Episode 65 Show Me the Money

This is Show Me The Money, your weekly guide to who is making the

cash and how they are doing it. With us tonight, Mike Farley, who

runs the house builder Persimmon. He says he could create more jobs

if he got more hell from the Chancellor. Helen Loveless writes

about enterprising businesses for the financial Mail on Sunday. James

Averdieck set up Gu Puddings. He is hoping for success in his new

business with his brother. Another day, another letter in the papers

from the people who run British companies. Earlier 500 of them wrot,

demanding the 50p tax rate be taxed. Today, 70 bosses have writ on the

the Government to ask it to consider its -- written to the

Government to ask it to consider its ban on another runway at

Heathrow Airport. Mike Farley, on this basic argument

of Heathrow first of all. London is a world-wide hub. We need to

maintain that status. There is an argument that if you spend on

infrastructure, you create jobs, you improve the fabric of the

nation at the same time? That is right. You get the regional

benefits. The hub feeds in on that basis as well. Helen, a lot of

business people travel to meet customers and make contacts - do

they need to travel so much nowadays given all the

technological advances? They need to travel less n the sense there

are video conferencing and other measures. However if you want to be

active on the international stage that involves in going to other

countries. You cannot do that by sitting at home. You sold souffles

to the French. Do you need to make those long journeys to drum up

business? I used to take the Eurostar to France. I don't live

near Heathrow, so it is easy for me to say I am a big fan of Heathrow

expansion. I think Terminal 5 is the best place to travel from,

personally. The actual travel business, to meet new customers, to

make new sales, there is no subs tuet, is there, for actually going

there in -- substitute, is there, for actually going there in person?

Absolutely. 50p tax the other issue. Did you sign the letter? No. I

didn't. Were you asked to? If I was asked I would not sign. No.

not? At this time the Government needs to look at all factors and

where it's going to get its income from. I think it is the right thing

to do. In the short-term I think the Government made that clear.

That is what I like to see happen. A little sacrifice in on the part

of captains of industry. Everybody has to do their bit. James do you

pay it? I used to. But I don't any more. I have been quiet in the past

year. Anything that can be done to reduce tax is a good thing. Do you

think the people who wrote the letter are saying it harms business,

it harms enterprise? I think it drives people to come up with

creative schemes or drives business out of the UK. Either way, I think

it is a bad idea. I don't pay the 50p rate tax rate. I will start

with that. I don't think it discourages entrepreneurialism.

There is evidence that suggests that it can lead to the tax take by

the Chancellor going down. If you put up taxes you encourage people

to legally avoid taxes and you get less money? In the long-term I

think what is the case. Will he be swayed by letters? I don't think he

will be this time T letters are the diminished with the frequent use as

well. Do you talk about these letters as a tactic to sway the

Chancellor? We've had them on 50p tax, on Heathrow. To you think it

is a tactic getting steal? I think they are losing some of their value.

Everything has its time. Time to move on now. Time to move on to

Boom or Bust, a quick flick through some of the news. Starting the

claws out for Tokyo's cat cafes. The places where you can stroke a

cat while drinking your cup of tea. The protection laws are about to

change, bringing in an evening curfew on display cats and dogs. It

means the cafes will is to shut up shop at 8pm, rather than staying

open 24 hours a day. Spread the news, these people are trying to

create the largest sandwich. This is taking part in Wisconsin, where

they like to put bacon and peanut butter between their bread. It was

sold for charity at the annual Wisconsin Bacon Fest. If you are a

pushover, then this could be the job for you. This is still in

America - where else! And still breaking world records. This time

for the biggest number of human dominoes. The emphasis being on

human dominoes. 850 people strapped themselves to the mattresses. They

broke the previous record by 300 people.

So, Mike Farley, the cafes and the cats in Tokyo. It seems that

nowhere is immune to red tape? say, I know we are a nation of cat

lovers. I think it is, I know a lot of bureaucracy. I think one thing I

would encourage the Government is to get rid of all of them around.

