There’s something very wrong about the CEO of Barclays telling Rachel Reeves “we’re all in it together” , to a backdrop of financial emporia in Canary Wharf.
Those who are not given access to the upper floors of Barclays Global HQ are 99.999% of the population – they are definitely not in it together with CS-Venkatakrishnan but they might be in the same national wealth fund – if Rachel Reeves has courage and conviction.
Nick Lyons, the Chair of Phoenix , told a meeting I was at last week, that he wanted the plan to fund the state pension by 2075. That would require considerably more than the putative amounts to be contributed to the Mansion House Compact. There’s an anecdote doing the rounds that Edi Truell sat between Nick Lyons and Andrew Bailey at a recent dinner and suggested that the Bank of England could seed the National Wealth Fund with £58bn of excess gilts , the Governor had spare.
Certainly for us all to be in it together, we’d need to be thinking of a National Wealth Fund valued in trillions rather than billions , by the time we had it to scale.
Our banks should be part of the plan , so should the insurance companies and the largest store of wealth (other than private housing) our pension funds. If we are to be serious about a National Wealth Fund, we must start thinking of allocations towards growth assets for long term liabilities (pensions) at the 50%+ levels currently deployed in some Canadian funds.
The idea of a 0.75% charge cap doing the heavy lifting is increasingly archaic. This cap has helped restore confidence in DC pensions by banishing the excesses of the pre-stakeholder era of DC, but it was never the long-term answer to the investment challenge facing pension schemes. If they are to deliver -whether DC, DB or CDC , they need to be looking at IRRs well north of 10% and you aren’t going to get those returns without substantial investment in long term growth assets.
It really is time for a shake-up in our expectations of value for money and Rachel Reeves is well placed to do the shaking. Now is not the time for risk-warning, now is the time for risk-taking with a view to making Britain competitive with the leading global economies.
So for me to take Reeves seriously, I want to see her showing some genuine ambition with this National Wealth Fund. It needs proper seeding, a mandated allocation from pension funds and a change in the regulatory climate so that Britain is not sitting in the quietest graveyard.
Not words, Rachel – but deeds! Genuine ambition, courage and conviction. We need leaders who lead.
Barclays Global? Or Barclays Local?
Barclays have been closing accounts for individuals living outside the U.K.
They also have been closing U.K. branches.
Is this the blind leading the blind?
I agree the sentiment, Henry. The current plan of c£7bn public and c£22bn private capital is orders of magnitude light, when you consider the government is running a £50bn p.a. net tax relief on pensions. Maybe the solution lies in that + similar multiple of private capital (provided it is done with careful through so as not to reduce pension outcomes – which is doable)! You’d get to a trillion in 5 years (if 3x private capital crowded in).
The problem isn’t the shortage of capital. The problem is finding productive ways of using the capital that is already available.
Pingback: Mr Farage taps the banks for £35bn – as predicted on this blog. | AgeWage: Making your money work as hard as you do