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Second meeting of the Chancellor's high-level group discusses proposals to further enhance city competitiveness

HM TREASURY News Release (55/07) issued by The Government News Network on 9 May 2007

The Chancellor of the Exchequer, Gordon Brown, and the City Minister, Ed Balls, today met with members of the High-Level Group on Financial Services to discuss progress from their first meeting as well as announcing new measures to enhance the global competitiveness of the City and the UK-based financial sector.

The Group welcomed progress over the last seven months and discussed a number of substantive new proposals including:
* the launch of a prospectus setting up a new world-class International Centre for Financial Regulation (ICFR) in London to carry out research and offer training on international regulation with a view to influencing global regulatory developments. The proposals are based on the findings of a working group chaired by Lord Currie, a member of the High-level Group.
The proposal has attracted significant financial support from industry and the City with 14 institutions and the City of London Corporation pledging financial support, in addition to the £2.5 million provided by the government over the next 3 years. The Government and the City are providing seed funding for the ICFR, and the ICFR will become self-funding after the initial set-up phase. At the request of the Chancellor, Mervyn Davies, Chairman of Standard Chartered, has agreed to chair the interim executive committee, representing donor interests, that will now prepare the centre for launch;
* a package of measures designed to increase the global competitiveness of the UK's fund management industry by reducing costs for fund managers by up to £290 million a year. The measures will protect investor assets whilst making UK funds more attractive internationally and promoting choice by allowing both retail and wholesale investors to access new overseas funds in the UK more quickly;

* the work of Lord Levene and the London Insurance Market Review Group on modernisation of the wholesale insurance market, which will report to an "Insurance Summit" to be held by Ed Balls in the autumn. At the meeting the Minister will report back on HMT's analysis of the sector and the potential for further reforms, which would inform the PBR 2007 process.
* delivery of the new strategy for overseas promotion of the UK-based financial sector agreed at the October meeting of the High-level Group., with the launch of new promotional materials including a brochure and a new joint website, http://www.thecityuk.com by UK Trade & Investment, the Corporation of London, Think London and International Financial Services London.

Speaking after the High-Level Group meeting, Gordon Brown said:

"The pace of change of globalisation is accelerating, and no more so than in financial markets. Britain is a world-leader in financial services but it must never be complacent about the challenges ahead. So today, we have taken further forward our discussions on what more business, the City and Government can do to both meet and benefit from the challenge of globalization."

Ed Balls said:

"Today's meeting demonstrates the progress we have made over recent months on the City competitiveness agenda. We are announcing a significant package of measures today, building on the Budget and on progress in recent months. I believe that, with the measures we have taken, together with the FSA's move towards more principles-based regulation. London and the UK-based financial sector will continue to attract the best global talent and to be a world leader for innovation, asset management, global regulation and Islamic Finance.

"Developing a new world class centre of financial regulatory expertise will not only help to inform the UK's principles based regulatory approach, but influence developments in regulation across the world.

"The Centre will be the first of its kind in the world, and although based in London it will have global reach, providing research and training for financial services regulators around the world."

Progress on the City competitiveness agenda since the first meeting of the High-level Group includes:
* Measures brought forward in Budget 2007 that will benefit the financial sector, including a reduction in the main rate of corporation tax and tax changes to support innovation in areas such as Islamic Finance and asset management, modernisation of the tax system to remove obstacles to competition between stock exchanges, and simplification and modernisation of aspects of the tax rules on insurance;
* Enactment of the Investment Exchanges and Clearing Houses Bill in December, which will protect the UK's well-regulated but proportionate environment for listing and trading securities;
* The Financial Services Authority's launch last month of their strategy on moving towards more principles-based regulation, building on the discussion Ed Balls held last week with FSA Chief Executive John Tiner and members of the High-level Group;
* Following the review of the UK's implementation of the EU Insurance Mediation Directive, which was highlighted in Lord Davison's review of gold-plating, HM Treasury has consulted on plans to deregulate freight-forwarding insurance by the summer;
* A meeting held by Ed Balls with City stakeholders on innovation in Islamic Finance, including ways in which the business and Islamic community could continue to work with the government to drive Islamic finance forward in the UK, following which the Treasury is examining the feasibility of the Government issuing Shar'ia-compliant debt instruments;
* Transport for London has announced a trial that will allow the use of mobile phones on the Waterloo and City line from April 2008. If the trial is successful, this could be rolled out to the whole Tube network by 2009.
* The Chancellor has agreed to implement in full the recommendations of the Varney review on HM Revenue & Customs' links with large business, with the aim of providing large businesses, including those operating in the financial sector, with increased and quicker assurance on the tax treatment of their activities and business transactions;
* In December, Her Majesty's Courts Service announced plans for a new commercial court building in the City, providing world-class facilities for handling business cases from around the world, for completion by 2010;
* In April, HM Treasury and the Home Office held a meeting with City stakeholders to discuss the Home Office's proposals for a new points-based migration system;
* HM Treasury has established, with the participation of the Serious Organised Crime Agency (SOCA), the FSA and other relevant authorities, a financial crime supervisory forum, whose work will assist in maintaining the reputation of the City.

