Financial Services Reforms

Andrew Griffith Excerpts

Tuesday 11th July 2023 Commons Chamber

[The Economic Secretary to the Treasury (Andrew Griffith)]

With permission, Mr Speaker, I will update the House on the Government’s latest efforts to make the UK the most open, innovative and competitive financial centre in the world.

We know how important financial and related professional services are to this country. They employ more than 2.5 million people and generate more than £100 billion in tax revenue. Two thirds of those jobs lie outside the south-east and London. As we lay the foundations for long-term growth, it is vital that these sectors continue to succeed.

Last night, at Mansion House, the Chancellor made clear some of the policies that this Government will pursue, building on last year’s Edinburgh reforms. The full package of policies was published this morning, and I am pleased to share some of them with the House at this first opportunity. They fall under three themes: first, through a series of measures, improving outcomes for long-term savers and increasing investment in high-growth companies by reforming the UK’s pension market; secondly, incentivising companies to start and stay in the UK by strengthening our position as a listings destination; and thirdly, reforming and simplifying our financial services rulebook to ensure that we have the most growth-friendly markets possible, without compromising our commitment to high-quality regulation.

I begin with our pensions market, which is the largest in Europe and worth more than £2.5 trillion. The market is meant to provide safe retirement income for later life. In many cases, it does a very good job of that, but it can do so much more. I pay huge tribute to the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Sevenoaks (Laura Trott), for her crucial work on this.

In laying out our plan, the Chancellor has set three golden rules: first, that in everything we do, we will seek to secure the best possible outcomes for pension savers, with their needs first and foremost; secondly, that we will always prioritise a strong and diversified gilt market as we seek to deliver evolutionary change in our pensions market; and thirdly, that the decisions we take must always strengthen the UK’s competitive position as a leading financial centre.

Today, however, UK institutional investors invest less in UK high-growth companies than their international counterparts. While many defined-benefit funds are in surplus, their returns are lower than some international peers, and some may still be underfunded. At the same time, on their current trajectory, some defined-contribution schemes may not provide the returns that their pension fund holders expect.

Critically, DC schemes also invest less than 1% in unlisted equity. Australian schemes, for example, invest around 5%. To bridge that gap, the Chancellor joined the Lord Mayor and chief executives of many of our largest DC schemes to sign the Mansion House compact. Its signatories, who represent around two thirds of the entire market, are committed to the objective of allocating at least 5% of their default funds to unlisted equities by 2030, unlocking up to £50 billion of investment in high-growth companies by that time—helping companies to grow while improving rates of return for investors.

To further boost returns, we will facilitate a programme of DC consolidation. As the Department for Work and Pensions, Pensions Regulator and Financial Conduct Authority response to the value for money framework consultation makes clear, investment decisions should be made based on long-term returns and not simply on cost. Pension schemes that are not achieving the best outcome for their members will face being wound up by the Pensions Regulator, and we will set out a road map to encourage new collective DC funds.

To help schemes access a wider range of investment opportunities, we have launched the LIFTS—long-term investment for technology and science—competition, which enables them to invest quickly and effectively in unlisted high-growth companies. Bids have already started to come in for up to £250 million of Government support, and we are considering them closely. We will also explore the case for Government to play a greater role in establishing investment vehicles, building on the skills and expertise of the British Business Bank’s commercial arm.

Meanwhile, on defined-benefit schemes, we recognise that the regulatory landscape is too fragmented and believe that there is scope for consolidation. We have launched a call for evidence on the role of the Pension Protection Fund and the part that defined-benefit schemes play in productive investment.

Taken together, our pensions announcement will have a real and significant impact. For an average earner who starts saving at the age of 18, these measures could increase the size of their pension pot by 12% over their career. That is more than £1,000 a year in retirement. That is a real upgrade to the power and the outcomes of our pension schemes.

We already have the largest stock market in Europe, and, in 2021, we attracted the most IPOs—initial public offerings—outside the US, but we want the world’s fastest growing companies to grow here and to list here. We have now published our near-final draft legislation on prospectus reforms, which will create a more effective regime than its EU predecessor, giving companies more flexibility to raise even larger sums from investors more quickly. We welcome Rachel Kent’s excellent Investment Research Review, which was published this morning, and the Government are accepting all the recommendations made to us.

