An overview of the ‘Leeds Reforms’

The choreography of Tuesday’s announcements – the Chancellor’s annual Mansion House speech in the City of London, on the heels of her trip up to Leeds to launch the Financial Services strategy earlier in the day – reflects the Government’s determination to combine its championing of the City, with reminding voters that financial services is not all about London, that the sector creates and sustains thousands of jobs far away from the capital, as well as facilitating investment in all the different sectors and regions of the British economy. (Leeds is Reeves’ constituency city, which she is trying – with some success – to get people to refer to as the “Northern Square Mile”, and Tuesday’s announcements as the “Leeds Reforms”.)

Reeves’ speech had the same upbeat, future-focused tone as the Spending Review, continuing her and Keir Starmer’s attempt to move away from the more negative rhetoric of 2024. Back on Treasury turf, Reeves cut an assured figure, in stark contrast to her last big moment in the public eye, and she was grateful for the warm response in the room – even if few of the attendees would recognise her framing of these reforms as the most radical in a generation. Much of the detail, including in areas likely to be controversial with Labour MPs like ringfencing and ISA reform, will have to wait on yet more reviews. But the sector should be thankful, in a time of accelerating political polarisation, to have a Labour Chancellor who is determined to champion financial. services and its role in driving UK growth and competitiveness, and willing to absorb a degree of political pain in doing so. There has been no shortage of voices on the left of Labour condemning the speech and announcements as a reversion to “discredited trickle-down economics”, though at the moment that reaction looks more like “noises off” than anything more organised. More fundamentally, while many will agree with her that our regulatory culture is too risk-averse – and often focused on the wrong kinds of risks – trying to change that comes with real risks itself, in political terms. Regulators complain that they face an asymmetry of risk and reward: if they relax the rules and a crisis follows, they will certainly be blamed, while if growth follows, they are unlikely to be the ones who get the praise. For politicians, the scales are more balanced; and for the present government, given the fiscal straitjacket its inheritance and its own decisions have placed it in, it is perhaps not surprising if Matt Cavanagh Senior Counsel growth is deemed worth the risk. But there are obvious scenarios in which future voters’ attitudes to these reforms – government-sponsored nudges away from cash savings and into equities, or changes to ring-fencing or capital requirements, if indeed they come to pass, or even relaxation of mortgage requirements – could turn decidedly sour. Reeves is famously not the cavalier, swashbuckling type of politician: she will have thought carefully about these scenarios, and the sector should acknowledge the personal capital she is investing in deciding to press on, even if they believe

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Matt Cavanagh, Senior Counsel

H/Advisors Cicero