NOTES FOR EDITORS

1. In Budget 2006 the Chancellor announced a commitment to work with the financial sector to establish High-Level Group, with senior representatives from across the financial sector, to develop and support a new strategy to promote London as the leading international financial centre.

2. The High-Level Group held its first meeting at 11 Downing Street on 18 October 2006. The Group was chaired by the Chancellor of the Exchequer, Gordon Brown, with Ed Balls, Economic Secretary to the Treasury and Minister for Trade, Ian McCartney, also attending (PN 77/06).

3. Following the first meeting of High-Level Group, the Economic Secretary asked Lord Currie to chair a working group to draw up plans for an international centre for financial regulation. The Government, industry and the City will provide start up funding for the ICFR, and it is intended that the ICFR will become self-funding after the initial set-up phase. Barclays; Citigroup; Goldman Sachs; HSBC; JP Morgan; Man Group; Merrill Lynch; Morgan Stanley; Prudential, Standard Chartered; UBS; Aviva; Aberdeen Asset Management and 3i and have all agreed to provide start funding of £100,000 per year for three years for the ICFR, and further discussions are underway with the other interested parties - UK and on an international basis. The City of London Corporation has also pledged their financial support.

4. At the first City High-Level Group meeting Lord Levene agreed to develop a plan to deliver further market reforms to increase the competitiveness of the wholesale general insurance market. The group also decided to examine the proposal for a centre of regulatory expertise that would provide teaching and research, which Lord Currie agreed to Chair.

5. Budget 2007 - package of measures to improve the tax rules on insurance to help business operate in a flexible and modern environment, and to reduce compliance burdens as far as possible. The measures on Lloyd's modernisation, life insurance and insurance premium tax are aimed at modernising the tax rules to reduce complexity and increase clarity.

6. Separately, as part of a parallel initiative, the Economic Secretary will tomorrow be hosting, alongside the Department for Education and Skills and the Financial Services Skills Council, the launch of the National Skills Academy for the Financial Services sector, aimed at employment opportunities in vocational roles within the sector. This is the pilot year of the Academy, and there are currently four operational centres in Tower Hamlets, Manchester, Leeds, and Norwich, delivering programmes to 16-19 year olds as well as professional courses. The programme is designed to help to plug the predicted future skills gap in customer service, administrative and back office roles.

7. The Chancellor of the Exchequer, Gordon Brown, chaired the second meeting of the High-Level Group at 11 Downing Street this morning, with Douglas Alexander, Secretary of State for Scotland and for Transport, Ed Balls, Economic Secretary to the Treasury, also attending. The Group comprises:

Members
      Martin Abbott            Chief Executive, London Metal Exchange
      Anthony Alt              Chairman, Investment Banking, NM
                               Rothschild
      Sir Win Bischoff         Chairman, Citigroup Europe
      Alderman John Stuttard   The Rt Hon The Lord Mayor of London
      Andrew Cahn              Chief Executive, UK Trade & Investment
      Jonathan Chenevix-Trench Chairman, Morgan Stanley International
      Michael Cohrs            Head of Global Banking,Deutsche Bank
      Sir Andrew Crockett      President,JP Morgan Chase International
      Sandy Crombie            Chief Executive, Standard Life
      Professor David Currie
      Peter Sands              Chief Executive, Standard Chartered
      Simon Davies             Chief Executive,Threadneedle Investments
      Michael Geoghegan, CBE   Group Chief Executive, HSBC
      Chris Gibson-Smith       Chairman, London Stock Exchange
      Martin Gilbert           Chief Executive, Aberdeen Asset Management
      Sir Fred Goodwin         Group Chief Executive, Royal Bank of
                               Scotland
      Andrew Moss              Finance Director, Aviva
      Huw Jenkins              Chairman and CEO, UBS Investment Bank
      Roy Leighton             Chairman, Nymex Europe
      The Rt Hon the Lord      Chairman, Lloyd's
      Levene of Portsoken, KBE Ken Livingstone          Mayor of London
      Harvey McGrath           Chairman, Man Group
      Stuart Popham            Senior Partner, Clifford Chance
      Sir Michael Rake         Chairman, KPMG International
      James Sassoon            The Chancellor's Representative for
                               Promotion of the City
      Teresa Sayers            Chief ExecutiveFinancial Services Skills
                               Council
      Richard Gnodde           Co-Chief Executive, Goldman Sachs
                               International
      Michael Snyder           Chairman, Policy and Resources Committee,
                               City of London Corporation
      Mark Tucker              Group Chief Executive, Prudential
      John Varley              Group Chief Executive, Barclays
      Andre Villeneuve         Chairman, Euronext.liffe
      Bob Wigley               Chairman, Europe, Middle East & Africa,
                               Merrill Lynch
      Alan Yarrow              Vice-Chairman, Dresdner Kleinwort
      Philip Yea               Chief Executive, 3i Observers
      Sir John Gieve           Deputy Governor (Financial Stability),
                               Bank of England
      John Tiner               Chief Executive, Financial Services
                               Authority  

8. Non-media enquiries should be addressed to the Treasury's Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk.

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