Investment industry launches Productivity Action Plan to boost British economy and end short-termism
The Investment Association has today unveiled an industry-wide Productivity Action Plan to boost the UK economy through long-term investment, helping to reverse the UK's Productivity problem. The Action Plan devised by the IA, has been welcomed by Government, referenced by the Chancellor in the 2016 Budget, and aims to catalyse the provision of long-term finance and enhance investor stewardship.
The Investment Association, whose members manage more than £5.5 trillion for clients around the world, has launched the Action Plan following a comprehensive review led by an industry Steering Committee made up of CEO's and senior fund managers of some of the largest investors in the UK. The Committee developed a framework for considering the barriers to long-term investment and how the industry can play a vital role in helping businesses to drive sustainable returns. This formed the basis and conclusions of the Action Plan, and five principal objectives are:
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Enhance company reporting for efficient capital allocation - through investment and analytical expertise the industry will identify and finance those companies contributing productive growth in the economy
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Enhance investor stewardship and engagement - the investment industry will engage with companies to help them achieve sustainable value creation over the long term and support investments in improved productivity
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Simplify behavioural incentives and the investment chain - the industry will work to ensure that the agreed incentives and governance of the investment chain ensure a clear alignment with clients' long term investment objectives
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Develop efficient and diverse capital markets - as key capital market participants, the investment industry has a key role in the development of asset classes and the efficient functioning of capital markets
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Overcome tax and regulatory impediments to the provision of long term finance - the investment industry should contribute to the debate on tax and regulatory impediments to investment so as to ensure the right long-term outcomes for clients
Commercial Secretary to the Treasury, Lord O'Neill who will be delivering the keynote speech at today's launch, said:
"Long-term investment is crucial to our plans to boost productivity. We need investors who are willing to back businesses that take this approach, whether it's building a new factory or creating an exciting new product.
"That is why today's report is a significant step in the right direction because it shows that investors are taking action to encourage the kind of long-term investment that we need."
Andrew Ninian, Director of Corporate Governance at the Investment Association, comments:
"Productivity improvements can help drive economic growth and require UK businesses to invest for the long term. The Action Plan the Investment Association launched today, outlines how we as investors can play a fundamental role to help improve UK productivity and support long-term investment. The Action Plan seeks to deliver ambitious and achievable remedies to the ills of some of the most serious causes of short-term thinking in the British economy. The investment industry remains steadfast in its commitment to play its part in fixing the UK productivity puzzle and help fix the challenge of our generation."
"Fixing the UK's Productivity Puzzle is a difficult task and the solutions are far from simple. This is a challenge that affects every corner of society and calls for a multifaceted response from the UK's leading business and economic stakeholders. We hope this Action Plan plays a part in improving UK productivity."
Each objective is underpinned by a series of recommendations, there are 12 recommendations in total. To deliver these, a series of tangible actions are proposed and each represents a future work programme in its own right. A clear measurement of the success of each recommendation is also stated. The Action Plan success will be clearly measured every 6 months and the Investment Association will formally update the chancellor on its progress on the first and third anniversaries of the plans publication outlining progress and development.
To view the full IA Productivity Action Plan please click here.
To get involved via Twitter by tweeting @InvAssoc and using #UKproductivity.
To view Andrew Ninian's blog on productivity please visit - Investment Matters: What is productivity? Why a healthier lifestyle, not a shot of espresso, can boost the British economy
