Retail Investment

Callum Anderson Excerpts

Tuesday 22nd April 2025 Westminster Hall

[Callum Anderson (Buckingham and Bletchley) (Lab)]

I beg to move,

That this House has considered Government support for retail investment.

It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank my hon. Friend the Economic Secretary to the Treasury for joining us today and for her continued engagement on this subject, and I thank hon. Members from across the House for making time for the debate.

I am grateful for the opportunity to raise the matter of retail investment in the UK stock market. This is about more than just the financial sector or the City of London; it is about how people across our country, from Sunderland to Swansea and Buckingham to Bletchley, can build more secure financial futures while helping the UK economy to grow.

When people use their own money to invest in shares, Government bonds or other regulated financial products, that is a force for good. It gives them agency and an opportunity to own a stake in the companies that they work for, buy from and depend on in everyday life. At its best, it allows people from every corner of our country to share in the success of our economy, to grow their wealth, to build financial resilience and to prepare for life’s great milestones, such as weddings, and unexpected moments.

Retail investment does not just help individuals; it helps companies, too. The capital that individuals invest provides the fuel for companies to expand, innovate and create jobs in every part of the UK. That is good for productivity, wages and Britain’s international competitiveness. Having more individual investors also strengthens our financial markets. They bring more stability, deliver more liquidity to our capital markets and provide a stronger base of support for UK quoted companies, making them more resilient to global shocks—be they pandemics or unexpected impositions of tariffs—and better equipped to focus on building their commercial offer.

The UK has a proud history as a global financial centre. We attract capital from across the world, and we should be proud to do so. We used to pair that with high levels of retail participation by British citizens, but sadly that has changed. The data paints a stark picture. In the early 1960s, individuals in the UK owned, by value, a little over half of all shares traded on the London stock exchange; today that figure is barely 10%. At the same time, overseas ownership of UK shares has risen to almost 58%.

What is more, according to studies from the London-based New Financial think-tank, the proportion of UK households that directly own shares has halved in under two decades, from 22% in 2004 to just 11% in 2022. That is far below the proportion in many developed countries, such as Sweden, where over a fifth of households own shares. There are many interconnected reasons behind those trends, and I do not propose to examine each in detail right now. Of course, some people simply cannot afford to invest, particularly when the cost of living remains high; others feel that they do not know where to begin or do not trust the system to work for them; and many are simply more comfortable with cash, even though it often fails to keep pace with inflation.

[Samantha Niblett (South Derbyshire) (Lab)]

Does my hon. Friend agree that increasing the participation in retail investment of women, who make up more than 50% of the UK’s population, is crucial not only for gender equality, but for the UK’s economic resilience? At present, women in the UK are significantly less likely than men to invest in stocks, individual savings accounts or pensions, despite often achieving comparable or better returns when they do. By addressing the gender investment gap through education, accessible financial products and tailored support, we can empower more women to grow their wealth independently, reduce long-term financial inequality and boost the overall vibrancy of the UK retail investment market.

[Callum Anderson]

My hon. Friend is quite right; it is really important that we encourage women and other under-represented groups to invest and participate in owning a part of their economy. By encouraging retail investment we are able to reduce a variety of wealth gaps, including the gender wealth gap. I should add that there is a social justice element, too. People from middle-class or wealthier families are simply much more likely than those from ordinary working-class backgrounds to be exposed to the range of financial options available. That creates an asymmetrical divide in confidence, knowledge and opportunity.

This matters because when UK citizens own less of their economy, the consequences are much more than just financial. It affects the efficacy of our economic model, the shape and direction of our growth path, our ability to support home-grown innovation and even, as we have seen in recent weeks, our economic sovereignty. If we want a strong economy that genuinely works for everyone, we must do what we can to help more of our constituents take part in it, not just as workers or consumers but as co-owners.

I want to reiterate that this is not about helping the City of London. It is about helping everyday people—our constituents—make the most of their money and have a say in the companies that are shaping their lives. We know that long-term investing consistently outperforms keeping money in cash savings or bonds.

[Anna Dixon (Shipley) (Lab)]

I recently met representatives of Morrisons, the fifth largest supermarket chain in the country, which is headquartered in Bradford. Since 2021, it has been owned by a private equity firm. Does my hon. Friend agree that we need to ensure that we retain family-owned British companies? When they are sold to private equity companies, there is a risk of undermining long-term patient capital and investment in the social fabric as well as the businesses themselves.

[Callum Anderson]

As I have mentioned ad nauseam since I was elected, my mum works for Morrisons, so I know the impact that various structures of ownership can have on workers and customers. My hon. Friend is right that that is one of the many factors that we should consider as policymakers.

A £100 investment in Government gilts in 1900 would have returned around £463 by 2019. The same investment in UK equities would have yielded £35,000. Despite that, many Britons still keep the bulk of their money in cash. In the G7, only the citizens of Germany and Japan hold more of their national wealth in cash than we do. Inflation, even at modest levels, steadily eats away at its value. I believe that we must do more to help people feel confident in making smart, informed, long-term choices, and that starts with awareness, the right tools and advice, and trust.

Let us take ISAs, the most commonly known product, as an example. In the 2022-23 financial year, the latest for which official statistics are known, more than 12 million adult ISA accounts were active, yet nearly two thirds of the total value—almost £290 billion—was held in cash. That is more than £290 billion earning very little return indeed. Some major high street banks, which I will decline to name, are at the moment offering as little as 1.35% interest on cash ISAs, yet we know that inflation has consistently outpaced that rate for the past four years; indeed, it has sometimes reached double figures.