As we continue to free ourselves from outdated retained EU laws, we have abolished protectionist rules, such as the share trading obligation and double volume cap, so that UK businesses can access the best and most liquid markets anywhere in the world.

Finally, we are ensuring that our financial services sector has the regulatory freedom to innovate at a speed that matches our modern world. To that end, the House recently passed the Financial Services and Markets Act 2023, which requires our regulators to facilitate growth and international competitiveness alongside their other objectives. With it, we have published today legislation to repeal almost 100 pieces of retained EU law for financial services that are irrelevant to our markets, such as payment account regulations and long-term investment funds, and we say farewell to the unloved packaged retail and insurance-based investment products. This is not divergence for divergence’s sake, but sensible reforms working with the sector.

This is a significant body of work. This Government’s vision for the UK is one of long-term growth, fuelled by strong British finance, providing returns for savers, funding for businesses, and investments for our economy. That is what we are focused on, and that is what these reforms deliver.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I thank the Minister for an advance copy of his statement. However, after 13 years of a low growth, low investment economy, these promises are too little, too late. On this Government’s watch, far too many high growth firms, particularly in the tech sector, have been bought by foreign competitors or have chosen to list in the US, in order to scale-up and grow.

Arm holdings, a UK tech success story, is now set to float in New York rather than in London. The Chancellor has been completely silent on this. When alarm bells were ringing, the Ministers shrugged their shoulders. Capital held in pension funds is vital for the growth of our most innovative companies. In the US, approximately 70% of venture capital funding comes from pension funds, while in the UK the figure is below 20%. That is just not good enough. This Government’s failure to mobilise pension money into productive assets comes at a cost. British pension savers have not been getting the returns that they should expect. It seems that a person is more likely to own a share in UK infrastructure today if they are a Canadian teacher rather than a British citizen.

Time and again, the Conservative party has promised action to unlock the patient capital that British firms need to thrive and grow, but has failed to deliver. There would surely be greater confidence given to savers, growing firms and financial services if the Government had provided more detail yesterday on how to turn this around. The Chancellor’s compact for DC pension funds lacks any plan to ensure that this will increase investment in UK assets rather than simply going overseas. What guarantee can the Government provide that British high growth firms will be able to access the capital they need to thrive and create good jobs in every part of the UK? With no clear roadmap, how will that be achieved?

I turn to what the Chancellor said last night about wanting to make London a listings destination. It is as though his party had not been in government for 13 years now. I remind the Chancellor that he was sitting around the Cabinet table for the best part of a decade during that time. Labour has been calling for action on listing for months and the Government have refused to listen. In the first quarter of this year there were just four London listings, raising only £81 million, the sixth-worst quarter for IPOs in London since 1995. That is pitiful.

I acknowledge and indeed welcome the fact that in some areas the Government are rather belatedly starting to follow Labour’s lead, but what has taken them so long? Where was the urgency, the ambition and the drive? Can the Minister explain why there was nothing at all in the Chancellor’s speech on green finance? That complacency puts our status as a net zero financial centre at risk.

Labour is committed to ensuring that the City retains its competitiveness outside the EU, whether through creating a positive environment for fintech or reform of Solvency II, and doing so without compromising on stability. Yet the Government have promised Solvency II reform 10 times in recent years with nothing to show for it.

We, and the country, will not take any lessons on financial stability from a Government that set fire to the economy last autumn with their mini Budget. That resulted in a Tory mortgage bombshell, with families facing £240 per month in higher mortgage costs when remortgaging, through no fault of their own. The truth is that the Chancellor’s Mansion House speech was not a big bang at all—it was a small splutter. There was none of the detail required to build confidence, no responsibility taken for the last 13 years of economic failure, and no strategy to end the doom loop of Tory economic failure.

The Labour party has a plan to unlock the full potential of the private sector to get the British economy growing again in the national interest. Through our active partnership with the City, reforms to the British Business Bank and a modern industrial strategy, we will grow the economy and help Britain to become the best place to start and grow a business. This tired Tory Government are out of time. It is time for them to step aside so that we can have a Government who will favour the national British interest—[Interruption.] There is no point Conservative Members laughing. The truth is that we need a Labour Government to provide the energy, the ideas and the leadership that our country and our constituents desperately need.

