Mansion House: Chancellor must achieve financial fusion to supercharge UK science
Greg Smith is CEO of IP Group, the British-based fund investing in tech companies. Tonight the Chancellor will announce plans to supercharge investment – but there is no time to lose
BRITAIN’S world-beating science base matched with the untapped potential of UK pension funds is a dream team combination – and today’s Mansion House speech is the moment to bring them together.
Get it right, and we can unleash boundless new energy for the UK economy.
Chancellor Jeremy Hunt has a chance to do just this when he addresses the City tonight.
His plans could be the catalyst for one of the greatest shifts for decades in the way we fund and grow British science. Our universities, labs and industry are teeming with innovation and invention.
But what’s equally important is making sure the pensions funds and insurers who hold the keys to this capital know what’s in it for them.
Having invested in science and technology companies for many years, I know how critically British companies need the funds to scale. Many want to keep calling Britain home, and if we can marry them with pensions funds, they will choose to grow, scale and stay here.
This lack of British support from home-grown companies is why we’ve been backing the Chancellor’s plans to evolve City regulations.
Since the 90s British funds have slashed the amount they invest in British stocks and companies. It’s been foreign counterparts who have filled the gap – and reaped the rewards.
We’re living proof of why pensions can count on science.
Pension funds from the US, Canada, Australia and Japan have long known that investment into innovative UK companies can offer returns that beat bonds or other asset classes hands down. GSK, Vodafone, and more recently, semi-conductor producer Graphcore have all had their backing.
If the UK’s pensions and insurance industry can embrace current reforms, including the Chancellor’s ‘Golden Rules’, it could not only access these returns, but kick start a wave of confidence across the market.
Of course, like other investors, I still have questions about exactly how the Chancellor’s plans will work for different types of pension funds. But it’s clear maintaining the status quo would be a missed opportunity.
These reforms could not only help give UK science superpower status but bring the entire economy with it.
And the result? Better net returns for UK pension funds. And impactful science and technology businesses that can lead to thousands of jobs in the sectors of tomorrow, huge gains in productivity, and technology.
And for pension savers, a better retirement, in a healthier, cleaner and tech-enriched future.
What’s more, much of this has been tried and tested before.
In the US, 65 per cent of Venture Capital fundings comes from public pensions.
Better yet, my own firm, IP Group, has been backed by British pensions funds for years. I can point to RailPen as our largest shareholder, and Phoenix and Border to Coast as key backers, among others.
They know the importance of working with trusted experts to carefully manage investments in a range of innovative sectors. We’re living proof of why pensions can count on science.
It’s right the Chancellor will avoid forcing investors hands, but the reasons for choosing to back UK science should be clear: greater returns, greater growth, and greater impact.
Let’s hope the Chancellor can achieve financial fusion tonight, and bring British science and British pensions together once again.