Perhaps we could take our claws out to reducing bobg rock casy.

don't -- bureaucracy. You were thinking of the planning regime,

want you? There are a number of hurdles we vo -- have to go through.

The list is never ending. I have yet to meet a businessman who does

not complain about that If you ask you would think it is tax. It is

legislation. Does that suggest that it is a

problem? I think it is a problem. The latest figures show it is about

the Government's pledges to reduce regulation. The net regulation will

be another 50 million plus in costs to businesses because of the new

regulations which have been introduced in 2011. It is clearly a

problem. James, I am gathering you are not a fan of red tape? Red tape

in France is spectacular compared to this country. Don't we get the

regulation we deserve? If business had not done things which offended

against the common sensibility then laws would not be brought in to

curtail it? Maybe. There is a health and safety culture which has

gone rampant. That is what I found. We don't always get the regulation

we deserve. If you are trying to stimulate the economy and growth

through small businesses, the last thing to do is overcrowd them with

regulations. They try and do their best by their staff. The staff in

this cafe, this is what I don't understand. How you persuade cats

to play during the day is another matter. The biggest sandwich - did

that appeal to you? No. Peanut butter was not doing it. And the

bacon was not. How productively you best use your lunch break when time

is so precious. If my employers were doing that it would be

initiative. The best thing is to get away during your lunch break.

Productivity levels are raised if you walk around the park for half

an hour. Those microbreaks do boost your productivity? I think they do.

James, moving on to the human dominoes - it raises a question of

product testing. Those mattresses had to be up to the job for them to

be able to do that test. How important is product testing in

your line of work? I was in the chocolate business. It was very

important. We were testing all the time. I remember I used to test

with kind of new products. I used to pop colour packaging into the

local supermarket and when nobody was looking, create space and see

if anybody picked it off the shelves. The fact there was nothing

in there, I would apologise and say "sorry there is nothing in there.

But thank you for picking it up." Id worked? It It worked? It worked

in my case. I am assuming you don't turn on the taps and bounce on all

the beds - but something close? think we are looking at kitchens, a

main feature of the house. We look to innovate our styles. It is a

vital part. This is what sells the house, the kitchen? Followed by the

bathroom. What is the kitchen need to have to wow home buyers? That is

a moving question. Depending on where you are, in what part of the

country. It is innovating all the time. Certainly a lot more goes

into kitchen designs these days. You have unveiled a 50% jump in

profits. A nice surprise for your shareholders, telling them they are

getting �2 billion back in dividends. �6.20 a share. That is

right. Was that money lying in the bank which you no longer have the

need for? It is the strategy. What we are outlining to shareholders

and staff is what we're going to do with the business. That is one half

of it. The business will grow, it will pay back that money over nine-

and-a-half years T other part is that we are looking to grow our

business. We want Persimmon to be a bigger, stronger business. Isn't

that the point that that �1.9 billion could be more productively

used buying land on which you will then build houses for the future?

Persimmon has a good land bank. We have a six-and-a-half year supply.

We can operate on a smaller land bank than that. We have cash to

invest in the future. I thought the trick was to buy up as much land as

possible to keep the price artificially high. It has been

proved that is not the case. should not read into this that this

is you effectively saying you don't think you will be able to build and

sell that many houses in the years ahead, so you are not going to buy

the land because you don't think you will need it? On the contrary.

We are setting out a route map for shareholders and our business. We

have clear direction for the business of the future. We do need

to build more houses, don't we? We are building fewer than in

generations. As many as the 1920s. You are right. What is stopping the

building? Lack of available mortgages. That is the crucial

criteria. Not the mortgages themselves; it is the loan to value

rash yo. It is first-time buyers and that lack of deposit, having to

find 20% deposit. People don't have that �30,000-�40,000. Things would

not have been helped by the Halifax putting up its standard variable

rate this weekend? Not at all. No- one likes to see an interest rate

rise. Overall mortgages are still cheap. If you look at the overall

rate, 4%. My first mortgage I was paying 15%. That was a long time

ago. Mortgages are relatively cheap. You are a crucial player. Any

discussion about how you get growth in this why r economy and how you

create more jobs, one way is to build more houses?. Very much so.

