City Minister BIM AFOLAMI says: ‘Let’s make the stock market great again!’

Many politicians talk about how their role gives them energy. In Bim Afolami’s case that seems to entail being unable to sit still for even a minute. 

The City Minister – or Economic Secretary to the Treasury to give him his formal title – repeatedly stands up and walks around his office during our conversation at the department’s sprawling headquarters in Whitehall as he gathers together details of his latest effort to rejuvenate the UK’s financial sector.

A keen reader of history, his coffee table is strewn with various economic tomes including biographies of former Chancellors Ken Clarke and ‘Big Bang’ architect Nigel Lawson as well as a hefty text on the collapse of the Soviet Union.

We turn to what is Afolami’s biggest challenge as he nears his third month at the Treasury – boosting the City’s competitiveness and kick-starting the UK economy amid fears that it is losing its dynamism.

His latest plan to fire up the economic engine involves the sale of part of the government’s remaining 36 per cent stake in banking giant NatWest, a holdover from when it was effectively nationalised during the 2008 financial crisis.

Energetic: Economic Secretary to the Treasury Bim Afolami in his Whitehall office

For Afolami, the sale represents not only a chance to generate some much-needed cash for the Treasury, but also to bring the stock market back into focus for ordinary Britons as a place to invest their cash.

‘We can use this sale to bring people alive to the UK stock market,’ he says.

‘It’s not just about NatWest, it’s about people being engaged with the London Stock Exchange, knowing how shares work and what the opportunities and risks are.’

Several big name companies have defected from the London stock market to New York in recent months, including gambling giant Flutter. This has sparked worries that the City and the wider financial services industry – once the envy of the world – are in irreversible decline.

Gallons of ink have been used to detail changes to policy and regulation to draw back companies and get businesses to list in London again. But for Afolami the issue runs much deeper.

‘I used to think the issue was with our regulators. And it is,’ he says. ‘But it is a problem with the political system and society more generally.’

That problem, he adds, is an aversion to risk that has permeated UK society and made investors unwilling to take a chance on innovation, which in turn has slammed the brakes on economic growth.

‘We have decided as a society over the last 20 to 30 years that we want to try to eliminate all risk from everything,’ Afolami says.

‘But I’m afraid you can’t do that. Because if you try to do that, what happens is you damage personal responsibility, you damage innovation, you damage growth.’

He compares this ‘culture of safety-ism’ to imposing a 20 mile per hour speed limit everywhere. ‘Those limits aren’t always wrong,’ he says. ‘Outside a school or a nursery, for example. But when we as a society decide we are now going to avoid all risk all the time, you can’t have an economy that runs. Those two things are not compatible.’

As a result, the Minister insists that simply tweaking a few regulations around stock market listings will not be enough to fix the malaise because much more deep-rooted changes are required.

One issue is the cost of financial advice in Britain, which he says means those who cannot afford to stump up the cash are often forced to be cautious.

He also blames this risk-averse culture for the current trend for British pension funds to eschew investment in UK companies.

The Treasury and Chancellor Jeremy Hunt are trying to implement the Mansion House reforms – measures designed to encourage pension schemes to back private enterprise in Britain. Some have voiced concerns about the perils of putting the savings of retirees into fast-growth companies that are not listed on the stock market. Such investments are more risky and less easy to trade.

But Afolami says: ‘If you look at where the money was being made over the last 10 to 15 years, it was in fast-growing, often tech businesses which are not listed.’

Afolami also points out that it is nothing new for pension funds from abroad to be investing in this zone.

‘Canadian pension funds, Australian pension funds, American pension funds have all been investing in British firms and their people are getting these returns.

‘But that money is not being seen by British savers. It’s going to Canada, Australia and the US,’ he says with characteristic vim.

Afolami’s high energy levels make a lot more sense after I discover that he was a competitive athlete at Eton before becoming part of the Oxford University football team (although he concedes that he is now somewhat out of practice). He is one of a long list of Tory high-flyers who were educated at Eton, including George Osborne, Sir Jacob Rees-Mogg, Lord Cameron and Boris Johnson. His activity level does not let up at home either. The 37-year-old Hertfordshire MP says that in his spare time he enjoys chopping firewood with his eldest son.

He always uses an axe for the task, telling me that his wife believes he is ‘too incompetent’ to use a chainsaw with any degree of safety.

A former corporate lawyer and HSBC executive, he arrived in Parliament following the 2017 General Election under the then-premiership of Theresa May.

Following his appointment to a string of positions in several government departments including Transport, Trade, Work and Pensions and the Foreign Office, the father of three was named as City Minister last November.

His proposals to rekindle the public’s relationship with the stock market take a softer tone than the ‘slash and burn’ approach to regulation and free-market individualism which is espoused by some of his fellow Tories.

‘It’s really important that people have a stake in society,’ he says. ‘But that isn’t just financial, it is of social importance.

‘It means you own a little bit more of the community you walk around in every day.

‘As Conservatives, I think we have focused too much on the economic and not enough on the social impact,’ he adds. Afolami also notes that the British obsession with home-ownership, which reached a new pitch during the long era of ultra-low interest rates, could also have been a factor in the dearth of interest in shares.

Many people would much rather invest in bricks and mortar than take their chances in the stock market.

‘I do think we became a bit lazy as a society when interest rates were very low. It was a global trend to assume that the only thing one needs to do with money was just invest in housing.’

Would his philosophy on risk and reward include highly volatile assets such as cryptocurrencies, which regulators have repeatedly warned against?

Afolami does not give his full-throated endorsement to crypto, instead saying that the sector will need to be regulated regardless due to its growing influence.

‘Some people say don’t go anywhere near crypto. I think that’s wrong. We need to accept crypto is part of the financial system and as a result, it needs to be regulated sensibly.

‘We have got to rediscover the habit of investing. And NatWest is going to be an opportunity to restart that conversation with the British people.’