The British government has pledged support for the financial services sector via new legislation, following its first budget in 14 years late last month.
Announced yesterday afternoon (7 November), the Finance Bill serves to solidify the government’s budgetary ambitions in legislation, covering its plans for tax and investment.
HM Treasury detailed that the Bill will support financial services, clean energy and the creative industries. Regarding finance, the Treasury has announced a vague ambition to ‘support innovation in UK markets’.
A more solid policy is seen in the plan for the creation of a new trading platform, the ‘Private Intermittent Securities and Capital Exchange System (PISCES). The platform will serve as a means for private companies to trade equity in ways similar to public listed companies, with the long-term goal of helping said firms scale up towards a public listing.
This may be significant for the UK’s payments and fintech sector, which is home to numerous high-growth and high-value companies which are yet to publicly list – Revolut and Monzo, Europe’s most valuable fintech and the UK’s fastest growing challenger bank respectively, are both private companies for example.
Exchequer Secretary to the Treasury, James Murray MP, said: “Last week’s Budget was a generational moment to wipe the slate clean by restoring economic stability and fixing the public finances, so that we can get on with our number one mission of growth.
“The Finance Bill will begin laying new paths to growth for key sectors with tax reliefs across film and TV, electric vehicles, and financial services.”
Like its Conservative predecessor, the Labour government has highlighted financial services as a ‘British success story’. The sector’s contribution to the British economy is undeniably significant, accounting for around 12% of the country’s GDP.
Throughout July campaigning, the party repeatedly asserted that it would act as a ‘party of business’, a label traditionally associated with its Conservative rivals. Both during the election and during its time in government, the Labour Party has continued to make moves in areas like Open Banking.
Source: UK Parliament
The Finance Bill follows the Digital Information and Smart Data Bill and the Data Use and Access Bill, launched to Parliament in September and October, with the former encompassing data centres and digital identity, and the latter focusing on data sharing.
Labour’s budget did not receive a wholly positive reception from finance stakeholders, however. Whilst the budget’s commitment to research was welcomed, there is some trepidation around tax raises, particularly the increase in capital gains tax.
The government’s counter argument is that investment is needed to support growth and innovation via investment, and taxation of companies is the best way of achieving this without putting a hole in the average person’s pocket.
Commenting on the Finance Bill, Rachel Reeves, Chancellor of the Exchequer, said: “Growth is our number one mission – and it depends upon stability. We’ve taken difficult decisions to restore that stability and now we’re going for growth.”
