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My Lords, I add my welcome to the right reverend Prelate the Bishop of Bristol—having been brought up and schooled at Bristol, I am pleased to see her in this House—and to the noble Baroness, Lady Bennett, who, following the previous speech, will have a challenge keeping up with the Joneses.
If ever there were a time for the Government to propose a sweeping raft of Bills to reform, to change, to energise and, most important, to project confidence, it is now. We have long endured the contradiction of continuing economic good news amid political uncertainty. Indeed, the ONS continues to record rising employment, with an unemployment rate of 3.9%—the lowest since 1974. There are now 1.3 million unemployed, down from the 2.5 million when Labour left office. Let that be a cautionary tale to anyone who thinks that the policies proposed by Labour are the answer to any of the challenges that this country faces.
It is worth noting in passing that Labour’s approach would clearly undermine our economic success. I am talking of course of £200 billion of taxpayers’ money to be wasted on a renationalisation programme that would take us back to the 1970s and the extraordinary idea of compulsory confiscation of 10% of companies’ equity.
Instead of a policy programme that would plunge us into recession and national insolvency, we need to respond to uncertainty with clear direction. At least a few Bills in the Queen’s Speech give me cause for optimism. This is an agenda based on low or no tariffs, free movement of goods and services and the relentless engagement required to capitalise on high-growth non-European markets. Indeed, the EU’s own analysis suggests that 90% of future economic growth will be outside Europe.
The gracious Speech is, given the context, just a start. It will lead to continuity of existing trade agreements to which we are party by the EU, implementation of the Agreement on Government Procurement and a new body to protect UK companies from unfair trade practices. These are important threads, but we must hope that the radical content is still to come once we know the framework we will use going forward. When it comes to negotiating our future relationship with the EU in detail, we must be especially clear on our red lines on trade.
Turning to financial services—a sector which, as the noble Baroness, Lady Kramer, said, is key to our economic success and uniquely vulnerable to Brexit uncertainty—the Bill moves to address this directly, and there is much in it to be commended. Asset management remains an absolute key for the UK economy. London is the second largest hub in the world and manages 37% of all European money. We must ensure it stays competitive. Simplifying the rules to allow the selling of overseas investment funds in the UK will assist this. The UK is already home to $3.1 trillion in overseas assets. I do not recognise the gloomy prognosis from the noble Baroness, Lady Kramer, earlier. I speak to people in the City and hear of an incoming wall of money that will arrive with us shortly.
Delivering on the fintech sector strategy will similarly bolster our competitiveness in this key sector. The UK, and London in particular, is unique in that we have a burgeoning tech sector co-located with financial services, and the opportunities for synergy are endless. This is about sector growth, but it is also about providing a better service to consumers, financial inclusion and economic empowerment.
Taking another Bill proposed, the pensions Bill, which I appreciate is not the subject of today, I will address my remarks to the financial services aspect of pensions. The Bill provides the framework for collective defined contribution schemes and improved advice for savers and delivers on the pensions dashboard—so far, so good. The role of fintech will be key to helping people. However, it will allow the pensions industry to grow only if it is able to do so by a responsible approach to regulation. The background briefing on the financial services Bill talks of the need to continue reforming our regulatory architecture after the failure of the twin peaks during the 2008 financial crisis.
While it remains important to protect consumers from bank failure and mis-selling, we must also take an approach that encourages and enables them to take their own responsibility for their own savings. We are far away from that at the moment. In particular, I want to highlight SIPP regulation as an exemplar. Specifically, I want to refer to the case of the company Berkeley Burke, a SIPP provider—which, I should make clear, is a client of my employer—whose SIPP division is now, this last week, insolvent following a ruling by the Financial Ombudsman Service. Berkeley Burke’s SIPP operation provided tax wrapper execution-only advice for investments on behalf of a client. A particular investment failed and even though Berkeley Burke had no advisory commissions—it recommended the consumer seek advice and warned the member of the risk—the FOS, somehow, ruled in the consumer’s favour. Looking back, the only counterfactual available to Berkeley Burke would have been to refuse to carry out execution-only investments that it thought were too risky. However, that would have seen it providing de facto financial advice which it was not permitted to do, so it was damned either way.
If the Government are intent, as I hope they are, on catalysing more responsible pension savings, they need to strike a better balance between protecting consumers and encouraging them to take responsibility. The current system could decimate the market for advice and products, to the ultimate detriment of the consumer. It is extremely depressing to see the ambulance-chasers now going after the entire SIPP industry. I am sure the Government want individuals to continue to have the freedoms to determine their own pension investments if they so choose. This is now a threat directly due to action taken recently by the FOS and the FCA. It is really worrying that this could spread to every single execution investment advice in the City.
Will the Minister speak to the Treasury to get it to commit to ensure that provisions in the pensions Bill support consumers and financial providers to achieve its ends? Will he start by reviewing the statutory status and powers of FOS in this respect and in particular the FCA?
To conclude, the Queen’s Speech provides a foundation for growth and competitiveness that will see our key sectors supported and our strengths bolstered through Brexit. We must ensure that future legislation in this Parliament enables us to benefit from being outside the EU. Restrictions on areas such as EIS, SEIS and VCT rules come to mind. I hope it is not restrained by too many of the playing field constraints that were mentioned earlier and by the Prime Minister this morning. This gracious Speech is only the beginning. Once we know the terms of our exit, the Government must double down to realise the real economic and financial dividends.