Many financial experts and advisers will rightly recommend keeping three, six or nine months of living expenses in cash savings. I know from my early career in financial inclusion charities that, for many households, possessing even £500 in emergency savings can often be out of reach. Let me be clear again: this debate is not about replacing or discouraging cash savings—far from it. It is about showing that even small investments—£10, £20 or £50 per month—can make a real difference over time.

If more people invest, our economy will be stronger in the long run. Imagine if we could shift just 10% or 20% of that £290 billion towards more productive, growth-inducing assets. That would mean more companies starting, growing and scaling right here in the United Kingdom and, therefore, more jobs, better pay and more people gaining that crucial bit of additional disposable income to invest for themselves or, perhaps just as importantly, to enjoy life with their families. That is the virtuous cycle that I believe we all agree that we need to build.

How can we—Parliament, Government, regulators and the industry itself—go about working towards that together? Ultimately, I believe that the UK would greatly benefit from a long-term retail investment strategy invested in by Parliament, Government, regulators and the industry. For the purpose of this debate, I think there are four immediate priorities.

First, we need to simplify the ISA framework and reform it to better support British investment. There are four types of ISAs, each with slightly different rules. For many, that is simply confusing and, I think, off-putting. Why not consolidate those products into a single ISA, with stocks and shares ISAs the default but, crucially, people can still hold cash if they choose?

The Government might also wish to consider reviewing the stamp duty framework on share purchases. Currently, it is cheaper for an individual investor to buy shares in Illumina than in Oxford Nanopore, in Lockheed Martin than in BAE Systems, and in Tesla than in Rolls-Royce. Is it time for us to ask ourselves whether we want to continue making it more expensive for Britons to buy British?

Finally on this point, we should ensure that ISA tax exemptions align much better with the needs of the UK economy as a whole. Today, someone can put £20,000 in a tax-free wrapper that invests in companies that create no jobs in the UK, pay nothing into our Exchequer, generate no domestic growth and contribute no intellectual property or research and development. Should we as legislators be asking ourselves whether that is a good use of taxpayer subsidy? Is it time to look again at the original PEP—personal equity plan—model introduced by Nigel Lawson in the 1980s, which required at least 50% of the ISA allowance to be directed towards UK-focused assets? That could strike a better balance between supporting investment freedoms and choice, and the national interest.

Secondly, we must boost, embed and entrench the virtues of financial education, because if people do not understand how investing works, they simply will not do it. I welcome the Government’s continued support for the Financial Conduct Authority’s review of the boundary between financial advice and guidance. It is really important that people can get timely and affordable help when making big financial decisions so that they can make the most of their money, but I think there is scope for us—for Britain—to go further.

Let us be honest: as I said in my opening remarks, kids from wealthier backgrounds are more likely than those from less wealthy families to hear about compound interest, investment portfolios and ISAs at the dinner table. That is why financial education should form a part of everyone’s life, from school right through to retirement, so that people feel confident and well informed at every stage of their life. That means recommitting ourselves to properly implementing age-appropriate financial education throughout our school system, from basic budgeting and saving at a young age, to more sophisticated learning about investment, risk and long-term planning in later school years. This is not just about economics; it is about equity and fairness.

Thirdly, we need to make it easier for citizens to engage with the companies they invest in. I believe that primarily means finishing the work of Sir Douglas Flint’s Digitisation Taskforce at pace, ending paper share certificates and creating a fully transparent modern shareholding system. However, it is also about access to information: right now, only the big top-tier institutions get first-class research; retail investors get patchy websites filled with jargon, if they get anything at all. The UK should be developing high-quality and accessible investment information, especially for those smaller UK firms that have the potential to be the Googles and Nvidias of tomorrow.

Fourthly and finally, we must fundamentally shift the British culture and mindset into individual investing. Too many of our constituents still see investing as something that other people do—something for the wealthy, or the experts, or the lucky to do. We must challenge that mistaken perception head-on. Why not launch a modern, compelling and inclusive public awareness campaign—perhaps a 21st-century version of “Tell Sid”? It should focus on real people, real lives, and real, genuine, tangible benefits that people can see in their local community. It should be visible, too, in universities, in jobcentres, in community places and in our workplaces, because this is not just a personal finance issue; it is a national opportunity.

I think that the case for retail investment is clear and I believe that this Labour Government have the chance to fuse their democratic socialism with a modern brand of democratic capitalism. By helping more people to invest in their own economy, we empower citizens, grow our companies and build a more prosperous country for everyone. I believe that capital markets can and should serve everyone, and that it is our job in this place to make that a reality.

[Wera Hobhouse (in the Chair)]

I remind Members that they should bob if they wish to be called to speak.

--- Later in debate ---

[Callum Anderson]

I had no idea, Mrs Hobhouse, that this was the first Westminster Hall debate that you have chaired. Given that we have 20 minutes left, hopefully this is the start of a good track record for you of ending debates in time.

Once again, I am really grateful for the opportunity to bring the debate to Westminster Hall, and to the Members from all parts of the political spectrum who have contributed in a thoughtful and considered way. And as I said at the beginning, I thank the Minister for her continued engagement and patience with me as I bring the issue up again and again. Clearly, there is a lot of cross-party political consensus. There is therefore a big opportunity for Britain to reinvigorate our capital markets and, as the hon. Member for St Albans (Daisy Cooper) said, to ensure we can democratise share ownership. I again thank everybody for spending an hour of their time contributing to the debate.

Question put and agreed to.

Resolved,

That this House has considered Government support for retail investment.