UK Chancellor Rachel Reeves Talks UK Pension Investment
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There's no business like small business. Hiscox Small Business Insurance. Bloomberg Audio Studios. Podcasts, radio, news. Thank you so much. I'm pleased to be joined by the Chancellor herself, Rachel Reeves. Chancellor, I want to start with this conflict at the heart of this policy between maximizing returns for pension funds and boosting UK economic growth.

Clearly we'd all love to see both, but what's your top priority? Well we do need to achieve both and we improve returns for savers in the UK and I know that people every month that save for their pension are making big sacrifices in doing that and

And I want them to know that they're getting the very best return on that money, which means a more diversified portfolio, including investing in fast-growing businesses and also in infrastructure. And what's welcome today is that 17 companies...

companies representing 90% of active pension savers have signed this accord, which means that now 10% of what they invest will be in these private assets. And for the first time ever,

A proportion of those, half of those, will be in UK assets. That's good for the UK economy, more money into the UK economy, but it's also good for savers. So if you're confident it's good for savers and for the economy, why not mandate these pension funds to invest in UK assets? We don't need to mandate them.

them if people are willing to sign a voluntary accord and today we've shown that that is possible with 17 businesses representing 90% of active savers signing up voluntarily to this because they know that it is in the interests of the savers whose money they invest. The challenge up until now

has been that no company wants to go first. And so this coordination, that's the role that government can play. And the work that myself and our pensions minister, Torsten Bell, have done is to bring the industry together in a way that hasn't been achieved before to ensure that the market will move together and send a very clear signal

that the best way to deliver for savers is to have a more diversified portfolio. But if they don't comply, because a one-year review of the original Mansion House Compact showed only limited progress in terms of assets invested, is there a point at which you would mandate pension funds to invest in UK projects? I'm never going to say never, but I don't think it's necessary.

Because what we saw today was 17 pension funds representing the vast proportion of pension savers in the UK deciding voluntarily to do this. And what they wanted was a government that was willing to corral and bring together the industry to ensure that they can best ensure that their

savers, their customers are better served and so I'm really pleased with what we've been able to do. It shows that you don't need to use a mandation if you can work together, have that compelling argument and also crucially, and this is so important, have

the pipeline of investments because another thing that pension funds have said to me is we'd love to invest more in private assets, we'd love to invest in infrastructure if we had that pipeline of projects and that's what our 10-year infrastructure at

plan will enable. There's a number of investable projects, whether that's the Lower Thames Crossing, whether it is investment at Heathrow or Euston Station, or projects around the country from rail in the north to gigafactories. There's so many investments that can be made, but that plan gives them that. Why focus on private markets when the London public market needs such help? There's a stark valuation gap between the UK and the US.

why not help out? Well of course AIM shares are included in this so it's not the case that no listed equities are included in the announcements today but what startup and scale-up businesses say to me is that they end up listing abroad because they raise capital abroad and one scale-up business, a really successful UK scale-up business said to me was that every time that they raise money they become a bit more American and so the point here is that our

fast-growing businesses will be able to raise money through that long-term investment from pension funds and therefore will stay in the UK and will list in the UK so this is good for UK stock markets too. Well you said never say never on mandation would there ever be mandating to invest in UK listed equities? I think what

What we've done today shows that we don't need to use a mandate. But you're not ruling it out? There's a willingness from businesses to do this voluntarily in line with their fiduciary duties to ensure best value for their savers. And today just shows what government and business can do, working in partnership, delivering for working people who in the end have got to be forefront of our minds because it is their money

that is being saved. Their money put aside for retirement and we've got a shared interest, government, business and most of all on behalf of working people to ensure that that money works for them. Chancellor, if we can turn to another issue top of mind here in the city, are you concerned that your non-dom tax changes will cost more than they raise? No, I

not concerned. We've had numbers produced by the Independent Office of Budget Responsibility who forecast that a combination of those rules, but also the temporary repatriation facility, will bring in money for the exchequer. When I became Chancellor last year, I faced a big black hole in the public finances. We needed to take immediate action to deal

We made a manifesto commitment to ensure that non-doms do pay their fair share of tax in the UK. But combined with a temporary repatriation facility, which makes it easier for people to bring money into the UK without facing punitive consequences.

tax is what has convinced the Office of Budget Responsibility and other forecasters to say that this will raise money for the exchequer, money that's much needed to invest, for example, in defence. But the OBR's modelling assumes that non-doms won't leave as a result of your policy. Well, that's not true. And they've admitted that it's very uncertain. The Office of Budget Responsibility do forecast that a number of non-doms will leave the country.

And indeed, every year you have huge flows of people in and out of the country. This is a highly mobile group of people. But as well as people leaving the UK for a whole variety of reasons, we have every year thousands of people, including some of the wealthiest people, come to the UK because they can see that this is a great place to do business, a great place to grow a business.

And you saw yesterday in the immigration white paper a real shift in our policies around immigration towards higher skill, higher value people coming into the UK to better support our economy. And Chancellor, I was interested to hear the Prime Minister saying that immigration doesn't boost economic growth. That directly contradicts the OBR. So who's right, the Prime Minister or the OBR?

Well, of course, immigration can be good for the UK economy, but you've got to get the right type of immigration. Just bringing in more low-skilled workers is not going to make people here in Britain better off, and that is the number one priority of this government. We do need to get the numbers down. More than almost a million people, net migration is a city the size of...

Birmingham coming into the UK every year that's clearly not sustainable for our public services for our housing when we've got nine million people in the UK who are economically inactive of working age yeah it's quite clear that our priority has got to be as it is through our welfare reforms of getting people back into work by giving them the support and training that they need if more people

people doesn't necessarily equal more growth though. Does that rule out the government agreeing to a slimmed down version of the EU's youth mobility scheme? Well we've got the EU-UK summit next Monday. Negotiations are ongoing ahead of that but we were clear in our manifesto there will be no return to free movement under this Labour government. You can see

that finally we've got a government that is trying to get a grip of uncontrolled migration. But, of course, we want Britain to be a place that welcomes entrepreneurs, researchers, the best talent, because that is something that makes our country a great place. Chancellor of the Exchequer, Rachel Reeves, it's always a pleasure to talk to you. Thank you so much for making time. And you.

Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online quote at Hiscox.com. That's H-I-S-C-O-X dot com.

There's no business like small business. Hiscox Small Business Insurance. You're listening to an iHeart Podcast.