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The speech made by Rachel Reeves, the Chancellor of the Exchequer, at the Mansion House in London on 14 November 2024.

Lord Mayor, Governor, Ladies and Gentlemen.

It’s an honour to be here with you this evening.

Thank you to the City of London Corporation for hosting us.

It is a privilege to follow the Lord Mayor’s address…

… and to give my first Mansion House speech.

As the Lord Mayor said, there are so many reasons to be optimistic about our country…

… and I absolutely share his ambition for our potential.

The potential of our financial services sector.

The potential we have to make Britain more competitive.

And critically, the potential that we have to grow our economy.

That is why…

… both in opposition and now in government…

… improving economic growth has been at the very heart of everything that I am seeking to achieve.

In my Mais lecture earlier this year…

… I set out my view that we are in a moment of flux…

… and a new approach was required to build secure and sustainable growth…

… on the platform of stability, investment and reform.

When I arrived at the Treasury just over four months ago…

… I said on day one that economic growth was now our national mission…

… as I set out plans to tackle some of the longstanding issues in the supply-side of our economy.

And two weeks ago, I delivered my first budget as Chancellor of the Exchequer.

It was a once in a parliament budget to wipe the slate clean.

It was a budget that tackled two elements in our plan for economic growth.

First, it provided economic stability…

… by putting our public finances back on a firm footing.

That required difficult choices.

On spending, on welfare, and on tax.

But by making those tough choices now…

… we are providing stability for the long-term.

Because instability in our public finances leads to instability in our financial markets.

That is not good for investment.

That is not good for growth.

And it is not good for business.

So by drawing a line under instability…

… business can now plan for the future.

And we have provided stability for our public services too…

… which now deliver within the spending envelope that they have been set…

… and through reform, they must live within their means.

The second step that we took to improve economic growth at the budget…

… was to change course on public investment.

Public investment was set to fall by nearly 1% of GDP under the plans that I inherited.

That would have held back our growth potential for many years to come.

As the International Monetary Fund have set out…

… low levels of public investment have been a major contributing factor to the UK’s weak growth performance…

… not least, because it makes it harder to catalyse the private investment that we so badly need.

Now, as a result of the measures that we have taken…

… public investment will be £100bn higher over the next five years…

… creating jobs…

… and driving growth and opportunity across the United Kingdom.

This will be delivered alongside a series of vital guardrails…

… to ensure that spending delivers the very best value-for-money…

… provides returns for taxpayers…

… catalyses private investment…

… and significantly boosts growth and productivity.

Because of the steps that we took…

… the Office of Budget Responsibility have set out that, in the long-term…

… our policies would permanently increase the supply capacity of our economy.

But that does not represent the height of my ambition.

I know that we can do more…

… to go further and faster in realising our growth potential.

So that is why economic growth will continue to be the central mission in the weeks, months and years ahead.

Having focused on economic stability and public investment in the budget…

… tonight I will set out the steps that we are taking …

…to drive growth across the other key areas that have long been my priority.

Increasing private investment.

And reforming our economy.

Let me begin with our plans to increase investment.

More investment is how we spur innovation and growth.

It is how we boost the efficiency and the capacity of our economy.

And it is how we create the new opportunities and high-skilled jobs in every part of our country.

Today, I am focusing on how we continue to attract investment across the world.

And how we increase private investment…

… by working in partnership with business…

… and specifically, with the financial services sector.

Before entering politics, I worked as an economist at the Bank of England.

And then in financial services.

Before we came into government…

… I was clear that financial services must play a central part in our economic vision…

… and our plans for economic growth.

Because I know that this sector is the crown jewel in our economy.

It employs 1.2m people, from London to Edinburgh, and from Manchester to Belfast.

It is one of the country’s largest and most productive sectors, accounting for 9% of our economic output.

And it is a global success story, as the Lord Mayor has said: we are the second largest exporter of financial services in the G7.

But we cannot take the UK’s status as a global financial centre for granted.

In a highly competitive world…

… we need to earn that status…

… and we need to work to keep it.

I have been determined to do just that since becoming Chancellor.

Just one week into office, I welcomed the biggest changes to the UK’s listing regime in over three decades…

… to reform our capital markets…

… increasing the flexibility for firms and founders of British high growth companies…

… so we have more British success stories…

… like Raspberry PI and Applied Nutrition…

… IPO right here in the UK.

In our first month, we launched the landmark Pensions Review, and I will return to that later in my speech.

And in September, we announced the final stage of our post-crisis reforms to banks’ capital requirements…

… marking the end of the journey to ensure that banks are well-capitalised…

… working side by side with the Governor…

… strengthening the resilience of our banking system…

… whilst protecting banks’ ability to lend to small and medium enterprises…

… and also for infrastructure.

