US and Canadian pensioners are getting more benefit from UK companies than British pensioners are, MPs have been told.
Lord Hill of Oareford, who led a review into the UK’s public listing scheme, also warned that some people are accumulating more money and a lot of that is going abroad.
“One of the consequences of what has happened I think, is that wealth has been concentrated in the hands of fewer and fewer people,” he told MPs on the Treasury Select Committee.
“And it’s also being concentrated in the hands of people not in Britain. And neither of those seem to be very good social and political objectives.
“I mean pensioners in the US and Canada – if I put it very crudely and simplify – are doing better out of British companies than British pensioners.
“And that doesn’t seem to me a very healthy state of affairs.”
He said that technological change should make it easier for regular people to participate in the stock exchange.
MPs also heard from the Lord Mayor of London Nicholas Lyons that around 60% of the capital that is invested in UK companies comes from foreign investors, that is compared to the US where companies get around 85% of their capital from domestic investors.
Julia Hoggett, the chief executive of the London Stock Exchange, said that British pension funds should feel able to take the same kind of risk that ones in many other countries do.
“I rather flippantly say there may be more teachers in Ontario financing start-ups in this country than teachers in Aberdeen, Belfast, Cardiff or Dover,” she said.
“A single Canadian pension fund invested more in one UK private company in 2021 than all of our pension funds did in private companies in the UK in the same year.
“So we’re not asking for radical risk taking, we’re actually just asking that our pension funds do what other established (funds such as) the superannuation fund in Australia or CPPIB in Canada or the Wellcome Trust does or major endowments do.
“But somehow we have, in a sense, got to a point where we have stopped doing that, and then created a narrative that this is extreme risk taking.
“I think it is risky not to invest in our own futures.”
