Pension Investment and the Mansion House Compact with Nicholas Lyons

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[00:00:00] Susannah de Jager: Welcome to this episode of Oxford+. My guest today is Nick Lyons. Nick started his career in political research in London and then Brussels before moving into investment banking with a career spanning 21 years. From his executive roles in banking, he then moved into the non-executive phase of his career, focusing predominantly on insurance companies, most recently as chair of the Phoenix Group, the UK's largest pension provider. Nick took a year out from Phoenix to become Lord Mayor of the City of London, a role which he has just finished.

[00:00:40] Susannah de Jager: Of particular interest to this discussion is his involvement in the Mansion House Compact which, together with Jeremy Hunt, he promoted during his mayoral year. The Mansion House Compact committed insurance companies and pension funds to a framework promising to invest 5 percent of their capital into UK unlisted companies and infrastructure by 2030. I'm especially interested to hear how Nick hopes the Mansion House Compact will impact the UK investing landscape, having myself been focused on this subject for the last two years, as a consultant to the BOOST project, chaired by Sir Peter Gershon. BOOST standing for Best Out of Science and Technology. Our primary focus was on DB money, where the Mansion House Compact is focused on defined contribution side of the equation, but nonetheless, many of the goals and potential outputs are very similar. Nick, thank you for joining me today.

[00:01:32] Nicholas Lyons: Great pleasure. Lovely to see you.

[00:01:34] Susannah de Jager: And you. I wanted to go straight into asking you about the theme that you chose in your mayoral year, that you've obviously just finished and understand a little bit of the thought process of how you selected growth as your particular focus.

[00:01:49] Nicholas Lyons: Well, the mayoral theme for the year was financing our future and that had various components to it. One was to do with the need for us to allocate more investment to infrastructure in this country. We've been significantly under invested in infrastructure for decades. Another was around the, what I would describe broadly as the growth economy, what you've referred to as sort of science and technology. The third is, of course, pensions, because we need to make sure that people have pensions that are sufficient to help them through their retirement and we know that we are very under contributed for our pension systems and the fourth area was around financial literacy. Again, you're thinking about financing your future, you need to understand what you're doing. So those are the sort of four prongs to it. It felt to me as if these were the things which the city of London could be absolutely central at finding solutions for, which would not require the government to fund through issuing more debt.

[00:02:53] Susannah de Jager: So coming back to the growth and the pensions, clearly the Mansion House Compact focuses or potentially has outputs that affect a number of those in that it can help pension growth to your point of funding people's pensions and their retirement, but it also can make a lot more of that capital, which is vast, productive for the goals of the country itself.

[00:03:18] Susannah de Jager: I'm intrigued that in your answer, you made a point of saying where the government doesn't have to fund it, because in conversations I've had, I've been struck by how much the government sees a lot of this as a private sector problem, where many other governments appear to see it as a problem that they are integral to solving. Where do you see the current government's involvement on that spectrum? And from your perspective, is it where it should be?

[00:03:48] Nicholas Lyons: Well, there's a lot to unpack in that question, but I'm a great believer in the private sector getting on its front foot and taking the initiative. We've got government debt in this country at roughly a hundred percent of GDP and we've got the tax take approaching thirty seven and a half percent of GDP, the highest level it's been for seventy years.

[00:04:10] Nicholas Lyons: So, on that basis, there is not a lot of scope for the government to sort of pull on the normal levers of borrowing and spending, or taxing and spending and therefore, you know, you have to then say, well how do we get growth into the economy? How do we stimulate investment if we're not going to be able to rely on the government borrowing and, priming the pump.

[00:04:33] Nicholas Lyons: So for me, of course, you know, the natural place to think about is pensions. We've got in a rather complicated, overly complicated pension structure that's still in transition, we've got about five trillion pounds. You know, that's twice the amount of government borrowings that we've got in this country.

