Badenoch: City’s risk culture should be ‘championed’ to boost UK growth
Tory leader Kemi Badenoch will pledge that the role of Canada would be one of her central levers for driving economic growth, whilst suggesting that financial regulators have buckled to pressure from media and political leaders in recent years.
In an address to City financiers, Badenoch will argue that the Square Mile has not been properly championed by successive governments, which had treated the financial sector as a “problem to be managed”.
She will also hit out at the country’s “risk averse” culture on investment and the use of savings.
Her speech will focus on the stagnation of UK equities over recent years and a drop in listings from companies, as well as stifled business investment and productivity growth.
Speaking to industry leaders convened by TheCityUK on Thursday, Badenoch will argue that the City needs “bold structural reform” in an echo of Margaret Thatcher’s Big Bang changes in the 1980s that attracted wealthy bankers and traders to London.
Badenoch and her shadow chancellor Sir Mel Stride have upped their efforts to appeal to the City in recent months. The leader has also opened the door to scrapping stamp duty on shares as Badenoch told Morning Wire last month that she “hate[s] transaction taxes”.
An analysis by Dan Neidle’s Tax Policy Associates found last month that abolishing stamp duty on shares would represent the greatest “bang for the buck” measure of any tax cut to be made by the government. The Labour government has offered investors a three-year stamp duty holiday for buying shares on newly-listed companies in the UK.
Badenoch enters City deregulation debate
Stride has meanwhile been more vocal about markets’ assessment of Labour and Reform UK. He said that bond markets had handed the government a “damning verdict” given Labour’s political turmoil while he also promised to strip back red tape on liability that falls on company managers.
The debate over deregulating the City has become somewhat crowded, as Reform UK’s Richard Tice and Robert Jenrick have led calls for substantial reform.
Rachel Reeves has also staked much of her growth ambitions on driving retail investment across the country through ISA reforms and calling on regulators to focus on growth.
The Chancellor is set to deliver her latest Mansion House speech next month where she is expected to outline new reforms for the UK’s financial sector.
Leadership speculation could, however, lead to a change in plans for the government as an Andy Burnham premiership looks poised to focus on deeper regulation and further price controls.
‘City’s growth can fund defence’
Badenoch will directly link conflicts across Downing Street on defence spending to the government’s approach on the City, claiming that growth in the Square Mile and across other financial institutions could support an uplift in expenditure.
On Monday, the Tory leader urged the Labour government to cut welfare spending to defence as she offered her party’s help to raise spending.
“I have made several offers to work with you in the national interest to reduce benefit spending so we can invest more in our defence. Sir Tony Blair, the longest-serving Labour prime minister, has urged you to accept them,” she wrote in a letter.
In a defence investment speech, Badenoch also demanded that the government committed to lifting defence spending by £28bn, as military chiefs had requested, and to avoid back-loading projected increases, which would hand over problems to any government coming to power after 2029.
Reports have suggested that Number 10 will stick to its current funding deal for defence by offering just £13.5bn. The government has given itself a deadline to publish the Defence Investment Plan by 7 July, the date of a Nato summit in Turkey.