Richard Tice

It is a great pleasure to serve under your chairmanship, Mr Stringer. I congratulate the right hon. Member for Salisbury (John Glen) on securing this debate. In reality, equity investment from pensions is deteriorating because UK equities are not performing relative to their global counterparts. One of the reasons for that is that we have become over-regulated and over-taxed. When the big bang was launched 40 years ago, the City of London became the most important financial centre in the whole world. In the last 10 years, that has changed. That is why, at Bloomberg a couple of weeks ago, I announced the creation of four key working groups to look at a complete reset—a sort of big bang 2. We need to look again at the whole issue of regulation, and at the status of the FCA relative to the PRA and the Bank of England—that is working group No. 1. Working group No. 2 is on pensions and savings. We also need to consider big-picture issues: why, for example, are we giving tax relief on £300 billion of cash ISAs? How does that help the UK economy? Those are the big questions that we need to look at. The third working group is on small and medium-sized enterprise growth capital. The right hon. Member for Salisbury asked why it is that on second, third and fourth-phase rounds of fundraising, companies are going elsewhere in the world. The truth is that our markets have become too difficult for raising that additional capital. The fourth working group that I have set up—and it will report in six to nine months’ time—is on taxation. We are over-taxed, and we enjoy the longest tax code in the world. At 24,000 pages, it is four times the combined works of “Harry Potter” and nothing like as much fun. We need to look again at all those issues, and then we need to look at the performance of our pension funds. If we look at the performance of one of the biggest pension funds in the world, the local government pension schemes, which I have been very focused on, we will see that they are being overcharged substantially, by a factor of about five of what they should be paying, and they are underperforming. In the year to March ’25, the LGPS produced a great performance—not—of 3.3%, yet paid out over £2 billion in fees. Frankly, if the active funds cannot match the tracker, why not use a tracker? That is the challenge for the active industry. One of the reasons that the LGPS is underperforming is because too much of them are invested in unlisted funds, and now invested in what I would call quite woke funds, but that is a whole different issue. People cannot get out of those unlisted funds, which are at 20% to 40%, and those funds cannot be properly valued. The fees are much higher and they are not performing as well. Those are the key reasons why the performance is deteriorating. The 10, 20 and 30-year track records of the local government pension schemes are all at over 7% in the long term, but in the short term, they are rapidly deteriorating because of wrong investment decisions and overpaying fees, and because we have a market in the UK that is over-regulated and over-taxed. All of those things reduce the incentive to invest. For many people, it is complicated, but fundamentally, if the active fund managers overcharge and underperform, we should not be surprised if investors end up going elsewhere, and that might mean overseas. We need to change the way we look at things, deregulate sensibly and reduce unnecessary taxation in order to improve the quantity of pensions invested in UK-listed equities.