Second time lucky for Lucy Rigby?
The Square Mile has welcomed its fifth City minister in two years and a familiar face is back in the hot seat- but can she deliver?
Few tears were shed in the City when it became clear that Rachel Reeves would be out of Number 11 Downing Street. Yet the surprise return of her erstwhile deputy, Lucy Rigby, as Economic Secretary to the Treasury last week may have given the Square Mile a rare opportunity to be cheerful as it faces challenges on multiple fronts.
Rigby was a rare rose between thorns in the Treasury, able to impress the City during her initial near nine month tenure under Starmer’s government, when relations with other figures in the Cabinet had soured. Amid the revolving door of City ministers, Rigby proved the most popular, with some in the Square Mile often having worried about losing her to a reshuffle.
In the end, those fears were proved right – Rigby was moved to Chief Secretary to the Treasury in May. But just weeks later, she has taken the mantle up once more under the new Burnham regime. So, does she have unfinished business?
While the role’s average tenure of eight months made many question its usefulness, Rigby did more than most to connect the government with the heart of the nation’s financial sector.
She championed a new tax holiday for stamp duty on shares for newly-listed companies and introduced the UK to Savvy the Squirrel, a campaign to get more retail investors into UK equities.
The furry rodent mascot wasn’t celebrated in all corners of the Square Mile – but her efforts helped her build bridges with banks, fintech and investment platforms.
But as she works her way through her in-tray after her eight weeks out of the City chair, problems plaguing the Square Mile have far from vanished and fears of a fresh banking sector sector tax raid are keeping execs up at night.
She’s got work to do.
Tackling the takeover wave
The stamp duty holiday on new listings was a welcomed gesture, and Rigby genuinely seemed motivated to try and revitalise the floundering London market.
But during her (short) absence, London’s equity markets endured some major takeover bids, including testing company Intertek, engineering group Rotork and budget carrier easyjet – and the IPO pipeline is looking drier than a suburban garden during a hosepipe ban.
This year alone the market has fallen victim to no fewer than eleven billion-pound takeover bids from private buyers.
Georgina Hamilton, fund manager at Polar Capital, said Labour have so far “not managed to arrest the decline in market capitalisation”.
“She’s got to find a way to address the valuation discount in the UK which perpetuates across every sector,” Hamilton told City PM.
Figures across the City seem to agree that Rigby’s most pressing problem is plugging London’s relentless delistings drama.
Clearly she can’t do this alone and the Financial Conduct Authority must be prepared to work in tandem with the City minister to resurrect the stock market and remove financial disincentives.
Many industry figures have called for the complete abolition of stamp duty on shares, claiming the removal of the red tape will stop both investors and businesses eyeing up the bright lights of New York, which has lured many a Brit.
Rigby also has control of the UK’s personal savings policy, allowing her to directly shape the structure of ISA reforms.
There has also been a renewed call for her to lower tax-free limits on cash ISAs to stop money idling in low interest accounts and attract more interest in stocks and shares ISAs.
Courting fintechs
It’s safe to say the UK’s fintechs have also welcomed back Rigby with some enthusiasm, after the industry showered her with praise, with one figure even claiming that she is one of the few “who gets it” upon receiving the brief.
But Britain is still waiting for the breakout fintech IPO many had hoped for, despite both autonomous driving company Wayve and financial services platform Moneybox listing on the London Stock Exchange Group’s early-stage PISCES network.
Rigby must once more work to galvanise the UK’s fintech IPO prospects and stop both private markets and the US from eating the London market for breakfast.
Those in the space have repeated earlier calls for tax incentives and access to capital in order to be courted to stay in the UK.
Investment bankers have told City PM Rigby needs to “push hard to drive the policy changes required” to get businesses to scale up and remain in the UK.
Ending instability
Above all, industry figures hope that Burnham’s decision to appoint market-friendly Rigby is a permanent one, or at least one longer than eight months.
The frequent turnover under Starmer stalled regulatory reform and left the financial services industry unsure about the trajectory of government regulation – with chatter of bank taxes still sending shivers down the spine of execs in Canary Wharf.
“We would like to see…clear, tangible policy action, supported by greater consistency and long term certainty,” said Emma Watts, head of corporate development at Cavendish.
If Rigby is given the time and backing to see her agenda through, she may emerge as one of the few figures in government the Square Mile may view as an ally.
Second time lucky?