The Prime Minister and the Chancellor call on the UK’s institutional investors to seize the moment for a ‘Investment Big Bang’ to boost Britain’s long-term growth.
In an open letter to industry, they challenge UK institutional investors to consider investing a greater proportion of their capital in long-term UK assets – from pioneering firms to infrastructure – enabling pensions savers to access better returns and support an innovative, greener future for the UK.
The Prime Minister and Chancellor believe that now is the time to unlock the hundreds of billions of pounds sitting in UK institutional investors and help drive the UK’s recovery from the pandemic.
The letter, co-signed by the Prime Minister and Chancellor, says:
Currently, global investors, including pension funds from Canada and Australia, are benefitting from the opportunities that UK long term investments afford, while UK institutional investors are under-represented in owning UK assets. For example, over eighty per cent of UK defined contribution pension funds’ investments are in mostly listed securities, which represent only twenty percent of the UK’s assets.
The Prime Minister and Chancellor recognise that choosing which assets to invest in remains a matter for pension fund trustees and other institutional investors, but urges them to consider whether they could invest more UK assets that require longer-duration investments.
This challenge comes alongside the action the Government is already taking to remove obstacles to long-term illiquid investment within the UK, by setting up the UK Infrastructure Bank and introducing flexibilities into the cap on fees that defined contribution pension schemes can charge. The Government is also working closely with regulators to ensure a supportive regulatory environment – for example, with the support of the Productive Finance Working Group, the Financial Conduct Authority will launch a framework for a new vehicle for long-term investment, the Long Term Asset Fund. The government remains open to addressing further barriers where they are identified.
This letter comes ahead of the Investment Summit in Downing Street in October.
Andy Briggs, Group CEO Phoenix Group, said:
Anne Richards, Chief Executive of Fidelity International, said:
Chris Cummings, Chief Executive of the Investment Association, said: