Pension Investment in UK Equities

Callum Anderson Excerpts

Tuesday 25th November 2025 Westminster Hall

[Callum Anderson (Buckingham and Bletchley) (Lab)]

It is a pleasure to serve under your chairship, Mr Stringer, and to keep the Minister company on the Government side. I congratulate the right hon. Member for Salisbury (John Glen) on securing this debate and on a highly compelling speech and argument.

The question of whether we can create the right incentive framework for domestic pension funds to invest more in the UK is a strong one—not only in UK equities but across all asset classes, including gilts and infrastructure. It goes to the heart of the Government’s growth mission. It is imperative for strengthening our national economy and for unlocking the regional potential of our economies, including in my own constituency of Buckingham and Bletchley, which lies in the engine room of the Oxford-Cambridge growth corridor.

Backing British businesses of all types and sizes across the UK with British capital is fundamental to jobs, greater levels of innovation and, in the long run, higher household incomes. However, it is also important for our economic sovereignty. As hon. Members have explained, if we are unwilling to invest in our own economy, we risk increasing our reliance on international capital, which may not necessarily prioritise the UK’s long-term national interest. I welcome the work that the Minister has advanced through the Pension Schemes Bill. It is a good Bill. Creating larger pension funds that are able to invest at scale will deliver stronger returns for millions of savers, including those in my constituency.

The scale of the challenge with regard to domestic pension investment in our economy is stark. The right hon. Member for Salisbury was clear in setting out the data from the new financial think-tank. The right hon. Member for North West Hampshire (Kit Malthouse) and the hon. Member for Boston and Skegness (Richard Tice) explained the steady decline of domestic pension investment over the last two, three or four decades.

Data that I would cite for international comparisons lies in the Capital Markets Industry Taskforce, of which I know the London Stock Exchange Group is a leading member, and which I cited on Second Reading of the Pension Schemes Bill, but it is worth repeating now. Canadian pension funds are hugely overweight in their own domestic economy relative to their share of the global markets by about two and a half times. The figure for France is a factor of nine; Italy 10; Australia 27; and South Korea is an astonishing 30 times overweight. By contrast, in the United Kingdom we are underweight by about 40%. That was the data from about a year ago. This is not a marginal trend; it identifies a structural weakness in our global competitiveness, our industrial capability and our long-term national economic resilience.

As has been said, it is not just about our pension funds. Since the pandemic, UK households have accumulated greater levels of cash savings—depending on the financial institution, that is £600 billion, £700 billion and so on. It is positive that UK households have bigger cash buffers, but having excess cash not only potentially damages the ability to grow long-term wealth and secure financial security in the long run, but it deprives the many innovative scale-ups that we have in the UK from the investment that they need to grow, create jobs and deliver tax receipts for the Exchequer.

If we want a stronger, more secure economy, we have to mobilise all sources of domestic capital—that includes pension funds, retail savings and also our public institutions like the British Business Bank—to meet what I think are three principal goals. The first is to strengthen the integrity and vitality of UK public equity markets—I do have an interest, having worked for the London Stock Exchange Group before I entered Parliament—which was rightly cited as a priority in the Government’s financial services growth and competitiveness strategy earlier this year.

Listed companies are already employing 4 million people across the UK. When domestic capital supports the domestic economy, firms can raise further growth capital, which we saw to its benefit during the pandemic. It can also create further jobs. A vibrant public market can also attract, in turn, a wider pool of investors, domestic or international, and create a virtuous cycle of demand, valuation and innovation.

Secondly, I have already referred to national economic resilience. When domestic firms depend primarily on foreign investors, as we have seen in the case of Arm—I was at LSEG at the time—they are more likely to list overseas and more likely to relocate there. Their leadership teams shift supply chains and take their tax receipts and intellectual property with it. We need to mobilise our own domestic capital, which secures our long-term economic sovereignty.

Thirdly, lastly, and perhaps most importantly, it is about ensuring that our exciting innovators, of which there are many in my own constituency, are able to thrive and reach their full potential here. They all require patient capital, which was outlined in the industrial strategy. If Britain wants to lead in those industries, we must mobilise all our pension savings to give our unicorns the opportunity to compete globally. I will stop there because I am very aware of my six minutes.