Every time we get a proper Labour Government, we have to ask that question and most times what I’ve heard back is “tax”. I have no wish to pay more tax. I want relief from tax and for the money that I’ve saved with tax relief to be put to good use to make Britain great again.
There are trillions sat in cash, a lot it is true already lent to Government by gilts but all the new stuff in equities and increasingly heading through the Mansion House agreement to fund growth in the UK.
Andy Haldane has said it at the BCC, Will Hutton said it at Pensions UK, Ashok Gupta says it in his paper “Efficient Investment”. There are a group of people at or around retirement (in the old sense of the word) who are not showing any sign of slowing down. I include John Hamilton, Ros Altmann, Sharon Bowles and William McGrath. All of these speak not just for themselves but for substantial numbers, They have or are representing the progressive parts of Stagecoach, the House of Lords, the accountancy progression and the economists who have been out in the cold for a quarter of a century.
The 25 years of this century, especially the 15 years since the financial crisis have seen little growth in the British economy, and – guess what – they have coincided with the withdrawal of pension capital from the UK. At the end of the last century 40% of money in pensions and more than that in with-profits life policies were invested in UK business and property . Now we struggle to get to 5%. We actually dipped below 5% in workplace pensions till Nest decided to get stuck in to the UK (though private equity and infrastructure).
Other workplace pensions are following, some DB schemes that were heading for buy -out by the American funders of UK insurers, are now deciding to run on. Their champion is Stagecoach Group Pension Scheme.
Andy Burnham has an answer to where his money for all this is waiting. Now he just needs to give the people who allocate it , a gentle nudge. Nudge finance is the only revolution in pensions that has worked and it can be reapplied to the investment of our money.
All this money that is now moving towards Britain and away from the USA is money that can be used to recapitalise the British economy. It may need a kick in the arse as the Mandate clause of the Pensions Act predicted it could. Thinkers as diverse as Ros Altmann and Andy Haldane argue that we should only get tax relief if our money is invested to make our society and economy more productive.
My friend Tom McPhail says it is impractical and could never be done. I say he is wrong. It is quite easy in DC “pensions” to cancel units to pay charges. That’s how AMCs are taken these days and it’s how tax-relief could be returned to the HMRC where trustee’s and the providers of personal pensions fail to invest their default funds (accumulation and decumulation) with Britain benefiting from a home bias.
Most people who have played or watched sport will know the advantage – playing at home – grants a team!