Rachel Reeves will try to convince some of the UK’s biggest investment firms to take more risks with their cash tomorrow as she looks to unlock billions of pounds of funding for her growth plans, City AM has learned.
In a meeting at Number 11 Downing Street, the Chancellor is set to pitch her new growth agenda to the Infrastructure Taskforce, a group of executives formed last year which includes the bosses of HSBC, M&G, Phoenix, Lloyds Banking Group and Fidelity.
An agenda, sent to those attending, indicates the Chancellor will use the summit to discuss the barriers blocking City investors from taking more risks with their money and financing assets like infrastructure.
The Chancellor is also set to pitch her growth plans to the firms in a bid to coax more funding from the private sector into energy, infrastructure and housing projects, a person familiar with the matter said.
The meeting of the taskforce – its second since its formation in October – comes at a crunch point for Reeves as she looks to win business leaders’ backing for a slate of new growth plans set out last week, including new housing initiatives in Oxford and Cambridge and a fast train link connecting the cities.
After taking power last July, Reeves has suggested that pension cash will be central to financing her economic plans. The newly formed National Wealth Fund has also said it will lean on pension funds for partnership investment into infrastructure projects.
However, writing in City AM today, Mike Eakins, the investment chief of Phoenix Group, said the UK’s pension wealth was currently being “squandered” due to the fragmented nature of the market and a lack of risk appetite from investment chiefs.
“The pensions and insurance sector need to work together with the government to focus on getting UK pensions capital flowing into productive assets, generating stable returns and working collaboratively with that outcome in mind,” Eakins wrote. “No one should be satisfied until that outcome is achieved.”
He warned that the UK’s pension system was being hamstrung by a “conservative” approach to investment decision-making.
The Chancellor will face an uphill battle to unlock cash from the pension system, which has largely shunned infrastructure as an asset class in favour of safer bond holdings.
The government has already tabled a planned overhaul of UK pensions in a bid to unlock more investment, which will see local government pension funds merged and companies given licence to tap into the funding surplus of ‘final salary’ schemes.
Both moves together could unlock some £240bn, according to Treasury calculations.
The government has already tabled a planned overhaul of UK pensions in a bid to unlock more investment, which will see local government pension funds merged and companies given licence to tap into the funding surplus of ‘final salary’ schemes.
Both moves together could unlock some £240bn, according to Treasury calculations.
“The British Infrastructure Taskforce will provide valuable insights for the Government’s 10 Year Infrastructure Strategy ahead of publication in June, and working together we’ll maximise private investment into the infrastructure needed to get the economy growing,” a Treasury spokesperson said.
Ministers are betting on an injection of private sector investment to revive their economic fortunes this year. Voters have soured on the Chancellor’s handling of the economy after sluggish growth in the second half of 2024 and warnings over the impact of her tax-raising Budget in October.
Polling for City AM by Freshwater Strategy, published today, found that some two-thirds of voters had lost confidence in her ability to handle the economy.