27th February 1900, 1951 and 2025
The 27th February is an auspicious date in the political calendar.
It was on 27th February 1951 that the US Constitution was amended to limit presidents to two terms of office. Although grateful for the New Deal he put in place, US lawmakers felt they needed to address Franklin D. Roosevelt’s unprecedented four-term presidency (1933–1945) and its break from the informal precedent set by George Washington, who voluntarily stepped down after two terms.
It was also on 27th February 1900 that the British Labour Party was officially founded at a conference in the now demolished Congregational Memorial Hall in Farringdon Street.
And this year, the 27th February saw the launch of New Capital Consensus’ (NCC)’s first full-length report Reviving UK Investment Flows: a systems approach to productivity and growth.
NCC Launches in the City
NCC set out its aspiration to introduce systems thinking to the problem of UK Productivity in January 2024. We finished our report late in 2024 and shared an embargoed copy with key political stakeholders earlier this year.
Yesterday, we launched our report to the wider public and particularly the City of London. Kindly hosted by Herbert Smith Freehills the event was attended by 140+ financial service executives, trade-associations, peer think-tanks and the media.
Introduced by Sir Keith Skeoch, Chair of NCC’s Advisory Panel, Ashok Gupta, the founding inspiration behind NCC, presented the NCC’s first full report Reviving UK Investment Flows.
There was then a panel chaired by Stephanie Flanders (Bloomberg Economics) ‘in conversation’ with Dame Elizabeth Corley (Chair Emerita of the Impact Investing Institute and former CEO of AllianzGlobal Investors), Martin Wolf (Financial Times) and Simon Ellis (Chair of one of the largest DC Mastertrusts in the UK).
The narrative was clear:
- The UK needs sustainable growth to revive our economy, pay for the public services people want and drive the transition to net zero.
- The UK investment system is crucial to delivering that growth: it is the ‘heart’ of the UK economy and the government increasingly gets this.
- The UK investment system is broken: it needs reform to deliver sustainable growth, make it responsive to changing demographics, and produce better individual and collective long term outcomes for savers.
- The ad hoc development of the investment system has created numerous economic, legislative, regulatory and cultural barriers, which prevent investments and savings being channelled most effectively to deliver better long term outcomes for savers.
- NCC has therefore been established to identify and promote practical reforms that are implementable with government and industry support, and will make a real difference.
- NCC is independent of vested interests and works across the sector.
- The purpose of NCC’s first report and all that we do is to work with industry leaders and key stakeholders to create a better investment system for all.
Outcomes
We will be blogging about the outcomes of the launch over the next few weeks and will soon post a video for those that couldn’t make it.
In the meantime, however, it is worth remembering how much is at stake if the UK continues to limp along with an investment system that fails to deliver ‘productivity’ either to UK investors (in the form of retirement returns) or the UK economy (in the form of funding).
While we may give thanks that 1951’s 22nd Amendment limits Donald Trump’s presidency to one final term, the new president has already shown how much grit he can throw into the wheels of other nations’ aspirations in alarmingly short order.
For productivity too, Trump’s re-election is problematic. While his rejection of Joe Biden’s own New Green Dealism is lamented in US productivity circles, the Rest of the World waits anxiously to understand what impact Trump’s pivot from internal revenue-raising (via domestic taxes) to external revenue-raising (via foreign tariffs) might have on their own fiscal and economic growth plans. The rest of the world also awaits the inevitable political response from EU and Chinese trading-blocks – fearing Ghandi’s admonition that ‘an eye for an eye makes the whole world blind.’
The UK’s new Labour Government thus finds itself in a less globally coherent world characterised by new political and economic principles of national self-sufficiency, autonomy and shorter supply-chains. It must therefore look to generate an investment system that both continues to allow the UK to operate as a global financial centre and delivers more domestic self-sufficiency simultaneously.
Fortunately, the Labour Party that was born in the Congregational Memorial Hall in 1900 could deliver such a system. As we say in our report:
The new Government has the opportunity to recognise its more fundamental function as a critical financial intermediator, channelling money from the UK savings and investment stock to UK firms in need of growth capital.
Such a view correctly locates the investment system at the centre of a what could be a virtuous spiral for the UK economy – with higher rates of investment driving a more productive economy in turn driving higher rates of investment.
Productive Reading-List
At the back of the new Government’s mind will no doubt be the conclusion of leading Labour economic thinker, Will Hutton, whose book This Time No Mistakes: how to remake Britain (2024) is worth a read for the philosophical fit Hutton identifies between Keir Starmer’s post-Corbyn Labour Party and the UK’s current ‘productivity’ needs. Likewise, new Pension Minister, Torsten Bell’s Great Britain: how we get our futures back (2024) is an excellent primer on the extent and roots of the UK’s current productivity crisis.
More than these, however, we would recommend a read of NCC’s Reviving UK Investment Flows: a systems approach to productivity and growth. Our report naturally contains concrete recommendations for policy reform. But at the same time, it warns against the lazy hope that a policy silver-bullet might still be found to slay the beast of the UK’s non-productive investment system. The problem is not that we haven’t yet found the right silver-bullet; it is that silver-bullets per se have no effect on ‘complex adaptive systems’ such as the UK investment system. What these systems need are correspondingly ‘complex adaptive solutions’ that work in concert with one another to alter the flow of the system itself. The beast of non-productive UK investment will be cut into shape by a thousand cuts of the reforming scalpel not killed with a single bullet.
Ultimately then, NCC’s report is as much a call for reaction from its readers as it is a statement of NCC’s certain conclusions.. We want to spark the debate, discussion and disagreement needed to derive an holistic set of ‘complex adaptive solutions’ from across the full range of system actors – from IFAs advising retail customers to investment banks issuing securities for UK corporates.
27th February 1932 and 2025
It was also on 27th February 1932 that James Chadwick discovered the existence of the neutron within the atomic structure alongside the proton and the electron.
While Chadwick’s discovery was itself noteworthy (and won him the Nobel Prize in 1934) the real gift that Chadwick’s discovery gave to the scientific community was a new perspective on an existing but confused issue.
Chadwick’s neutron completed the picture of the atomic system, established the new proton-electron-neutron structure as the standard across the scientific community and thereby provided the foundation for what followed in nuclear science.
Chadwick did not himself innovate nuclear fission, the atomic bomb, nuclear power, particle physics or neutron-driven medical imaging. But none of these innovations would have been possible without Chadwick’s initial re-statement of the reality of atomic structure and challenge to others to respond to this new truth.
NCC hopes to stimulate innovation in financial services policymaking in the same way.
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