Top-down mandates from governments rarely build great companies. This golden rule of business growth was sadly not on show at the splashy launch of UK chancellor Rachel Reeves’ ambitious, but flawed Mansion House accord (Report, May 14) forcing pension funds to invest in the UK will not encourage growth, and as rightly noted in the follow-up piece by George Parker and Mary McDougall (Report, May 14) may have the opposite effect.
If you want UK pension funds to back transformative businesses, you need to fix the incentive structure. The best investments in private markets come from deep conviction and operational insight, not regulatory obligation.
If the government wants pension funds to lead, it has to help them think like venture capitalists with the right tools, talent and risk appetite. Otherwise, you are just rearranging capital, not building anything new.
Too often, private capital can often lean heavily towards low risk, expensive bets on infrastructure. It is imperative that Reeves follows through on her promise in the announcement to unlock more backing for “exciting start-ups”.
The UK’s thriving tech sector is at the centre of this, and by incentivising more investment, we can supercharge the growth of the sector leaders of tomorrow.
Sam Hields
Partner, OpenOcean, London SW1, UK
