My Lords, one of the great challenges that the UK faces in the next century is the way in which it engages with globalisation, and makes it work for the benefit of the British people. Whilst some companies and industries have found it difficult to adjust to the global economy, others have prospered. Britain has one of the most globalised of economies, and a significant proportion of our national income is now dependent on global trade. And a significant proportion of that global trade is won by service industries such as finance and the industry in which I have worked, insurance. I would like to mention the achievements and concerns of insurers in this speech, to give you some idea of the problems faced by all UK financial service companies.
As Chairman & Chief Executive of an insurance broking and Independent Financial Advice organisation, I am proud of the achievements of my industry. In 2004, the insurance industry was the largest single contributor to net exports in the UK finance sector, with a contribution of £6.4 billion - equivalent to almost half of the value of UK oil exports. The insurance industry owns £236 billion of overseas portfolio investments, and the earnings derived from its activities are vital to the British economy and the British people - insurers pay £1 billion per week to pensioners and long-term savers.
These are remarkable achievements, yet there are clouds on the horizon, and the threats faced by insurers are similar to those faced by other finance service industries.
First, I believe insurers would very much appreciate greater understanding and recognition from Government that the exports of tomorrow will be in services as much as goods. To that end we need better intelligence and lobbying on regulatory barriers by our Embassies in key markets such as China, India and Brazil. China already has a larger economy that ours, and India and other countries may follow in the next decade. With our expertise, we are potentially well-positioned to establish market-leading positions in those markets - if we can participate fully in them.
Second, I believe that the industry and the Government must work together on a market-opening strategy to replace the failed Doha Round of World Trade talks. After two decades of economic growth fuelled by free trade, I fear that the world may now be taking ever-increasing prosperity for granted. We need to keep the momentum for free trade, otherwise markets will start to close up, with both long-term political and economic repercussions.
Third, as well as moving into overseas markets, its also important for the industry - and for Britain - that the City remains a highly competitive financial services jurisdiction. The Association of British Insurers fears that some international insurance business is drifting from London to Bermuda and Ireland. More generally it is quite clear that the ever-increasing flow of regulations and directives from Westminster and Brussels are damaging our markets and diverting critical resources away from innovation and improvement. To enable the industry to continue its activities and expand in a global market it's vital that excessive regulatory and fiscal burdens are avoided. Can the Noble Lord tell the House whether the Government is planning a review of the tax and regulatory regime affecting the City. Current concerns from the ABI include worries over the complexity and unpredictability of the tax regime and the poor state of public transport in London.
The hard work and enterprise of thousands of people have produced world-beating British companies, paying billions into the Treasury and into the pensions and savings of the British people. Open markets at home, and opening markets abroad, are the key to continued prosperity.