[00:04:51] Nicholas Lyons: So, you know, when you look at the pension system, you would say, you know, let's make sure that we are investing that primarily in a way that will deliver the best returns for savers and when you start looking at that and you look around the world and say, well, what are the systems that are delivering the best returns for pension savers? You will gravitate quite quickly to Canada and to Australia and when you look at the, what those pension systems are invested in, one is a DB, predominantly a DB system, one is predominantly a DC system. They both invest a lot in unlisted assets, i.e. assets that don't have a disclosable market price that you can look at every day. So they're invested in, there are four real asset classes that fit into that. One is infrastructure, secondly real estate, private credit, private equity and unlisted equities and so for me, it's really important that we have a proper conversation about how our pensions are invested.

[00:05:52] Nicholas Lyons: There are two things that can deliver the sort of pensions that we need and when I'm talking about the pensions that we need, I'm talking about the sort of customers that Phoenix looks after. We've got 12 million customers, but the average pension pot is about £30,000, you know, it's woefully inadequate for what they're going to need in, you know, 30-40 years time. So there are two things that have to happen.

[00:06:16] Nicholas Lyons: One is you need to encourage people to put more money, make larger contributions into their pensions in the first place, both employees and employers and then you want to make sure that you're going to be driving the best possible returns and for me, one of the really exciting areas about the UK is our science and technology.

[00:06:35] Nicholas Lyons: We've got 4 of the best 10 universities in the world, 7 of the best 20 universities in the world, as an example. We've got lots of Fin Tech startups, we've got more unicorns than France and Germany put together. So, we've got great talent, we've got great businesses, but there is actually a shortage of capital that's going into those businesses. So there's certainly a shortage of UK capital that's going to those businesses.

[00:06:58] Susannah de Jager: Yeah and it's an interesting point about how well positioned we are, to the point of where we find ourselves in terms of tax take, debt and conversations I've already had recording for the podcast, it does seem to me that there's been perhaps a path that we've trodden, where we've dampened our own outcomes. So for instance, sort of the regulation within pension reform has led to a place where people took it so literally that we haven't had very productive outputs and you've alluded to the structural constraints too, which are real. But to a question around that, how do you see the Mansion House Compact outcomes and the money it will produce being invested?

[00:07:46] Nicholas Lyons: Yeah, well I think that's an important question because this is not simply a question of finding the capital and then everything sort of falls into place. I think there are three particular areas that we have to be very thoughtful of and we need to tackle all three. So one is not just having that capital pledged, which hopefully 5 percent of money that sits in the DC system and we've got 550 billion in the DC system right now, it'll be a trillion by 2030, just from contributions alone, if there's decent performance it could be 1. 3 trillion. So 5 percent by 2030 is sort of 50 to 60 billion pounds. But if it was 50 to 60 billion pounds in lots of little 250 million pound funds, we would be not really changing the dial on this. You have to look across the world, where are the most successful creators of investment capital in early stage companies? It's definitely the United States, West Coast United States, you look at it's Sequoia Capital or Andreessen Horowitz, Salesforce, you know, these are big companies with a lot of very skilled investors who have got a lot of track record of taking early stage companies through Series A, Series B, Series C through to listing or sale and we lack those skills in scale in the UK. So for me, of course it's about scale and that's why the sort of 50 billion, 50 to 60 billion is the right sort of number. But I would like to see a collective investment fund that can accumulate a significant amount of that money so that it can compete with the Sequoia Capitals and the Andreessen Horowitz's of this world who have got sort of 40 to 50 billion dollars of VC money there.

