WEBVTT - UK Chancellor Rachel Reeves Talks UK Pensions; US-UK Trade

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Chancellor. Since we last spoke,

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<v Speaker 1>Donald Trump has been re elected. Does that change your

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<v Speaker 1>secure andomics vision, given it was at least partly inspired

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<v Speaker 1>by Bidenomics.

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<v Speaker 2>Well, the idea of secure nomics is that we build

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<v Speaker 2>a strong and secure economy on strong foundations. And that

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<v Speaker 2>does mean thinking about where things are made and who

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<v Speaker 2>makes them. It means being more resilient in the face

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<v Speaker 2>of shops, whether those be energy price shocks or pandemics.

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<v Speaker 2>And I think those are important principles because the UK

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<v Speaker 2>has found itself very exposed, whether it is the energy

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<v Speaker 2>price shock after Russia's invasion of Ukraine or during the

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<v Speaker 2>pandemic and struggling to get the supplies of vital equipment

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<v Speaker 2>that there needed.

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<v Speaker 1>But would you rule out regulatory tariffs?

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<v Speaker 2>Well, look, I think it'd be wrong to speculate what

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<v Speaker 2>an incoming US administration would do. But we benefit, and

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<v Speaker 2>so does the United States, from trade worth more than

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<v Speaker 2>three hundred billion pounds a year. That trade is growing

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<v Speaker 2>and it's important for the prosperity of both the United

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<v Speaker 2>Kingdom and the United States. And we'll continue to make

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<v Speaker 2>representations for free and open trade that benefits both of

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<v Speaker 2>our nations.

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<v Speaker 1>Okay, let's turn to your Mansion House speech. When it

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<v Speaker 1>comes to harnessing pension money to boost growth. What are

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<v Speaker 1>you going to offer in terms of reform that your

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<v Speaker 1>conservative predecessors didn't.

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<v Speaker 2>Well, I've long believed that we need to reform how

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<v Speaker 2>the UK pension system works, and I welcome what the

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<v Speaker 2>previous government and what Jeremy Hunt did when he was

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<v Speaker 2>Chancellor to look at the consolidation and the investment choices

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<v Speaker 2>of pension funds. But I want to go further because

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<v Speaker 2>there's more that we can do to unlock that long

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<v Speaker 2>term patient capital to help British businesses like Quell where

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<v Speaker 2>we are today in White City in London and others,

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<v Speaker 2>and also to help secure investment into infrastructure. If you

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<v Speaker 2>look around the world, so countries like Canada where I

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<v Speaker 2>was in the summer, or Australia, they have mega pension

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<v Speaker 2>funds that achieve economies of scale, get better returns for

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<v Speaker 2>their savers and help unlock that long term growth that

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<v Speaker 2>we desperately need in Britain.

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<v Speaker 1>You mentioned Australia. Australia gives tax breaks to funds that

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<v Speaker 1>invest in domestic companies. Where you offer the same.

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<v Speaker 2>We already have very generous tax breaks for investing in pensions,

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<v Speaker 2>and rightly so, we want to incentivize people to invest

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<v Speaker 2>and save for the future. What we don't have in

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<v Speaker 2>the UK is mega pension funds. We don't have those

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<v Speaker 2>economies of scale in our pension funds, which is why

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<v Speaker 2>the interim report that we're publishing looks at having a

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<v Speaker 2>minimum size of twenty five or fifty billion pounds, similar

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<v Speaker 2>to what you have in Canada and the United States.

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<v Speaker 2>Those sorts of mega funds will have the expertise to

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<v Speaker 2>make those investments, both in startup and scale up businesses

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<v Speaker 2>and in British infrastructure.

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<v Speaker 1>At the size matters, but I'm wondering how you get

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<v Speaker 1>that money into UK companies. Are you looking at mandatory minimums.

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<v Speaker 2>We're not looking at mandating pension funds. What we're looking

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<v Speaker 2>at in these reforms, building on the reforms of the

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<v Speaker 2>previous government, is to create a smaller number of big

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<v Speaker 2>pension funds with the expertise and the scale to make

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<v Speaker 2>those long term investments. Quell where we are today received

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<v Speaker 2>money from the British Business Bank, which leverages in private

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<v Speaker 2>sector investment, but most of the funding that this business

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<v Speaker 2>and so many other scale up businesses in Britain have

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<v Speaker 2>been able to access comes from the United States. I

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<v Speaker 2>don't want it just to be US investors benefiting from

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<v Speaker 2>investment in UK startups and scale ups. I want savers

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<v Speaker 2>here in Britain to be able to benefit from that

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<v Speaker 2>growth potential that we see at this business and so

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<v Speaker 2>many others.

