Chancellor Jeremy Hunt's Mansion House speech

Chancellor of the Exchequer delivers his first Mansion House speech on the evening of Monday 10 July

The Rt Hon Jeremy Hunt MP

My Lord Mayor, Governor, Ladies and Gentlemen – it is an honour to be with you at the Mansion House tonight.

While some may be distracted by events in Windsor, we all know that Walbrook is the place to be this evening.

Thank you to the City of London Corporation for hosting us so generously. It is a privilege to follow the Lord Mayor’s excellent address and to give my first Mansion House speech as Chancellor.

Tonight, I want to talk about long term reforms to our competitiveness, but let me start with the immediate challenge of tackling inflation.

Following the pandemic and energy shock, like other countries, the UK faces difficult challenges.

It has shown itself more resilient than many predicted, but that resilience is itself one of the reasons for higher inflation.

In a cost-of-living crisis, that leads to great concern for many families who see the cost of their weekly food shop or the price of petrol go up.

But with the levers of fiscal and monetary policy, wholesale food and energy prices falling and a government that has made the battle against inflation its number one priority, there is nothing insurmountable in the current situation.

Let me be clear again tonight. Working with the Bank, we will do what is necessary for as long as necessary to tackle inflation persistence and bring it back to the 2% target.

Delivering sound money is our number one focus. That means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary.

It means recognising that bringing down inflation puts more money into people’s pockets than any tax cut.

And it means recognising that there can be no sustainable growth without eliminating the inflation that deters investment and erodes consumer confidence.

Tackling inflation therefore unlocks the Prime Minister’s two other economic priorities – growing our economy and reducing debt – but because it is a prerequisite for both, it must come first.

As we tackle inflation, we must always remember our responsibilities to those struggling the most, so I am therefore grateful to our banks and mortgage lenders for their help in developing last month’s Mortgage Charter.

I agree with the Governor that margin recovery benefits no one if it feeds inflation.

And I will continue to work with regulators to make sure the needs of families are prioritised in a tough period.

This evening, though, I want to look further ahead.

I want to lay out our plans to enable our financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for our growth businesses.

We start from a position of strength.

The financial and related professional services industry employs over 2.5 million people. Although two thirds of them are outside the South-East, it has made London the world’s second largest financial centre and one of the most dynamic cities on the planet.

It generates more than £100 billion in tax revenue, paying for half the cost of running the NHS.

A strong City needs a successful economy, and a strong economy needs a successful City.

Recent challenges have led to some lose hope and even peddling a declinist narrative.

They are profoundly wrong.

I am proud that since 2010, we have one million more businesses and one million fewer unemployed.

And we’ve grown faster than France, Italy, Japan or Germany.

In the last decade we have become Europe’s largest life science sector, Europe’s largest technology sector, its biggest film and TV sector and its second largest clean energy sector.

But as we emerge from our current challenges, the Prime Minister and I have big ambitions for the British economy.

We want to be the world’s next Silicon Valley and a science superpower, embracing new technologies like AI in a way that brings together the skills of our financiers, entrepreneurs and scientists to make our country a force for good in the world.

That means making sure our financial services sector, traditionally so nimble and agile, has the right architecture to provide the best possible security for investors as well as capital for businesses, and the best talent right here in the UK to make that happen.

The structures put in place after the financial crisis have served us well and financial stability will always be our top priority.

But we can further improve the functioning of capital markets, so this evening I set out the government’s Mansion House reforms.

They build on the Edinburgh Reforms I announced in December and the vision for financial services which the now Prime Minister spoke about here in 2021 of an open, sustainable, innovative and globally competitive sector.

Firstly, I am announcing a series of measures to boost returns and improve outcomes for pension fund holders whilst increasing funding liquidity for high-growth companies.

Second, I will set out ways to incentivise companies to start and grow in the UK by strengthening our position as a listings destination.

And finally, we will reform and simplify our financial services rulebook to ensure we have the most growth-friendly regulation possible without compromising our commitment to stability.


I begin with pensions.

The UK has the largest pension market in Europe, worth over £2.5 trillion. It plays a critical role in providing safe retirement income as part of the social contract between generations.

Government policy, such as autoenrollment, has strengthened it but so too has confidence in the expertise of our financial institutions to manage investments wisely.

However, currently we have a perverse situation in which UK institutional investors are not investing as much in UK high-growth companies as their international counterparts.

