John Glen: We want high standards for financial services. That’s not the same as derailing our competitiveness agenda.

9 Feb

John Glen is Economic Secretary to the Treasury and City Minister, and is MP for Salisbury.

When I was appointed Economic Secretary and City Minister in January 2018, the world looked very different to now. Back then, the fundamental trajectory of post-Brexit Britain was still contested across the country, and across the Conservative Party.

However, I have always been crystal clear in my conversations with Treasury officials that we had to deliver a Brexit for financial services that enabled us to remain global leaders in this industry. It therefore came as somewhat of a surprise to see Daniel Hannan argue on these pages last week, that he had been most disappointed by a failure to distance ourselves from the EU in financial services.

It’s important, right at the outset, to highlight that despite the numerous forecasts of woe – massive job losses, capital flight, loss of competitiveness – our financial services sector remains in robust health. Just last week, the City of London Corporation produced research showing that London was clear of the international field for its attractiveness to the financial services industry.

London scored 61 in analysis of 95 different metrics, ahead of New York (58) and Singapore (53), and far clear of other European centres which had been much talked about as future rivals. Frankfurt trailed in fourth place with a score of 45, while Paris was even lower down at 41.

Last July the Chancellor outlined his vision for an open, technology embracing, green, and globally competitive industry. Having previously worked in financial services, he understands the importance of creating an agile and dynamic sector that works in tandem with a world-leading regulatory framework.

We are not interested in a race to the bottom, where we seek to attract the world’s best companies and nurture start-ups on the basis of creating a Wild West for financial services judging success by how many regulations we have disposed of. The key to the future success of the industry is competitiveness. High standards and robust but reliable regulators enhance that and should not be framed as derailing our competitiveness agenda.

The Government’s response last year to Sir Iain Duncan Smith’s Taskforce on Innovation, Growth and Regulatory Reform (TIGRR) showed very clearly how we plan to maximise the benefits of leaving the European Union. We are repealing all retained EU law and giving the domestic UK regulators, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), powers to regulate the financial services sector.

Following the Future Regulatory Framework the regulators’ action will be underpinned by a growth and competitiveness objective and clear accountability to our elected representatives at Westminster. This is not an EU-lite approach at all. We are pursuing the most fundamental reset and changes in our financial services architecture for many generations, and the Treasury is working at pace to develop the legislation needed to deliver these changes.

We have also had the Ron Kalifa Review of UK Fintech and Lord Hill’s UK Listings Review. This has led to prompt changes in listing rules and the setting up of a Centre for Finance, Innovation and Technology to drive further growth in FinTech across the UK. By avoiding complacency but responding to the findings of independent reviews Government is delivering a radical reform agenda and executing fundamental changes.

Many of the legacies of EU directives are embedded in cost structures and corporate thinking. Our job is to enable the swift rightsizing of such rules in a way that industry finds helpful (e.g. reforming the UK prospectus regime to make access to our deep capital markets easier; creating a new Long-Term Asset Fund structure to allow investors access to better returns or removing the Share Trading Obligation and Double Volume Cap to promote greater choice and better outcome for investors). We aim to do this in ways that minimise disruption and new costs as global growth opportunities abound.

It is a very exciting time to be the minister responsible for financial services. There is enormous opportunity across the UK, not just in London, especially with our innovative, world-leading fintech industry. Increased regulatory agility post-Brexit will also help us to better enable new prospects in cryptocurrency and blockchain. We have an ongoing leadership role to play in the Green Finance arena, and in wholesale markets we continue to move swiftly to maintain the UK’s status as a global financial centre and deliver for large and small UK companies, as well as international businesses who want to raise money and manage risk.

Domestically we intend to legislate imminently to secure access to cash for citizens up and down the country and introduce reforms to Credit Unions so more products can be offered – again building on a deep dialogue with that sector over recent years. I welcome the progress on the No-Interest Loans Scheme which will test whether No-Interest loans can sustainably provide a vital option for those excluded from credit.

We are most certainly living in an unprecedented moment of innovation in the industry, and the space and autonomy that Brexit has created will serve us well to continue capitalising on our unique financial services ecosystem and drive us forward in the years ahead.

George Freeman: This new report shows how we can build on Britain’s vaccine success to make the best of Brexit

16 Jun

George Freeman is a former Minister for Life Science and Chair of the Prime Minister’s Policy Board (2016-18). He is co-author and editor of the 2020 Conservatives book Britain Beyond Brexit.

Nothing better illustrates the advantages of being outside the EU than the UK’s vaccine success. Our leadership in genomics, vaccine research and development, accelerated access trials and our ability to procure at speed has allowed the UK to lead the world in the battle against the pandemic. This has been a London 2012 moment for UK Life Science.

