00:11:30.399 --> 00:11:31.840
Welcome back to Business as Usual.
00:11:31.919 --> 00:11:39.919
Now, the British public has been subject to all kinds of tax hikes over the last few years, but one that really doesn't get enough attention is Frozen Thresholds.
00:11:40.000 --> 00:11:43.200
Now, to talk about this, we are joined by our editor-in-chief, Christian May.
00:11:43.279 --> 00:11:45.759
And I'm here, you have some things to get off your chest about this.
00:11:46.080 --> 00:11:46.960
That's what I'm here for.
00:11:47.120 --> 00:11:49.679
This show is very successful and it's been running now for a while.
00:11:49.759 --> 00:11:54.799
And this is the first time I've exercised my authority to say, I want to come on your show and talk about something.
00:11:55.519 --> 00:11:57.120
You asked in a very restrained way.
00:11:58.080 --> 00:11:58.399
I did.
00:11:58.639 --> 00:11:59.519
What if we'd said no?
00:11:59.840 --> 00:12:05.840
Well, then I would have just burst in and commandeered the microphone because I'm mad as hell and I'm not going to take it anymore.
00:12:05.919 --> 00:12:18.159
Um, I wanted to talk about frozen thresholds because we all of us spend so much of our time looking at possible future tax changes and what went up at the last budget and how they're going to get through this time, and where does the headroom stand?
00:12:18.240 --> 00:12:26.000
And this is all very important and interesting, but there's a sort of foundational sin, if you like, that I think we do need to spend a bit more time considering.
00:12:26.159 --> 00:12:28.559
And I think it accounts for a lot.
00:12:28.960 --> 00:12:32.080
Um, and I'll have to put this into context, I suppose.
00:12:32.240 --> 00:12:40.320
It was 2021, Chancellor Rishi Sunak, obviously at the height of the pandemic, pandemic that was going to end up leaving us with a bill of 300 billion quid.
00:12:40.720 --> 00:12:51.679
Uh, said that he was going to, this was March 2021, he was going to freeze the personal allowance and the thresholds, the the income you're on, at which you start paying different rates of income tax.
00:12:51.919 --> 00:13:00.000
And he said that he was very clear and he knows this is this is going to basically take money away from people, but this is a national crisis and it's the fair thing to do, and that's what he did.
00:13:00.080 --> 00:13:08.000
So he froze those thresholds, the um the uh income level at which you start paying 20% tax, 40%, 45% tax.
00:13:08.480 --> 00:13:17.519
Um and then the following year, a new Chancellor, Jeremy Hunt, said that um he was going to do the same, and in fact, he had to extend it because it was the right thing to do.
00:13:18.240 --> 00:13:26.639
Um and then in Rachel Ree's first budget, amidst all the horror of the 40 billion pounds worth of tax risers that she imposed, she said she was going to end this.
00:13:26.960 --> 00:13:28.799
She said it was appalling, and she was right.
00:13:28.960 --> 00:13:41.120
She said this fiscal drag, as it's known, not only pulls millions of people into higher rates of tax each year because their salaries might go up with inflation, but the thresholds triggering new tax bans have not been going up with inflation.
00:13:41.200 --> 00:13:43.360
And she said it was an outrage, and I applauded it.
00:13:43.519 --> 00:13:52.639
And then 12 months later, uh in November 2025, she realized that she needed even more money and therefore she wasn't able to do this, and she extended it through to 2031.
00:13:52.799 --> 00:14:05.840
So you will have had 10 years of those thresholds being frozen, and that will have uh pulled in over that decade about an extra 50-60 billion quid for the Treasury.
00:14:06.000 --> 00:14:14.240
Which, by the way, accounts for just under a third of the amount by which the benefits and welfare bill will have risen over that 10 years.
00:14:14.559 --> 00:14:20.080
And I was looking at all this yesterday, and I wrote a small column about it, and I wanted to get it off my chest, and I thought we should come in here and talk about it.
00:14:20.159 --> 00:14:26.240
I probably used up all my time just setting the scene, but the scene is egregious, it's appalling.
00:14:26.399 --> 00:14:39.600
You know, I I guess what I wanted to say was of all the reasons, and there are many why people might feel like they're stuck, why we don't feel as a country like we're moving forwards, why people individually don't feel like anything's getting easier, this is the foundational problem.
00:14:40.000 --> 00:14:43.519
They are paying tax to a degree that they really ought not to have been paying.
00:14:43.600 --> 00:14:58.240
And I'll just end by pointing out that if you are on a relatively modest salary of, say, 65 grand, you are now paying three and a half thousand pounds more in tax than you would have been had those tax thresholds risen in line with inflation.
00:14:58.399 --> 00:15:04.320
So I just wanted to put it out there that we shouldn't overlook it as we think about all the other ways in which taxes might rise or should be cut.
00:15:04.480 --> 00:15:11.279
This has been a will be by the time it concludes, assuming it's not extended beyond 2031, a decade-long sin.
00:15:12.000 --> 00:15:15.759
When um I think it was, I can't remember which Labour front bencher it was.
00:15:15.840 --> 00:15:26.960
There was one who confronted Jeremy Hunt about this in Parliament, probably back in 2022, and accused him of being a fiscal drag queen at the time, which I think he's he took actually quite a lot of offense to, and I think probably could have could have taken in in better humour at the time.
00:15:27.039 --> 00:15:29.200
But that was a Labour front bencher saying that to him.
00:15:29.360 --> 00:15:31.840
Now it's presumably we'll flip the other way.
00:15:32.080 --> 00:15:35.519
Quite depressing that there's a bipartisan level of complicity in this.
