2023 Mansion House Speech: unlocking investment for the UK tech sector
techUK welcomes the Chancellor’s announcements and reforms in his 2023 Mansion House Speech, which look to support pension investments, energise the UK’s financial services, and increase the access to funding for technology and other key sectors of the UK economy. The announced reforms focused on three areas:
Restructuring pension investment vehicles that will support pension fund holders and increase funding liquidity for high-growth companies.
Increasing the UK’s attractiveness as a listings destination for companies looking to start and grow.
Reforming the financial services sector that will aim to balance regulation with stability.
Themes of financial stability and innovation were central to the Chancellor’s speech, including a renewed commitment to get inflation under control. Additionally, the Chancellor set out ambitions for the UK’s financial services sector, announcing new investment vehicles and structures that will help to revitalise the UK’s attractiveness and competitiveness as a global financial hub. This strategy can work for tech—a more globally integrated UK financial sector will open up a wider range of funding for high tech, high impact, and high growth companies, many of which are part of the UK’s robust technology sector.
Importantly, these reforms will have the chance to address funding gaps for the tech sector, one of the key areas identified in techUK’s “A UK Tech Plan,” which is a plan that aims to help the UK do more with less and to seize the opportunity of being a global tech leader. If these reforms are successful, they will have the potential to address multiple opportunities identified in techUK’s plan, including fixing the UK’s broken scaleup economy, sharpening the UK’s innovation economy, and increasing the UK’s attractiveness as a green technology hub.
This speech also reaffirmed the UK’s desire to be the next Silicon Valley, accompanying the Government’s ambition to lead in technologies like AI and following this year’s creation of the Department for Science, Innovation and Technology. These reforms fit in the UK’s wider agenda to bolster the domestic tech sector’s ongoing success and ambition, which in 2022 became just the third country to host a tech sector valued at $1 trillion.
The Chancellor also annouced the brokering of an agreement between many of the UK’s largest defined contribution (DC) pension schemes to allocate at least 5% of their default funds to unlisted equities by 2030. This has the opportunity to increase the availability of investment by upwards of £50 Billion for companies that are looking to grow here in the UK, if the rest of the DC market were to follow suit.
However, concerns remain regarding the UK’s ability to support the tech sector, so implementation of these reforms must be cohesive with a larger agenda to boost UK technology. Tech companies consistently cite challenges around access to funding and difficulties accessing scaleup funding, as well as issues with access to skills, digital infrastructure, and R&D support.
A policy agenda that complements the announced investment reforms with targeted policy interventions addressing broader challenges for the tech sector will help to bolster it and meet the UK’s longer-term ambitions. If these reforms are successful, the UK will mark another step in its journey as a leading destination for financial services, investment, and technology.
Review of Future Payments Landscape
Additionally, the Chancellor announced a new review of the future payments landscape to be conducted by Joe Garner, who was formerly Head of Retail Banking at HSBC and CEO of Nationwide.
The review has a call for input which features just three questions, and techUK are seeking members' views on these so we can reply on behalf of the sector ahead of the 1 September deadline.
The questions in the call for input are:
What are the most important consumer retail payment journeys both today and in the next 5 years? For example, paying a friend, paying a bill, paying businesses for goods and services, in the UK or internationally etc.
For these journeys today, how does the UK consumer experience for individuals and businesses compare versus other leading countries? For example, the quality of experience, security or cost.
Looking at the in-flight plans and initiatives across the payments landscape, how likely are they to deliver world leading payment journeys for UK consumers? For example, we welcome suggestions that you feel would support, or are essential to delivering, world leading payments for UK consumers.
To share your views or to talk more about the review of the future payments landscape, please contact techUK’s Head of Financial Services, Andy Thornley [email protected].