Share
An overview of The Chancellors Mansion House speech
On the evening of 14 November 2024, Chancellor of the Exchequer Rachel Reeves delivered her first Mansion House speech, outlining a bold vision for the future of the UK’s financial services sector. This address highlighted the government's commitment to fostering economic growth, enhancing competitiveness with a focus on the insurance industry, and driving innovation within the financial services industry. Here, we explore the key points from the Chancellor’s speech and their implications for the financial services sector.
Economic Stability and Public Investment
Chancellor Reeves emphasised the importance of economic stability as a foundation for growth building upon commitments outline in the Autumn Budget. She noted that the recent budget aimed to provide long-term stability by making difficult choices on spending, welfare, and tax. This stability is crucial for financial markets, as it creates a predictable environment in which businesses can plan for the future.
The Chancellor announced a significant increase in public investment, with an additional £100 billion allocated over the next five years alongside a set of guardrails to ensure that spending delivers value for money, provides returns and spurs private investment. This investment is expected to create jobs and drive growth across the UK, providing a boost to the financial services sector by catalysing private investment and enhancing productivity.
Financial Services Growth and Competitiveness Strategy
One of the most significant announcements in the speech was the upcoming publication of the first-ever Financial Services Growth and Competitiveness Strategy in the spring. This strategy aims to give the financial services sector the confidence it needs to invest and grow. The strategy will focus on five priority growth opportunities: Fintech, sustainable finance, asset management and wholesale services, insurance and reinsurance, and capital markets.
By promoting these areas, the government aims to remove barriers to growth and investment, ensuring that the UK remains a global leader in financial services. The strategy will be developed in partnership with industry stakeholders, driven forward by City Minister Tulip Siddiq. On the say day, the government also published a consultation on captive insurance in a move to begin consulting with the industry on the potential for a new approach to captive insurance companies to support competitiveness in the sector.
Attracting Investment and Innovation
Chancellor Reeves highlighted the need to increase private investment by working in partnership with the financial services sector. She announced the capitalisation of the National Wealth Fund, which aims to invest in future industries and catalyse over £70 billion of private investment. Recent deals include funding for full-fibre broadband across the UK and new infrastructure projects in Wales. This will be facilitated by the creation of a new National Infrastructure and Service Transformation Authority (NISTA) and a ten-year infrastructure strategy set to be published next year.
The Chancellor also emphasised the importance of sustainable finance, announcing the launch of the Transition Finance Council in partnership with the City of London Corporation. This initiative aims to position London as a global hub for financing the energy transition, attracting billions in private capital for clean energy projects.
Pension Funds and Long-term Investment
The speech included a focus on leveraging the UK's substantial pension funds to support economic growth. Chancellor Reeves announced the interim report of the Pensions Investment Review, which sets out plans to create "megafunds" similar to those in Canada and Australia. These consolidated funds are expected to unlock around £80 billion for investment in private equity and infrastructure projects.
The government will legislate for these changes in the Pension Scheme Bill next year, aiming to deliver better saver outcomes while supporting growth. This approach underscores the importance of long-term investment in driving economic stability and growth.
Regulatory Reforms and Competitiveness
Chancellor Reeves acknowledged the need for regulatory reforms to enhance the competitiveness of the financial services sector, advocating the need to regulate for growth, rather than for risk. She announced new growth-focused remit letters for key regulatory bodies, including the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). These letters emphasise the importance of supporting economic growth and competitiveness.
The Chancellor also highlighted specific regulatory changes, such as reviewing the Senior Managers and Certification Regime to reduce administrative burdens and consulting on reducing pay deferrals to attract and retain talent. Additionally, the FCA will consult on changes to financial advice and guidance to ensure consumers receive the support they need.
Conclusion
Chancellor Rachel Reeves’ Mansion House speech sets a clear and ambitious agenda for the UK’s financial services sector. By focusing on economic stability, increasing public and private investment, leveraging pension funds, and implementing regulatory reforms, the government aims to enhance the sector's competitiveness and drive long-term growth.
The insurance sector may welcome being marked as one of the five priority growth areas, alongside Fintech, sustainable finance, asset management and capital markets and will look forward to further details around the strategy set to be published in Spring 2025. The Chancellor has laid out an ambition to work with these industries and we expect further call for views alongside the captive insurance consultation to feed into future developments.
The upcoming Financial Services Growth and Competitiveness Strategy, along with targeted initiatives in fintech, sustainable finance, and other key areas, will provide a roadmap for the sector's future. As the UK navigates a complex global landscape, these measures will be crucial in maintaining its status as a leading global financial centre.
Related items:
Banking and finance
United Kingdom