00:15:35.679 --> 00:15:41.679
It must be very tempting if you are a Chancellor or a Treasury official simply to let this just drift on and on.
00:15:41.759 --> 00:15:43.279
How do you break the deadlock on this?
00:15:43.519 --> 00:15:49.120
But the politics are interesting as well, because I think now both Lib Dems and Reform are saying that they would unfreeze the threshold.
00:15:49.360 --> 00:15:54.480
So it is a pol it is a policy that has some level of bipartisan agreement the other way.
00:15:54.799 --> 00:15:58.799
I suppose it's quite easy if if if you're that bit further away from the prospects of government.
00:15:59.840 --> 00:16:01.200
Not the reform, but actually that far.
00:16:01.440 --> 00:16:07.600
I mean, look, one of the things that's happened here is that it's, and this is precisely what Rachel Reeves did uh in 2025.
00:16:07.840 --> 00:16:15.200
She had to make the numbers add up towards the end of a certain forecast period in order to be able to say that she's going to get through with her fiscal rules.
00:16:15.360 --> 00:16:27.279
Um and one of the ways you can do that is to just say is to point to future, as yet unrealised, technically hypothetical tax arrangements that will on paper mean that you can add it all up.
00:16:27.440 --> 00:16:36.080
But the consequence of that is that if this does stay in place until 2031, and by the way, it could be extended even further, but I think you get it should get people out on the streets at that point.
00:16:36.240 --> 00:16:51.039
But you've got a decade in which people uh are not only uh paying uh more tax than than is reasonable, well out of kilter with inflation, and also you've also got more and more people pulled into those rates of tax that was designed never to catch them.
00:16:51.120 --> 00:17:07.119
And it's it's this sort of foundational sin now that I think accounts for a lot of the feeling that people have of an unfairness, of a certain kind of uh low-level persistent hardship that they're not getting on in the l in in life in the way they thought, in the way they feel they ought to.
00:17:07.359 --> 00:17:22.960
I don't know quite how you get out of it, although I would reiterate once again that the 50 billion quid raised by the policy over a decade really is a tiny little rounding error in the grand scheme of government expenditure, and only a third of the amount by which the welfare bill will increase over the same period.
00:17:23.279 --> 00:17:32.640
Obviously, you're right that it's it's hardest for people in the lower tax brackets, but we are CTM, so we should we should uh you know raise the question of I think it also confuses our whole perception of wealth.
00:17:32.720 --> 00:17:34.480
So a figure that I found really striking.
00:17:34.640 --> 00:17:39.200
If it had gone up in line with inflation, the top rate taxpayers should be earning£191,000.
00:17:39.680 --> 00:17:41.839
Um, instead it's something like£160,000.
00:17:41.920 --> 00:17:46.880
And that's can that's uh that's skewing our whole attitude to wealth and all the conversation we often have about Henry's and so on.
00:17:47.039 --> 00:17:51.200
Yeah, look at the I mean let's look at the figures, and I'll try I'll try and remember them as best I can.
00:17:51.279 --> 00:17:54.160
At the moment, the personal allowance is about£12,500, I think.
00:17:54.240 --> 00:17:56.079
That's the amount you can earn before you pay any tax at all.
00:17:56.400 --> 00:18:05.200
Had it risen in line with the inflation, i.e., had we not been uh suffering under these frozen thresholds, it would be about 16 quid, which is quite a generous allowance by European standards.
00:18:05.359 --> 00:18:13.599
Uh the 40p rate at which you start paying 40p in the pound um is um about what is it, Alice, 45 grand?
00:18:14.799 --> 00:18:16.319
Should should be should be 64 grand.
00:18:16.640 --> 00:18:19.119
Maybe it's 50 grand, I think, and it should be 64 grand.
00:18:19.440 --> 00:18:32.559
Um, and as for the additional rate of 45p, I mean Jeremy Hunt's got a double whammy here because first of all, he uh lowered uh the um threshold uh on salaries down from 150 to 125,000.
00:18:32.720 --> 00:18:38.799
That puts you in that disastrous 100 grand cliff edge withdrawal of personal allowance childcare nightmare zone.
00:18:38.880 --> 00:18:40.559
Uh, and of course he's extended the freeze.
00:18:40.640 --> 00:18:41.440
So, yes, you're right.
00:18:41.599 --> 00:18:48.319
You the 45p rate should only really be applied to income over 190 grand if all was fair, but life's not fair.
00:18:48.720 --> 00:18:50.720
Life's not fair, and that's probably a good note to leave on.
00:18:51.039 --> 00:18:57.599
A sombre note, but we should rename this podcast Life's Life's Not Fair and galvanize the public towards towards rage.
00:18:57.759 --> 00:19:00.559
Uh, Christian, thank you so much for coming in for your your eight minutes rage.
00:19:00.720 --> 00:19:03.119
Uh, it's so important that we do this uh every once in a while.
00:19:03.359 --> 00:19:05.039
And always let us know when you'd like to.
00:19:05.279 --> 00:19:06.240
It's healthy for me, you're right.
00:19:06.880 --> 00:19:09.200
I think it's important, but we'll we'll figure out a good schedule for it.
00:19:09.279 --> 00:19:11.440
And that is all we have time for on the podcast today.
00:19:11.599 --> 00:19:16.960
So thank you all, viewers, listeners at home, for listening to Business as Usual brought to you by Workday.
00:19:17.119 --> 00:19:17.759
Thank you very much.
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This podcast was produced by Jolie, and we'll be back tomorrow at 6am.
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Goodbye.
