Primary Stock Exchange Listings

Question

Asked by

To ask His Majesty’s Government what assessment they have made of the implications of the decision by a number of companies, such as Wise, to shift primary stock exchange listings from London to New York.

My Lords, the Government want to see high-growth companies start, scale, list and stay in the UK. Current market sentiment is challenging, but the UK remains the top destination for equity capital raising in Europe. The Government are focused on further boosting the competitiveness of UK capital markets. In her Mansion House speech, the Chancellor will set out a 10-year vision for financial services.

Since tabling this Question, AstraZeneca, the biggest company on the London Stock Exchange, has discussed shifting its stock market listing to the US. This would be a real blow to our stock market of £160 billion. It is also increasingly feared that AstraZeneca could be redomiciled to the US, risking losses for London as a hub, hundreds of jobs and tax losses for the Chancellor. What changes will the Minister make to the UK’s investment environment to stop the troubling and damaging exodus of high-value firms from our market? We would love some detail.

I am grateful to the noble Baroness for her question. The Government recognise, as she did, that the UK’s equity markets have faced challenges in recent years, but that is not a new phenomenon; there has been a net decline in investment in UK funds for nine consecutive years. That is a matter for concern, of course, though it reflects global trends and the outflow in 2024 was £2.3 billion less than in 2023.

Firms may choose to list in other countries for a variety of reasons. The noble Baroness mentioned some specific companies. It would not be appropriate for me to comment on individual companies or on speculation, but, of course, the Government should do everything that they can, as she said, to improve the competitiveness of our market and the attractiveness of the UK as a place to list. We are taking forward reforms to boost competitiveness, including overhauling the prospectus regime and legislating for PISCES. This will complement the FCA’s rewrite of the UK’s listing rules, providing more flexibility to raise capital on UK markets. As I have said, next week at Mansion House, the Chancellor will publish our 10-year strategy for financial services, which will include capital markets.

My noble friend raises an important issue, and I am grateful for his reply. The noble Baroness raised the large companies, but surely the real problem is the rebalancing over several years of the London Stock Exchange away from the funding of small start-ups which are proving their worth and need to be able to scale up. Might it not be time to have an investigation into the direction, strategy and governance of the LSE?

My noble friend is absolutely right on the importance of capital for start-ups and how we can enable them to scale up. It is why in the industrial strategy and the spending review we significantly increased the funding available to the British Business Bank to help innovative small companies to do exactly that. They now have record amounts of capital. We have increased the capital available to our funding streams in that way by 40% since the election, and I think that is exactly what my right honourable friend is seeking to do.

My Lords, I declare my interest as a director of the London Stock Exchange. In addition to the pull of US investors, does the Minister recognise that there are push factors making the UK a hostile environment for innovative, high-tech growth companies? There are neither public nor private sector customers, as the chair of GSK told our Science and Technology Committee recently. Excessive government retention of IP exploitation rights in procurement and grant contracts undermines companies’ growth prospects.

We are 45 years behind the US, which ended such emasculating IP contract terms in the Bayh–Dole Act, leading to the boom in revenue-producing high-tech companies and university spinoffs. Will HMT put its weight behind the economic benefit and long-term value for money that growth-friendly licensing contracts would have? Will the Minister meet to discuss these and how the UK can get its own Bayh–Dole effect?

I am grateful to the noble Baroness for her question. I do not necessarily share the overall pessimism that she started her question with. Of course, reform is necessary and that is why next week at Mansion House the Chancellor will publish the 10-year strategy for financial services, which I hope will cover some of the things the noble Baroness is talking about. We need to rebalance our system towards growth in the way she described.

My Lords, the loss of AstraZeneca, were it to happen, would be a devastating blow to the London Stock Exchange. Is it not therefore very important, if we are to retain the listings, that the Government have a supportive policy for life sciences in particular? Is it not regrettable, first, that the life sciences review has not yet appeared and, secondly, that the Government refused to back the vaccine plant at Speke near Liverpool? The Government also increased the rebate payable by pharma companies from drug sales from 15% to 22%—a stealth increase if ever there was one. Is it not important that, if we want to retain the listings, which will mean retaining the research, development and employment, we have a proper strategy with these companies and do not just regard them as cash cows but valuable investments to be encouraged?

I fundamentally agree with the underlying point the noble Lord made about the importance of investing in and having the right environment for life sciences companies in this country; they are incredibly important to us. It is why they are fundamental to our industrial strategy.

In terms of specifics, I am not going to comment on speculation. We want to see high-growth companies start, scale, list and stay in the UK. He is absolutely right; the life sciences sector plan is forthcoming. If he is just a little bit more patient, he will see it very soon. Through that, we will seek to harness the life sciences sector to drive long-term economic growth and build a stronger, prevention-focused NHS.

I think that most people would agree that there is a depressing lack of detail from the Minister in response to the important question about the lack of support given, compared with the United States, to high-growth businesses. Perhaps the Minister is not fully briefed on it. Could he come back to the House, if necessary in writing, and give us much greater detail rather than just saying we have to wait for a speech at the Mansion House for an answer?

I cannot say what the Chancellor is going to say at her Mansion House speech now, otherwise there would not be much point in her giving her Mansion House speech then. She will publish a 10-year strategy for financial services at that point, and I am sure the noble Lord will enjoy reading it.

My Lords, reference has been made to the Science and Technology Committee of your Lordships’ House, of which I am a member. It is investigating the crucial question of how we can scale up companies in Britain. I ask my noble friend the Minister what he hopes the effect of the Mansion House accords and reforms will be on trying to, for example, get more of our pension funds in this country to invest in British-based science and technology companies, because that will be crucial for the future of growth.

I thank my noble friend for his question, and I pay tribute to his expertise in this area; I know it is something he is deeply passionate about. He speaks about the importance of scale-up in this country. For many years, we have been very good at start-up, but much less good at scale-up. That is something we are seeking to do. As I have already mentioned, the reforms and increased capital for the British Business Bank will be crucial to that. Throughout our work to develop the industrial strategies, we have seen that access to finance has been a central challenge for many companies. He talks about our pension reforms and the Mansion House compact. Those reforms aim to generate up to £50 billion of additional capital to help companies to start to scale up and for crucial funding at that stage of their life.

My Lords, I declare an interest as a senior partner of Cavendish plc, the largest nominated adviser to listed companies on the stock exchange. We asked our clients why they are going to America. They give us two reasons: the multiples are higher in America—so be it—and the net remuneration package. Both founders of Wise and many directors of AstraZeneca were born abroad. The non-dom rules are driving away entrepreneurs in droves. This is why many companies are choosing to list abroad. We know that Labour is going to change its policy on non-dom tax—it is not a question of if; it is a question of when. Can I implore the Minister to speak to Treasury to make it as soon as possible?

I commend the noble Lord for knowing more about government policy than I do. He talks about those companies listing abroad. It is interesting, just to look at some evidence, that IPOs on US exchanges show that non-US companies tend to perform much less well than US ones, suggesting that from a valuation perspective it is better for firms to list on their home market. In the last 10 years, of the 20 British companies that listed in the US, nine have already delisted, only four are trading above their IPO price and the rest are trading down on average by 80%.