[Andrew Griffith]

It is always a pleasure to listen to the hon. Lady. In general, what I learn is that the Opposition have no plan. It is all critique and no counter-proposal. She talked about this being too little, too late, but this Government are moving at pace, in what the sector acknowledges as one of the fastest rates of implementation of financial services reform for a generation, taking advantage of our Brexit freedoms and the regained control of our rulebook, which she and her party seek to oppose again and again.

The hon. Lady talked about the lack of growth, but under Labour I am told that the percentage of the workforce with a private pension declined by 20%. She also talked about patient capital, which should not be a point of disagreement between us. This Government have done an enormous amount to support British patient capital, with £2.3 billion of investment, and we have recently increased the length of the British patient capital scheme for a further period.

The hon. Lady also talked about capital going overseas, but that is nothing to the degree to which capital would be flooding overseas were her party ever to return to power, accelerating us to the point where once again the Chief Secretary to the Treasury is writing notes to remind us there is no money left. I potentially discern a point of difference between us, which perhaps in due course she will clarify, in the approach to the compact. It is not the position of this Government to mandate where people’s pensions should be invested. Indeed, the last time a Labour Chancellor decided what was good for our pension schemes, it did not end well.

Finally, the hon. Lady talked about green finance. This Government are doing a copious amount on green finance; only yesterday my right hon. Friend the Secretary of State for Energy Security and Net Zero met some of the world leaders in green finance, and earlier this year we published an ambitious green finance strategy, continuing the UK’s progression to being one of the world’s first net zero-aligned financial centres.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

I should probably note in this context that I am a trustee of the Parliamentary Contributory Pension Fund.

I warmly welcome the work that the Economic Secretary and the pensions Minister have done in this important area, and strongly endorse what the Economic Secretary says about its meaning that future pensioners will be able to retire with higher pension incomes. However, he will know that I have put another piece of urgent work in his inbox, about helping the 93% of our constituents who are unable to afford access to financial advice and have to rely on bog-standard generic guidance. Can he update the House on how his review of the advice-guidance boundary is going and how he will help the majority of people who save in defined-contribution schemes to get access to some sort of personalised coaching or guidance?

[Andrew Griffith]

It is always a pleasure to respond to my hon. Friend and to the work of her tremendous Treasury Committee, which rages across this broad financial sector. She is right to raise the question of access to financial advice; I am afraid the world of financial services regulation is fraught with unintended consequences, and one unintended consequence of financial regulation and a growing compensation culture is to move financial advice beyond the financial ability of so many people who would benefit from receiving it. That is called the advice gap. I and my officials continue to work on that and I look forward to sharing proposals with the House and with my hon. Friend and her Committee in the autumn.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Economic Secretary for his statement. I agree with him on regulation, where he said that regulators would be required to facilitate growth and competitiveness alongside their other objectives. However, as he knows, unless the central bank is obliged to do the same, we might end up in the rather odd and undesirable position of regulators and the central bank taking contradictory actions. I want to ask mainly about pension reform: under the Mansion House compact, potentially 5% of the DC funds are to go towards unlisted equities. There is huge potential in that for growth, for innovation, for jobs, for global competitiveness and for scaling up to compete, but that comes with a commensurate risk, which is presumably up to 5% of the value of the DC fund, should the value of that unlisted equity be wiped out.

While I hope the scheme succeeds, what liability would fall on the Pension Protection Fund should it fail? What liability might there be on the taxpayer? If the scheme works and the value of the funds increases, what guarantee is there that the pension holder will receive the entire value of that increase and it will not be gobbled up by unnecessary and excessive fees?

[Andrew Griffith]

I thank the right hon. Gentleman for his support for growth and competitiveness. We have talked regularly about the need for regulators to improve their performance and deliver better outcomes for those whom they regulate. He talked about the 5%, and I emphasise that, ultimately, it is a voluntary pact; it is for the individual trustees to make those decisions, and the Government continue to have in place a strong programme of regulation. However, I hope he respects the fact that there is risk in inaction as well—the risk that our pension beneficiaries do not receive the pensions that they deserve or the sort of performance from their pension that other international long-term savers benefit from. He raises the issue of defined contribution and the liability for the taxpayer. Of course, that does not attach to defined-contribution schemes, which is why it is so important that they continue to benefit from the highest-quality regulation. I and my colleague the pensions Minister remain very committed to that and will continue to work with TPR and the FCA to ensure that that remains the case.

