In a significant announcement on the role of investment in the UK’s long term economic growth, the Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak recently called on UK institutional investors to boost the UK’s long term economic growth through an “Investment big bang”. The letter comes ahead of a number of announcements expected over the coming weeks on investment, leading to an Investment Summit at Downing Street in October.

In the letter to institutional investors, the Prime Minister and Chancellor refer to the “ripe pool of assets for long term investment” and outline how UK institutional investors are currently under-represented in owning UK assets. They have called for an investment big bang to unlock hundreds of billions of pounds from UK institutional investors and recognise the responsibility of government to remove obstacles and costs to making long-term, illiquid investments in the UK. A number of government initiatives are listed in the letter to remove obstacles to investment, including reforming the cap on fees that DC schemes charge.

The BVCA had been briefed by HM Treasury Special Advisers yesterday on the announcement and we released a press notice ahead of the announcement from Director-General, Michael Moore:

“Today’s intervention from the Prime Minister and Chancellor is great news for British pensioners, and a welcome acknowledgement of the value venture capital and private equity investment brings to our country. The industry is the driving force behind many critical innovations in the UK, creating huge economic and social value for our country in the form of jobs, growth and world-leading products and services.”

“This activity has in turn delivered strong long-term returns for investors in venture capital and private equity. In 2019, the 10-year annual return to investors was 14.2%, compared to the FTSE All-Share which returned 8.1% over the same period. But UK pension funds currently comprise less than 5% of fundraising by venture capital and private equity funds in UK. Today’s call to action from the Prime Minister and Chancellor should help UK pensioners benefit from these returns too.”

Source BVCA