Tell Sid part II?
The business news that matters
Retail investors own just 21 per cent of the UK’s assets under management and the portion of listed companies owned by households has dropped from more than 50 per cent in the 1960s to just 12 per cent, according to new research.
These numbers are well below other European countries, with retail investors in Germany owning 30 per cent of the assets and those in France holding 28 per cent.
The research has been conducted by the Centre for Policy Studies, a think tank that supports free markets, centre-right policies and was co-founded by Margaret Thatcher in 1974. The report has been backed by Pimfa, the trade body for financial advisers, and Andrew Griffiths, the City minister.
The CPS says that UK households have £1.8 trillion of cash in savings accounts and are losing out because the value of this cash is being eroded by inflation. Households should be encouraged to invest some of their savings in shares instead, the report says.
Griffiths, who was the finance director at Sky before going into politics, says of the report:
“Wider share ownership is good for savers, good for the economy and good for society.
“Outside of the EU, we have the opportunity to knock down regulatory barriers to help individuals make their money work harder for them and to make it easier for entrepreneurs and businesses to raise investment in the UK.
“However, increasing individual share ownership is also about changing culture, attitudes to risk and supporting individual responsibility.”
The CPS has proposed that the government launches a new public awareness campaign to boost share-ownership, similar to the “Tell Sid” advertising campaign of the 1980s that encouraged the public to buy shares in privatised companies. The think-tank also says that the public should get the chance to buy shares in new IPOs and that cash ISAs and stocks and shares ISAs could be merged into a single product.
You can find a summary of the CPS’s report here and the full report here.
I have written about this issue before, pointing out that the debate around surging energy and fuel bills could be more constructive and less “them and us” if households owned more shares in BP or Centrica. Privatisation in the 1980s was about cutting the national debt and raising cash, but it was also about promoting the idea that people could have a stake in the success of these companies. Buying property is promoted relentlessly in the UK but buying shares is not. However, between 2010 and the end of 2019 the FTSE 100 and FTSE 250 outperformed the average house price on a capital value basis.
This new report has been published amid concerns about the future of Thames Water, with the government holding talks about temporarily nationalising the company. Nils Pratley writes in The Guardian today that getting Thames Water on the stock market could be a productive solution. He writes:
“It wouldn’t be a cure-all, but it would be a step towards saner financing models and greater accountability, which is a bare-minimum requirement if customers are to be told to shoulder bigger bills.”
You can read that column here
However, the UK has a lot of work to do to improve the rights of retail investors and their ability to actually buy shares easily and cheaply. The Quoted Companies Alliance, which represents small and medium-sized listed businesses, is working hard in this area, but as Helen Thomas writes in the Financial Times today, there are still an estimated 8.6 million share certificates in circulation, reflecting a system that is old-fashioned and difficult to access. You can find that column here. Meanwhile, Archie Norman, the chairman of Marks & Spencer, has said his company’s annual meeting will have to “look different” next year after retail investors were told it would be digital-only and they shouldn’t attend in-person. Story by The Times here
Other stories that matter…
1. Sales of new cars in the UK rose by 25.8 per cent year-on-year in June as the industry recovers from supply chain disruption caused by the Covid-19 crisis and consumer demand holds up. Sales of battery electric vehicles rose by 39.4 per cent and accounted for 17.9 per cent of all sales, although this was driven by business and fleet sales rather than those to households. The most popular car was the Tesla Model Y, followed by the Ford Puma and Vauxhall Corsa. You can find the data from the Society of Motor Manufacturers and Traders here
2. A follow-up to what I wrote about Monday’s edition: Orkney Islands Council has voted in favour of exploring a motion tabled by leader James Stockan to explore “alternative forms of governance”. The motion was supported by 15 votes to six. A report will now be put together on Orkney’s options. These options include leaving the UK to be a self-governing part of Norway, although Stockan said after the vote: “There is a far bigger suite of options here - this could even be that we could get our money direct from the Treasury in London and look after our own future.” A spokesman for Rishi Sunak has ruled out the prospect of Orkney leaving the UK, saying:
"First and foremost there is no mechanism for the conferral of Crown Dependency or Overseas Territory status on any part of the UK.
"We have no plans to change the devolution settlement we are supporting Orkney with £50 million to grow the economic prosperity of the Scottish islands, through the islands deal.
"But the government's position is that the UK is stronger united."
You can read more about Orkney in the BBC’s story here
3. Build-to-rent housing is a key part of the regeneration plans in Sunderland, where I have been this week. On that topic, Aviva has just announced it will invest £400 million alongside Moda Living in a new build-to-rent project in Birmingham. This will involve 1,000 apartments being built near Birmingham New Street station. Announcement here
4. The owner and former chairman of Fleetwood Town football club in Lancashire has been sentenced to 13 years in jail after being found guilty of fraud. Andy Pilley was found to have mis-sold gas and electricity contracts and posted fake customer reviews online. The charges relate to Pilley’s work at BES Utilities, where he was chairman. Pilley was found to have used telesales operations to encourage businesses to sign long and expensive energy contracts with his companies. The companies connected to Pilley had annual revenues of more than £100 million by 2019. More details from the Lancashire Evening Post here
5. Nature has done an interesting piece on how the UK’s Covid-19 contact tracing app saved thousands of lives and that it is important to learn lessons from this about how to use data and decentralised apps to improve people’s lives while also respecting privacy. Piece here
And finally…
Yesterday I wrote about Seaburn and Roker beaches in Sunderland, two of the best in the UK. For those looking for somewhere to stay to enjoy them, check out the Seaburn Inn, which is where I stayed. It has excellent rooms with a seaview, good food and decent prices. You can find the hotel here
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Best
Graham