We have “capitalism without the capital” – we should be patient!

Nigel Wilson

It’s budget day and Nigel Wilson has been on Wake up to Money, urging the Chancellor to encourage Britain to invest positively for its future. He tells us that Britain has “Capitalism without the Capital”, he’s right and I’m with the caller from Portsmouth who urged L&G’s CEO to become UK CFO and step into Phillip Hammond’s shoes.

I don’t seem to be agreeing with much that John Mather says at the moment but I agree with this message he sent me last night;john mather

Where are the Statesmen? Can we quadruple the return in £300bn of cash ISAs by cutting out that banks and lending directly to the smaller developer who builds homes and communities across all markets

I support John’s attempt to get ISA money flowing into housing as development capital as I support the work of L&G which is doing rather more to increase the UK housing stock than the grand words of Government (I hope I can change this paragraph after this afternoon’s budget).

What Wilson and Mather are saying is that the money we are holding to pay tomorrow’s bills can be put to better use than short term deposits or short and medium term bonds. The duration of an equity is limitless and is right for longer term investment. We have a bond and cash culture, Mather and Wilson want us to think for the longer term and (in different ways) for the good of Britain. I would be glad to see both of them in the Treasury, but they are probably doing more good where they are!

More Wilson, less  Morgan

nikkiI could do with less of Nikki Morgan, who has recently been given the role of chief secretary to the Treasury. She spoke at the TISA conference yesterday afternoon. She repeated the mantra around broadening the range of tax incentivised products to line the financial adviser’s briefcases.

She was hot on Fintech and robo-advice to fill the FAMR gap and she talked about funding long-term care . Her animus against long-term investing through pensions was barely concealed.

Steve Webb’s assertion (most recently made at the First Actuarial conference) that the Treasury hates pensions, rung truer the longer that Morgan talked.

Meanwhile, one of the great British Pension institutions, the British Steel Pension Scheme is being ransacked by financial hooligans , repeating the anti-pension message.

The short termism of the Treasury in respect to saving (pension or otherwise) is creating an epidemic of like-minded behaviour which is doing lasting harm.

My hope for Hammond

There is an opportunity in this afternoon’s budget for Phil Hammond to put the Capital back into Capitalism , to create investment in urban renewal though the building of new housing and the infrastructure to support urban dwelling.

There is plenty of capital. including the £300bn sitting in cash ISAs which could be incentivised to be put to this use. We still have a funded defined benefit pension system with more than £1tr in assets, well over half of which aren’t being invested in growth seeking assets.

My hope for Hammond is he looks at this money and gets it working. Wilson and Mather and many others will help.

My fear is that we will instead retreat into the shrivelled carcass of the austerity project and pull up the drawbridge (not just on Europe but on growth).

As Wilson said on the radio this morning, there is nothing stopping us, now is the time to look forward and avoid the timidity that has oppressed us for nearly ten years. We do not need another financial bubble, we need simple policies such as those advocated by Wilson and Mather, that put our money back to work.

But as the cartoon below shows, it will take more than a budget to move us on, we need to restore our confidence in equity, in long term savings and in pensions.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to We have “capitalism without the capital” – we should be patient!

  1. Dave C says:

    You need a rapidly growing pop, i.e., baby boomers, to justify investment for a growth outlook.

  2. John Mather says:

    Thank you Henry If we agreed on everything one of us would be unnecessary.

    On the Bond idea this is going well, It helps being commission free and with just 0.3% for the compliance platform. Institutions don’t need to pay this so totally clean contract

    On Friday we launch it at the EIS and VCT conference, pre launch first £1M is in the bank and the pilot is only £5M so a couple more disciples required adn we can roll this out to a more meaningful project to build communities not boxes, integrated rent and own mixtures not social housing ghettos

    07974728984 Call me if you want to join this project

  3. Richard Bryan says:

    Surely Nikki Morgan is Chair of the Treasury Select Committee rather than Chief Sec. to the Treasury?

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