The 696th Lord Mayor of the City of London has urged for bold measures to unlock economic growth, in a keynote address to the Prime Minister and political leaders at Guildhall.
Speaking at the Lord Mayor’s Banquet yesterday, the Lord Mayor will welcome the Government’s Industrial Strategy and the Chancellor’s initial steps on regulatory reform, particularly in pensions. He will reflect on whether current efforts are sufficient to boost investment in UK equities and support the growth of British companies. By highlighting proposals to incentivise investment through ISAs and revisit stamp duty on UK share trading, the Lord Mayor will advocate for a balanced approach to help homegrown businesses thrive.
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The Lord Mayor of the City of London Corporation, Alastair King, said: “Prime Minister, this government has been unequivocal that economic growth is its central mission. The Chancellor has started the process of regulatory reform, particularly in pensions.
“Here in the City, we strongly welcome your Industrial Strategy that recognises the critical importance of the financial and professional services sector in achieving growth. But we must ask ourselves: are we going far enough and are we going fast enough? I believe the answer is no.
“Take ISAs, for example. In the 10 years to April 2023, people put £436bn into cash ISAs but only £255bn into stocks and shares ISAs – even though stocks and shares ISAs have performed better. When the forerunner of ISAs was introduced, the deal was simple: in return for favourable tax treatment investors put their money into United Kingdom equities.
“It is time to look at that model once again – not mandating anything, but, offering better advice and incentives and saying that if you want the full tax break, you need to be investing in United Kingdom publicly quoted equities – which would bring us in line with our competitors.
“Redirecting this money from non-productive to productive assets would help scale British companies, improve returns for savers, and democratise the market by letting many more people benefit. It would require a change in the rules, yes, but not a charge to the Exchequer.
“Pensions also offer us huge scope for opportunity. According to the think-tank New Financial, a mere 8% of funds in United Kingdom defined contribution pensions are invested in United Kingdom equities – far behind the levels found in analogous economies.
“One of my aims this year – in tandem with our Policy Chairman, Chris Hayward – is to engage with key partners to continue the success of the Mansion House Compact launched by my predecessor Sir Nicholas Lyons 18 months ago.
“I am already working with the signatories on a refresh of the Compact, and in the meantime would like to see much more investment in the AIM and Aquis markets – home of fantastic British growth companies from AudioBoom to Shepherd Neame.
“And with the pipeline of institutionally-owned and founder-led companies needing to go public over the next few years growing, we should look again at stamp duty imposed on trading in UK shares. It cannot be logically correct that, as it stands, we do not pay tax on purchases of international vehicles such as Tesla, but we are taxed for investing in a British brand like Aston Martin.
“Recalibrating that misalignment would provide a shot in the arm for homegrown companies looking to scale-up… companies that are currently all too often heavily reliant on US funds, resulting in even more of them listing outside the United Kingdom.
“The City of London Corporation will always be an impartial and honest broker between industry and government. The Government provides the platform for growth, but it is here, in the City, where the growth will take root. Prime Minister, let us find that growth for you.”
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