But it could have been very different. In 2010, the UK Life Science sector was in a decline: Pfizer closed its UK R+D HQ, Astra Zeneca announced it was closing its UK R+D HQ to move to Massachusetts, and other companies were reducing their UK presence.

The UK was falling behind as a global destination of choice. The combination of slower and more expensive clinical trials, slow NHS procurement, lack of leadership in genomics and clinical informatics (data on how new drugs work in patients) set alarm bells ringing.

The new Government responded. Having just been elected after a career in the biomedical research sector, I was lucky enough to be appointed Government Life Science Adviser to lead the UK Life Science Strategy.

We appointed Sir John Bell, launched a ground-breaking ten-year strategic commitment to lead in the genomics and clinical informatics so key to modern research. We unveiled Genomics England, NHS Digital and MHRA parallel approvals. I also launched the Biomedical Catalyst, Accelerated Access Reform to NHS procurement, the Early Access to Innovative Medicines Scheme and the UK Life Science Investment Office. We worked with AZ to persuade them to move to Cambridge UK, not Cambridge Massachusetts.

Over the next five years we pulled in over £5 billion of inward investment. It’s a model of what we can do in other sectors.

Boris Johnson gets this. That’s why I was delighted to accept the Prime Minister’s invitation to help lead the new Taskforce for Innovation, Growth and Regulatory Reform (TIGRR) with Iain Duncan Smith and Theresa Villiers. We came from opposite sides of the Brexit debate – two of us having supported Leave and one Remain – but with a shared determination to make this a moment of profound renewal. The urgency of the post-Covid recovery makes this more essential than ever. Our TIGRR report published today shows how the UK can deliver on the promises of Brexit without abandoning our high standards.

We are living through an extraordinary period of technological change – not just in life science but in host of sectors: from AI to robotics to agri-tech, nutraceuticals, nanotechnology, synthetic biology, biofuels, satellites and fusion energy.

The UK is indeed a ‘science superpower’. But we have traditionally been woeful at commercialising here in the UK. There are many reasons. But, in recent years, the EU’s increasingly slow, bureaucratic and ‘precautionary’ approach – copied in Whitehall – has made the EU and the UK an increasingly poor place to commercialise new technology.

In 2013 BASF, one of the giants of German industry, moved its crop science division to the USA because of EU regulations preventing agricultural genomics which are the key to reducing chemical farming by promoting naturally occurring disease resistant traits. That’s why I wrote the Fresh Start Report in 2014 urging the EU to reform to avoid regulating the UK into the slow lane of global bioscience. And why, as UK Minister for the sector, I pushed for reform and warned the EU that they risked the UK leaving if they didn’t reform. They didn’t. We did.

For years the Brexo-sceptics have cynically sneered that there is no Brexit dividend. There is.

We need urgently to usher in a new era of ‘smart’ regulation. That means ensuring that Britain is once again a global leader not just in science but in commercialisation of innovation. We can do that by harnessing the City to make the UK a global innovation financing capital of the world, and through our trade and aid policies to boost global exports and technology transfer. Now those decisions are back in our hands. Our critics assert that the only regulatory dividend is in abolishing workers’ rights and environmental standards in a ‘race to the bottom’. They are profoundly wrong.

Of course, there are some daft regulations we can get rid of like the EU ban on the blight-resistant potato. In fact, the blight-resistant potato reduces the need for around 14 applications of toxic (and highly carbon intensive) fungicide and could help avoid famine and starvation. We can also do without the lobbyists dominating Brussels corridors for big corporates and promoting regulations which exclude new entrants.

Successive governments have announced ‘bonfires of red tape’. But no one would want a vaccine that hadn’t been tested properly. Or food with E. coli. Or dangerous workplaces with high rates of injury.

The key to smart regulation is to play to our strengths. We must embrace global leadership in smart, agile regulation in the highest growing sectors of tomorrow. Around the world, the UK is still highly trusted as a regulator of choice. We have a chance to build on that.

The TIGGR report published today sets out three big recommendations for post-Brexit regulation.

First, a coherent strategic framework for UK regulatory leadership in an innovation age.

Second, ten high-growth sectors we could unlock NOW with the right regulatory structure and where we must focus our efforts for post-Covid Recovery.

Third, a strong commitment to delivery and proper accountability to Parliament. Taking back control means WE set our regulations in a way that reflects UK values and UK public opinion.

Over the course of the last six months, we have held 75 industry roundtables. The result is a serious plan that ensures we become a pioneer of smart, innovative regulation. Not by abandoning our standards but by improving them. The TIGRR report today shows how it can be done.