[00:09:38] Nicholas Lyons: So the scale of what we're trying to do could put us in that position, but we don't want to have it with, you know, too diffuse with lots and lots of little pop. That ultimately is one of the reasons why we've got the problem with the pension system that we have, we've got 27, 000 different pension, DC pension schemes. That's why I was pushing, throughout my mayoralty for us to create a collective investment fund, which I call the Future Growth Fund and it can be called anything you like, but I call it the Future Growth Fund, that's a sort of shorthand for what I'm talking about as a collective investment fund, which hopefully will accumulate fifteen to twenty billion of that money and will gather into it therefore, some of the most skilled venture capitalists that we have, who can then allocate money. In many cases, it will be through funds. This will effectively be a fund of funds in the first instance, but as that expertise develops, we'll be doing sort of direct investment as well and I think if we can create a fund like that, we will be able to see lots of opportunities to co-invest with some of the other very big international investors around the world and these early stage companies and just to be clear, this is not just about the UK. If you were talking to the government, the government, would say, this is a way to allocate huge amounts of capital to the UK growth industry. The industry, the people who signed the compact are focused on pension savers returns and with that in mind, we need the flexibility to be able to allocate that capital to the best possible returns and that means there'll be international diversification, it's not going to be exclusively UK. When people ask me, well, why isn't it just UK? Well, I say, well, don't worry about that. I don't want to see us having to mandate things where it's a private sector initiative. I want to make sure that our very bright asset managers and venture capitalists can do their job. But, you know, the most sophisticated investors in the world. are taking a big equity stakes in these VC companies and as you go through series A, series B, series C, series D, the percentage that's provided by international investors gets larger and larger. I mean, it's into the 90%.

[00:11:54] Susannah de Jager: No, its 87% at megaround plus, I believe. We've really dropped off the curve at that point.

[00:11:59] Nicholas Lyons: So we had dropped off the curve and of course it's not just therefore about trying to make sure that we're getting a piece of the pie for UK pension savers, which is really the prime motivation here, it's that if we can create the capital market in the UK, then these companies can say, well, we may choose to move to the US or to some other part of the world, but we don't have to. We actually could stay here in the UK, we'll have access to capital, because if you've got a future growth fund that's punching its weight with alongside the employers and the Andreessen Horowitz's, et cetera of this world, we are going to see more international capital coming into the UK to find those companies. A case in point is that Andreessen Horowitz have just set up an office in London and Mark Andreessen came to see me in the Mansion House a couple of months ago with Sriram Krishnan, who is the partner who's heading up that office and they said, look this mansion has compact, this commitment to put 50 billion to work in the UK, UK and elsewhere, but primarily it's going to be in the UK, is a really strong message to us. We know that we're going to have to work harder to find the investment opportunities that we can invest in. So we're coming over to London, we want to be part of this exciting UK and it's terrific!

[00:13:25] Susannah de Jager: That's really interesting because I heard the exact same kind of example being used but with a slightly different perspective this morning, funny enough in a coffee, where somebody was saying that those GPs used to come and raise money from family offices often in London and that now that pool is running slightly thinner, that they are not just seeing the competition for ideas, that they are seeing the opportunity to be the managers of that money. So potentially, not mutually exclusive, but another agenda on that kind of movement is here is a pool of capital that's going to be looking for an experienced VC firm to invest on their behalf and so I think that I would agree with you, a large at scale fund, and you know, as you know, you and I have discussed this before, would be fabulous and it solves a lot of the problems that the UK pension funds have currently. But I also think there's a huge, both potential and something that we need to be very mindful to avoid, and when I say we, it's the sort of collective pension fund holders and those that advise them, is that we don't end up either investing at all in the best VCs from America, wouldn't necessarily be a bad outcome for pension holders, wouldn't necessarily be a great outcome for the UK, arguably tax breaks would be a good way to deal with that. But also that we don't just end up duplicating fees because my fear about this is that this extraordinary opportunity is created and that too many fees get spent and that the dilution of that capital, the diluting effect of that capital means that returns get pushed down and that in five or ten years people turn around and say the experiment didn't work, but a lot of people got rich off it.

