During the Thatcher premiership, popular capitalism came to the fore, focused on boosting home ownership and broadening share participation. It was a period when the City was growing and finance was helping drive economic success, and there was a desire for more people to share in this. The Big Bang reforms of 1986 transformed London’s financial markets and strengthened the City’s global competitiveness. A strong economic backdrop amplified that momentum and privatisation helped broaden public support. All of this combined to create a clear sense of opportunity.
Now, the economic environment is very different, but the underlying argument that drove the case for popular capitalism then is even more relevant today.
The UK saves and invests too little. This is a decades-long problem.
The amount of UK equities held domestically has fallen from 96% in 1981 to 42% by 2022 (10.8% by people and 31.5% by funds), according to latest ONS data.
Rising public debt reinforces the case for stronger private pension provision in retirement and, thanks to auto-enrolment, progress is being made. But more will be required as longevity rises, job roles change and public debt stays high.
Younger generations already face multiple hurdles, with high youth unemployment, student debt repayments that result in high marginal tax rates, alongside a weakening graduate premium as AI reduces entry-level roles. Getting a foot on the property ladder is proving elusive, preventing Generation Rent from becoming Generation Buy.
Popular capitalism is not just about those with money accumulating more assets, it’s fundamental to helping people address real challenges in a low growth economy that needs to grow faster.
The result is a quiet but profound shift: millions of people are living in an economy where they may work hard, do the right thing and yet remain outside asset ownership for much of their adult life. That is not just unfair; it is economically corrosive. It lowers saving, weakens incentives, damages aspiration and leads to a questioning of the very policies that the UK needs so it can compete globally.
Popular capitalism alone cannot address these challenges. As I argued in a research paper for the Centre for Policy Studies, CapX’s parent organisation, last summer, a three-pronged approach is essential, focused on fiscal credibility, supply-side policies that raise growth and low inflation.
Popular capitalism plays an important role within this wider strategy. It should involve boosting national savings and directing more money into UK companies, helping them grow. It’s about helping people achieve life goals, whether it be to pay for a holiday, a wedding or a car, or to get their foot on the property ladder.
A country that saves more can invest more. This in turn can raise productivity. Broader ownership can make those outcomes more durable because more people have a stake in the success of firms and markets.
Encouragingly, significant progress has already been made through the development of personal pensions and ISAs, which now provide a solid foundation on which to build. These are already part of middle-income Britain’s savings habits and should be treated as such.
The next step should focus on deepening these channels, widening participation and shifting more savings towards long-term productive investment, rather than leaving too much money inert in cash.
The desire to see more UK pension assets invested in the domestic stock market is understandable but this should not be by compulsion. It should be by choice, based on improved prospects for the UK. The Mansion House reforms of 2023 and 2025 were valid attempts to encourage more pension fund money into productive investment and to revive the UK’s equity ecosystem. These reforms need to gain traction but not undermine the fiduciary responsibility of pension fund trustees, who act in the best long-term interests of members. Popular capitalism 2.0 should strengthen that discipline, not weaken it. Issues such as the green agenda can be enhanced alongside this as the scale of green assets in which to invest grows.
The only sustainable way to attract more UK allocation is to make the UK a better place to invest: better growth prospects, deeper markets, stronger governance and a clearer pipeline of investable companies. It was welcome that last year saw the Chancellor acknowledge the regulatory pendulum had swung too far; the very words I have used for some time.
The need is to ensure this is reflected in a regulatory approach that aids competitiveness and growth.
Incentives are critical. One area that should be revisited is the tax and regulatory inheritance of the late 1990s. The removal of the dividend tax credit for pension funds in 1997 amounted to a de facto tax raid and the accompanying regulatory drift compounded the damage. Over time, funds were steered away from equities and pushed towards gilts and fixed income, treated as safer. This risk-averse framework was reinforced through short-term matching of assets and liabilities. In practice, equities have historically delivered superior long-term returns.