At the same time on their current trajectory, some defined contribution schemes may not provide the returns their pension fund holders expect or need.

Whilst many defined benefit funds are in surplus, their returns are lower than some international peers and some are still underfunded.

So alongside our outstanding Economic Secretary Andrew Griffith and brilliant Pensions Minister Laura Trott I have engaged with some of our largest pension schemes, insurers, asset managers and experts to put together tonight’s Mansion House reforms. I am also immensely grateful to Sir Jon Symonds and Sir Steve Webb for their advice on how to construct this package. And I’m also very grateful to Gwyneth Nurse and her brilliant team in the Treasury. Gwyneth is of course the real Chancellor as we Official Chancellors come and go.

Tonight I lay out the direction of travel. Sometimes consultations will be necessary, but all final decisions will be made ahead of the Autumn Statement later this year.

And as we make those decisions, I will be guided by three golden rules.

Firstly everything we do we will seek to secure the best possible outcomes for pension savers, with any changes to investment structures putting their needs first and foremost.

Secondly we will always prioritise a strong and diversified gilt market. It will be an evolutionary not revolutionary change to our pensions market. Those who invest in our gilts are helping to fund vital public services and any changes must recognise the important role they play.

The third golden rule is that the decisions we take must always strengthen the UK’s competitive position as a leading financial centre able to fund, through the wealth it creates, our precious public services.

I start with Defined Contribution pension schemes, which in the UK now invest under 1% in unlisted equity, compared to between 5 and 6% in Australia.

Today I am pleased to announce that the Lord Mayor and I joined the CEOs of many of our largest DC pension schemes – namely Aviva, Scottish Widows, L&G, Aegon, Phoenix, Nest, Smart Pension, M&G & Mercer – for the formal signing of the “Mansion House Compact”.

The Compact – which is a great personal triumph for the Lord Mayor - commits these DC funds, which represent around two-thirds of the UK’s entire DC workplace market, to the objective of allocating at least 5% of their default funds to unlisted equities by 2030.

If the rest of the UK’s DC market follows suit, this could unlock up to £50 billion of investment into high growth companies by that time.

Secondly, we know funds can only optimise returns from a balanced portfolio if they have the scale to do so. We will therefore facilitate a programme of DC consolidation, to ensure that funds are able to maintain a diverse portfolio of bonds, equity and unlisted assets and deliver the best possible returns for savers.

Tomorrow, the Department for Work and Pensions will publish its joint consultation response with the Pensions Regulator and the FCA on the Value For Money framework, clarifying that investment decisions should be made on the basis of long-term returns and not simply cost.

Pension schemes which are not achieving the best possible outcome for their members will face being wound up by the Pensions Regulator. We will also set out a roadmap to encourage Collective DC funds, a new type of pension fund which we believe holds great promise for the future.

Third, we need to ensure that all schemes have access to a wide range of investment vehicles that enable them to invest quickly and effectively in unlisted high growth companies.

We have launched the LIFTS competition, and will consider closely the bids that have already started to come in for up to £250 million of government support.

Alongside that, we will explore the case for government to play a greater role in establishing investment vehicles, building on the skills and expertise of the British Business Bank’s commercial arm which has helped to mobilise £15bn of capital into over 20,000 companies.

Ahead of Autumn Statement, we will test options to open those investment opportunities in high-growth companies to pension funds as a way of crowding in more investment.

I now move on to Defined Benefit schemes which number over 5000 and operate under a different regulatory regime. Their landscape is also too fragmented.

I recognise the important role played by insurers offering buy-out schemes, which will continue to be an essential part of the way we improve security for pension members in this market.

But in addition, we will set out our plans on introducing a permanent superfund regulatory regime to provide sponsoring employers and trustees with a new scaled-up way of managing DB liabilities.

Having engaged closely with a range of experts, we will launch a call for evidence tomorrow on the role of the PPF and the part DB schemes play in productive investment - whilst always being mindful of the second golden rule to protect the sound functioning and effectiveness of the gilt market.

Fifth, we will look at the culture of investment decisions and improve the understanding of pension trustees’ fiduciary duty across both DB and DC schemes. DWP and HMT will jointly launch a call for evidence to explore how we can overcome barriers and ensure a focus on good saver outcomes.

And finally, government must lead by example, so we will consult on accelerating the consolidation of Local Government Pension Scheme assets, with a deadline of March 2025 for all LGPS funds to transfer their assets into local government pension pools and ensure greater transparency on investments.

