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Jeremy Hunt will this week pledge to scrap nearly 100 pieces of “unnecessary, obsolete and protectionist” EU legislation in a bid to boost Britain’s post-Brexit financial services.
The Chancellor will also unveil plans to boost pension investment in UK corporates to “increase returns” for savers and “free up capital for our growth businesses”.
A series of deregulation proposals as part of the implementation of the government’s so-called Edinburgh reforms will be announced in his Mansion House speech on Monday.
The Telegraph understands that Mr Hunt will unveil new legislation to support stock exchange listings; scrapped laws inherited from Brussels requiring companies to produce “excessive” transparency documents; and public pension reforms aimed at encouraging UK pension funds to invest tens of billions of pounds more in the domestic economy.
A source from the Treasury said the chancellor’s speech will focus on “removing outdated EU regulations, doing away with protectionist rules inherited from our time in the [bloc] and repeal almost 100 unnecessary EU laws”.
The chancellor is expected to say: “I want to lay out plans to enable our financial services industry to increase returns for retirees, improve returns for investors and free up capital for our growth companies.”
It comes as the City of London continues to struggle, with new data from last week showing share prices on the London Stock Exchange (LSE) falling again in the first six months of the year.
Shares in a newly listed payments company also flopped on the first day of trading, another blow to London’s capital markets.
Writing in The Telegraph on these concerns, Andrew Griffith, the town’s minister, said the UK faces “a challenge” due to the reduction in domestic listed companies over the past 20 years.
He added: “The chancellor will reveal more about how we will tackle this head-on.
“He will update our extensive program of capital markets reforms, which will make the UK an even more attractive place for companies to start, scale and grow.”
Mr. Hunt wants to make the documents companies produce when raising capital simpler and more useful to investors.
After consultation, he will also confirm that the Packaged Retail and Insurance-based Investment Products (PRIIPs), which require companies to distribute information sheets showing customers the risks and expected returns of their products, will be scrapped.
A source at the Treasury Department said EU-era rules have forced companies to produce “excessive transparency documents that have failed to improve consumer understanding”.
Mr Hunt will also unveil a long-awaited shake-up in the pensions sector, outlining a series of reforms designed to encourage new UK superfunds and spur more investment in UK assets. He will also focus on incentives to consolidate existing pension pots to the scale needed to invest in high-growth companies and other illiquid assets.
Mr Hunt is expected to initiate a process that will push the current 86 local government pension funds “further and faster” into larger pools of investment. This will build on work started in 2015 by former Chancellor George Osborne and lead to a smaller number of pools exceeding £50bn.
Changes are also expected in the so-called ‘value for money’ pension framework, which the chancellor fears is currently too focused on benefits rather than potential returns.
The Treasury has also considered the role of master trusts and the Pensions Protection Fund (PPF), which could play a greater role in consolidating thousands of smaller UK pension funds.
The PPF currently protects people in pension plans when their employer goes out of business, but the pension lifeboat has consistently delivered higher returns through a diverse investment portfolio. Clearly Labor is also considering using the lifeboat to create a pensions super-fund by encouraging smaller schemes to fit into the PPF.
Treasury sources insisted that the changes would pay off over several years, saying, “This will not be a sudden change. If you look at what happened in Canada, it was like going over a period of 20 years.
Ministers are reportedly concerned about the relatively low capital that pension funds invest in UK assets compared to international peers.
In May, Mr Griffith urged pension funds to embrace a “culture of risk-taking” amid fears that a reluctance to put money in the stock market is dragging the brakes on the economy.
The Chancellor will also unveil a commitment by insurers to invest around 5% of the available premium pools they manage in startups and infrastructure projects.
A senior executive at a FTSE 100 insurer, who has been involved in discussions with industry officials and the government, said: “We would see this as beneficial to both our investors and the economy at large. We would certainly welcome it and think it would be a positive step.”
Mr Hunt will also confirm that Mifid 2 rules, which force financial firms to separate investment research costs from trading costs, will be dropped following a review by Rachel Kent, a senior lawyer for City.
Mifid was an EU-introduced financial investigation regulation that was intended to reduce conflicts of interest, but is widely believed to have harmed capital markets.
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