The investment industry has three asks for Reeves’ Mansion House speech
The investment industry is listening to the Reeves’ rallying cry for growth, but there are three things we need to make it happen, says Chris Cummings
In just over two weeks’ time the Chancellor will deliver her Mansion House address to the financial services sector. It is an important moment for government to demonstrate progress and signal next steps on its Herculean task to inject growth back into the UK economy.
Investment has already been rightly identified as an engine for growth, which is also the theme of our annual conference taking place today. The recently published Industrial Strategy set the wheels in motion for a partnership between business and government to unlock future growth and prosperity.
We now need to build on this momentum if we’re going to deliver for people across the UK.
With the Chancellor’s upcoming speech offering a rallying cry for the rest of her term in government, it is also a moment for our industry to consider what more we can do – here are three things our industry will be hoping to hear in this year’s speech:
Remove stamp duty on shares
Over the last year, we’ve seen a welcome shift towards risk-on regulation. Appropriate risk in the system is imperative for the UK to remain a world-leading investment management centre. There have been positive steps through reforms to the listing regime and pensions market, but we must build on this momentum.
That’s why I’ve called on our industry to lead the charge in becoming the world’s leading digital investment management centre. Through innovation such as fund tokenisation, we can reinvigorate capital markets and encourage more private investment into the UK.
However, we cannot work alone. A vibrant IPO market is a powerful incentive for innovation and early stage risk-taking. Yet stamp duty on UK shares is higher than in the US, France and Hong Kong, giving businesses an additional cost to consider when choosing where to list. Removing this tax, starting with key strategic sectors, could give the UK a significant leg up on the global stage.
Increase pension saving
Second on our wish list is a pensions system that secures financial futures.
We have advocated for sophisticated scale in the pensions system, to give savers access to asset classes and strategies that improve outcomes and capital allocation and we’re glad to see that’s been adopted for the Pension Schemes Bill. Our latest research also shows over 4 per cent of adults believe pension funds should invest a portion of their money in the UK, bringing the benefit of investment beyond households to the wider economy.
But pension savers will need more help to turn these assets into a stable retirement income, and our industry must evolve a new generation of products which help them to do just that. Before this point, contribution levels of eight per cent are simply not high enough for most to have the retirement incomes they expect; increasing these levels is the most effective policy lever government can pull to close this gap.
Rebrand the stocks and shares ISA
Recent research from the FCA found that three in five adults with over £10,000 of investible assets hold at least three-quarters in cash.
Yet we know that money and finances are taboo for many: Brits are more likely to discuss politics and current affairs (50 per cent) than money and finances (29 per cent) at the dinner table. We must create a culture of inclusive investment that encourages people to make financial decisions that benefit them both now and for the long-term.
Bold reform is needed to achieve this, starting with the ISA. We want to rebrand the stocks and shares ISA as the ‘Investment ISA’, a simpler name to encourage uptake.
Just 12 per cent of people in the UK receive help from a financial adviser. However, over 3 in 5 Cash ISA savers would consider investing if given the right support. Our vision for this includes an outcome focused Targeted Support regime and a shift in risk disclosures from warning to informing, empowering consumers to make decisions that work for them.
Investment makes us all richer over time. Our industry has a responsibility to help people enjoy prosperous lives and create a thriving domestic economy. It is time for government and industry to deliver on this ambition. Opportunities are out there, and they will reward those who seek them.
Chis Cummings is CEO of the Investment Association