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<v Speaker 1>Terms of there's also the issue of how you get

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<v Speaker 1>more money into the pension parts. In the first place.

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<v Speaker 1>Employers are already squeezed by the tax hikes in the budget.

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<v Speaker 1>How are you going to address that.

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<v Speaker 2>By the end of this decade, we expect to have

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<v Speaker 2>one point three trillion pounds in pension funds, either in

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<v Speaker 2>DC or in the local government pension scheme. But I

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<v Speaker 2>don't think anyone believes that money is working well enough,

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<v Speaker 2>either for savers or indeed for our wider economy. And

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<v Speaker 2>the reforms that we're bringing in is about ensuring that

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<v Speaker 2>the money that is invested the assets under management work

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<v Speaker 2>better for the UK economy and work better for savers.

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<v Speaker 1>I'm just wondering what's different to what Jeremy Hunt did,

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<v Speaker 1>because he just finished this consultation into consolidating the local

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<v Speaker 1>government pension scheme. It made these exact points. Do you

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<v Speaker 1>really need another consultation.

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<v Speaker 2>The difference between what we're doing and what the previous

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<v Speaker 2>government did is that we're going to legislate and the

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<v Speaker 2>previous government haven't had a pensions bill, didn't have a

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<v Speaker 2>pensions bill for around five years. We have a slot

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<v Speaker 2>in the king Speech for a pensions bill in this

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<v Speaker 2>session of Parliament. Will be introducing legislation in the Mark

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<v Speaker 2>in the spring, so that we don't just talk about

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<v Speaker 2>consolidation in the pension industry. Anyone can do that, but

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<v Speaker 2>we actually make sure that it happens. That's the difference

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<v Speaker 2>between this government and the previous government. We're getting on

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<v Speaker 2>and doing the job.

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<v Speaker 1>All right, what about the regulators? How are you going

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<v Speaker 1>to make them prioritize competitiveness?

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<v Speaker 2>Well, I'll be publishing the remit letters to the regulators

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<v Speaker 2>tomorrow at the met Mansion House Speech. Obviously, regulation is

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<v Speaker 2>incredibly important both for protecting consumers but also for protecting

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<v Speaker 2>our wider economy. But we don't just need to regulate

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<v Speaker 2>for risk. We also need to regulate for growth. There's

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<v Speaker 2>huge growth potential in our financial services sector. The secondary

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<v Speaker 2>objective that we supported in opposition is really important, but

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<v Speaker 2>we now need to bring that to life and ensure

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<v Speaker 2>that our regulatory system helps businesses to grow, not just

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<v Speaker 2>manage risk.

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<v Speaker 1>But Chancellor, US investors tell us that all these recent

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<v Speaker 1>regulatory reviews make investing in UK financial services less attractive.

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<v Speaker 1>Are you planning anything to give them more certainty?

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<v Speaker 2>We had a very welcome response over the last few months,

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<v Speaker 2>whether that's to our changes in ring fencing rules, our

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<v Speaker 2>implementation of the Basel rules, or indeed the SAA's rules

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<v Speaker 2>around listing in London. Things that we've done in our

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<v Speaker 2>first four months of government to make Britain a more

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<v Speaker 2>attractive place for global investors in financial services. We've brought

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<v Speaker 2>in sixty three billion pounds worth of investment at the

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<v Speaker 2>International Investment Summit just a few weeks ago. So we

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<v Speaker 2>recognize the important role that regulators have in encouraging growth

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<v Speaker 2>in financial services, not just managing down risk.

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<v Speaker 1>I mean it's the motor services they're pointing to, and.

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<v Speaker 2>There's a court case at the moment, so it's important

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<v Speaker 2>to let that work through the system and be up

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<v Speaker 2>to the motor finance companies whether they appeal the court decision.

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<v Speaker 2>It is welcome that that sector continues to offer motor

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<v Speaker 2>finance through a number of workarounds. But it's now up

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<v Speaker 2>to those individual companies whether they want to appeal the

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<v Speaker 2>court decision.

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<v Speaker 1>All right, Chancellor, good luck with you, mana and House

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<v Speaker 1>speech tomorrow. Thank you very much.

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<v Speaker 2>Thank you,