Another priority should be cutting or abolishing stamp duty on shares. This tax reduces liquidity, raises the cost of investing and weakens London’s competitiveness. If the ambition is to widen share ownership and rebuild an equity culture, it is hard to justify a permanent toll on buying shares, especially when major competitors impose no equivalent charge.
We need not only to protect ISAs but to promote them. There is a growing narrative that treats ISAs as a cost to the Exchequer. But that framing often carries a deeper assumption: that government is automatically entitled to tax savings. It is a person’s money, not the government’s. It also risks turning saving into a discouraged behaviour through double taxation, which is the last thing the UK needs given its weak savings culture.
Popular capitalism 2.0 must also tie in with increased home ownership and address the housing crisis. Turning Generation Rent into Generation Buy needs more supply and increased turnover alongside lowering the barriers to entry. Previously I called for a history of paying rent to count in place of a deposit and this now happens but there is still the scope to encourage other innovations. One might be blended mortgages, thus allowing the market to absorb more of the perceived risk to facilitate first-time buyers.
Encouraging individuals to take greater control of their finances should be a central goal. The tax system around savings and investment vehicles is too complex, deterring engagement and eroding trust. Greater clarity and stability would give savers the confidence to plan.
Reducing the costs associated with saving should be part of this. The pension and wealth management industries are too often opaque and expensive. Charges should be transparent so people can compare value and make informed choices. High fees quietly destroy compound returns over time. Transparency, low fees and solid returns should be the norm. It should be easier and quicker for people to transfer pensions to where they wish their money to be managed.
Improving financial literacy must also become a national priority, and appears to be creeping into the curriculum.
There is a need though to recognise the challenges in a low growth, low wage economy. For many households, the issue is the absence of any savings and the reality of a daily grind to make ends meet. Hence the importance of a progressive tax system, but global pressures, plus disincentives, limit the extent to which taxes can keep rising. Tax simplification is essential and with better economic management, a lower tax take should follow.
Modern popular capitalism should help people build small sums consistently, with low costs, easy access and products that work for smaller contributions. Micro-finance with little fees.
There is also the intergenerational divide: asset ownership is concentrated among older cohorts, while younger people face high housing costs, student debt and limited savings. That argues for targeted interventions to build early participation: encouraging better starter products and using tax-related matched contributions if needed. Structured incentives for under-40s, where they are well designed and properly costed, make sense.
Popular capitalism will need to adapt and modernise. Crypto-assets, tokenised securities and fintech are reshaping how finance is organised, executed and who participates. The UK should prepare for how this affects attitudes, products, regulation and the City’s competitiveness. A recent TheCityUK report, which I contributed to via an interview, argues the UK should move quickly on tokenised assets, underpinned by clear legal and regulatory certainty. It also points to the practical gains from a universal, consumer-friendly digital and corporate identity for financial services, improving access while lowering costs. Popular capitalism and financial innovation can reinforce each other.
There is a need to be cognisant of the risks and to take these into account when setting policy. Boosting home ownership must avoid inflating house prices and therefore necessitates increasing housing supply, reflecting the importance of joined-up policy thinking. Likewise, pension trustees should not be pressured to invest domestically regardless of returns: fiduciary duty has to remain the anchor. There is also a need for realism: in a difficult economic climate, where living standards are not rising, many households have very little slack and any agenda that assumes people can simply save more will disappoint. One size, in terms of one approach, does not fit all.
The strongest case for popular capitalism is that it was a success the first time around. Above all because it was associated with a mindset change. It reinforced the belief that you could do what you wanted to do, that hard work paid rewards and that aspiration was legitimate. It was manifested in practical ways that people could touch: buying council houses, wider share ownership through privatisation offers and a general widening of participation in the wealth-creating economy. The point is not to rerun the 1980s, but to address current-day challenges. The right approach can help incentivise people, shape culture and achieve results. At its best, popular capitalism fostered a simple belief: progress felt achievable because ownership was within reach.
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