Now, we must build on the steps we’ve already taken.

In the Spring, we will publish the first ever Financial Services Growth and Competitiveness Strategy.

This will give the financial services sector the confidence it needs to invest.

Financial services is one of the eight growth sectors in our modern industrial strategy…

… recognising that, just as in other parts of the economy…

… we must constantly work to remove barriers to growth and investment.

This approach will ensure that we promote our strengths across the world.

And today, we are setting out the five, priority growth opportunities on which that strategy will focus…

… Fintech…

… sustainable finance…

… asset management and wholesale services…

… insurance and reinsurance…

… and capital markets.

And we will work in partnership with you…

… on the development of the strategy…

… ahead of its publication in the Spring…

… driven forward by our City Minister, Tulip Siddiq

By providing the basis of long-term stability for the sector…

… we are laying the foundations for more private investment.

The UK has the lowest levels of business investment in the G7 as a percentage of GDP.

In the Budget, we confirmed our plans to capitalise the flagship impact investor, the National Wealth Fund…

… to invest in the industries of the future…

… and catalyse over £70bn of private investment.

And in the last month alone, the National Wealth Fund has struck a number of deals…

… including funding to deliver full fibre broadband across the UK…

… and to support the building of new infrastructure in Wales.

The PRA, the Treasury and the National Wealth Fund will work together to crowd in investment by insurers…

… in productive assets…

… taking full advantage of the new Solvency UK regulatory regime.

That includes investment in clean energy projects.

I want London to be the place where the billions needed to finance the energy transition are financed…

… and we have already mobilised significant private capital through the International Investment Summit last month…

… including £4bn for the East Anglia 2 wind farm…

… and £2bn to build new solar farms in Essex, Yorkshire and Wiltshire.

This week, the Prime Minister welcomed the launch of the Climate Investment Fund Capital Market Mechanism on the London Stock Exchange.

Tonight we are building on these foundations to deliver a world-leading sustainable finance framework.

This will be built in partnership with industry…

… and we will be co-launching the Transition Finance Council alongside the City of London Corporation.

This presents a huge opportunity for the UK financial services sector…

… and I am determined that we win this race for global business.

Alongside our National Wealth Fund…

… we must ensure that there are a wide range of other vehicles to drive private investment.

Tonight, I want to focus on our plans in one of those key areas: pension funds.

Our pensions market is one of the largest in the world.

There will be £800bn of assets in workplace Defined Contribution schemes…

… and £500bn of assets in the local government pension scheme…

… by the end of this decade.

Pension funds will always play an important role in the gilt market…

… but for too long, pensions capital has not been used to support the development of British start-ups, scale-ups or to meet our infrastructure needs.

I have long been of the view that this hurts our economy…

… because our highest-potential businesses cannot expand…

… and savers are not seeing the returns on their investment which they deserve.

So I was pleased when the previous government, led by my predecessor as Chancellor…

… working with industry…

… took steps through the Mansion House Compact…

… to encourage more pension fund investment into productive assets.

I welcomed those reforms and we will take them forward…

… but now we need to go further.

That is why one of my first steps as Chancellor was to announce the Pensions Investment Review…

… led by our first ever joint Treasury and DWP Minister for Pensions, Emma Reynolds…

… who has worked with many of you over recent months.

Australian pension schemes invest around 3 times more in infrastructure investment compared to Defined Contribution schemes in the UK…

… and 10 times more in private equity, including in high growth businesses, compared to the UK.

One of the key reasons for this is the much larger size of their funds…

… while our pensions landscape remains highly fragmented.

That means many of our pension funds do not have the capacity to invest at the scale required.

And more often than not, it is Canadian teachers and Australian professors…

… reaping the rewards of investing in British productive assets through their pensions schemes…

… rather than British savers.

That’s not good enough…

… and we need to change that.

So tonight, we are publishing the interim report of the Pensions Investment Review.

It sets out our plans to create Canadian and Australian style-“megafunds” to power growth in our economy…

… and start the most significant set of changes to the pensions landscape since the Turner Review…

… underpinned by a clear commitment to legislate for these changes for the first time…

… in the Pension Scheme Bill next year.

We will deliver a significant consolidation of the Defined Contribution market…

… to enable schemes to deliver better saver outcomes…

… while investing to support growth.

And we will legislate on measures to consolidate the Local Government Pension Scheme…

… one of the largest pension schemes in the world…

… and require that the 86 Local Government Pension Scheme administering authorities consolidate all their assets into 8 pools.

These reforms will deliver real change in our economy.

