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IEA - National Wealth Fund risks wasting taxpayers’ money, says IEA expert

Professor Len Shackleton, an Editorial and Research Fellow at the Institute of Economic Affairs responses to the government’s announcement of the National Wealth Fund

“I wish this new initiative well, but the NWF needs to be realistic about what government can do. 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.”

“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.”

“The government is promising ‘policy certainty’. But this is 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.”

Notes to Editors

Boost for new National Wealth Fund to unlock private ...

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