New Economic Secretary To The UK Treasury Outlines Priorities

by Robin Pilgrim, LawAndTax-News.com, London

11 July 2007

Speaking on Monday at the London First 'Building The Capital's Capital' event, the newly appointed Economic Secretary to the UK Treasury, Kitty Ussher outlined her priorities for the future.

She revealed that:

"As Minister for the City, I give you this guarantee: I will be your ambassador to government, and your representative in Europe. No decisions will be made that affect the financial services sector, be it in London or across the UK, without the fullest possible consultation and debate with business and the City. That's my commitment. And it is one that is shared by the Chancellor and the Prime Minister. Because maintaining and building on our competitiveness is a top priority for this government."

"So whether it's working together to get the best out of Europe, or modernising the regulatory environment to ensure it works with the market as things adapt and innovate, government, business and the City need to work side by side."

Ms Ussher went on to observe that:

"London is, I have no doubt, the world's greatest global financial centre. In terms of scale, scope and internationalism, it really is unparalleled - it's the natural location for 70% of the global secondary bond market, over 40% of both the derivatives market and cross-border equities trading, over 30% of world foreign exchange business, and 20% of cross-border bank lending. And the UK is a base for over 250 foreign banks, mostly in London - more than any other financial centre."

"These are pretty impressive statistics - and London makes a major contribution to the fact that the UK also has a trade surplus in financial services twice as large as anywhere else in the world, at over GBP26 billion last year."

Commenting with regard to the UK's relationship with Europe, she acknowledged that:

"I know that many in the City can at times be frustrated by the detail of some of Europe's directives, and by their implementation. If it helps, we in Whitehall sometimes are as well. But I believe that London is strengthened as a global financial centre by Britain's EU membership."

"In wholesale financial services, London has established itself as Europe's gateway to the world - with 35% of the EU's market and nearly a third of the jobs - and as the world's financial services gateway to Europe. And we're seeing key European banks like Deutsche Bank, Societe Generale and BNP Paribas locating substantial parts of their wholesale operations in London."

"Europe also offers our financial services industry opportunities in jobs and investment, from the prospect of an enlarged and competitive retail financial services market."

"Of course, retail markets are intrinsically different to wholesale markets, and there are a number of differences that can't simply be regulated away. But I hope that with Commissioner McCreevy's focus on the Better Regulation Agenda, and Neelie Kroes' robust use of competition policy to dismantle anti-competitive barriers, we can make real progress that will benefit consumers, and that will enhance the competitiveness and efficiency of Europe's financial services industry."

"These conversations will be top of my agenda when I go to meet with Commissioners McCreevy and Kroes in Brussels on Friday, and I'll be reaffirming the importance of an effective competition regime. Because we will need to fight our corner, make our voice heard, and win the arguments."

"We've shown that we can do that on the savings directive, for example, and on the markets in financial instruments directive, MiFID, which will be implemented in the UK later this year. By doing so, we've helped ensure that the UK and Europe stand to gain from the greater openness and competition that will come from MiFID - and I know that firms and authorities here have put significant effort into preparing for MiFID here in the UK. I welcome Commissioner McCreevy's recent moves to put pressure those Member States that are dragging their heels over implementation - and I'll be making clear later this week that he can count on my support."

Speaking with regard to the High Level Group established by Gordon Brown during his time as Chancellor of the Exchequer, the Treasury Economic Secretary announced that:

"Aside from developments in the European and international arena, the second major challenge I'd mention is quite simply working out how to work together. I sense this has improved recently, not least thanks to the establishment last year by Gordon Brown of the High Level Group, which gave a formal process for senior representatives of Government and the financial services sector to address their common concerns, and to work more closely together to strengthen and promote the City."

"One of the things that the new Chancellor, Alistair Darling, did when he was appointed last week was to reaffirm his commitment to this process. The Group will continue, and we will engage with it at the highest level."

"Because it is a process that is showing real promise. The Group has already developed a new strategy for overseas promotion of the UK-based financial services sector, and it has also been considering a number of aspects of the business environment in which the financial services sector operates - three of which I'd like to mention today."

"Firstly, we're working together to reduce regulation. So, for example, the last meeting of the High Level Group in May discussed proposals, which are now the subject of consultation, on a package of measures to deregulate the UK's fund management industry, reducing costs by up to GBP290 million per year. As you all know, the FSA is leading the way in its move towards more principles-based regulation. And in February my predecessor, Ed Balls, held an informal meeting of the Group focussed on EU regulation, with Commissioners McCreevy and Kroes, to ensure that the Commission fully understands and takes account of the views of UK practitioners."

"Secondly, the Group is considering ways to modernise the wholesale insurance market. Lord Levene is leading work to develop proposals that he will present to an insurance summit that I will host in autumn, and that summit will also discuss work, which the Treasury have been carrying out, on the potential for further reforms of the business environment."

"Thirdly, we have to realise the importance of the UK having the right skills in place. London already has a hugely talented workforce. That's the result of both the UK's high quality education and training, and of our openness to inward migration -demonstrated by one quarter of London's senior managers in financial and business services coming from abroad."

Stressing the need for a "partnership approach" between government and the private sector to nurture growth opportunities within the Islamic finance sector, Ms Ussher concluded:

"I'm delighted by what a strong position the (finance) sector is in - I know that position is the result of a huge amount of hard work, but also of working together."

"I know how important that engagement has been, and I'm committed to ensuring that it continues over the coming months and years, and that it continues to support the strong and strengthening position of the City at the heart of a thriving British economy. My role in that, as I said at the outset, is to be your ambassador to Government and within Europe, and to ensure that we make no decisions that affect the UK financial services sector without the fullest possible consultation with business and the City."

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