To make sure we are delivering the maximum benefits of scale, we will invite views on barriers to achieving better investment returns across the LGPS as well as setting a direction that each asset pool should exceed £50 billion of assets.

We will also consult on an ambition to double the existing local government pension scheme allocations in private equity to 10%, which could unlock a further £25 billion by 2030.

Today’s announcements could have a real and significant impact on people across the country.

For an average earner who starts saving at 18, these measures could increase the size of their pension pot by 12% over their career - that’s worth over £1,000 more a year in retirement.

At the same time this package has the potential to unlock an additional £75 billion of financing for growth by 2030, finally addressing the shortage of scale up capital holding back so many of our most promising companies.

Increasing borrowing through £28 billion a year of unfunded spending commitments, as some are suggesting, would entrench inflation and push up interest rates.

These reforms, conversely, unlock capital from the private sector delivering growth not by subsidy, but by increasing support for entrepreneurs and investors who take risks to create long term value.


I now move onto listings. The UK has the largest stock market in Europe and in 2021 attracted the most global IPOs of any stock market outside the US.

But between 1997 and 2019, there was a 44% decline in the number of domestic listed companies in the UK, part of a wider trend across western markets, with the US and France seeing even steeper falls.

I want the world’s fastest growing companies to grow and list right here, making LSE not just Europe’s NASDAQ but much more. As David Schwimmer and Julia Hoggett say, we want it to be the global capital for capital.

So today we are publishing draft legislation on prospectus reforms, delivering another milestone of Lord Hill’s UK Listing Review. This will create a more effective regime than its EU predecessor, giving companies the flexibility to raise larger sums from investors more quickly.

The government welcomes Rachel Kent’s excellent Investment Research Review published today and has accepted all recommendations made to it. We therefore welcome the FCA’s commitment to start immediate engagement with the market to inform any rule changes on removing the requirement to unbundle research costs by the first half of next year. This will ensure we are better able to fund quality research into the new Silicon Valley sectors.

Last week, we abolished protectionist rules inherited from our time in the EU such as the Share Trading Obligation and Double Volume Cap so UK businesses can now access the best and most liquid markets anywhere in the world.

And, in a highly innovative step which represents a global first, we will establish a pioneering new “intermittent trading venue” that will improve private companies access to capital markets before they publicly list. This will be up and running before the end of 2024, and put the UK at the forefront of capital market innovation.

Smart regulation

Finally, behind all those plans must sit a financial services sector ready to innovate faster with regulators willing to support them as they do.

We have one of the most robust regulatory regimes and some of the best regulators in the world. Brexit gives us the autonomy to put their skills to even better use as we seek to become leaders in the industries of the future.

So I am delighted that we have just last month passed into law the landmark Financial Services and Markets Act, which will ensure our regulators have an appropriate focus on growth and competitiveness alongside their wider responsibilities.

The Act also unlocks wholesale reform of our approach to regulation and today I can announce that we are commencing repeal of almost 100 pieces of unnecessary retained EU law, further simplifying our rulebook whilst retaining our high regulatory standards.

Alongside this, last month I was delighted to sign the new UK-EU financial services Memorandum of Understanding as we build a new relationship with our European partners.

We are working closely with the Bank of England to reflect on lessons from recent events to ensure the UK has the best possible arrangements in place to improve continuity of access to deposits when a bank fails even if it is not a systemically important one.

And I want to make sure we remain at the forefront of payments technology. So I am launching an independent review into the future of payments - led by Joe Garner - to help deliver the next generation of world class retail payments, including looking at mobile payments.

We are laying new legislation to give regulators the powers they need to reform rules on innovative payments and fintech services, and, together with the Bank of England, we are exploring potential designs for the digital pound should we decide to introduce it.


My Lord Mayor, Governor, Ladies and Gentlemen.

Pension industry and listings reforms, backed by smart regulation, to unlock better returns for savers and more growth capital for businesses.

That is what today’s Mansion House reforms deliver.

British growth driven by British financial firepower, providing higher living standards and better funded public services.

With cooperation between government, regulators and business closer than ever…

… we will deliver not just more competitive financial services but a more innovative economy.

More money for savers.

More funding for our high-growth companies.

And more investment to grow our economy.

That is the vision I have set out today – let’s deliver it together.

Thank you.

HM Treasury
The Rt Hon Jeremy Hunt MP