The UK parliament is crying out for reform, but don’t expect it to happen anytime soon.
Before I start this discussion, I wanted to let you know where I am from — certainly not some trendy lefty or socialist background. Where I grew up, you never heard of a Labour member of parliament. You were more likely to see Buddy Holly singing a duet with Elvis in the high street branch of Woolworths — remember them? — than a Labour voter.
Yes, I was raised in 80s Essex. I wore white socks, drove a Ford Capri and watched West Ham play at the weekends. I belonged to the ideal electoral demographic targeted by Tory HQ, and in the days of Margaret Thatcher, was happy to vote accordingly.
However, over the past decade, the Tory party has become dysfunctional and useless, turning into a national embarrassment. It is also dangerous because the Tories are in government, which means they should be steering the country.
We have seen their mismanagement of the triple challenge of Brexit, the Covid -19 pandemic and an economy falling behind European neighbours. Throw in vicious infighting, the disastrous Liz Truss premiership, several buckets of sleaze and you end up with an even bleaker picture. A general election is due within a year, and unless something drastic happens, it will mean a Labour government and Tory wipeout
Investment destination
Our ruling clique still argues the UK is ripe for investment, but this depends on the timeline. For the short-term — less than two years — the UK is in a bad position. Political issues have created instability. Debt has skyrocketed, even though some was necessary due to Covid-19. High inflation impacts cost of living, with a general sense of doom and gloom. The only viable short-term investment strategy is buying undervalued assets, hoping their stock rises.
From a longer-term view — more than three years — the situation could be positive, assuming the political situation stabilises. This hinges on the government supporting businesses and the economy, as opposed to shallow headline-grabbing press opportunity stunts.
The UK is specialised in several sectors which will define our future, including financial services, technology and artificial intelligence. But we also face deep issues. An ageing population will seriously impact the National Health Service, care and pensions. Poor travel infrastructure requires massive investment. There is no real plan for climate change. And we still have not seen the long-term impacts — both good and bad — of Brexit.
If the UK can take advantage of these positives, and manage the challenges, it will be a good place to invest. But businesses need ‘real’ government support, meaning it is prudent to wait until the political situation stabilises, before making long-term investment decisions.
Wealth management targets
Despite these concerns, larger wealth managers are still targeting the UK and new ones are springing up. I see this trend slowing down in future. The older population, born after 1960, have paid off their mortgages, and have good pensions and savings, with ‘spare’ money that wealth managers could oversee.
But the younger cohort, born after 1990, do not enjoy this luxury. They are subject to higher house prices — with mortgages taking more than 30 years to pay off — and less disposable income. This leaves less free money to channel to wealth managers, signifying a shrinking market, to which wealth firms are reacting in different ways. For example, they are targeting individuals with less money, stealing clients from competitors, looking to merge with rivals and replacing product offerings with less costly services.
The current UK political situation mirrors the financial services credit crisis of 2008/2009. Politicians and financiers alike were guilty of poor behaviour, both morally and legally, with both operating in a bubble, totally ignorant how their actions impact the wider community
Wealth managers are stuck in the ‘fear of missing out’ syndrome. They see competitors investing in the UK and follow them blindly, rather than stepping back and thinking strategically, ending up with long-term consequences.
The current UK political situation mirrors the financial services credit crisis of 2008/2009. Politicians and financiers alike were guilty of poor behaviour, both morally and legally, with both operating in a bubble, totally ignorant how their actions impact the wider community.
Root-and-branch reboot
But there is one key difference. Financial services benefit from an independent regulator — or several if you operate across borders — which now, post-credit crisis, has real powers to prosecute firms and individuals. UK politics does not does not have this facility. Parliament appears to regulate itself, although rules are unclear, vague, and often ignored. Root-and-branch reform is needed to make UK politics fit for purpose.
Most importantly, parliament is crying out for an external regulator with teeth, staffed with non-politicians such as judges and other respected people, to oversee and punish MPs. We need diversity and inclusion to ensure MPs are representative of the entire UK population. This shouldn’t only cover race and gender, but must include education, demographics and age.
In order to gain ‘real world’ experience, politicians should be required to work 10 years in the outside world before entering parliament. Second, third and fourth jobs should also be banned, enabling MPs to focus 100 per cent on their public service role. To this end, a maximum parliamentary tenure of 12 years for all MPs should be set to avoid stagnation and complacency.
All donations, regardless of size, must be listed on an easy-to-access website that the public can review. And lastly, the House of Lords needs a shake-up. While a second house should oversee the House of Commons, it must reflect the general population, rather than being filled by nominees of political parties, or those inheriting titles from parents.
Will this happen? Of course not. Why would the UK parliament want to take down the ladder that put them there, especially if they are still standing on it? But relying on the next generation of ‘Essex Man’ to dutifully vote them in is no longer a viable strategy for the Tories.
Paul Taylor is a consultant implementing change across financial services, oil and gas companies, charities and professional bodies
