The UK needs a Sovereign Wealth Fund (SWF) to reduce reliance on taxes, fund key investments, and secure long-term prosperity. Countries like Norway and Singapore generate billions through their SWFs. In fact, over 20% of their respective governments’ annual expenditure is funded by yield from their funds.
The UK can do the same by investing globally with its reserves (it’s a shame we didn’t do this earlier, but it’s never too late to start!).
Benefits
- Lower Taxes – Investment income can supplement tax revenues.
- Economic Stability – A financial cushion during downturns.
- Future-Proofing – Offsets declining North Sea oil revenue.
- Stronger Infrastructure & Innovation – Funds major projects without new taxes.
- Global Financial Strength – Diversified assets attract investment and stabilize the pound.
- Strategic objectives - The UK can use its SWF to fund ideas and areas that align with its strategic objectives.
Funding Sources
- Asset sales – Sell underused state assets.
- Excess tax revenues – Invest surpluses from economic booms.
- Energy windfalls – Use profits from North Sea oil & gas.
- Green investment partnerships – Co-fund renewables with private investors.
Execution
- Independent, professional management. - must not be government controlled. Luckily we have plenty of asset management talent in the UK.
- Global, diversified investment strategy.
- Reinvest earnings for long-term growth. - we can take e.g 50% of annual profits to be used for public expenditure (this is the Singapore model).
Why Labour’s National Wealth Fund Falls Short
Labour’s plan focuses only on domestic infrastructure. A true SWF should also invest globally to maximize returns, ensuring financial security for future generations.
For instance, Singapore’s Temasek SWF invests in tech unicorns as well as major financial companies such as VISA and Mastercard. By staying ahead of the game and up-to-date with the market they ensure positive annual ROIs on a continuing basis.