Through consolidation of the DC market and Local Government Pension Schemes into megafunds…

… previous domestic and international experience suggests…

…that we could unlock around £80bn for investment in private equity, including exciting growth businesses…

… and in vital infrastructure projects including transport, energy and housing projects here in the UK.

We will take a more proactive approach to working with investors to ensure that capital is directed to the UK’s biggest growth opportunities.

We are creating NISTA and we will publish a ten-year infrastructure strategy…

… to ensure that there is a pipeline of projects to attract that investment.

We have established a new pathfinder British Growth Partnership…

… to crowd-in institutional investment into venture capital funds and innovative businesses here in the UK.

This work is already making an impact.

I can confirm this evening that Aegon UK…

… will be a substantial cornerstone investor…

… and Natwest Cushon…

… and they have now agreed to work with the British Business Bank on the launch of the British Growth Partnership…

… with a view to making an investment in the initial fund.

The final area I want to focus on when it comes to investment is the importance of looking internationally.

Last month, with the support of many people in this room – including the Lord Mayor and Barclays, HSBC, Lloyds, and M&G – we hosted an International Investment Summit in London…

… where we saw £63bn of investment flow into the UK.

That shows the potential that we have to attract funding from across the world into our country.

But I want to be clear-eyed about the context in which the UK…

… and its businesses…

… will be operating under in the years ahead.

We face geopolitical uncertainty.

There are other countries who are looking for the very same economic opportunities as we are.

And we face structural challenges too, including those which have come from Brexit.

It will not be straightforward to navigate all of these headwinds.

We should be honest about that.

But as we navigate them…

… I will be guided by a clear principle.

I will always do what is in our national interest…

… for our economy…

… for our businesses…

… and for the British people.

That means free and open trade…

… especially with our most economically important partners.

That includes the United States…

… our single most important destination for financial services trade…

… and there is so much potential for us to deepen our economic relationship on areas such as emerging technologies.

I look forward to working closely with President-Elect Trump, and his team, to strengthen our relationship in the years ahead.

And of course our biggest trading partner is the European Union.

We will not be reversing Brexit or re-entering the single market or customs union…

… but we must reset our relationship.

That will be my message when I attend the Eurogroup meeting of finance ministers in Brussels next month.

We must recognise that our markets are highly inter-connected…

… and ensure that on the economy and in financial services…

… our approach supports growth and delivers investment.

And where there are other important economic opportunities for the UK…

… including by engaging with significant and fast-growing economies like India, China and the Gulf states…

… we will look to realise those opportunities, too.

Alongside economic stability…

… and higher levels of investment…

… we need reform.

Supply-side reform has been a central part of our work in the last four months…

… through changes to our planning system to unlock housing and new infrastructure…

… policies to reduce economic inactivity, improve skills and bring people back into the workplace…

… and a focus on place-based measures to deliver growth right across the UK.

I know the Governor will have more to say on the topic of supply-side reform shortly.

Tonight, I want to build on the work we have done…

… which puts reform at the heart of this government’s agenda.

First, I am clear that this must include reform of our public services.

In the budget, I set out our future spending plans…

… to ensure that our public services have the investment that they need for the years ahead.

That additional investment comes with the clear expectation of better value for money…

… and higher productivity.

As the Secretary of State for Health said yesterday…

… taxpayers welcome the additional investment we put it into the NHS…

… but they worry it won’t be spent wisely.

So reform will be a central focus of the second phase of the Spending Review right across government.

We will use digital technology more effectively.

We will focus on prevention, to manage pressures in the system.

We will join-up services across government to increase efficiency and to bring costs down.

And we will harness the knowledge and expertise of business leaders as we do so…

… so that we can ensure that we bring the best ideas into government from beyond Whitehall, too.

Alongside this …

… we need economic reform to unlock the full potential growth potential of the British economy.

Our approach to regulation is a critical part of that.

As the Prime Minister has already set out, the key test for regulation is whether it will make our economy more dynamic and more competitive.

So we will review the strategic guidance that we give to the CMA and to other major regulators…

… to underline the importance of growth.

That includes our financial service regulators.

It was right that successive governments made regulatory changes after the Global Financial Crisis…

… to ensure that regulation kept pace with the global economy of the time…

… but it is important that we learn the lessons of the past.

These changes have resulted in a system which sought to eliminate risk taking.

That has gone too far…

… and, in places, it has had unintended consequences that we must now address.

Let me set out some examples.

First, while the Senior Managers and Certification Regime has helped to improve standards and accountability…

… some elements of it have become overly costly and administratively burdensome.