It has been proven for each house build that creates five new jobs.

That is not just jobs on the housing sites, that is people in

the high street, building societies, retailers, estate agents, et cetera.

It supplies jobs for all those people. Have you said this to the

Chancellor? The Government has listened. We hope for an

announcement later this month. We hope they will bring forward 95%

mortgage. That is number one priority for the industry. We will

wait for that announcement. This is a deal where the Government helps a

little, you as house buildings help a little and the homeowner chips in

a substantial chunk as well. As far as the homeowner is concerned he is

putting out 5% deposit, swi a realistic deposit for people to

save. We are putting 3.5% of the payments into a fund and the

Government is giving a guarantee of 5.5%, which banks are hoping for.

It is good business all around. What could happen is volumes of the

industry could grow by 10-15%. So the number of new houses which

could be built as a result of schemes like this, 10% more than

before? That is possible. impact that could have on job

creation would be what? If you work that five times up, extra house

build, that is a substantial number of jobs in the industry and

ancillary business as well. If it is such a winner, it makes you

wonder why it has not been done before? I think the Government have

listened. Let's look forward rather School leavers who want to start

their own business, rather than go to university, are to be offered

loans by the Government to get them going. It's reported the plans may

be in place in time for the Budget on the 21st of March. Is a scheme

like this going to make a difference, is it needed? I think

it is needed. There are many young people with good business ideas.

Many solid established businesses have trouble getting bank finance

so, yes, this would be a great way to stimulate the growth of small

businesses. You also stimulate the growth of employment and further

jobs. The comparison has been made with these and student loans. These

can be anything up to �36,000 in some cases. We could be talking

about some substantial amounts of money being made available. I think

it would be a small amount to get started and alongside that they

will be offering mentoring which must be a key part of any package

to make sure people have the business support they need. The

other thing I read this morning is that people will have to pitch

Dragon's den style for funding, they will not just be given the

cash. They have to demonstrate they have a good business plan, a good

business idea and that the business is Bible. Would this have helped

you? You were not a school leaver of course but some Government

encouraged inducement? I was 30 years old when I started. The only

thing that concerns me about this is that most people when they leave

school firstly do not have an idea about what they want to do and

secondly have not really got the experience that you need to start a

business. I would be encouraging people to go and get experience,

work for a really good company in the sector they are interested in

before they actually died in and commit money. Do you think it is a

mistake that people are being encouraged to think Starting Your

Own Business straight out of school as an alternative to employment or

university? Yes, I think there are better uses for Government money. I

would rather encouraged links between business and universities,

encourage people to go out and export more as we were talking

about earlier. I think it is too early for people, sorry to put a

damper on things, far be it from me to discourage entrepreneur

serialism but I think it should be discouraged. The there are

university initiatives to help students put their ideas into

reality. That is happening already. Also use a pause there are jobs for

these people to walk into and there are not. If you think we can

encourage them to contribute to the economy and set up their inventions,

that has got to be encouraged. have employed quite a scoop --

quite a few school leavers and the issue employers have is the

discipline of these guys when the start in the world of work. It is

very important to get used to the world of work before starting a

business. A don't you learn by doing? I absolutely. Yes, you do,

but you do not have to start a business immediately. 18 is very

young and the types of businesses you will be encouraging are not

going to be, in my view, I think they will have high failure rates

and not be the kind of businesses we necessarily want to encourage.