[Stephen Hammond (Wimbledon) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests. Like my hon. Friend the Member for West Worcestershire (Harriett Baldwin), I warmly welcome the work that my hon. Friends on the Front Bench have done. The Mansion House compact is a huge step forward, but does my hon. Friend the Minister agree that getting the Kent investment review reforms right, particularly on unbundling, will also help us to have high-quality research, enabling better decisions and more investment into high-quality firms?

[Andrew Griffith]

My hon. Friend, who knows so much about this topic and has engaged so lucidly on it, is absolutely right about the importance of investment research. It provides access to markets, makes our UK stock exchanges an attractive international venue, narrows spreads and drives fair valuations for investors and companies seeking investment. This is one example of where we inherited a European fact pattern that was not quite right for the UK. I look forward to pensioners, investors, savers and companies benefiting from our research review.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Work and Pensions Committee.

--- Later in debate ---

[Andrew Griffith]

I thank the right hon. Gentleman for his contributions on how we can deliver the best pensions for long-term savers. There are no estimates for the share of the UK. We are mobilising an additional £50 billion of assets over time. That is evolution, not revolution. We would expect—and it is the job of this Government—to present that investment capital with a wave of attractive options across some of the fastest-growing sectors, as the Prime Minister and Chancellor have laid out, and to remove frictions and obstacles as people seek to invest in the UK, creating a conducive environment for that investment but falling short of mandating it, in the knowledge that the allocation to international investments for some of our actively managed schemes already exceeds that of other comparable companies. On the charge cap, we are this morning publishing a consultation on the new value for money framework. Clearly, we want to continue ensuring that pensioners benefit from fair charges, but also that that does not come at the expense of the underlying performance that they receive.

[Mr John Baron (Basildon and Billericay) (Con)]

I welcome this set of measures, particularly the ending of the packaged retail and insurance-based investment products regime and the introduction of the Mansion House compact, on which some of us have lobbied the Government. I will share two key concerns with the Minister. On fintech and early-stage businesses, we have a problem in this country because the pension fund industry has divested itself of UK equities, to the detriment of the London stock exchange and, ultimately, of financial services generally. It troubles me that that 5% is not focused on early-stage start-ups in the UK, unlike many other domestic pension funds, which do support their own. More generally, a bigger piece of the jigsaw is missing in my view. Pension funds have generally divested themselves of UK equities to such a great extent—some estimates suggest a 90% reduction since 2000—that we need to see more encouragement by Government to get the pension funds to use their wealth by putting it into UK equities for the betterment of the UK economy. After all, they do benefit from tax breaks.

[Andrew Griffith]

I thank my hon. Friend for his, as ever, apposite points. That encouragement is exactly what the proposals are all about: working voluntarily with the sector and encouraging it to lean in. I want people to see 5% as a potential floor, not a ceiling. Many will seek to go much further forward. The broad objective of the Government is to provide good access to capital at every stage of a Government’s life, whether it is our support for the seed enterprise investment scheme, the enterprise investment scheme or the venture capital trust; the expansion of the pool of individual investors who are able to invest directly in the stock market; and some of the opportunities that he talked about, all the way through to ensuring that our listed and private capital markets work extremely well. That is the objective of the reforms.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Public Accounts Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I draw the House’s attention to the fact that I am a trustee of the parliamentary contributory pension fund. Forgive me if I am a little sceptical about Government involvement in pension funds. We have seen how the annual and lifetime allowances, announced at the Dispatch Box by a former Chancellor, have played out. It was also this Government who took us through McCloud in the public sector. The Minister said that the average earner who starts saving at 18 could increase the size of their pension pot by 12% over their career. Can he give the House examples of the assumptions behind that figure, and will he publish the modelling behind it?

[Andrew Griffith]

The Government Actuary’s Department is the source of those figures, which we published this morning—I draw the hon. Lady’s attention to that fact. Clearly, there are a number of assumptions within that. I do not think it is right to be sceptical. These are reforms that have been formed with wide consultation, including from across the House. I hope that we can form a growing consensus so that the industry receives a signal from this place that it is ultimately time to stop talking and to get on with investing. That is the outcome that we seek.

[Robbie Moore (Keighley) (Con)]

I welcome the statement, particularly the aim to unlock assets in the local government pension scheme through an acceleration of pooling with the aim of doubling existing investments in private equity to 10%, which could unlock £25 billion by 2030. Does the Economic Secretary agree that the reforms are a welcome step to improve our growth prospects and boost investments?