So the Treasury, the FCA and the PRA will shortly publish the outcomes of our review…

… including a commitment to consult on removing the current Certification Regime from legislation.

Second, as the PRA have acknowledged…

… post-crisis pay structures made the UK an international outlier on deferral arrangements…

… so we will support their intention to consult on reducing the length of pay deferrals…

… helping firms to attract and retain talent.

Third, some of our regulatory requirements are duplicative, and they could be streamlined…

… so I look forward to seeing the outcomes of the FCA’s Handbook Review…

…which can free up resources for businesses to innovate and to grow.

And finally, while regulation has been successful in improving the quality of financial advice being offered to consumers…

… many people do not get the help with their finances that they want and need…

… so the FCA will shortly consult on transformational changes to financial advice and guidance…

… to ensure that people get the right support.

As these examples show…

…the UK has been regulating for risk, but not regulating for growth.

So while maintaining important consumer protections…

… upholding international standards of regulation…

… and protecting the vital stability of our financial services system…

… now is also the moment to rebalance our approach….

… and take forward the next stage of reforms needed to drive growth, competitiveness and investment.

The last government introduced legislation to make growth and competitiveness secondary objectives for our regulators…

… which we supported in opposition.

Tonight I can announce that we have issued new growth-focused remit letters to the Financial Conduct Authority…

… Prudential Regulation Committee…

… Monetary Policy Committee..

… Financial Policy Committee…

… and the Payment Systems Regulator.

These make clear that I expect them to fully support this government’s ambitions on economic growth.

I welcome the work that the FCA and PRA have already started…

… and I look forward to seeing their next steps to deliver that growth and competitiveness.

I have also heard from many of you that our approach to redress can cause uncertainty..

… and be a drag on investment.

The Financial Ombudsman Service plays a vital role for consumers to get redress when things have gone wrong, and that will not change.

But reform is needed to create a surer climate for investment.

So we have worked closely with the FCA and the Ombudsman to develop a new agreement between the two institutions…

… with clearer expectations on how they cooperate…

… including on historic market practice and mass redress events.

And I strongly welcome their joint Call for Input, to be published tomorrow…

… which seeks to significantly improve the rules governing how the Service operates.

Alongside these measures…

… we are tonight setting out a range of further steps…

… to build a true partnership between government and the financial services sector…

… and unlock its potential.

Let me take you through them.

Because reforming capital markets is a priority for this government…

… we are today committing to legislate to establish PISCES…

… an innovative new stock market…

… by May 2025…

… to support companies to scale and grow.

We are supporting innovation in the financial services sector…

… by launching a pilot to deliver a Digital Gilt Instrument…

… referred to as DIGIT…

… using distributed ledger technology.

Insurance markets are also pivotal in supporting growth.

So we are today publishing a consultation on captive insurance…

… where a new approach could cement the UK’s position as a leading financial services centre.

And alongside the regulators’ continued efforts, we will consider further steps to improve the UK’s Insurance Linked Securities offer.

To protect the integrity of the financial services sector…

… we are working with tech platforms and telco networks to reduce the scale of incidence and losses from fraud.

To empower female entrepreneurs and support women in business…

… we are backing the ambitious work of the Invest in Women taskforce, led by Debbie Wosskow and Hannah Bernard…

… delivered alongside our Women in Finance Charter – led by Dame Amanda Blanc – which continues to go from strength to strength.

To support the mutual sector…

… we are launching our call for evidence on the credit union ‘common bond’…

… and asking regulators to report on the mutuals landscape.

And I welcome the work of Nationwide, Co-operative Group, Arla and Royal London to establish an industry-led Mutuals Council to drive growth in the sector.

And finally, we are publishing our National Payments Vision…

… including decisive action to progress Open Banking…

… and support our fintech businesses.

Lord Mayor, Governor, Ladies and Gentlemen.

In the budget, two weeks ago…

… we fixed the foundations…

… and restored stability to our public finances.

The precondition for a strong and successful economy.

The changes that I have set out this evening will drive growth and competitiveness…

… through investment and through reform.

A long-term strategy to harness the strengths of our financial services sector.

Making the UK a global leader in sustainable finance.

Reducing uncertainty by developing the right approach to redress.

Reinvigorating our capital markets by unlocking private investment through our pension funds.

And reforming our approach to regulation to make it more dynamic and the sector more competitive.

Taken together, these measures represent the most pro-growth financial services package since the financial crisis.

Because we cannot rest on our laurels.

Where we have strengths…

… we must build on them.

Where we have weaknesses…

… we must address them.

And in everything we do, we will work together…

… with you …

… in partnership.

Because that is what our country needs to prosper and to grow.

Thank you very much.