[00:15:18] Nicholas Lyons: No I can see that concern, I look at it in a different way though. One of the things that I did as Lord Mayor was, as I went around the world, is we have something called the Global Investment Futures Campaign, where when you're, in all of these countries around the world, you talk to the big sovereign wealth funds, the big asset pension funds, what have you, Aussie supers, to get them to put more of their money into the UK and more of their people into the UK, because this is about, you know, the role of the Lord Mayor is as an ambassador for UK financial and professional services, but also for London as a global financial center. So I'm very much of the view that if we can continue to make London as strong as possible as a global financial center, the whole country will benefit from that and so for me, having Andreessen Horowitz come to London is terrific, having CPBIB here, having CDPQ, I opened an office for them in Mayfair, they have 75 people, they're going to grow that to 250, Aware Super in Australia just opened their office in November. You know, when I was over in Australia back in February, we had a lot of conversations then, I've been very much involved in ongoing discussions with them and you know, they all came and had a lunch at Mansion House to celebrate the opening of the office. This is all great stuff because you're bringing expertise, you're bringing capital into London. These guys are recruiting and they're recruiting and training, you know, they're recruiting UK people and training them and that's good because I want the Future Growth Fund to be able to draw in extremely good people who can really deliver for our pension savers and make sure that this business is allocated to the best possible ends.

[00:17:05] Susannah de Jager: And I think you make a really good point there about training the talent and interestingly, you know, conversations about the depth of the research side of the marketplace here and that people go and listen on the NASDAQ because they're effectively worried often that there just isn't the expertise or the liquidity to support them and so I think all of what you say really corresponds and answers some of those justified, but perhaps not as extreme as people sometimes cast them to be, fears. So I'm so supportive of that and I think that we do need to be mindful that this money that you have untapped and I'm so excited about this, you know, I sound like I'm being a bit negative perhaps, but I think it's excellent, I think it's going to do brilliant things for the UK, I think that my natural cynicism just wants to make sure that it does as good of things as it can for the UK with as few hurdles and I spoke to the Wellcome Trust about a year and a half ago and they were saying, and they're probably one of our most evolved venture investors in the UK and they were saying, It took us ten years to get a seat at the table of the best deals where people wanted us to sit on them and so I suppose what I'm observing, and you've answered it in fairness, is that the gap between setting something up afresh and it having access to the best deals because of the signaling power is just there to be noted.

[00:18:28] Nicholas Lyons: Yeah, but you know, what I would say is that, although this is, and the Future Growth Fund that I've been talking about would be a private sector initiative and you know, conversations with the government and the suggestions that maybe the government should get involved or maybe, as they think about what they do with British Business Bank and British Capital within it, the UK Infrastructure Bank, British Growth Fund, you know, other ways in which you could combine these government sponsored or underwritten or guaranteed entities to again create scale and, you know, could we potentially crowd in private capital behind it? My personal view is no, you can't, I think you need to keep government sponsored initiatives and private market initiatives separate because I don't think the private market is interested in having a particular exposure to a fund that is controlled in some way or another by the government because different governments can move it in different directions.

[00:19:29] Nicholas Lyons: However, let's not underestimate the value that the government can bring in changing the culture and in convening meetings and you know, it's really important that we have, whether it's the Conservatives or whether it's Labour, we have a government that is really motivated to try and build Britain's capabilities, particularly in the growth economy and to do that, they need to be engaging all the time with the private sector. So I think there is a natural and symbiotic relationship here between the government on the one hand and the private sector on the other, to create the right environment, whether there's legislative change that needs to be looked at, whether there's some fiscal incentives, whether some regulatory shift, we've already seen some of that. I think we're actually in a much, much stronger position now than we were eighteen months ago, because we have better dialogue between private sector and public sector and a better alignment of interest and intention and that I think, is very positive. So, I completely understand Wellcome Trust's view that it took them ten years. I remember I was talking to Joe Taylor at Ontario Teachers, congratulating him on delivering a 9.6% compound annual growth rate for 32 years.

[00:20:44] Susannah de Jager: That's unbelievable.

[00:20:45] Nicholas Lyons: And he said, Nick, he said we made every mistake in the book. He said, we'd love to talk to you about what you're trying to do, because we can help you avoid making some of those same mistakes. Look, I think there are a lot of very, good organisations around the world who have a strong desire to see the market in the UK really succeed because it'll create great opportunities and you know, one of the other things that we have worked hard on is to make sure that we've got some changes to insurance capital legislation, Solvency 2, European...

