House of Commons · Urgent Question
13 May 2025 · 24 other contributors
Opened by Mel Stride Con Central Devon
Summarised by AI from the official record, so it can contain mistakes.
Mel Stride raised concerns about mansion house accord 2025-05-13 in the House of Commons. A government minister responded. Other MPs also contributed.
Key points
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
Will the Chancellor confirm if the Government intend to take new powers to mandate pension funds to allocate minimum amounts to specific classes of assets, and explain what this would mean for the existing fiduciary duties set out in legislation?
Question
Can the Minister confirm whether the Government intend to take such legislative powers in the pensions Bill later this year? If he cannot rule out making such a move, can he explain what it would mean for the existing fiduciary duties set out in legislation?
Minister reply
There has been a debate across this House and in the wider industry about mandation, including on UK equities. However, what we are setting out is a voluntary agreement led by the industry.
Question
Given that fund managers will need time to pool together funds that reflect the Government’s wishes and the voluntary accord, when does the Minister expect it to kick in? At that point, might he consider mandation?
Minister reply
The decision by the industry is that the targets for asset allocation are for 2030.
Question
Would the Minister unpick for us what core lessons he has learned from Australia and Canada, which have already embarked on this path? Also, it has long been a long-term investment opportunity for many in the pensions industry to invest in rental opportunities. How can we drive the opportunities in the social rented sector through the accord?
Minister reply
The levels of private asset allocation in pension schemes in Australia and Canada are far higher than we see here in the UK, which is absolutely right. On investment in the social rented sector, many of our pension funds are already doing that.
Question
Will the Minister spell out how this deal provides real change for constituents across the country, and what it means for infrastructure projects, especially housing?
Minister reply
There is no way that Britain can return to growth unless it starts investing in its future again. This is part of a much wider story where there is consensus across the pensions industry and among most economists who look at the UK economy that we need to move to a higher investment level.
Question
How will the reforms support regional innovation growth through better access to investment, particularly outside London?
Minister reply
The Minister confirmed that these commitments aim to address both regional imbalance in investment and the long-standing problem of providing growth finance for firms. He highlighted the role of British Business Bank in aggregating small-ticket items to a higher level.
Question
How will the Minister continue engaging with the City on changing risk-aversion attitudes among defined benefit schemes considering taxpayers' money used for tax reliefs?
Minister reply
The Minister recognised the need for innovation in pension landscapes and emphasised a positive view towards industry consensus for change. He mentioned focusing on funding pipelines of companies that can list publicly, and private assets including private shares.
Question
How will local infrastructure projects benefit from bringing together UK pension schemes and local/regional governments?
Minister reply
The Minister stated they will address this in the pensions investment review final report. He emphasised that private investment is needed at scale to crowdfund local investment, including perhaps from private pension funds.
Question
Given fiduciary duties of asset managers, how will the accord ensure they invest in UK markets if not already doing so?
Minister reply
The Minister suggested that the hon. Member has not read the accord which focuses on private assets. He expressed optimism about Britain's future compared to the hon. Member's pessimistic view.
Question
Will this deal equal more investment in British businesses as demonstrated by National Wealth Fund in Leeds?
Minister reply
The Minister confirmed that the National Wealth Fund and British Business Bank aim to work with regions to ensure projects are de-risked and supported, unlocking private investment.
Question
Does the Minister share concerns about pension firms refusing to invest in profitable defence industries on ethical grounds?
Minister reply
The Minister acknowledged debates on this issue. He stated that UK Government supports private investment in defence sectors for national security and economic growth, noting most funds do invest in defaults including defence companies.
Question
How will the policy help infrastructure investment in places like Peterborough, outside of London?
Minister reply
The Minister emphasised the need for higher public investment to support regeneration projects and highlighted that public sector investment crowds in private investment across various sectors.
Question
How will this announcement support broader investment in the green transition across England and beyond?
Minister reply
The accord supports higher levels of private asset allocation, which is crucial for financing large-scale infrastructure projects including renewable energy. The Government has accelerated approval processes for solar farms and other clean energy initiatives to ensure swift progress on net-zero goals.
Question
What discussions have been had with the Pensions Regulator and the Association of British Insurers about changing the regulatory environment for pension investment?
Minister reply
Discussions are ongoing regarding regulations that can provide trustees with a range of options to invest in diverse assets, including surplus release measures and superfund regimes. These changes aim to encourage more long-term private asset allocation without mandating specific sectors.
Question
Can the Minister update on what discussions are being had with industry about reporting progress under the accord in a clear and transparent way?
Minister reply
The Government is committed to transparency. The pension schemes Bill will introduce provisions for monitoring investment changes, ensuring that there is consistent reporting on how firms are progressing towards their commitment levels.
Question
While welcoming British pension funds investing in infrastructure, should the Government avoid specific sector mandates due to lack of transparency?
Minister reply
Encouraging transparency is crucial. The Government supports voluntary measures for better valuation disclosures by private market investors, ensuring that both savers and policymakers have accurate information on asset performance.
Question
What does the announcement mean for constituents in Central Ayrshire and Scotland?
Minister reply
It signals a shift towards higher investment, growth, and wage increases. The Government’s focus on long-term stability and economic success is aimed at reversing years of stagnation and benefitting communities across Britain.
Question
Given the past failures like GB Energy, how can savers have faith in this Government delivering investment opportunities?
Minister reply
The pipeline of projects is being delivered now: approvals for solar farms, wind farms, grid expansion, and housing developments. The political stability under the current administration supports these efforts.
Question
Does the Minister agree that this Labour Government’s economic stability is crucial for pension fund commitments?
Minister reply
Absolutely. Political stability has attracted interest from international funds, such as Australian and Canadian investors looking to open UK offices due to improved confidence.
Question
Will the Government ever interfere in pension trustees' fiduciary duty to deliver best returns for their members?
Minister reply
No, the accord ensures that pension trustees maintain their fiduciary duties while diversifying asset allocations. This aligns with increasing UK asset investments for better long-term value.
Question
Will the Minister ensure that more local impact investments like renewables and affordable housing are supported?
Minister reply
The LGPS, with its significant assets under management, will be a key area for reforms to enhance professional governance and local investment practices, maximizing benefits for taxpayers and communities.
Question
How can the Government ensure that this investment focuses not just on London but across the UK, including Northern Ireland?
Minister reply
The accord aims to diversify investments beyond London. The Government is working towards a broader geographic distribution of investment opportunities to benefit all regions, including Northern Ireland.
Question
What steps will the Government take to help ramp up investment as quickly as possible and ensure regulators encourage pension funds to invest directly in real economic assets, such as changes to the matching adjustment?
Minister reply
I thank my hon. Friend for his comments. The investments we will be making, delivering on the supply of capital with reforms like today's accord, while allowing building for housing, transport projects and more, are exactly what will make a difference in the longer term.
Question
How will the Mansion House accord help channel greater investment from pension funds into innovative firms to support scaling up and growth?
Minister reply
Innovation is one of the ways we drive higher productivity, which is essential for higher wages. Our pension funds need to invest in a wider range of private assets, including through venture capital, to provide that growth financing needed by our innovative companies.
Government Response
I can confirm that there has been a debate across this House and in the wider industry about mandation, including on UK equities. However, what we are setting out is a voluntary agreement led by the industry. On the industry consensus behind the accord, 90% of the defined contribution industry, by active savers, have signed up today—and all providers, including those that did not sign up today, are committed to the idea of more investment in private assets.