(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves plans to stress the positive role of finance firms and pledge to tackle regulatory barriers to business in her first Mansion House speech next month as the Labour government seeks to boost the UK’s competitiveness.
The chancellor will also set out new guidance for the Prudential Regulation Authority and Financial Conduct Authority, either to be published with the Mansion House speech or shortly after, several people familiar with officials’ thinking said.
The so-called remit letters are set to give clearer direction on how the watchdogs should meet an objective imposed last year to improve the country’s global standing, the people said, asking not to be named while discussing confidential plans.
After several stumbles with business bosses since winning power in July and a Budget this week that’s set to raise taxes, the speech on November 14 is a chance to turn the corner on Labour’s relationship with the finance industry.
Prime Minister Keir Starmer signaled what is to come when he told Labour’s international investment summit this month that he would “march through the regulators” to ensure unnecessary red tape is cut.
Bolder Moves
The previous Conservative government also issued remit letters to the financial watchdogs in December 2022 highlighting the competitiveness objective. While Reeves’s plans are still to be finalized, she is expected to go into more detail, potentially tackling areas of regulatory overlap, removing unnecessary rules and costs and ensuring the bodies are not straying into areas they are not mandated to oversee, the people added.
“At Mansion House, the chancellor will set out how she will work in partnership with industry and regulators to deliver growth,” a Treasury spokesperson said in a statement. “This will include providing the stability the financial services sector needs to grow and delivering the reform it needs to prosper. The chancellor will also explain how government will support the sector to deliver investment across the country.”
According to executives, there is broad support for the government’s plans to give more teeth to the new competitiveness regime.
But some are also talking about bolder moves, such as forcing regulators to view competitiveness as a primary objective in their decisions, and potentially reviving the idea of a “call-in” power for ministers to override regulators.
This power, which was floated and then dropped last year, would require a change in the legislation so would not be immediate, the people added.
More drastically, Labour had looked at the idea of restructuring the FCA and the PRA before July’s general election, several people said. That could be revisited if the regulators do not fully back growth, they said.
While some favour a bigger shake-up, others say strengthening the current rules could make the secondary competitiveness objective work.
“We always said if you put the right teeth in place a secondary objective can work,” said Caroline Wagstaff, CEO of the London Market Group, which represents insurers and brokers. “It is too early to tell yet.”
--With assistance from William Shaw.
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