business

National Wealth Fund Taskforce Report

In response to the government’s announcement of the National Wealth Fund, Professor Len Shackleton, an Editorial and Research Fellow at the Institute of Economic Affairs, said:

“I wish this new initiative well, but the NWF needs to be realistic about what government can do. Investment is important, but it needs to be sensible and analysis of potential returns needs to be hardnosed. Facile objectives – like becoming a ‘clean energy superpower’, whatever that fantasy means – should be ditched.”

“We need to boost not just the quantity but also the quality of investment. 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 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.”

“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. 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.”

The UK has been crying out for years for a proper industrial strategy. This announcement shows steel, automotive and energy workers that Labour is serious about investing in our industrial base and the towns it supports.

Public investment is an urgent first step in boosting strategically important industries that have been neglected for the past 14 years.

Trade unions are eager to work with the government – and employers – to ensure that new investment delivers the 650,000 quality jobs, stronger growth and climate action that working people need.

This step change in approach from the new administration is welcome.

TUC General Secretary Paul Nowak

Louise Hellem, CBI Chief Economist, said:

“The green economy is one of the UK’s highest-growth sectors and one the Government is right to prioritise. Businesses are ready to play their part in realising green growth that drives investment and new jobs across the country – and is essential to meeting our 2050 net zero commitment.

“The investment required will not come from the public or private sector alone. Investors and industry support the Task Force’s recommendations for a green catalytic fund that derisks low carbon investments and see it as a vehicle that will crowd-in private finance to deliver decarbonisation infrastructure.

“Having a flexible investment mandate, aligned to net zero policy and wider industrial strategy, will give investors confidence that the fund provides long-term support targeted at addressing market failures. Offering a range of financial instruments, delivering via existing institutions and coordinating with other investment vehicles will also help industry to access appropriate support at speed.

“Businesses want clarity about how the National Wealth Fund will operate alongside a newly introduced GB Energy and are keen to work with the Task Force to ensure that its implementation delivers on our shared objective for UK green growth.”