RUTH SUNDERLAND: It’s time to scrap stamp responsibility on share dealings

Rachel Reeves may have infuriated her predecessor Jeremy Hunt by blaming him for what she contentiously described as a ‘£22billion black hole’ in the nation’s finances.

But she seems to be in agreement with the previous occupant of No 11 on the importance of the UK stock market to the country.

The City, despite recent well-publicised stories of companies defecting to the US, remains the envy of most of the world.

The Square Mile lost some ground to rivals after the vote to leave the EU, but Donald Trump’s antics are putting that in the shade.

With Wall Street in a funk, the London stock market and the UK in general are starting to look like a haven of stability for investors, relatively speaking at least.

This creates a window of opportunity for the Chancellor, if she is brave enough to grasp it.

No laughing matter: Turmoil on Wall Street creates a window of opportunity for the Chancellor, if she is brave enough to grasp it

Perhaps it seems counter-intuitive that a Labour chancellor would want to do so. But the point of the City, in very basic terms, is to act as a conduit for capital from investors to businesses and projects that will make a return.

These will employ people, provide money for our pensions and help us all live more prosperous lives.

There is no shortage of capital in the UK: our pension funds are looking after squillions of savings on our behalf.

The problem is that the money is not going to where it is most productive, so we are all losing out.

Much of it is held in gilts, or government IOUs, which are seen as low risk but often merely lock in a low return. Far too little is invested in UK-listed shares, let alone in start-up ventures that are risky – but could be the titans of tomorrow.

Pension funds seem to struggle to find infrastructure projects in areas such as green energy or transport in which they want to invest. Canadian and Australian retirement funds often seem more keen on Britain than British ones.

Reeves has not helped by creating an atmosphere of uncertainty around pensions. Ahead of her October Budget, this turned into a low-grade version of Trump’s tariff hokey-cokey.

The will-she, won’t-she speculation that she would attack the tax-free lump sum or relief on contributions was very damaging, as were the changes to inheritance tax. She should give ‘forward guidance’ that no more changes on pensions are planned.

The Chancellor wants to revitalise the London stock market without foregoing any tax revenues in the short term, even if it would pay off long term.

So she is going about it indirectly, with moves such as asking regulators to change their philosophy on risk and consumer protection.

Senior figures in the City would like a bolder approach.

Virtually everyone in the Square Mile wants the Chancellor to scrap stamp duty on share dealings. That would be a start.

Some want her to go much further and abolish capital gains tax on share profits, along with taxation on dividend income.

Slashing taxes on shares would not be popular with her trade-union friends.

But it would send out a very strong message, not only to domestic investors but to the world, that the UK is the place to invest.

Without action of this sort, one suspects we will remain stuck with the status quo indefinitely.

This can seem like an abstract concern, but it really isn’t.

In the end, it is about the real economy and real people’s lives.