Our chancellor needs to think a bit bigger and smarter (Image: Getty)
is a smart lady. She’s not just Rachel from accounts, she’s made it to become one of the great heads of state.
And love her or loathe her as Chancellor of the Exchequer she holds the UK’s collective debit and credit cards in her hands. (I also happen to know she’s smart because she’s grown out her fringe).
The UK government’s borrowing, which now totals £2.7 trillion, may have soared this week and the price of sterling fall as result – oh, and our
But don’t let any of those facts distract you, there is a solution to all this and it is staring us right in the face.
At the moment it’s laregly foreign investors benefitting from the interest the government is paying on its borrowing. Pension funds and banks do also invest heavily in gilts, but experts are saying many UK institutions have reached peak ‘gilt investment’.
Mercer partner and senior investment consultant James Brundrett told Jonathan Stapleton, editor of Professional Pensions that these new gilt buyer are a “mix of both overseas investors and hedge funds rather than the more traditional buyers like pension schemes and insurers”.
That means – in layman’s terms – other countries and hedge funds (for goodness’ sake) stand to benefit from our government’s misery, and ergo our misery as this will push up .
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So my question to Rachel Reeves is – why are we letting foreign companies and hedge funds make money out of taxpayers’ cash?
If the government is going to borrow, why not harness the savings power of the UK?
For the last two decades our government, and that’s under both Labour and and Conservative adminstrations, have been in thrall to foreign countries. Even our pension funds invest massively abroad. We’ve also let our prime property real estate be sold off, even wealthy(ish) Londoners cannot afford to live in our capital city.
Surely Reeves could talk to a few banks and building societies and could come up with something?
I was at a conference last autumn where Louis Taylor, chief executive of the state-owned economic development bank the British Business Bank (BBB), issued a rallying cry for institutional investors to look closer to home when seeking growth opportunities.
He said the UK was home to some of the world’s dynamic companies, start ups and established ones.
Taylor who was talking at the Pensions and Lifetime Savings Association conference said investors were needed to unlock the “gold mine” potential of the UK’s “dynamic and innovative business ecosystem”.
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His ideas could also be applied to UK saver. Not just savings either – Reeves could even set up a British lending bank and rather than pay shareholders, use the interest borrowers pay on their – on top of costs – to plough it back into our NHS and education system.
Why isn’t our government thinking bigger? Why is it picking on old people and people on low and middle incomes?
Because they are an easy fix and they don’t upset the big guys. Encouraging us to put our £10/£20 a month savings into British companies would be ‘disruptive’.
But it could work.
So Rachel, how brave are you? And if this is not a good idea, tell us why and show us you can do big things.
Taylor’s last point was that a cultural change may be needed.
He said: “If you go to the US and you go to a barbecue, you’ll talk baseball for a while, but then you’ll talk about what’s in your 401k [a US pension] in Australia.
“You’ll talk Aussie Rules, and then it’ll be what’s in your super [Australian pension]. Here, we’ll talk about football, and then we’ll talk about our house price, which is not a productive asset.”
He added: “We have to get over the idea that people think of their pension as something that’s 40 years down the line, and you don’t need to think about.
“It’s your wealth accumulation plan, and you should be focused on it.”