What will the new Treasury ministers mean for financial services?

With Tulip Siddiq’s resignation earlier this week, questions now abound as to what the likely impact newcomers, Torsten Bell and Emma Reynolds will have on the financial services and pensions sector. Emma Reynolds, having returned to Parliament last year as MP for Wycombe and serving as Pensions Minister, will now take on the position of Economic Secretary to the Treasury, or City Minister – responsible for financial services policy and regulation. In her place, Torsten Bell, will now serve as joint HM Treasury and Department of Work and Pensions Minister.

In many ways, Reynolds was seen as the obvious candidate for the role of City Minister. 

With her experience of working on financial services policy issues (as Managing Director for TheCityUK, a financial services industry advocacy group) she will be seen as someone who understands the importance of ensuring a competitive regulatory environment for the sector, as a key engine for UK growth. 

Through her time at TheCityUK she has made various contributions to questions around financial services reform and regulation. It is here that Reynolds will be most impactful. Historically, she has shown consistent support for a ‘reform and regulate’ approach to financial services which highlights the importance to providing a competitive UK listing regime, as well on issues such as crypto asset regulation and net zero. One to watch out for will be her approach to digital assets, having made cautiously supportive statements in the past on the role that crypto assets can have on financial services. 

Her appointment has not been without criticism. Reynolds is already under fire in relation to her previous role at TheCityUK. The accusation? That Emma Reynolds would not recuse herself from policy on China after she lobbied the previous Conservative government against including China in the “enhanced tier” of the Foreign Influence Registration Scheme. This controversy, however, has not dissuaded her political bosses (the Prime Minister and Chancellor) from appointing her. They will be far more focused on how she can support their overarching ‘mission’ of economic growth by boosting the UK’s biggest and most successful industry.

Elected Member of Parliament for Swansea West in 2024, Bell headed the Resolution Foundation think-tank after serving as a special advisor to then Chancellor Alistair Darling and Director of Policy for Ed Miliband while he was Leader of the Opposition. As a self-declared “bread and butter social democrat,” his recent book, ‘Great Britain? How We Get Our Future Back’, called on Labour to fix the high inequality and low growth that, in his view, has been plaguing the UK economy.

Bell’s appointment has been welcomed by many Labour MPs due to his existing economic expertise and his being “highly political” as an opportunity to correct HM Treasury decisions on scrapping winter fuel payments. For others, his clashing opinions to government policies, have been raising hairs. In 2020, Bell called for the government to replace the triple lock, which sees the state pension rise by the highest of inflation, 2.5 percent every year, or average earnings change. Later, in 2023, another Resolution Foundation report reiterated this point arguing that benefits for working-aged people had not kept in pace with inflation, pushing for a closer link to average earnings as part of a “smoothed earnings link.” His repeated criticism of the “messy” triple-lock on state pensions could leave him at odds with the Prime Minister, who restated Labour’s commitment to the policy on Wednesday. 

However, for Torsten Bell, it is important to stress that whilst he has big opinions on the triple-lock and auto-enrolment, ultimately these decisions will be made by Chancellor Rachel Reeves, and both remain Labour manifesto commitments. Instead, he is set to be picking up his predecessors work in delivering proposals from the Pensions Investment Review. As set out by Reeves, he will now continue to push for creating pension mega funds through consolidating defined contribution (DC) schemes and pooling assets from the 86 Local Government Pension Scheme authorities. Notably, Bell has aligned with government commitments in these areas. Published under his leadership in 2023, a report by Resolution Foundation called for wide-ranging reforms to the pensions system including the creation of ‘superfunds.’ Now underway with the Labour government, this is likely to take up most of Bell’s time.