James Ashton, chief executive of the Quoted Companies Alliance, has warned Chancellor John Healey that Britain must force pension funds to back domestic businesses.
Ashton urged Andy Burnham and Healey to introduce strict conditions on tens of billions of pounds in pension tax relief to stop overseas buyers acquiring UK firms at bargain prices.
He called for retirement savings to be funnelled into domestic companies rather than foreign assets, arguing that UK small and medium-sized firms are vital for national prosperity.
Call for pension tax relief reform
Ashton, 51, proposed that the Treasury review investment incentives in the upcoming Budget to encourage UK funds to support local businesses.
"We offer tens of billions of pounds of tax relief to pension funds with no strings attached," Ashton said. "Other countries incentivise investment in their economies. Everybody else is wise to this."
He challenged the traditional view of pension trustees, who often seek maximum returns abroad. Ashton argued that a retiree's best interest also includes "a road not full of potholes, schools that are not closed and high quality jobs for their grandchildren."
Pointing to Healey's previous role as defence minister, Ashton expressed hope that the Chancellor understands national resilience. "If you want good growth in every postcode, you have to do this. It is about being more positive about being British. Britain has to bring that pension money back home," he said.
Decline in London stock market listings
Ashton highlighted a severe contraction in the domestic market during his four-year tenure leading the QCA, which represents smaller listed entities.
"Every month I have been in this job we have seen a reduction in the number of companies trading shares in London. That is 45 consecutive months of decline," Ashton said.
He noted that private equity and foreign buyers are taking advantage of undervalued British companies while local institutional investors look elsewhere.
"Private equity and overseas buyers are picking off UK companies because they are going incredibly cheap, because we aren't backing ourselves, because we have too much money under the mattress and because our pension funds are busy building world-leading companies abroad. We need to change that," he added.
Takeover pressure on domestic businesses
Several prominent companies have recently attracted interest from foreign predators, including airline easyJet, testing group Intertek, energy marketing firm DCC, sweetener producer Tate & Lyle, outsourcing company Mitie, and Teesside pawnbroker Ramsdens.
Ashton emphasised that a public listing keeps critical national assets anchored within the country. "In this summer of takeovers it is really important to remember that a share quote is an anchor in the UK for jobs, for intellectual property and for tax," he said.
He singled out the takeover bid for Middlesbrough-headquartered Ramsdens by buyers based in Texas as an example of domestic undervaluation.
"Look at Ramsdens. It is not in the business of AI or any of the things we are meant to get excited about. But it is a company that came to market around 10 years ago and it has grown, opened stores and hired more people," Ashton said.
"Then suddenly investors in Texas decide this company is worth at least 50 per cent more than anybody in the UK could comprehend and so it now is going to go to the US. I just don't understand how that company is better run from Fort Worth in Texas than it is from Middlesbrough."
Cutting regulatory costs for smaller firms
During his leadership of the QCA, Ashton campaigned to reduce regulatory requirements and listing expenses for growing businesses.
His proposals include ending stamp duty on UK share transactions, a measure supported by the Daily Mail, as well as reforming audit rules that disproportionately burden smaller companies.
He criticized the expansion of annual financial reports, which now average 98,000 words in length. "No government is going to win votes by saying we are shaking up the audit market, but that doesn't mean it shouldn't be done," Ashton stated.
Loss of major UK technology companies
Ashton pointed to Cambridge semiconductor and chip design firm ARM as an example of a valuable UK business lost to foreign ownership.
ARM was a constituent of the FTSE 100 index with a dual listing in New York before Japanese conglomerate SoftBank acquired it in 2016 for 24 billion pounds. After being taken private, ARM re-floated on the US Nasdaq stock market three years ago.
With a market capitalisation of 191 billion pounds, ARM would rank as the second most valuable company on the FTSE 100 behind HSBC if it were still listed in London.
"ARM was a big watershed. But, from a positive point of view, it was on the London market for 18 years, it still has the best part of 4,000 staff in Cambridge and it still calls Cambridge its world headquarters," Ashton noted. He published a book about the firm in 2023 titled The Everything Blueprint: The Microchip Design that Changed the World.
Challenges facing investment trusts
Alongside his role at the QCA, Ashton serves as an independent director at Finsbury Growth & Income Trust, managed by investor Nick Train.
Although the trust maintains a strong long-term track record, it has experienced difficulties over the past five years amid wider sector pressure from US investor Boaz Weinstein and his vehicle Saba.
"With investment trusts, of course there are challenges, but they are another of London's unique assets," Ashton said, noting that Finsbury holds stakes in major firms including Relx, Games Workshop, and Unilever.
"Why doesn't that story cut through? It is about how we all talk about Britain's prospects. It may be something in the British psyche. But the best investment has got to be close to home. If a company is really present and visible in your community, why shouldn't you buy shares?" he added.
Literacy advocacy and personal background
Ashton, a former journalist who previously worked at the Daily Mail, is expected to step down soon from the QCA after four years to lead another industry organization.
Educated at Mirfield Free Grammar and the University of St Andrews, Ashton lives with his wife Viveka Alvestrand and their daughter Alice.
Following the sudden death of their three-and-a-half-year-old son Oscar from an undetected heart condition in 2012, the couple established Oscar's Book Prize for pre-school books. The award ran for ten years.
Ashton now serves as a trustee for reading charity Coram Beanstalk during the national year of reading. "Around 25 per cent of kids leave primary school and their reading is not where it should be. But this is not just about school or lessons, it is about introducing kids to the pleasure of reading," Ashton said.
His personal interests include paddle boarding, hill walking, and reading, with his current book being Lazar by Nelio Biedermann. His dream home is a Swedish farmhouse near the sea, his favourite drink is a gin and tonic, and his ideal dinner guest is David Hockney.
