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Shadow Chancellor Rachel Reeves has pledged to “unapologetically” defend Britain’s financial services sector if Labor wins the general election, slamming politicians who have been “embarrassed” by the City’s success.
Reeves will launch Labor’s financial services plan this week, promising to cut red tape, embrace artificial intelligence, strengthen regional financial centers and promote green finance.
But Labour’s plan, drawn up with advice from City leaders, stands out above all for what it doesn’t do: Reeves acknowledges that the sector does not want major political upheaval after years of post-Brexit change.
“The last thing we need is a massive upheaval,” said a Reeves ally. “Rachel recognizes that stability and security are necessary. »
The plan, seen by the Financial Times, welcomes some recent Tory regulatory changes in the city, including Chancellor Jeremy Hunt’s Edinburgh reforms and changes to the Solvency II insurance regime.
Reeves’ argument is that many of them didn’t go far enough. “Too often over the last decade, British politicians have seemed embarrassed by the sectors we excel in,” she told the FT. “That will change with Labor.”
“The next Labor government will unapologetically defend the UK’s financial services sector,” she added.
Former Labor leader Ed Miliband once described parts of the City as “predatory”, while his successor Jeremy Corbyn had a dismal relationship with the Square Mile. Pro-Brexit Tories have also clashed with the City in recent years.
The financial services plan will be launched on Thursday at a Labor day attended by 400 business leaders, including from companies including Google, Shell, AstraZeneca, Airbus and Goldman Sachs.
Reeves hopes his financial services plan, drawn up with Shadow City Minister Tulip Siddiq, will help cement ties between Labor and business.
Nigel Higgins, chairman of Barclays and one of several City figures who advised Labor on its financial services plan, said the party’s report recognized “the importance of international competitiveness”.
The report includes several proposals, some of which have already been announced and others which will be subject to consultation:
An overhaul of city regulations to remove outdated rules and reduce overlap between different oversight agencies
Regulating the “buy now, pay later” sector and “exploring” long-term mortgage prospects
Approve the use of artificial intelligence in the City and become a “global standards body”
Building a “more collaborative relationship with the EU”, including mutual recognition of professional qualifications
Empowering the British Business Bank to invest more in growth capital
Deploy 350 “banking hubs” to allow citizens free access to banking services
Advisers on the Labor plan, acting in their personal capacity, included Sir John Kingman, chairman of Legal & General; David Schwimmer, managing director of the London Stock Exchange Group; and Baroness Shriti Vadera, President of Prudential.
Charles Randell, former chairman of the Financial Conduct Authority, also gave his views on the plan and said it provided for “stable and proportionate regulation”.
The Conservatives argued that Labor would be bad for business, particularly targeting the party’s £28 billion-a-year spending plan on green investment. The Conservatives claim this would force Labor to raise taxes or break its fiscal targets of reducing debt as a share of GDP within five years.
Some City residents also fear that Reeves, if she becomes Labor chancellor, will target businesses with higher taxes to raise money for struggling public services. Labor has said it has no intention of doing so.
Prime Minister Rishi Sunak is expected to announce the makeup of his 2024 business advisory council on Wednesday.