Without the right tax framework, UK will drive wealth creators away
Lord Mayor Alastair King will welcome leading family offices to Mansion House this week to explore how Britain can channel its £3.9 trillion in investment assets into scaling businesses, upgrading infrastructure, and keeping the UK globally competitive.
Later this week, I will welcome leading family offices from across the globe to the first ever Global Family Office Summit to be held at Mansion House. At its heart lies a simple but urgent question: how can Britain secure the capital we need to scale our brightest businesses, renew our infrastructure, and remain competitive in a fast-changing world?
The scale of the challenge is stark. The UK economy remains under pressure, with inflation proving stubbornly high, interest rates on hold, and no growth recorded in July. This environment makes it even more urgent to unlock the investment needed to power the scale-up economy, upgrade digital, energy and transport networks, and underpin long-term prosperity. Importantly, this shortfall is not due to a lack of capital. Britain is home to £3.9 trillion in investment assets, yet too little is flowing into the sectors that matter most. Our scale-up businesses, already contributing £1.4 trillion to the economy and employing over 3.2m people, require an additional £15bn annually to reach their full potential. Yet 70 per cent report difficulty accessing finance. Infrastructure investment must also rise by at least £5bn a year to meet the government’s £80bn annual target.
This underinvestment puts the UK at risk of falling behind. Competing global centres are actively courting growth capital and investors are increasingly mobile. Without the right environment for capital deployment, we risk losing out on both innovation and the economic dividends it brings.
Research by PwC showed in 2023, family offices accounted for 74 per cent of venture capital invested in UK startups, and around 30 per cent plan to increase allocations to infrastructure over the next two years according to Blackrock. This kind of patient, long-term investment is exactly what the UK needs to bridge the gap between ambition and delivery. The Global Family Office Summit will spotlight opportunities to channel this capital into sectors that drive competitiveness and growth.
Capital is not enough
But capital alone is not enough. The government has rightly developed an industrial strategy that highlights the important role of the financial and professional services. Now we must create the right business environment to make these investments attractive. That means a credible pipeline of investible projects from energy and digital upgrades to transport links. A tax and regulatory framework that doesn’t punish wealth creators, and enables institutions like annuity providers and pension funds to deploy more capital into infrastructure and growth assets.
The City Corporation is already taking action. The Mansion House Accord aims to unlock at least £25bn in domestic investment by encouraging pension funds to allocate more to private markets. Alongside this, the new Investment Hub is targeting £10bn in international capital by 2030.
Deeper collaboration between government, regulators and investors can generate the bold thinking needed to mobilise underutilised domestic capital.
UK defined contribution pension funds hold significant assets but allocate only a small share to domestic equities and growth assets such as start-ups, well below international benchmarks
UK defined contribution pension funds hold significant assets but allocate only a small share to domestic equities and growth assets such as start-ups, well below international benchmarks. Pension schemes in countries like Canada and Australia dedicate a far higher proportion to these areas. That is why, as Lord Mayor, I have been championing initiatives such as the Scale-Up Showcase — opening up Mansion House to bring investors together to back start-ups and high-growth firms. The UK must raise its game to remain competitive.
The Global Family Office Summit is more than a milestone event. It is a signal of intent: that London is serious about leading the next chapter of global investment and talent and about putting that capital to work in ways that deliver tangible benefits for our economy and society.
Alastair King is Lord Mayor of Canada