[00:21:20] Susannah de Jager: All that really sexy stuff.

[00:21:21] Nicholas Lyons: That really gets dinner parties humming that one. But, you know, the changes that are being proposed that should come in 2024 should mean that insurance companies can invest in unlisted asset classes without punitive capital charges, sort of listed bonds and things. What I'd like to see is companies, you know, having access to plenty of capital. I mean, the difference that we've always said in the in between the US and the UK is that an early stage company over here goes sort of cap in hand to raise ten million and sort of scratches around and get seven or eight, and then they're back at the door in a year's time. Whereas in States, they'll say, well have fifty.

[00:22:00] Susannah de Jager: Yeah, what can you do with this?

[00:22:01] Nicholas Lyons: And accelerate your plans. We want to see whether or not you can succeed or not. Going with that is a different mentality as well and again this is something that we often talk about differentiating the US and the UK, which is if in the US you fail, you're eminently investable, because you're deemed to have learned some very important lessons. Too often in this country, because capital has been scarce, if you fail, you become a pariah. That's not right, we need to have the surplus capital going. Now, to your point, I think the Future Growth Fund, I would anticipate the Future Growth Fund would be able to have massive diversification, this is really what the key thing here is. In an asset class that is naturally a higher risk asset class than listed equities or listed bonds, you need to have a lot of diversification. So you need to have a lot of different investments, but you also have to have a different sort of duration investments or different, if you like, different timings of series A, series C, series B and again, for the future growth fund, I'm not talking about incubator here, I'm talking about taking it on from incubator and accelerating it. But some of these companies will be cash generative and those that are should be able to fund themselves with venture debt. Again, I think it's a very specific skill, and we need to make sure that our financial service providers have those skills. Regulators will be anxious if they don't, you know, but it is a skill, there will be, you know, good returns and obviously preferential returns over equity holders.

[00:23:35] Susannah de Jager: Yeah. How do you see this money, very specifically, we've spoken about some of the mechanisms, but filtering into places like Oxford, and I suppose flipping it the other way, in your role as mayor, what do you see the gaps that are needed within the kind of university ecosystems?

[00:23:56] Nicholas Lyons: I don't know whether this statistic is right, but I think I saw that only sort of eight or nine percent of capital going into early stage companies is actually rooted through the university system. So it's not exclusively a university issue, but there's no doubt that the sort of golden triangle of Oxford, Cambridge, and London have been the main recipients of a lot of the venture capital that has been raised. As Lord Mayor, I travel around the country. I travel extensively internationally. I did about 75 days internationally, but I did 25 days around the UK and Ireland. I was in Dublin, London, Derry, Belfast, Cardiff, Edinburgh, Glasgow, Sheffield, Leeds, Manchester, Birmingham, Cambridge, didn't get to Oxford unfortunately. But in every one of those cities, I saw lots of tremendous early stage companies doing terrific things, all of them baying for more capital, more attention, more focus and so I very much see, again, the benefit of something like the Future Growth Fund, with the scale that it's got, of being able to have coverage that is fully around the UK and one of the ideas that this government had, whether or not it will materialise or not, I'm not quite sure, was to have hubs in different parts of the country, sort of a biotech hub or a cyber hub or whatever it might be, or a space hub so that you encourage companies with the same sort of interests to congregate and there is some real value in that because then you'll get investors who want an exposure in one of those particular areas to go there and you know, meet 50 companies, but you'll also get expertise in helping those companies to navigate their way through growth with the sort of lowest risk profile and you'll get mentors, you will get non-executive directors that can sit on boards and help people with their journey.

