Shadow Chancellor Sir Mel Stride has delivered his Mel Stride City reform verdict, branding Rachel Reeves’ two years at the Treasury as ‘managerial incrementalism’ and warning that her likely successor Andy Burnham will prove openly hostile to banks.
Stride told City AM the country needs a ‘big bang two for the City, not just some kind of tinkering and incremental movement,’ adding that banks share his view when spoken to privately.
Leeds Reforms fall short, Stride argues
Reeves is due to deliver a Mansion House address next Tuesday, expected to be among her final acts as Chancellor. Her deregulation push centred on the Leeds Reforms, announced on 15 July 2025, which the government billed as the widest-ranging reforms to financial regulation in more than a decade and part of its first Financial Services Growth and Competitiveness Strategy, targeting the UK as the top destination for financial services businesses by 2035.
The package included a crackdown on the Financial Ombudsman Service (FOS), a review of the ring-fencing regime and a campaign to boost retail investment. Industry welcomed the moves publicly, but critics called them ‘untransformative.’
Stride was pointed in his assessment. ‘Don’t just try and open up a chink in [ring-fencing],’ he said, characterising that approach as the sum of the Reeves reforms.
The Conservatives want to go further: full abolition of ring-fencing, which requires major banks to separate retail and investment banking operations, and the scrapping of the FOS entirely. A government ring-fencing review concluded that changes to primary legislation would be brought forward through a new Financial Services and Markets Bill to create a more proportionate framework, with a consultation on a New Growth Allowance to follow.
The Tories estimate ring-fencing abolition would free up £1.5bn in capital. NatWest, Lloyds, HSBC and Santander back the move. Barclays chief CS Venkatakrishnan has been the only major bank chief to defend the current regime, whose retail arm benefits from insulation against its large investment banking operations.
Mel Stride City reform agenda targets Bank of England capital rules
Capital requirements are a thornier battleground. Setting them rests with the Bank of England’s Financial Policy Committee (FPC), which at its meetings on 25 November and 1 December 2025 cut its benchmark for system-wide Tier 1 capital requirements to around 13% of risk-weighted assets, equivalent to a Common Equity Tier 1 ratio of around 11%. That is 1 percentage point below its previous benchmark of around 14%.
The FPC’s revised benchmark comprises an underlying optimal level of 11% (inclusive of the neutral rate for the UK countercyclical capital buffer) plus 2 percentage points to account for gaps in risk-weighted asset measurement.
Stride said the UK is ‘not competitive, certainly with America, and it’s not entirely competitive with Europe either.’ He said a Conservative government would legislate to require the FPC to take competing jurisdictions into account when setting requirements. ‘It won’t just be a request. It would be a clear requirement,’ he said.
The Bank of England has clashed with Reeves on deregulation. The most public friction came when Governor Andrew Bailey blocked a meeting she convened between Revolut and regulators as the fintech pursued a banking licence. Revolut, valued at $75bn, spent four years in the process before the Prudential Regulation Authority (PRA) completed its authorisation and lifted restrictions on Revolut Bank UK Ltd this year. Revolut had entered mobilisation, a restricted authorisation stage, after its initial licence grant, with UK customers remaining with its e-money institution throughout, as Revolut confirmed at the time.
Stride did not address Revolut’s case directly but said that where licence approvals are appropriate, ‘you want that to happen as quickly as possible.’
‘We have gone into this kind of cul-de-sac of trying to squeeze out every single wrinkle of risk within the system,’ he added.
Burnham seen as threat to the City
Reeves is expected to leave the Treasury when Burnham succeeds Sir Keir Starmer as Prime Minister. Stride said he hears ‘anti-banking rhetoric in and around the Burnham camp’ and accused Labour of viewing banks as ‘the most politically and easy hit.’
JPMorgan chief Jamie Dimon has warned the bank could reconsider its £3bn Canary Wharf tower if government turns ‘hostile’ to banks. City firms are reported to be concerned Burnham may appoint energy secretary Ed Miliband as Chancellor.
‘Whoever it is, I will be ready,’ Stride said, though he added it ‘feels like more of the same’ and said he was ‘quite fearful about where all of that will lead.’
The Mansion House speech next Tuesday will be the next formal test of whether Reeves can shift that perception before her tenure ends.
