Brexit gives us a once in a generation opportunity to recast the kind of country we want to be.
We’ve got an unbalanced, rock-and-roll economy that’s too dependent on consumer spending and doesn’t invest enough for the future. That makes us less economically productive than the Germans or Americans, so we work longer hours for lower pay than they do.
Once we’ve balanced the government’s budget, we can solve the problem by contributing to a UK Sovereign Wealth Fund to fund our pension and benefits system sustainably. We would save and invest more, making us more productive to raise our living standards, fund better public services and build an economy that works for everyone.
Our rock-and-roll economy would sober up, and stay on the wagon for good. Giving our pensions and benefits system the same, strong financial foundations as other occupational pension schemes in the UK would mean we weren’t saddling our children with the bills for our lifestyle today. And we’d be fairer, because everyone would own the same stake in the fund.
I hope the government gets behind my campaign.
Tim Worstall, senior fellow of the Adam Smith Institute, says No.
The only reason to have a Sovereign Wealth Fund is to keep money out of the domestic economy. Norway’s fund is there to stop the torrent of oil money from driving up the exchange rate to the point where the rest of the economy is throttled.
So a wealth fund to invest in British infrastructure is ridiculous – quite apart from the fact that we run a trade deficit and thus aren’t about to suffer from that Dutch Disease the Norwegians are avoiding.
As to some percentage of GDP being assigned to infrastructure as with foreign aid – DfID has been known to spend foreign aid on sending feminist activists to Black Lives Matter conferences. That’s what happens when there’s a target to be reached.
Finally, that we spend less of GDP on infrastructure than other countries does not means we should spend more. It could mean we are more efficient at such spending than others. And given that we get similar results in growth than others, that would seem to be the correct answer.
There is no reason to have a UK Sovereign Wealth Fund, no need for a percentage of GDP infrastructure spending target and we don’t do hypothecation anyway.