[00:26:03] Susannah de Jager: Interestingly, we just had a guest, Mark Preston, who is Formula One, Formula E, and was talking about the motorsports cluster in the UK, which I didn't really understand the scale, but employs 40, 000 people and I think brings in more than 10 billion a year and he was talking about all of those things you've identified, but actually an additional one that he noted and said was especially useful was when you're wanting to attract just the fundamental talent to build the business, that sense that they're not sort of moving their whole family to a location where if that doesn't work, if that startup doesn't work, or if they don't enjoy that role that they've sort of hemmed themselves in geographically, is just not a risk and how important that is if you want to be able to attract really great academic commercial talent to an area and so it makes a lot of sense.

[00:26:52] Nicholas Lyons: It's a great point and you know, we know that the, you know, we've got a massive societal problem in this country about housing and lack of housing, expensive housing, but, you know, the most expensive housing tends to be in the Southeast. you know So why on earth aren't we helping to drive the sort of leveling up agenda and really, you know, locating real expertise in green and renewable technology or clean technology or what have you in the Northeast or cyber down in Cardiff, there's a lot of good cyber companies down there, you know, same with AI. Again, I think we ought to be able to do this and we've got, you know, venture capital investors, mostly at the seed level, you know Northern gritstone operating with a number of the universities in the Northeast. Pete Davis at Lansdowne has done a lot in Oxford, but he's also with other universities too. There are more of these initiatives going on and they're much to be encouraged and those are the areas where I think the government can play an important role in creating the, you know, either sort of tax free zones, whether it's sort of free ports, you know, as one of the initiatives that this government had. I think there are some fiscal incentives that can be produced to help encourage people to gather in certain areas and stay in certain areas.

[00:28:14] Susannah de Jager: Yeah and I think that's exceptionally important. I mean, I spoke earlier in sort of broad, not very helpful terms perhaps, but again, in the conversation with Mark, but also with others, he was specifically talking about the costs around Brexit for the motorsports industry and how obstructive they are and that there haven't been many wins seen from that and it does seem that the government needs to make sure that both to retain really good clusters but also to encourage new ones to form that there are really great incentives and ways that business can be made more easy and on another practical note, one has heard a lot about just getting really great talent visas and that is something that can be just hugely time consuming and one understands some of the reasons behind that, but when you're talking about top tier talent for science and technology companies, it does seem we're somewhat shooting ourselves in the foot not to ease that as much as possible.

[00:29:12] Nicholas Lyons: Yeah, I mean, I think there are schemes that are in place already where people can expedite, companies can expedite the sort of visa process and we are, if you talk to the government, they will talk about the fact that they want to make sure that we don't have barriers to, you know, the brightest and the best coming. Bearing in mind, you know, again looking at from my perspective, from a sort of a London point of view, London has always been a trading entrepôt. It's always had people coming from all around the world for centuries and centuries and that sort of pervasive multicultural frame of mind and from the financial services point of view, we always, the investment banks, US investment banks, British investment banks, always attracted great, you know, Europeans, Asians, Americans always love to come over here as well. That is a really important ingredient of what makes the UK so tremendous. It's because we've got a system of parliamentary democracy that people trust, an independent judiciary and a great sort of legal profession and regulators that are very well respected around the world. These are three fundamental platforms on which international investors base their investment decisions, and we need to make sure that we get people here. Again, it's the breadth and depth of talent that people talk about when they, international companies, banks, insurance companies, asset managers, talk about London as such an important place for them, because they can recruit some of the best talent here. So we need to make sure that we are always a marketplace for talent. So I think that's exactly right, I have spent a year avoiding saying anything negative or positive about Brexit because frankly, you know, it's just not a lens that is worth looking through.

[00:30:59] Susannah de Jager: No, it's true, although it's amazing how, you know, MiFID II is being repealed and so, for anyone listening that doesn't know what that means, that's about how brokerage costs are bundled up or, in this case, were unbundled and therefore, in theory, made more transparent. But in truth, the net effect appears to have been that people just paid for less research and therefore we have fewer researchers in London and it affects the perceived and real depth of analytical research, which obviously then has ongoing effects that were in fairness, unforeseen, but if you had listened to people, they were seen by some people. So we are now looking, so I don't particularly want to go into whether Brexit should or shouldn't happen, but I think that we need to discuss it to the extent that there are things that we can change now that we're out and we should be looking for some benefits, but we also should be just looking at history for the sake of being able to look forward and say, you know, was the information correct? Was it measured in the ways that we now are looking at it with hindsight? And how might we improve things?

