Jeremy Hunt under pressure from high-level city task force to release hundreds of billions of pounds in funds to support UK growth
Under pressure: Chancellor Jeremy Hunt
Jeremy Hunt has come under pressure from a top city task force to release hundreds of billions of pounds in funds to support the UK’s growth.
The Chancellor is urged to encourage the investment of more of the £4.6 trillion managed by pension schemes and insurers in businesses.
The intervention, days before Hunt unveils its first budget, comes amid soul-searching on the UK’s seemingly diminishing status as a place where businesses can thrive or go public.
It was highlighted by the recent decision by Arm, the Cambridge-based chip designer, to opt for Wall Street as the location for his £50bn float.
At the same time, entrepreneurs are frustrated with Britain’s poor record of translating its enviable reputation for innovation and exciting start-ups into so-called ‘scale-ups’ that can become world leaders . Often they go abroad or are taken over by foreign companies.
Today a letter to Hunt on behalf of the Capital Markets Industry Task Force (CMIT) – set up last year in consultation with the government to address the issue – highlights the collapse “alarming” of the amount of “risk capital” invested in the United Kingdom. assets by UK pension schemes and insurers.
He notes that in 2000, 39 percent of all shares listed on the London Stock Exchange (LSE) were owned by these institutions, but by 2020 that percentage had fallen to 4 percent. Instead, much of the money was transferred to bonds and property.
“The result has been both lower returns for UK pensioners and, crucially, that UK pensions are not being used to drive the growth of the UK economy,” says the letter, signed by boss Peter Harrison. from asset manager Schroders. , and Andy Briggs, who heads pensions giant Phoenix, on behalf of the task force, which is chaired by LSE boss Julia Hoggett.
It highlights two key changes needed. One is the much-delayed Solvency II reform package allowing insurance companies to deploy more risk capital. Another is the need to consolidate thousands of small pension plans.
Hoggett said: “This debate is about everyone. Every pound invested in UK capital markets drives economic growth, benefiting businesses and savers alike.