On July 9th Britain’s new chancellor, Rachel Reeves, confirmed plans to set up a £7.3bn ($9.4bn) National Wealth Fund (NWF). The details, including its personnel, risk tolerance and degree of independence, are yet to be ironed out. But in its outlines, the plan brings to mind the old cliché about the Holy Roman Empire—that it was none of those three things.
Despite its name, the NWF is not intended to be a sovereign-wealth fund, an open-ended pot of government-run investments along the lines of Singapore’s GIC or Australia’s Future Fund. Instead, Ms Reeves wants the NWF to be a development-bank-cum-investment-concierge. Focused narrowly on a handful of favoured green industries like steel, hydrogen and batteries, it will aim to “crowd in” three times as much private capital by biting off the riskiest chunk of projects. That vision makes it closer in spirit to the UK Infrastructure Bank (UKIB), a Boris Johnson-era green lending venture.
Britain has a long lineage of state-backed efforts to pull cash into voguish industries. Some are still running, like UKIB or the British Business Bank, a lender to startups that dates back to the Conservative-Liberal Democrat coalition of 2010-15. (Ms Reeves intends to eventually pull both under the NWF umbrella.) Others are now defunct. The UK Green Investment Bank, another coalition-era lender, lost favour and was sold off in 2017 to Macquarie Group, an Australian investment conglomerate. Further back, the NWF has some similarities to the 1970s National Enterprise Board, a vehicle that propped up Britain’s ailing manufacturing sector during Harold Wilson’s premiership. The chances of the NWF substantially greening and expanding the British economy do not seem much greater than those of its predecessors.
