LETTER: Time to create a Wealth Fund in the UK

The recent report “Give us our fair shares” from the think-tank Centre for Policy Studies which recommends the Coalition Government privatise the part state-owned banks of RBS and Lloyds Banking Group by distributing shares to taxpayers, is a useful starting point for debate.

Typically, the report is blinkered by ideology and tainted by populism which, given its close association with the Conservative Party, is hardly surprising.

Nevertheless, there are two options the report fails to consider properly.

The first is a retaining by the state of a small part of the holding as the first step in creating a UK Sovereign Wealth Fund, and as a second alternative the distributing of the shares to local councils so here in Pendle we can begin the task of creating a Pendle Wealth Fund.

Some years ago, Norwegians realised they had a duty to maximise the benefit of their revenue from North Sea oil for the benefit of their children and grandchildren. Norway established a Sovereign Wealth Fund – a fund created by using money from North Sea oil that was invested in assets around the world. The fund’s assets are now worth around $600bn and I believe the Norwegian Government can draw on some of the income in certain circumstances.

Here in the United Kingdom, the political elite of all the main parties showed no such foresight. Perhaps now might be the time for Messrs Cameron, Clegg and Miliband to break with tradition and open debate on a plan that promises a better future than the direction in which we are headed.

Currently, the Coalition Government is pursuing a deliberate policy of punishing the prudent and sacrificing the citizenry through inflation by debasing the currency. Folks are getting poorer, and will continue to do so for many, many years ahead.

I admit this is not the best of times to begin creating and building a Wealth Fund. It would involve sacrifice and hardship, and in the short term make people poorer, but the money would be placed into assets that generate income and as the Norwegians have shown this can build very quickly through the process of compounding into a tidy sum.

If the United Kingdom had created a Sovereign Wealth Fund, the country today would be in a far stronger position both in economic and financial terms.

The nation could be enjoying compounding income instead of compounding debt. Moreover, the impact of the recession could have been mitigated and the future would now be looking much brighter by far.

KEVIN HEY

Castle Road, Colne