[Andrew Griffith]

I absolutely agree with my hon. Friend. The local government pension scheme is a huge opportunity for this country. In many cases, it is already very progressive. It is investing in local opportunities and allocating its capital to the sort of private growth assets that we wish to seek. With £365 billion under management, an increased rate of progress towards asset pooling, which, as the Government have made clear, should attract at least £50 billion, will provide the scale to invest well on behalf of beneficiaries. That is a great opportunity for us all.

[Sarah Olney (Richmond Park) (LD)]

The number of companies listed on the London stock exchange has plummeted to such an extent that the market value of Apple is now greater than the entire FTSE 100. Recently, Cambridge-based chip giant Arm decided to list in New York rather than in London. Does the Minister think that the Mansion House compact will reverse the trend of British-based companies deciding to list elsewhere?

[Andrew Griffith]

Yes.

[Sir Desmond Swayne (New Forest West) (Con)]

This is an excellent package, but one way to ensure that investment flows to productive enterprise is to prevent it from being crowded out by growing Government debt, isn’t it?

[Andrew Griffith]

Our objectives are threefold in that respect: to bear down on inflation; to reduce Government debt, with the benefits that my right hon. Friend seeks; and to grow the economy. These are long-term plans and ambitious programmes, and ultimately, the acid test will be how we can grow our economy.

[Nick Smith (Blaenau Gwent) (Lab)]

The Minister says that he wants the “best possible outcomes” for pension savers. The pensions dashboard, which is designed to help pensioners understand their pension’s performance, was promised by Chancellor George Osborne, but it is still delayed. When will the pensions dashboard be delivered to support UK pensioners?

[Andrew Griffith]

My hon. Friend the Minister for pensions is proceeding at pace to deliver that important element in people’s ability to access the most information. It is just one component. We want people to have good pension choices and to understand the ways that investments are being made. The hon. Gentleman will understand, because we have engaged in the past about pensioners not necessarily having had the best information available to them in a regulated way, that it is better to be right in this case than to be fast.

[Nickie Aiken (Cities of London and Westminster) (Con)]

I was delighted to attend the Mansion House dinner last night as the Member of Parliament representing the City of London and to listen to excellent speeches by the Lord Mayor and the Chancellor of the Exchequer. Does the Minister agree that the Mansion House compact will do much to secure the City of London’s position as a global powerhouse in the financial services sector and will also create more jobs across the country?

[Andrew Griffith]

My hon. Friend, who knows so much and speaks so lucidly for Cities of London and Westminster, is absolutely right. These are a bold and ambitious set of reforms. They will not just help communities across the whole of the United Kingdom—I never fail to remind the House that financial services touch almost every constituency—but continue to underwrite the strong and leading position of the City of London, which she so ably represents.

[Bill Esterson (Sefton Central) (Lab)]

It is always fascinating to hear Ministers justifying their failure over the last 13 years. The Minister would do well to recognise that business investment is at a record low in this country. One way to address the record low in business investment is to listen to the professional services sector, which says that a mutual recognition agreement with the EU would increase that performance and contribution. Why have the Government made no progress on that mutual recognition agreement?

[Andrew Griffith]

I am enormously proud of the fact that we have recently reached agreement with all the member nations of the European Union on the memorandum of understanding in respect of financial services. That joins a number of such agreements, all of which have the objective of seeking access to as many of the growing markets in the world as possible for our financial and professional services. Only last week I met my opposite number, the German deputy Finance Minister, and next week I will be meeting the Luxembourg Finance Minister.

[Sir Christopher Chope (Christchurch) (Con)]

By how much will today’s announcement reduce the burden of regulation on UK business? I ask that because the Government promised that there would be no net increase in the burden of regulation on business during this Parliament, but so far we are £14.3 billion in the wrong direction.

