nursing the baby firms in the UK

Guy Opperman is a very good commentator on politics and here he is reporting on the prospects from a pension. He is a conservative politician trying to be balancing. On this pod he is in the company of people who want a Government to cut spending, reduce debt and meet out austerity on the lucky people of Britain who have been profligate.

Opperman reckons that what’s needed is investment in high tech manufacturers  (not data centres). This is politically popular spending and it gives momentum to Andy Burnham’s steady start. There is no appetite to do more cutting in a country that doesn’t feel it has a lot of room to tighten its belt. This is not the news that the hosts wanting politicians to reduce risk, increase return but be responsible. This seems to Guy impossible unless some drastic action is taken. The action will he hopes come from pension schemes who he hopes will be given the same tax breaks individuals get to invest in start ups via EIS. This will get money into start ups to get them to scale ups. I’m not sure this is where there is a shortage of investment. But the principle can be transported into an investment into scale ups.

The question that Opperman is putting is about how decisions are taken to get money from British pensions back into the British economy. Torsten Bell (our pension system) would point to the change in pensions where it is no longer the saver who is being urged to take this decision, it is the scheme’s investment team. The scheme is no longer a group of personal pensions but a master trust destined to be larger than £25bn within a few years.

Decisions are likely to be taken in the future is by pension schemes about what their fund looks like and how investment is implemented by investment managers. Opperman rightly uses the platform of this podcast to point out that pensions now have the opportunity to restore growth by putting capital in the hands of those capable of growing our economy – the entrepreneurs that Britain has been good at encouraging for 300 years.

Short term pothole filling , long-term projects or both?

Opperman complains that the OBR has made the Government’s decisions rather limited. It is very hard for pot-holes to be filled or long-term projects to be invested in because of the OBR’s fiscal limitations. Goodness! Opperman at this point sounds a very left-wing politician demanding we invest for growth against the OBR’s restrictions. The answer is to be through pensions which get round the red and green books in the Treasury. He cites the booking of the gains from the salary sacrifice pension cuts which will come in in 2029 but whose savings have already been booked.

Covert cuts and overt spending

Opperman thinks that the new Chancellor will cut further the tax free cash from pensions (an example of covert cuts).

Projects that don’t deliver much by 2029 are pushed down the road (or cancelled). But Opperman turns the conversation around saying there’s in Rotherham on the Orgreave colliery site a group of small manufacturing companies including those investing in technology. He points to a new railway being built into Newcastle and he’s done what he does very well which is getting people to look at matters optimistically. Julian Bovill and Ben Kumar get excited and the podcast slips along till we get to bonds.

The worry that “we’re not on our own”.

We are vulnerable to bad things happening in the Middle East and Opperman says that his former constituency farmers aren’t producing much food because of the hot summer and we will be seeing inflation going up because we import it from abroad stuff that should have come to us through Hormuz.

The pod ends in a dark place which is a shame as Opperman is at his optimistic best. The two hosts are natural pessimists it seems. That seems to be because the Government’s not on the side of the rich.

The rich are rather on their own awaiting the budget.

I’m delighted that Opperman is bold enough to be optimistic about the future we might have. There are not many in the City (or in this case Shoreditch) who share Guy Opperman’s  optimism about the budget.