Lord Fuller (Con)

My Lords, those people who have done the right thing and saved for retirement have made a bargain with the state: in exchange for a little help on the way in, the state will be relied on a little less on the way out—that is the deal. The responsibility for finding people to look after your money lies with the individual and the trustee or investment managers they appoint. On that simple truth, London has developed global leadership in asset and investment management, and the entire City ecosystem has created a tax gusher that pays for defence, schools and hospitals. We should not place it or its reputation under threat. We have heard a lot from the Dispatch Box over the last 12 months or so about the sort of investments that the Government think we should invest in. We need to learn some lessons from history. One such investment is green schemes, forgetting that when they tried this under political direction in Sweden it created the $5.8 billion Northvolt disaster and all the public sector pensioners lost their shirts. The Minister from the Dispatch Box lionised the large Canadian public sector schemes as the model that should be followed. Last year, their investment returns went down by 5%, at the same time as our own LGPS went up by 9%. Ministers want schemes to backfill UK infrastructure, and perhaps steel, which we now learn could cost us over £1 billion in a little over a year—money that will never be seen again—or carbon storage and passive funds, which, by arithmetic, lead you into bubbles or into high-risk private assets. At 5 am this morning, the Financial Times published an excoriating demolition of the claims that private equity funds do as well as the Chancellor claims, especially as the J-curve gets stretched out beyond 10 years. I could go on, but I will not. The point is that, while Ministers want to pick winners, they have been selling lemons. The pound shop pundits are trying to force-feed the riskiest parts of the market—the bits the other professionals turn their noses up at or consider are not right for the man in the street—down the throats of those for whom taking excessive risk is not necessarily the right thing. The Government’s job is to create the environment for the best and most attractive investment ideas to come forward, not to beat pensioners with a stick and strong-arm them into financing their high-risk pet projects, with high fees and uncertain returns. But, worst of all, if mandation does come, it will create the sort of value-sapping moral hazards and conflicts of interest that will allow the most poorly performing managers to have a “get out of jail free” card—“It was that Torsten Bell chap what told me to do it, guv”—while trashing the global reputation of the UK asset management business and imperilling that tax gusher we all rely on. But, ultimately, it will be the little guy who pays the price, poorer long after Rachel Reeves and Torsten Bell have become a footnote in history. It is our duty to stop this, and we must.