Last week I reported on Bim Afolami’s bold bold new approach to regulating the regulators

This week , I decided to pedal over to Old Queen Street, by the Treasury, to witness this wise-cracking lawyer, banker and now Minister in person. The meeting had been billed as answering some pretty big questions.

Though the UK has recovered from the economic impact of the Covid-19 pandemic faster than expected, households are still grappling with the high cost of living and rising borrowing costs. The economic growth forecast for the UK remains sluggish and inflation, despite falling, remains high. How can the Government release private capital to boost productive investment? What role can pension fund capital play in achieving this? How can we ensure growth is sustainable and contributes to better outcomes for younger generations?

Bim Afolami wants City Regulators to stop presiding over the “safest graveyard“, a phrase that was much in evidence at a meeting of the Centre for Policy Studies in Westminster yesterday morning.

He was given some competition by Benn Mikula of Cordiant Capital who gave us “the wet cement of institutional rigidity” as the barrier to the adoption of productive finance.

The shameless Afolami has already purloined  the phrase and adopted it as his. We have a showman in our midst.

Setting aside the rhetorical gymnastics , this was a well-spent hour which gave us Ros Altmann , explaining her work in levelling the playing field for investment trusts to compete against LTAFs for DC investment and David Fairs talking about the asymmetric risks for employers of putting money into pensions ( easier to pay too much , than get back the surplus).

Normally these affairs turn into show-boating opportunities but the event was well chaired and the comments of Benn Mikula were to the point . We have had Investment Trusts 150 years and they have provided access to otherwise inaccessible assets that have served us well. They provide liquidity and deserve more promotion. I am pleased to see some institutional DC platforms, such as Mobius can accommodate them off their insurance balance sheet.

What is happening to regulation?

The new approach to regulation was described by Afolami as a new objective. He expects each regulatory report he will receive in future to start with a section on what the particular regulator is doing to promote growth and productivity.

Since half of the private sector is regulated in some way, it is hardly surprising he calls his Ministry the best job outside the cabinet.

In his view, “risk” is something to be embraced to drive growth and not supressed. The concept of a “growth and productivity” driven regulator is an interesting re-brand.

Even though he admits he only has a year to install and instil this new approach, he has youth, energy and charisma on his side.

Beyond these broader changes in regulatory direction , Afolami talked specifically about pensions. He mentioned the loosening of the Solvency II rules, the promotion of regional investment to create greater opportunities outside of London and he spent some time explaining how the Government was going to have another go at creating “ownership” amongst the public – of previously public assets. The cupboard is a little bare, but NatWest looks like “Sid’s” new opportunity.

“Wet cement”

I hope that a record of this meeting will emerge. Altman, Fairs, Mikula and Afolami offered as diverse a group of enthusiasts for change as you could expect to find on a damp Tuesday morning.

If we are to lift feet out of the wet cement of institutional rigidity, we need people like these to take the lead.

This blog will continue to promote the productivity and growth agenda.

Thanks to

• Bim Afolami MP, Economic Secretary to the Treasury
• Benn Mikula, Managing Partner & Co-CEO – Cordiant Capital
• Baroness Altmann, Member of the House of Lords and Former Pensions Minister
• David Fairs, Partner – LCP
• Nick King, Research Fellow – Centre for Policy Studies (Chair)