RACHEL REEVES, Labour’s shadow chancellor and shadow City minister Tulip Siddiq hosted a champagne reception at the Guildhall in the City of London for “industry leaders” in finance at the end of February.

The drinks reception was held “in partnership” with the City of London to celebrate Labour’s Financial Services Review. Ordinary members weren’t invited. Journalists were excluded.

This Financial Services Review says: “Labour’s defining economic mission is to restore growth to Britain. This calls not just for a change in government, but a change in mindset: an active government prepared to work in partnership with business to remove the barriers to economic success.”

But the review defines “business” entirely in terms of “finance.” Labour persuaded 10 “business” people to lead the review, but everyone is actually a City figure; it didn’t pick anyone from manufacturing, let alone any trade unionists or social campaigners, to contribute.

One of the 10 Labour advisers is Douglas Flint. Currently chairman of investment firm Abrdn (the new vowel-free name for Standard Life Aberdeen), Flint is best known as group chairman of HSBC from 2011-17.

He wasn’t in charge of some of HSBC’s biggest scandals, but the US Federal Reserve did fine HSBC $175 million in 2017 for not properly supervising its foreign exchange traders over the period 2008-13, well into the time of Flint’s leadership.

The 2008 crash and subsequent “dirty money” scandals showed the government’s need to regulate the banks, but Flint lobbied hard for fewer rules.

In 2014 Flint argued that thanks to post-crash regulations there is a “danger of disproportionate risk aversion creeping into decision-making,” warning that “unwarranted risk aversion” would stop loans and kill the international financial “ecosystem.” He lobbied then-chancellor George Osborne hard to reduce any new regulations.

So one of Labour’s leading City regulation advisers ran a bank that got huge fines for breaking the rules and then lobbied hard against the rules being tightened up.

Labour is nervous about making public investment commitments. Instead, it wants to try mobilising City money into “green” investments to revitalise the economy: the review looks at “capital markets,” which will include how to try to tempt that City money into Labour’s favoured schemes.

If these “public-private partnerships” are structured too favourably towards investors, they could repeat the public rip-off seen in Labour’s private finance initiative (PFI) under Tony Blair and Gordon Brown. Unfortunately, two of Labour’s advisers were involved in PFI so are unlikely to steer away from this danger.

Baroness Shriti Vadera, currently chair of Prudential, sits on Labour’s Financial Services Review panel. From 1999 to 2007 Vadera was one of Brown’s advisers, and she was one of the main pushers of the PFI. Vadera was particularly associated with the disastrous London Underground public-private partnership which collapsed after a few years.

One “partnership” promoted in the review is that there should be “green mortgages.” Under Labour’s former “£28 billion green investment plan,” Labour would make public investments to upgrade 19 million homes to make them energy efficient. Under this plan, you are going to have to borrow the money from the bank to “retrofit” your home. You will pay — the banks will profit.

The City Review has a particular focus on getting pension money into “riskier” investments. It says the government should push pension schemes to “invest a proportion of their assets into UK growth assets split between venture capital, small-cap growth equity, and infrastructure investment.”

It says this should include a version of a French scheme called the “Tibi” programme. Labour’s policy of encouraging pension money into riskier “venture capital” — which also likely means private equity — mirrors a Tory plan of Jeremy Hunt’s, that was in turn inspired by the Tony Blair Institute. This shows a “consensus” across the very narrow divide between the leadership of Labour and The Tories.

Just to make the circle smaller, the Tony Blair Institute plan that Hunt picked up was inspired by a man called Michael Tory, who as his name suggests, is a Tory. He was a senior banker with Lehman Brothers until Lehman went bust in 2008, in one of the key collapses of the financial crisis. He set up a new “boutique” investment bank called Ondra Partners.

Tory is a big Conservative Party donor. He’s given the Tories £397,000 between 2014 and 2022. Tory went to Conservative Leaders Group dinners with Boris Johnson and Theresa May, according to party records.

Tory then collaborated with the Tony Blair Institute to write a report in May 2023 (“Investing in the Future. Boosting Savings and Prosperity for Britain”) recommending the government should work to overcome the “extreme risk aversion on the part of pension trustees” and get them to invest in “risk capital” in British “new technology” firms and the like to rejuvenate the economy.

There are two problems with this. First, he wants to risk our pensions on risky investments. Second, he was very keen to encourage those pension funds in “private equity” firms, which are often not about long-term investment in developing industries.

Rather, they can be aggressive, tax-avoiding, asset-stripping investors. Pushing pension funds into this kind of investment could make a lot of money for “boutique” banks and investment advisers like Tory’s Ondra partners.

Tory had a particular recommendation that the Pensions Protection Fund, which is set up to bail out collapsed pension funds, should actually start taking over lots more pension funds and use the money for these riskier investments.

His plan for turning a financial “lifeboat” into a more buccaneering vessel struck many as irresponsible.

But a Tory donor called Mr Tory working with the Tony Blair Institute was an irresistible combination for Chancellor Jeremy Hunt. Last July he used his Mansion House speech to launch the “Mansion House compact” which was influenced by Tory’s proposals.

Hunt’s compact was to get eight of the bigger private pension providers, including Aviva and Legal and General, to invest 5 per cent of savers’ money in riskier unlisted companies, and for the local government pension to put 10 per cent of their money in this category. A change of government is likely to see this kind of programme increasing, not decreasing.

Follow Solomon Hughes on X at @SolHughesWriter.