“Now there might be an inefficient market, and so you might recognise that whilst the underlying opportunities are attractive, perhaps it needs a bit of a spotlight shining on it. Perhaps it needs to grow to scale, and that's when these kinds of initiatives come in and can be powerful.
“But equally, you generally tend to do these kinds of initiatives when you are trying to stimulate nascent areas, new technologies, existing technologies in new applications, or applications that perhaps haven't reached commercial scale yet. And at this point, the problem is that those underlying investments may not be, of themselves, sufficiently attractive for a purely financial investor.
“And the problem is then that your one pound of government money may not attract those other three pounds when you turn it into an investment, or the seven pounds when you leverage the asset, because there may not be debt available for those kinds of assets because they're unproven.
“There's a constant tension between the definition of the investment mandate of a sovereign wealth fund, or for a particular initiative or vehicle that it's trying to form in partnership with the private sector, and its overarching policy aims.”
Nevertheless, Williams says he is supportive of a national wealth fund. “It's a concept that has existed for a very long time in a variety of other jurisdictions.
“The idea of investing today to protect the wealth of a nation tomorrow, and to provide for the future of the country tomorrow, I think is a good one.”
Increasing UK investment from pensions
Besides a national wealth fund, Labour says it will act to increase investment from pension funds in UK markets.
The pledge is similar to the chancellor’s Mansion House reforms for new investment vehicles for pension schemes to support investment into high-growth UK companies.
When it comes to pension schemes, Association of Investment Companies chief executive Richard Stone highlights the issue of engagement. “The use of default funds with vanishingly little allocation to the UK is a significant issue.
“There needs to be a fundamental shift in financial education and a greater understanding by individuals of where their savings are invested; in short, much greater engagement.
“The push for increased disclosure by pension schemes is a start. We would generally be averse to compulsion, not least because of the impact it would have on the role of the pension trustee. Pressure needs to build from investor demand fuelled by better understanding and engagement.”
But Wyn Francis, chief investment officer at Brightwell, an end-to-end service provider for defined benefit schemes, says UK pension schemes are already major investors in the UK.
