General election: AIC comments on priorities for the next government

Commenting on the Prime Minister’s decision to call a General Election on 4 July 2024, Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “The incoming government will have a long to-do list. Whilst the detail may vary there is cross-party agreement that the country needs significant investment in infrastructure and public services and that will require private capital from investors.

“The investment company sector is at the heart of the public markets and can play a vital role in helping gather and direct private capital, as it has done for over 150 years. Investment companies range from large FTSE 100 companies to venture capital trusts investing in early-stage companies driving growth and innovation. We trust that the next government, whoever that is, will value the role investment companies play and will continue to work with us to deliver even more for UK investors and the economy.”

The AIC has highlighted five key priorities for the incoming government to reinvigorate capital markets, mobilise private capital and drive UK growth, innovation and productivity.

1. Reform of financial services regulation

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “Accurate and meaningful disclosure of costs is critical to a properly functioning market where investors can make well informed decisions. PRIIPs, MiFID, and the AIFMD are just three examples. There is cross-party support for the principle that the government sets the boundaries for regulation and the regulator then sets the rules. There is an urgent need for the incoming government to press on at pace with the transfer of rule-making in these areas to the FCA.”

Please see the AIC’s separate press release on cost disclosure.

2. Supporting the UK’s growth businesses

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “There is cross-party support for the continuation of the venture capital trust scheme which plays a vital role in filling the capital gap suffered by early-stage growth businesses. The decision to extend these schemes until at least 2035 requires EU approval before April 2025 and this should be a top priority.”

3. Reinvigorating the UK’s equity markets

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “There’s a lot to do to get capital markets moving again, including regulatory reform and prospectus reform. A clear signal of intent would be the abolition of stamp duty – a tax on the market’s liquidity. At the least, this should be removed from the trading of investment company shares where there is double taxation and an unfair disadvantage relative to open-ended funds.”

4. ISA reform

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “The current government in its last Budget proposed a UK ISA. The proposals would potentially exclude many UK-listed companies, including many investment companies. This misses the key objectives of driving an investment culture, supporting the UK equity markets and their related infrastructure, and encouraging companies to list and seek capital in the UK.”

5. Pension reform

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “It’s well recognised that we need to encourage pension funds to invest more in UK assets. The current government has started this process by requiring increased disclosure, hoping this will lead to public pressure to invest more domestically. We do not believe compulsion is the way forward but neither is reinventing the wheel. Investment companies, tried, tested and proven, are the perfect vehicle to help channel investment into illiquid assets in the UK such as infrastructure, renewable energy and private equity.”
 

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Notes to editors

1. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 330 members and the industry has total assets of approximately £273 billion.
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