UNIONS welcomed Labour’s plan for a National Wealth Fund today, but economists criticised it for taking public risk to create private profits.
New Chancellor Rachel Reeves declared Britain “open for business” and announced plans for the fund, which aims to attract private investment to overhaul the nation’s crumbling Tory-era infrastructure, and transition Britain into a low-carbon economy.
Due to be launched in less than a week, it will offer investors £1 of public cash for every £3 of private capital.
The focus will initially be on five industries: green steel, green hydrogen, industrial decarbonisation, gigafactories and ports.
City bosses make up the taskforce behind the fund and include chief executives from Aviva, NatWest and Barclays.
TUC general secretary Paul Nowak said: “This announcement shows steel, automotive and energy workers that Labour is serious about investing in our industrial base and the towns it supports,” calling it a welcome step-change towards an industrial strategy for Britain.
But Sheffield University professor of accounting practice Richard Murphy dismissed it as “nothing more than a private equity fund being set up with state backing.”
He warned that much of the profit opportunity in it is “likely to be passed in large part to the private sector, and financiers in particular.”
Mr Murphy added that it was difficult to work out why Labour could not invest directly to deliver housing, transport and energy systems, unless it is “in awe of finance and the pay cheques commonplace in it and think those working there are very clever, and those in this government are not, which does not speak well of them.”
Public ownership campaign We Own It director Cat Hobbs said the fund was a “fantastic idea” in principle.
But she flagged concerns about “the private sector taking the profit here while the public sector takes the risk, an approach that has been bleeding us dry for 40 years.
“A huge amount of money for investment could be generated by ending wasteful outsourcing and privatisation, where we are currently paying for the dividends and debt of the private sector.
“Ten million pounds a week is wasted on private profits because of NHS outsourcing.”
Ms Hobbs argued that the government could also tax multi-millionaires like former PM Rishi Sunak.
“We don’t always have to go with a begging bowl, relying on the private sector to get things done.
“Building up the public sector should be this government’s first priority and it has the mandate and the tools to do it.”
John Lister, campaigner and co-editor of the Low Down, who has written extensively about the Tory government’s crippling private finance initiative contracts, suggested that public services and infrastructure “can only be funded through progressive taxation on the wealthy – which could include equalising the tax on dividends with income tax, a wealth tax, increasing inheritance tax, or corporation tax.”
He added that other ambitious alternatives could include a “turnover tax to ensure multinational corporations finally pay tax on the business they do in the UK.”