We should be going for export orientated hi-tech high I p

businesses. I do not think there is not room for both. You are seeing

they are not the kind of businesses we want to encourage but you do not

know, there are some 18-year-old people out there with fantastic

ideas, they might be the Google of the future. If they have fantastic

ideas I am sure we will find out. What are you doing nowadays? You

have sold Google, haven't you? have, yes. And how much did you get

for it? We got a pretty good price for it. De pizzazz that the issue

will go? This is the thing, entrepreneur's set up businesses

and then sometimes think what will I do with them? Absolutely, you can

see I am still young guy, I do not want to play golf all day. I am

working in a fantastic new business which has nothing to do with

chocolate which is all about music for online advertising. Are you are

doing this with your brother, I hope the two of you get on? He is

my twin brother, we do get on, we are used to sharing. It has its

down sides but it's upsides as well. You have to be careful about the

relationship and who is doing what, who gets the profits when you sell

the business! Thank you very much. The next big plan for boosting the

economy is this. Get your nails done. Penny Haslam gets her talons

into a booming business. There have never been so many places to get

your nails done. Who would have thought this would make an economic

indicator. A decade ago, going out and getting your nails done on a

regular basis was pretty much unheard of, now there is an Eyl bar

on every high street. In here is a gold mine. -- nail bar. At the

moment we are cutting back on big ticket items but still spending on

smaller treats. 10 years ago there was a growth in poor economic terms

on lipstick scales -- lipsticks sales. What we are seeing now is

potentially a similar phenomenon. One are so many springing up on

every high street? The entry costs are pretty law and the training

times are short. You can start off with a law overhead because Neil

varnishes are not expensive. Nail bars are growing because you cannot

get them done on the internet. It draws people to town centres and

they can socialise and get their nails done for less than a tenner.

The make-up more than 15% of new outlets in the past three years. In

Europe at the height of recession nail polish sales do nearly 10

times as fast as the overall make- up market. In the UK Superdrug is

putting nail bars into some of its stores but there is no real

ownership of the market, 95 % are run by independents. It does seem

we just cannot get enough. What colour are you having? Just natural

with a white tip. I have always done my nails, I have been doing

them on and off for about 10 years. They just make me feel girly and

nice and it completes an outfit I think. It just makes every day

hassles fade away in the background. It is not just the meal bars

themselves cashing in on the trend for a glossy manicured nails. Best

hairdressers has found space for pampering. This man has been in

business for 11 years and set up the manicure table at the front of

his shop at the end of last year and says it has been well worth

doing. We set up for an extra revenue scheme -- scheme. We

thought it would benefit the salon if we offered them an extra service

while they sit under the heat lamp. All climbs enjoy getting their

nails done and for a relatively small outlay of about �100 we are

now generating an extra �100 per day. It is a no-brainer. The rise

of glossy celebrity looks and a wide range of catwalk inspired

colours has pushed the popularity of nail bars. Even Tesco has set

some up in their stores. You can pretty much guaranteed there is one

near you ready to take your money which is pretty handy. Next week

stand by your beds, we have the boss of Best Western on the

programme and we hear from the man who lost everything in the stock

market in the 80s turn his passion for grown-ups into a multi-million

pound business. -- Don't that's -- donuts. A wet Sunday for large

parts of the country and called. There will be a return to chilly

nights for the week ahead and spells of rain blown in on strong

spells of rain blown in on strong winds. Tonight a frost will form

winds. Tonight a frost will form across Scotland and parts of

northern England. It could be IAC in many parts. East of England will

stay wet with sleet and snow mixed in with the rain. It is a cold

start to the working week wherever you are. Many places will have a

fine Monday, perhaps a few scattered showers in the south-west

of England but largely a bright and dry start. There will be a

scattering of showers in Wales which will fizzle out through the

morning. Northern Ireland will have a few showers but mostly a dry and

bright start. A few showers will continue to feed in across the

Highlands of Scotland. Much of eastern and southern Scotland try

and find along with most of northern England. Down this eastern

side that dream is still around in parts of Lincolnshire and East

Anglia lingering for most of the day. The aim will be accompanied by

a strong and bitterly cold wind making it feel quite miserable. The

showers will push back across the home counties even into D East

Midlands the rue the day. -- into the East Midlands. Throughout the

day. Temperatures will be struggling across parts of the East.

At least the rain is falling in areas that really need it. 60 mm of

rain falling in the next 36 hours is in eastern areas which have been

very dry. It will fizzle out on Tuesday but still some vestiges