Rachel Reeves, new Chancellor of the Exchequer, gave a barnstorming speech to the annual Mansion House dinner in the City of London. She emphasized that the industry needs to act urgently to help unlock the capital savers who invest through ISAs, and challenged the finance industry’s orthodoxy on savers investing in equities. Her remarks are part of an increasing clamor to jumpstart growth in the laggard UK economy, which entered negative territory in May.
Reeves opened her remarks with a light-hearted acknowledgment of the challenges of her role, saying, “Given the events of the last few weeks, I suspect many of you would sympathise if I had said ‘anything but chancellor’.” This witty remark could have provided the humorous frame for her otherwise substantive comments on getting the economy back on track.
Throughout her speech, Reeves was very intentional about reaching back to historical precedents to make her case. She specifically pointed to the brilliant 1986 “tell Sid” campaign, which Margaret Thatcher’s government launched to persuade the public to buy shares in British Gas. She underlined that similar campaigns can create an environment conducive to investment in British firms today.
The Chancellor mentioned her desire to do more with ISAs, or Individual Savings Accounts. She announced that she would “continue to consider further changes to ISAs, engaging widely over the coming months,” after stepping back from cutting the tax-free limit on cash ISAs following backlash from lenders. Her aim is to move some of the £300 billion that’s already sitting in ISAs into investments in UK companies.
Reeves had those business leaders in the palm of his hand. In his remarks, he called upon the financial sector to transform the dominant “bad” story about our investments. She stated, “For too long, we have presented investment in too negative a light, quick to warn people of the risks without giving proper weight to the benefits.” By promoting a more favorable environment for stock investment, she argues, long-term savers can make a more effective contribution to economic growth.
As well as these initiatives, Reeves said that her administration is not ruling out tax increases in the final budget due on 15 November. Recent U-turns on cuts to welfare benefits and changes to the winter fuel allowance could be behind these expected increases. Human beings respond to these shifts. As the pressure builds to find ways to jumpstart that growth, she noted that the need for regulatory reform within the financial services industry is paramount.
Reeves outlined her vision for these reforms, saying, “In too many areas, regulation still acts as a boot on the neck of businesses,” and emphasized the need to avoid “choking off the enterprise and innovation that is the lifeblood of growth.” Taken together, her remarks signal a move beyond over-caution in regulating. She champions policies that will spur opportunity and prosperity throughout the country.
Reeves talked about her plans, and she showcased previous actions by the federal government to increase public investment. She pointed to the 2013 privatisation of Royal Mail on the London Stock Exchange as one of the main examples. She sounded a hopeful note that these kinds of campaigns could excite broader campaigns to interest everyday savers in investments.
The Chancellor ended her keynote with an explicit call to action to banks and private sector industry leaders. She urged them to embrace a growth-oriented approach, saying, “must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country.”