Rachel Reeves speech - how finance system changes affect you from mortgages to shares
Rachel Reeves has issued a rallying cry to the financial sector - saying it must change "negative" perceptions about investing in stocks and shares.
In a key speech in central London, the Chancellor also vowed to cut away red tape she branded a "boot on the neck of businesses". She also said new changes will boost people getting their first mortgage as she declared "Britain is open for business".
There will be good news on pensions, Ms Reeves said. She warned that the global economy is increasingly uncertain, but vowed: "The job of a responsible government is not simply to watch this change - We must step up, not step back."
Speaking to City chiefs, Ms Reeves said: "For too long, we have presented investment in too negative a light, quick to warn people of the risks without giving proper weight to the benefits."
She also said that the "tangled system" of financial advice available to the public needs to be tackled. Here we look at some of the key things that came out of Ms Reeves' speech.
Stocks and shares
Mr Reeves promised a shake-up to make investing in stocks and shares more accessible. She branded financial advice a "tangled system" and said people aren't sold the benefits.
The Chancellor said: "For too long, we have presented investment in too negative a light quick to warn people of the risks, without giving proper weight to the benefits. And our tangled system of financial advice and guidance has meant that people cannot get the right support to make decisions for themselves."
She continued: "That is why we are working with the FCA (the Financial Conduct Authority) to introduce a brand-new type of targeted support for consumers ahead of the new financial year."
Pensions
The Chancellor lauded new legislation coming into law in the coming months to boost the pension sector.
She told the audience: "Last year at Mansion House, I set out an overhaul of our pensions system and the Pension Schemes Bill, led by my colleague the Pensions Minister, will be signed into law in the next few months.
"The creation of Defined Contribution and Local Government Pension Scheme megafunds will mean larger and more powerful pots of funding invested productively across the country."
And Ms Reeves continued: "We have a duty to maximise the potential of people's pension savings and our Bill reserves the power to mandate pension funds to invest productively in a wider range of assets sending a clear signal that pension funds and this government are united in our determination to deliver higher returns for savers and more investment for the economy.
"But I am confident that I will not need to use that power because firms see the urgency and importance of this as clearly as I do."
Mortgages
Ms Reeves said new changes will mean tens of thousands of people will be able to get a mortgage in the 12 months who wouldn't have been able to previously.
The Chancellor singled out Nationwide's Helping Hand scheme and said she welcomes new lending rules will make a huge difference.
She said: "I welcome the recent changes the Financial Policy Committee has announced to the loan-to-income limit on mortgage lending which the PRA and FCA are implementing immediately.
"That means tens of thousands more people buying their first home will be able to get a mortgage over the next year with Nationwide already offering its 'Helping Hand' mortgage to more first time-buyers supporting an additional 10,000 each year."
And my thanks to Dame Debbie Crosbie for her leadership.
Global uncertainty
The Chancellor said that the global economy is becoming more uncertain - meaning ministers must be on her toes.
She told City bosses that the importance of economic security had been "brought into sharp focus" in recent months. Ms Reeves said: "As the world changes before our eyes, and the global economy becomes more uncertain.
"The job of a responsible government is not simply to watch this change - we must step up, not step back." And she said success must not be "limited to a handful of sectors, a few people, or only certain parts of the country".
Work so far is getting results
Ms Reeves said that steps taken since Labour came to power are making a difference.
She pointed to cuts in interest rates, as well as reductions to the cost of mortgages and lending and wage growth. The Chancellor said: "The stability that we have restored is already delivering:
"Four cuts in interest rates by the Bank of England since the General Election, reducing the cost of mortgages and business lending; Real wages up by more in the first ten months of this government than in the first ten years of the previous government;
And investment is returning to our economy. "At the Spending Review, I set out £120bn of additional public investment over the next five years and last month, the Prime Minister confirmed that the UK has attracted £120bn of private investment – in just the last 12 months."
Cutting back red tape
The Chancellor told the audience that red tape is stifling businesses, and vowed to do more to cut back on red tape.
She described regulation as a "boot on the neck of businesses". Ms Reeves stated: "As I look ahead it is clear that we must do more. In too many areas, regulation still acts as a boot on the neck of businesses choking off the enterprise and innovation that is the lifeblood of growth.
"Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country."
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