[00:32:01] Nicholas Lyons: Yeah, I think I'm not somebody who, looks back. I mean, I'm a historian, so I should do, but I do really, genuinely want to always try and look forward. I think you need to look around the world always and say, where are the good examples of what we want to accomplish? Whether it's education in Finland or pension management in Canada, you know, whatever these issues are, find the examples of where it's worked well, understand them, don't sort of allow yourself too focused on trying to justify something or other historically, but just say what do we need to do? How can we get there? Is there a legislative change required? Is there regulatory change required? Is there fiscal incentive required? And what's the best way to accomplish that? One thing that does irritate me is when, you know, we find ourselves in a situation where something good happens and somebody says, well that's a benefit of Brexit. Well it's not actually, it's a direct result of somebody working incredibly hard to turn something that potentially was a problem into a solution. We can always do that and that's what the city of London has always done, we've turned problems into solutions and it doesn't matter, you know, whether or not there's a sort of political kerfuffle or a, you know, an external issue or a plague or famine or fire or pestilence, whatever it is. Over the centuries, the City of London has always found ways forward and that's why, for me, it was absolutely central to try and get the narrative around the city changed during my mayoralty, so that we were absolutely part of the discussion, so that we could use our expertise, not in an arrogant way, we don't have all the answers, but we do have some of the answers, and we absolutely have organisations that can be mobilised to do things that are going to be really good for the economy and that's probably been the most satisfying thing of the last year for me was to see these great British and international companies coming together and saying, if we put our heads together on this, we can come up with solutions and that's really been a competitive advantage and we must always, when we think about MiFID or Solvency 2, these European pieces of legislation, which now can be unraveled, the motivation should always be, how do we break down barriers? How do we make ourselves more competitive? You know, this is what's really important because it's a very competitive world out there and we, you know, we see this particularly in the listing environment with all of the challenges that, that we've got on that one and again, when it comes to that, that's a really important part of what we've been talking about for the last 45 minutes, Susannah. There's no point in fostering these early stage companies, in funding them, in creating the academic support, the mentoring, the non-executive directors with experience that can help guide them, changing the legislation around research so that we've got good research analysts that can tell the story about these companies. If we don't then have a listed equity market that can actually take these companies and give them a really good birth here and now we do have that capability, I think a lot of the criticism that's come out about London as a listing market is misplaced. But the fact of it is, there are a lot of companies who are listing elsewhere, who could be listing here, and we want to create that. If the Mansion House Compact is to be deemed successful, then in 10 years time, we'll have 3, 4, 5, fifty billion pound companies in the FTSE 100 that weren't even thought of today. Whether they're biotech or AI or tech or fintech, whatever it may be and that will be the acid test, but we can only accomplish that if at the same time as all we're doing around the VC market is also reflected in changes around the listed environment.

[00:36:10] Susannah de Jager: Yeah and one hears a lot about that and you know, I know that you've done a lot of work with Julia Hoggett and her team and the capital markets industry task force, focused on not just this side of it but absolutely that side of it and I am encouraged by the fact that MiFID II is going to be unbundled because I think that's a part of the puzzle but I think the point you made is very well put about your role and the convening power of the City of London and the role of Lord Mayor because I so often say the same thing, you know, you are not often the person that knows, in fact you're rarely the person that knows the most about anything in any room. But if you can be a conduit for conversations and for sort of assimilating and diffusing down what other people who know their own respective areas much better are saying, the answer is normally in the room and the City of London, the answer really is in the room and I think that you have been hugely successful at getting all of those people to sit down in rooms and in tables and focus and so, for my part I'd like to congratulate you on a very successful mayoral year. But for the purposes of this conversation, is there anything else you particularly wanted to talk about?

