Labour will tomorrow pledge to spend £8bn to start a UK sovereign wealth fund if it wins the next election in a bid to boost domestic manufacturing.
The National Wealth Fund will invest in British green energy production, with the British state taking ownership of assets held under the fund, shadow chancellor Rachel Reeves will announce at Labour’s annual conference.
A new arm’s length government body – similar to the UK Infrastructure Bank – would oversee the fund’s administration and the initial £8bn would be invested over a decade.
The funding would come as a part of Labour’s 2021 pledge to spend £28bn a year on green energy.
Labour shadow business secretary Jonathan Reynolds will also launch the party’s industrial strategy tomorrow, which includes plans to provide more tax incentives for private investment and create a new Industrial Strategy Council.
Reeves is expected to say during her conference speech that the new fund will ensure “the British people will own a share of that wealth and the taxpayer will get a return on that investment”.
“What you will see in your town, in your city, under Labour is a sight we have not seen often enough in our country,” she will add.
“Cranes going up, shovels in the ground. The sounds and sights of the future arriving.”
Reeves said the fund will initially be spent on building new gigafactories, clean steel plants and green hydrogen projects.
Labour said the fund “will crowd in private investment and attract inward investment that could otherwise go overseas, giving businesses what they need to invest”.
The new initiative is being based on the Norwegian and French sovereign wealth funds, which have $1.19 trillion and $33bn assets under management respectively.
The new green energy manufacturing push comes as Labour pitches its annual conference around the tagline “Greener, Fairer Future”.
Andy Mayer, chief operating officer at the free market Institute of Economic Affairs think tank, poured doubt on the new policy.
“Labour’s fantasy industry plans rest on a belief in the ability of Ministers to correctly predict and build competitive industries of the future,” he said.
“It’s a growth gamble, corporate socialism, and ‘trickle-up economics’, using higher taxes on all of us to reward favoured lobby groups, in the hope of one day being paid back.”
Sir Keir Starmer today said a Labour government would reverse Liz Truss’ decision to slash the top rate of Income Tax from 45p to 40p.
Starmer told the BBC that he would keep the government’s planned cut of basic Income Tax from 20p to 19p.