Shadow city minister Tulip Siddiq is urging the industry to submit ideas on pension, financial education and innovation policies and reform as part of the financial services review which will help form Labour’s statement of intent if the party wins the next General Election.
In the opening keynote speech at the annual flagship conference of The Investing and Saving Alliance (TISA) 2023, the shadow economic secretary said when there is a General Election, there is a possibility there will be a change in Government and that it will be a Labour Government.
But the economy it will inherit “is not going to be an easy one”, with Siddiq saying “there will be lots of challenges along the way”.
One of the major challenges is financial literacy and financial education, as she says “it’s clear the UK is falling behind on financial literacy, ranking only 15 out of 29 OECD countries”.
However, the Confederation of British Industry (CBI) estimated that prioritising financial education could add nearly £7bn to the UK economy each year.
“It is therefore vital that we improve financial education in primary and secondary schools to ensure that even at an early stage we’re improving the financial literacy of our young people, boosting their financial resilience and wellbeing in the process”, Siddiq said.
Financial advice gap and fragmented pensions
The Hampstead and Kilburn MP also said the Labour party is committed to increasing participation in financial markets to drive better returns for working people while unlocking growth.
This includes addressing the “lack of affordable financial advice” that’s available to people.
“We, the Labour party, recognise the need to close the advice and guidance gap, and we will be watching the FCA’s work with great interest as it develops.
“We’re committed to supporting firms in producing a new form of regulated personalised guidance, ensuring there is no watering down of safeguards for consumers”, she said.
She also spoke of a ‘fragmented pensions market’ and a “pensions and capital markets environment that’s discouraging long-term investment and undermining the future prosperity of our country”.
Indeed, Siddiq said millions of people are facing the prospect of an inadequate pension in retirement, as she revealed that nearly a third of the UK workforce are not saving for a pension at all, while the majority of people are not saving enough.
“Structural and cultural challenges embedded in the UK pension system such as fragmentation and focus on cost rather than value add up to smaller pensions in future.
“We in the Labour party believe that we must enable the pensions industry to do a better day job of providing a secure and comfortable retirement for millions of people in every corner of the UK.
“And that must entail getting more from UK pensions into more productive investment. We’ve talked about how we will encourage the creation of consolidation of Defined Contribution, Defined Benefit and local Government pension schemes to provide the scale and professional management required to deliver better returns for the saver and make capital more productive to fuel growth in the economy,” she said.
She added that the party will also explore other policies encouraging saving for retirement and better standards of living in old age such as building on the successes of auto-enrolment which was introduced by the last Labour Government.
However, she was quick to reassure the room that Labour isn’t intent on ripping up existing policy and regulation, saying this is a “slightly unfair accusation”.
“Our intention is not to come in and rip up all legislation. Our intention is to build on reforms that have been made on the future regulatory framework and try and build on existing legislation that’s good for our economy.”
Financial services review
She has also been tasked with conducting a financial services review where she will work with consumer groups and stakeholders in the city to help define the party’s ‘statement of intent’ if there is a Labour Government.
“It’s to show the direction of travel that a Labour Government will take when dealing with the city and financial services industry,” she said.
Siddiq explained that, as the opposition party, “we don’t have a host of civil servants who are supporting and working with us” which is why the party is reaching out to industry to explore policy ideas.
She said: “We want to hear about capital markets, we want to hear about your ideas on pension, financial education and literacy, innovation, because we want to make sure we’re taking advantage of new technologies whether that’s open banking, open finance or AI. We want to make sure that we’re at the cutting edge of what’s coming over the hill.
“I also want to make sure that we address the biggest concern that we have at the moment about regional inequality in our country and we really believe that if we work with the financial services sector and the fintech sector this is something we can address and it also feeds into Keir’s main mission to have the highest sustained growth in the G7,” Siddiq added.
All ideas are welcomed directly to Siddiq’s parliament email address: email@example.com until the end of this year which may be used in February at the Labour business day.