The City of London’s wish list for the new Labour government

The Labour party’s promise of a programme of “national renewal” after sweeping to power on Friday has sparked hopes among City of London executives for a prolonged period of political stability.

Some corporate bosses called for “bold” action to boost the UK’s capital markets but top of the agenda was a desire for a period of predictability after years of disruption caused by Brexit, the pandemic, Liz Truss’s disastrous 2022 “mini” Budget and frequent changes of political leadership.

“We hope this government will usher in a new era of policy certainty, stability and predictability — one that the UK urgently needs to boost investment, drive growth and bolster its international competitiveness,” said Miles Celic, chief executive of TheCityUK, the financial services lobby group.

Bruce Carnegie-Brown, chair of the Lloyd’s of London insurance market, echoed the call for the new government to “bring a period of greater stability and to enact reforms necessary to improve the economy’s competitiveness”.

Labour has built strong ties in the City over recent years and businesses said they wanted this to continue as the party considers changes to regulation.

“The government has a clear mandate to lead — which is good for stability and getting things done,” said Marco Amitrano, senior partner of PwC UK. But he added that the government should have a “healthy dialogue” with companies because “without care, significant measures can have unintended consequences”.

NatWest chief executive Paul Thwaite and Lloyds Banking Group boss Charlie Nunn were among those who welcomed Labour’s commitment to prioritising economic growth.

The financial services sector has a long wishlist for the new government and has framed some of its demands to align with Labour’s aim of boosting the UK’s economic fortunes.

Regulation & competitiveness

One area being closely watched in the City is Labour’s approach to regulation. The financial services industry won the ear of Rishi Sunak’s Conservative government after complaining about what it said was a stifling regulatory environment that was too focused on eliminating risk-taking.

Businesses want to know “what’s going to be done in terms of taking a different approach to the balance of risk”, said Celic.

Executives’ frustrations over regulation came to a head in recent months as the industry clashed with the Financial Conduct Authority over the watchdog’s plans to more regularly “name and shame” companies under investigation, even when they had not yet been found guilty of wrongdoing.

Peter Horrell, UK chair of Fidelity International, said the pension and savings market was one area that had become “skewed” towards avoiding risks. “From an individual’s perspective, a focus on keeping things ‘safe’ is creating far bigger risks,” he said. “Individuals are not investing enough in pensions, investments — such as equities — and benefiting from the long-term growth versus risk that these can provide.”

Labour has promised to create a regulatory innovation office to “improve accountability and promote innovation in regulation”.

But it has not explained how it will work in practice — one of several areas, including the party’s wider industrial strategy, where Labour has set out its ambitions without explaining how it will achieve them.

“We’ve seen the prospectus,” said Celic. “How is the management team now going to deliver on it?”

Capital markets reform

Former chancellor Jeremy Hunt has left office before completing an overhaul of UK capital markets rules, including the so-called Edinburgh and Mansion House reforms.

The programme to shake up the capital markets included changes to stock market listing rules and other measures to reverse the flow of companies and capital out of the UK’s public markets.

Wealth managers and fund groups said Labour must focus on making domestic equities “attractive” to tackle depressed investor interest in the UK stock market.

“We need a government that is going to be bold and imaginative” to tackle the UK’s capital markets “malaise”, said Matthew Beesley, chief executive of Jupiter Fund Management.

Calls to encourage pension funds to invest in UK companies are set to continue, along with executives seeking the reduction or abolition of the 0.5 per cent stamp duty on trading in the shares of UK-listed companies, which raises about £3.8bn a year for HM Treasury.

Michael Summersgill, chief executive of investment site AJ Bell, said the regime meant “we’re not giving ourselves the best possible opportunity here, we’re levying a charge on our own stocks and shares”.

CS Venkatakrishnan, chief executive of Barclays, said “inspiring a culture of informed equity risk-taking is critical to the growth of the UK’s next generation of technology companies, and reinvigorating our public markets”.

Paul Geddes, chief executive of Evelyn Partners, added that making London more attractive would “not only increase domestic interest but also encourage foreign investors to increase flows to the UK exchanges”.

Many in the industry also want Labour to foster closer ties with the EU but are cautious about arguing for this too loudly, given the political sensitivity.

“Banks would like to see relations with Europe rebuilt, so that mutual market access is improved and we can seamlessly operate cross-border without inefficient cost duplication,” said a London-based executive at one international bank. 

Pensions and insurance

The trillions of pounds managed by the UK’s pensions and insurance industries will be a crucial part of any overhaul of capital markets and Labour’s efforts to increase private investment in UK infrastructure.

The party pledged in its manifesto to review the UK pensions landscape and some executives expect it to be bolder than the Conservatives in attempting to push the industries to invest in British assets.

Hendrik du Toit, chief executive of asset manager Ninety One, said the UK equity market had been “destroyed” by defined benefit pension funds shunning it as part of a de-risking over the past two decades.

Defined contribution funds were being held back from taking risks for pensioners because of caps on the costs they can incur, he added. To address these issues, he said a review of regulation and “the nurturing of the wealth management industry should be considered by government”.

Some in the industry argue that making it easier for pension funds to invest in unlisted assets, such as infrastructure projects, can help boost not only the economy but pension-holders’ returns.

The industry insists it is ready to invest more to help the UK reach its net zero target but that there is a lack of investible projects. Labour is seeking to tackle the issue by shaking up planning rules and creating a national wealth fund to help “crowd in” private capital into decarbonisation projects.

Andy Briggs, chief executive of FTSE 100 pensions group Phoenix, said it was “vital we give UK pension savers greater access to a wider pool of investment opportunities”.

He also called for an increase in contributions under the UK’s auto-enrolment regime because of the underfunding of many people’s pensions. Any increase would be politically sensitive as it would affect workers’ take-home pay but Briggs said “inaction risks people being lulled into a false sense of security that saving at the statutory minimum will be enough”.

Reforms to the Solvency II rules on how insurers can invest their capital are largely complete, but executives continue to push for more flexibility to invest in long-term UK assets such as infrastructure. They have called for more funding for planning authorities to speed up their decisions and binding targets for strategic infrastructure projects.

Insurers have also called for improved competitiveness, for example by reheating Conservative plans for a new regulatory regime to foster “captive” insurance businesses, used by big companies to self-insure risks.

General insurers, meanwhile, have warned against Labour’s promised crackdown on motor insurance prices, insisting the market is highly competitive.


Labour has pledged to publish a “road map” for business taxation, a move welcomed by business groups, including TheCityUK and the CBI, for the certainty it would offer companies.

But there is concern in some quarters about a planned crackdown on a tax “loophole” used by private equity executives to pay a lower rate of tax on the profits they make from successful deals. Labour is set to consult on the policy but has vowed to raise £565mn a year by taxing “carried interest” as a capital gain rather than as income, which attracts a much higher rate.

“With an almost certain attack on the way many in the private equity industry are compensated . . . this may be just the start,” said Kevin Cummings, partner and tax lawyer at McDermott Will & Emery, citing further rule changes and possible tax increases that would affect some wealthy clients.

Labour has promised to further tighten rules on “non-doms” living in the UK and has not ruled out increasing the rate of capital gains tax, raising the possibility that wealthy individuals will seek to sell assets or leave the country.

Additional reporting by Akila Quinio, Patrick Jenkins, Ortenca Aliaj and Suzi Ring

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