Wealth Fund

Description

Stewart Lansley:

"The concept of a wealth fund would bring fundamental changes in the way we manage national wealth. Imagine if the UK had had the foresight to follow Norway, Alaska and others in creating an oil-financed wealth fund in the 1980s. If proceeds from the wave of major privatisations since the 1980s had been added in, the UK would today have one or more funds worth upwards of £600bn (bigger than the sovereign wealth funds of Qatar and Russia combined ).

Funds on this scale would have been economically and socially transformative. They could have boosted infrastructure spending without the need to borrow, paid for regeneration in poorer areas, or funded a generous annual dividend paid to all citizens.

Crucially, such funds offer a new instrument for tackling the UK’s extreme level of inequality. They embrace a vital principle: that part of the national wealth should be communally owned, with the returns going to all citizens. Acceptance of this principle would open up the possibility of building model “citizens’ wealth funds” that tackle inequality directly, and help end the way a small financial elite are able to colonise the fruits of growth.

A model fund is a collectively held financial fund, established initially by the state, but wholly owned by citizens and managed independently of government for the public good.

Citizens’ funds tackle inequality directly, and help to stop a small financial elite colonising the fruits of growth They challenge one of the principal drivers of inequality: the dominance and extreme concentration of the private ownership of capital. In the UK, the wealthiest tenth of households owns 45% of total private national wealth, while the least wealthy half holds a mere 9%. Because of such concentration, the substantial returns that stem from wealth (in dividends, rent and interest ) accrue almost wholly to the already rich.

In contrast to this built-in inequality escalator – what the French economist Thomas Piketty calls a “fundamental force for divergence” – citizens’ funds offer a new counter-force for convergence.

Over time, they would raise the share of all national wealth that is held in common (currently this stands at less than a tenth), ensuring that a growing part of the returns from capital are shared equally among all citizens. Such funds operate like a giant community-owned unit trust, giving all citizens an equal stake in a part of the economy." (https://www.theguardian.com/inequality/2017/may/22/could-citizens-wealth-funds-halt-dominance-of-financial-elite)