Reeves warned about Wealth Fund’s limitations10 Jul 2024 05:26
Chancellor Rachel Reeves has been warned that Labour’s new National Wealth Fund risks wasting taxpayers’ money unless it sets realistic objectives.
Two key funding institutions are to be brought together as part of the government’s aim to unlock investment into the economy.
Ms Reeves and the Business Secretary, Jonathan Reynolds, have instructed officials to begin work aligning the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund.
The announcement came as Ms Reeves and Ed Miliband, Secretary for Energy Security and Net Zero, convened a meeting of the National Wealth Fund Taskforce at No 11 Downing Street.
The plan has been widely welcomed across the business spectrum, though Professor Len Shackleton, an editorial and research fellow at the Institute of Economic Affairs, adopted a more cautionary tone.
“I wish this new initiative well, but the NWF needs to be realistic about what government can do,” he said.
“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.”
Prof Shackleton continued: “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.”
Prof Shackleton said promises of ‘policy certainty’ are 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 National Wealth Fund taskforce includes former Bank of England Governor Mark Carney, Barclays CEO C.S Venkatakrishnan, Aviva CEO Dame Amanda Blanc and large institutional investors.
CONTINUED.............
https://dailybusinessgroup.co.uk/2024/07/reeves-warned-about-wealth-funds-limitations/
Sign In
Follow the stocks
