The National Wealth Fund is designed to spur UK industrial growth
The National Wealth Fund is designed to spur UK industrial growth

UK National Wealth Fund ‘should set realistic goals’

The new UK Labour government should drop energy superpower aspirations and set realistic goals under its newly launched National Wealth Fund, according to the Institute of Economic Affairs (IEA).

Reacting to today’s much-trumpeted launch of the fund, which is designed to spur industrial growth and particularly renewables, the IEA said the new government needs to be ‘hardnosed’ about potential returns.

Professor Len Shackleton, an Editorial and Research Fellow at the IEA, said the UK needs to boost not only the quantity but quality of investment.

He said, “In the past, governments have been far too influenced by fashionable boondoggles — nowadays, anything with ‘green’ in the title should ring warning bells — and have wasted vast amounts of taxpayers’ money. Sometimes, pension funds and other private investors who paid too much attention to the government of the day also lost out.”

The incoming government has pledged £7.3bn additional funding will be allocated through the UK Infrastructure Bank so investments can start being made immediately, focusing on further priority sectors and catalysing private investment at scale, which is in addition to existing UKIB funding.

Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds have instructed officials to immediately begin work to align the UK Infrastructure Bank and the British Business Bank under the new fund.

Ed Miliband, Energy Security and Net Zero Secretary, said: “Our Mission to make Britain a clean energy superpower is about investing in Britain. Our National Wealth Fund will help create thousands of jobs in the clean energy industries of the future to boost our energy independence and tackle climate change.”

But Shackleton warned such ‘facile objectives’ should be scrapped.

“The government is promising ‘policy certainty’. But this is nothing new, with many past governments forced to backpedal due to unforeseen events. When, long ago, a previous Labour administration set up the National Enterprise Board, it was justified as promoting advanced technology in profitable firms.

“But the wind changed, and with rising unemployment, 95% of government funds went into attempts to revive lame ducks.”

He added that the government should always remember that it isn’t just cautious investors who hold new projects back.

“The mass of regulations and prohibitions, plus an increasingly unfavourable corporate tax regime, inhibit much potential investment spending,” he said. “The government will need to attack these issues as well. But that’s inch-by-inch ‘hand-to-hand fighting’, not just making grand declarations and sticking new signs on government offices.”

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