- The Mansion House reforms were announced by Jeremy Hunt in July 2023
The Mansion House reforms need an overhaul if the Chancellor is to succeed in her mission to boost economic growth, a leading investment bank has warned.
Announced by former Chancellor Jeremy Hunt in the summer of 2023, the Mansion House proposals are aimed at spurring investment in high-growth businesses.
They included a pledge among Britain’s largest defined-contribution pension providers, including Aviva and L&G, to allocate 5 per cent of assets in their default funds to unlisted equities by 2030.
UK pension funds dedicate just 4 per cent of their funds on average to support local equity markets and firms, compared to 50 per cent in 1999 and between 8 and 10 per cent among most countries.
Peel Hunt points out that doubling the current proportion invested in UK equities to around 8 per cent would unleash approximately £100billion of further investment.
Dr Miles Dixon, an analyst at Peel Hunt, said the Mansion House Compact is ‘laudable and much-needed’, but believes 2030 is ‘too late to deliver desperately needed growth for the UK economy’.
Low investment: UK pension funds dedicate just 4 per cent of their funds on average to support local equity markets and firms
He has called to widen the definition of ‘growth’ so that UK DC pension schemes can access more ‘diversified and liquid investment opportunities’.
Dixon suggested the government include listed vehicles that invest in venture, such as specialist pharmaceutical investors PureTech and HBM Partners.
He also said the Long-term Investment for Technology and Science [LIFTS] initiative, a scheme aimed at unlocking investment for science and tech companies, is ‘overly focused’ on venture capital.
It thinks this could lead to a ‘lawn’ of small firms wanting to list on the Nasdaq and deter DC pension funds from investing whilst LIFTS’ performance is being assessed.
‘The assumption underpinning Mansion House 1.0 do not pass muster,’ remarked Dixon, adding: ‘Capital needs to be directed along the investment continuum, from early stage to scale-up and beyond.
‘A fuller ecosystem is needed to build appetite for companies to remain in the UK.’
Britain’s capital markets have struggled to attract new listings and seen an exodus of major businesses in recent years due partly to concerns about low valuations and strict regulation.
Cybersecurity group Darktrace to supermarket chain Morrisons, and video games services provider Keywords Studios are just some former London-listed companies that have fallen victim to billion-pound foreign takeovers.
In addition, Paddy Power owner Flutter Entertainment, building materials supplier CRH and mining giant BHP have transferred their primary listings overseas.
Since the start of 2025, there have been just five initial public offerings in London that have raised over £10million, according to Peel Hunt.
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