[00:37:28] Nicholas Lyons: Well, look, I think one of the things that I felt was very important, which I sort of kicked off at the beginning of my mayoral year and actually I had to twist a few arms to get people to agree to it, I feel it's really important as you think about London as a global financial center to think of it in the same way you would as a business and I chair a FTSE 100 company called Phoenix Group and you want to think about, you know, long term strategy. So for me and you know, we're seeing countries like Saudi Arabia with their Vision 2030, that's what I feel the City of London needed. So we actually commissioned some work, which we did with Oliver Wyman, who were brilliant actually, and we got eight very senior city figures to lead four work streams looking at a variety of areas. But basically the question we asked was, What does the City of London need to do to make sure it is as preeminent in 2030 and beyond as it has been historically? And as a result of that, over 300 different private sector organisations were consulted and we came up with a 50 page report, a vision for economic growth, which is a living document, it's got nine big moves. There are five main areas that we're focusing on, one is growth, one is a sort of a digital first, one is investment, one is green and sustainable finance and the fifth is connectivity. Those are the sort of five big buckets where we need to make sure that we've got some really good ideas and the purpose of doing this wasn't just to have something you know, a report to stick on the shelf. It was to have a report that came out in September that could be taken to the different parliamentary parties at the party conference season to say, this is what the private sector feels the City of London can accomplish and here's the way that we're going to do it. Very few things needed significant government intervention. Most of it could be done by just sort of changing the culture, changing the language, talking about, you know, the sort of risk aversion that's become a sort of form of paralysis that's inhibited our financial services from doing their job properly. But what it does is it basically gives us a strategy to keep Britain where it belongs in financial and professional services, and that aligns governments, regulators, because they've been heavily consulted in this, private sector. So that we can say this is the way the UK is presenting itself, this is what we think we can accomplish, and this is how we're going to do it and so, the idea being that we create a structure which enables a very regular rhythm of meetings between the government of whatever hue and the City of London, chaired by the Chancellor of the Exchequer of the day, meeting every quarter with the senior leaders from financial professional service to say, here are the priorities to make sure that we're continuing to do what we can do to support the government's growth investment ambitions. So that I think is an important point just to add, which is that, you know, you don't just have sort of a one off mayoralty where a Lord Mayor goes sort of flying off in one direction and the next Lord Mayor goes flying off in another direction.

[00:40:46] Susannah de Jager: Consistency of communication.

[00:40:47] Nicholas Lyons: Yeah so this just sort of sets the tramlines as to what we're going to be accomplishing over the next sort of seven to ten years and there is, you know, real alignment around this. So I'm very optimistic, I think we've got a huge amount to look forward to in this country.

[00:41:03] Nicholas Lyons: We've got to be a little bit more optimistic about what we've got here. I get very frustrated by, you know, journalists and politicians who are endlessly talking this country down. We have so much that other countries admire hugely and I suppose my one takeaway from my year as Lord Mayor, traveling around the world to so many different countries is the extraordinarily high esteem in which this country is held for its role, the role that it has always played in geopolitics, in being a source of wisdom, integrity, good moral judgment, a great force of good in the world and gracious me with all of the challenges that there are around us in this world today, you know, the UK really has a need to step up and perform that role and right at the heart of it is what the City of London can do and I'm very proud to have been Lord Mayor, it was a huge privilege and you know, I think we've got everything to look forward to.

[00:42:05] Susannah de Jager: Well, thank you very much, Nick. I've really enjoyed talking to you about it.

[00:42:09] Nicholas Lyons: Thank you very much indeed.

[00:42:10] Susannah de Jager: Thanks for listening to this episode of Oxford+, presented by me, Susannah de Jager.

[00:42:15] Susannah de Jager: If you want to stay up to date with all things Oxford+, please visit our website, OxfordPlus.co.uk and sign up to our newsletter so you never miss an update.

[00:42:24] Susannah de Jager: Oxford+ was made in partnership with Mishcon de Reya and is produced and edited by Story Ninety Four.