Financial Services Reforms

Tulip Siddiq Excerpts

Tuesday 11th July 2023 Commons Chamber

[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.