--- Later in debate ---

[Andrew Griffith]

My hon. Friend may wish to ask that question in due course. With respect to the Secretary of State for Business and Trade, I can only speak for the financial services sector. Today we are publishing documents to repeal 100 elements of retained EU law. That builds on reforms we already had in train, such as the prospectus directive. I can certainly give him my confidence and assurance that we are significantly lightening the burden of regulation, but more importantly, making it appropriate for the unique fact pattern of the UK as an open, innovative global market.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

The Minister will be aware that the Bank of England had to intervene in the gilt market after the disastrous mini-Budget last September to restore market functioning, when sharp and rapid rises in gilt yields led to widespread selling of gilts by pension schemes’ liability-driven investment arrangements. We all recognise that we need to do more to ensure that our pensions—especially our defined-contribution schemes—are better. My question is about the risk. What risk assessment has been made of this proposed reform, particularly in terms of where the burden of risk falls?

[Andrew Griffith]

We have published today a consultation, and I hope the hon. Lady will feel that she can raise points during that. My hon. Friend the Minister responsible for pensions will always be happy to undertake engagement with the sector. Needless to say, we believe that we have the right balance of risk. The hon. Lady talks about volatility in the gilt market. That is one of the reasons we are so focused on not making unfunded spending commitments. The last thing that pensioners or the wider economy need is Labour’s £28 billion unfunded spending plans.

[Richard Fuller (North East Bedfordshire) (Con)]

I welcome the announcement of these reforms, but will the Chancellor and the Minister look further at two consequential areas? First, to make the most of the newly available capital, this country needs to attract the world’s best innovators, insurgents and entrepreneurs. The Labour party has already said that it does not want them here and will change tax policy to make sure they look to other countries. This Government need to come forward with measures that say, “We want the best and the brightest to come to the UK.”

Secondly, to make the most of these reforms, we need to ensure that our businesses can work speedily and with clarity. That means that regulators need to focus on what our companies are doing with these reforms, as well as protecting customers and consumers. Will my hon. Friend look at what further measures we can take on regulatory reform?

[Andrew Griffith]

The work of regulatory reform to make this country globally competitive and an attractive place to invest is never done, as my hon. Friend knows. He will also know that we are seeing right now the fruits of the Prime Minister’s vision and strategy, with firms such as OpenAI and Andreessen Horowitz—two of the leading technology firms changing our world—both choosing in recent weeks the United Kingdom out of the entire rest of the world as the place to do business.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Further to the question from the hon. Member for Blaenau Gwent (Nick Smith), what assurances can the Minister give that when the pensions dashboard is launched, it will be mandatory for all providers to participate in it and will not be done on a voluntary basis, to avoid it being what one analyst described as “half-baked”?

[Andrew Griffith]

The hon. Member is quite right: it will be mandatory for all providers. That will be underwritten by legislation. The focus is to ensure that it is a usable, well regulated and well understood user experience for members.

[Mr Philip Hollobone (Kettering) (Con)]

Over the last decade, thanks to automatic pension enrolment, an extra 10 million people have been able to save more for their retirement, but until now, due to investment restrictions, those returns have been limited. What my constituents want to know is, would the reforms announced today have been possible without Brexit, and how much better off will they be when it comes to retirement?

[Andrew Griffith]

I hope that my hon. Friend can reassure the constituents he so diligently represents that on average, as supported by the Government Actuary’s Department, if they started their working life now under the new assumptions about the compact, they could be up to £1,000 a year better off in retirement. That is a meaningful difference. At the end of the day, this is about making people’s money work better for them and harder for them and delivering them better outcomes. He is also right to observe that our ambitious programme of regulatory reforms, although it will never be divergence for divergence’s sake, could not have been achieved if it were not for the ability of this place to set the corpus of regulations under which financial services operate.

[Nigel Mills (Amber Valley) (Con)]

I welcome the Mansion House compact and the focus on auto-enrolment pensions delivering a better pension for their scheme members, but if the Minister looks at the websites of the firms that have signed up to his compact, he will see that they are all still marketing themselves as being cheap and simple for employers, rather than the best quality and best return for savers. What more can we do to give individual members a choice of which scheme they are auto-enrolled in? Will he look at a clearing house scheme, under which it would be individual employees who choose where their pension savings go, not their employer a few years ago based on what was easy and cheap?

[Andrew Griffith]

My hon. Friend is absolutely right to talk about the need for that culture to change, moving away from an excess focus on cost to the detriment of performance—that is what these reforms will achieve over time. He is also right to talk about giving agency to individual long-term savers over time. Making sure that we have that usable journey for pensioners that delivers across the whole of their life is something that my colleague, the pensions Minister, is passionate about.