David Green is Chairman of Civitas.

It’s time to move on from the levelling-up agenda to promoting earned prosperity for all. Many countries have successful sovereign wealth funds. Indeed some of them own big chunks of our own infrastructure. The model could be democratised to give every British citizen a chance to share in the productive capital of the nation.

Here is one way it could work. Instead of creating a state body, with the government retaining any profits, we should establish a people’s wealth fund owned by individual citizens who would receive dividends. The fund could be called the British People’s Wealth Fund.

Managers of the wealth fund would only permitted to use deposits to buy gilts or to invest in productive enterprise in the UK. The fund should not invest overseas.

There would be an income from the interest on government bonds and, once investments were up and running, there would be profits. How should shareholders in the British People’s Wealth Fund be rewarded? For the first two years shareholders could receive a fixed rate of 5 per cent, with the proviso that if market interest rates go even higher they would receive bank rate plus one per cent. Subsequently they would receive dividends. A rule could be made that half of all profits must be paid in dividends, and the other half reinvested. All receipts would be tax free.

Deposits would be locked in for the first three years, and after that shareholders could sell back to the wealth fund at par value or sell privately at the market value, but only to other British citizens.

To ensure wide participation it would be a simple matter for the Government to cover any losses. The promise that you can’t lose but could gain a lot would be a legitimate reward for investing in Britain.

In addition to creating a pot of new money to encourage economic growth, establishing a people’s wealth fund would also have some other advantages.

First, we have recently been reminded that a government that wants to increase public borrowing by selling gilts to bond dealers is going to have to pay a high rate of interest. A people’s wealth fund would reduce reliance on international bond markets. As a result of quantitative easing the Bank of England owns about one quarter of UK government gilts. It has already started to reduce its holding, which could put public policy-making even more at the mercy of international bond markets.

Second, the war in Ukraine has focused minds on the importance of energy security. A people’s wealth fund would enhance our self-sufficiency and help to reduce the price of natural gas. We can compare the typical US price with the typical European equivalent per megawatt hour (MwH).

In the US in November last year, the typical cost of energy was 33 euros per MwH – according to the Henry Hub distribution centre, the US benchmark. It can be compared to 119 euros per MwH in Europe, according to price on the Dutch TTF, the European benchmark. The difference is partly accounted for by the cost of shipping and converting natural gas to liquified natural gas (LNG), but the main reason is that the USA has invested in the development of its reserves more fully, notably in fracking.

Third, energy security is not the only concern. When entities owned or dominated by potentially hostile foreign states control significant parts of our essential infrastructure our arms can be twisted. No doubt this is why the Government recently reduced the role of Chinese companies in building new nuclear power plants. A Chinese company controls about 25 per cent of North Sea oil, and others own suppliers of gas, water and electricity. All Chinese companies are under the influence of the Chinese Communist Party (CCP), whether they are nominally private or not. Our reliance on Chinese imported manufactures is now so great that many foreign-policy decisions have to consider the preferences of the CCP.

And fourth, it would help to overcome our historically low rate of investment. The OECD has published expenditure on gross fixed capital formation (GFCF) for 34 member states from 1997 to 2017. Over that period the UK annual average was six percentage points lower than the OECD average.

In 2017, the UK was bottom of the table with 16.7 per cent spent on GFCF as a percentage of GDP. Italy spent 19.6 per cent, Germany 20.5 per cent, the USA 20.8 per cent, France 21.7 per cent, and Japan 24.6 per cent.

Governments blow hot and cold about regulation and deregulation, but in the end the only way of increasing our lasting prosperity and spreading it widely is to invest in the production of the goods and services we need.

In Lawrence of Arabia, Colonel Brighton says to King Feisal, “Great Britain is a small country; it’s much smaller than yours; … it’s small but it’s great, and why?”

“Because it has discipline!”

The repeated and prolonged failure to invest is a sure sign that we have lost that discipline.

A people’s wealth fund would reverse that failure and provide vital support for economically viable independent small and medium-sized enterprises that create new opportunities for people to discover their personal greatness – on which a free society ultimately always depends.

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