UK Sovereign Wealth Fund

Debate between Gareth Thomas and John Penrose

Wednesday 14th December 2016 Westminster Hall

[John Penrose]

At this point in my remarks, I envisage a consistently balanced budget across the economic cycle. That would be a major step forward and, given this country’s history since the second world war, it would produce a welcome degree of certainty for businesses, Government and everyone else. I will come on to how we might then build up the sovereign wealth fund; the hon. Gentleman might like to come back at me at that point if he thinks I have not covered the issue properly.

Once we have stopped borrowing, we can start saving, which is the point the hon. Gentleman just made. That is where the sovereign wealth fund comes in. Most of that huge national debt comes from our pay-as-you-go state pension and benefits scheme, so paying off Government bonds—gilts—will not be enough on its own. Even worse, we cannot just grow our way out of trouble, because the pension and benefits scheme’s liabilities will just grow with us. Instead, we need a sovereign wealth fund to pay for what we owe in our pensions and benefits system.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

As the hon. Gentleman is one of the more assiduous members of his party, he will have seen that the Co-operative party floated in September 2013 this very idea of a UK sovereign wealth fund. Does he see our proposal of turning the Crown Estate into that sovereign wealth fund as an attractive idea?

[John Penrose]

I have not included in my paper any proposal to take existing Government assets and pour them into the sovereign wealth fund, to give it a kick-start. It would be possible, and there are parallels. The previous Chancellor floated the idea of a regional shale gas sovereign wealth fund, based on the proceeds from fracking. A number of Government assets could be added to any sovereign wealth fund, though in my paper, I do not propose that they should be, but there are respectable parallels. For example, the Norwegian sovereign wealth fund is based on the proceeds of its North sea oil. That is certainly an option to consider. I am not proposing it here, but it is certainly not beyond the bounds of possibility. There are very respectable parallels and antecedents elsewhere in the world.

We need a sovereign wealth fund to pay for what we owe in our pensions and benefits system. It would give the scheme the same strong financial foundations as other occupational pension schemes in the UK for the first time in our country’s history. Like those other schemes, it should be managed through a fully independent board—in this case, a new stand-alone national insurance trust with a heavyweight board of trustees, like that of the Bank of England, to prevent political meddling.

Building the fund is rather like repaying a mortgage or saving for a pension: we have to put a little aside every month for a very long time. We would start by creating a new national debt charge, carved out of income tax, to pay the interest on the national debt, currently projected to be just over 2% of GDP by 2021. It would be set as a percentage of GDP and, as the economy grew, any surplus would be used to build up the fund. The process needs to take a long time—several generations—so that the costs do not all fall unfairly on current taxpayers. It is urgent too, because we need to start soon. There will be a brief moment, when the Government’s budget reaches balance in the next Parliament, when we could set the fund up, but old, bad habits die hard. As soon as there is a hint, a sniff, of a surplus, there will be dozens—hundreds—of proposals for tax cuts or extra spending from both sides of the House. Many of them will be excellent ideas, but we must ensure that we do not miss the golden opportunity to set the fund up at that moment, when we can, before it is too late and any surplus money is earmarked for other things.

We must ensure that all the effort and sacrifice of getting the budget in balance is not wasted. A balanced budget cannot be just a one-off episode of fiscal sobriety, in which our rock ’n’ roll economy detoxes for a few months before hitting the party scene again. We need a long-term commitment to clean living—to the fundamental rebalancing of our economy that the sovereign wealth fund would deliver.

Creating the fund would rebalance our economy; build stronger foundations, so that we invest more for the long term; deliver faster growth and extra jobs, so that we could afford stronger and better public services; insulate us against the next economic shock, such as the latest banking crisis; make us less dependent on foreign investors once Brexit is complete; build our international heft around the world; and answer some of those fundamental questions about the kind of country that we want to be after we leave the EU.

Draft Representation of the People (England and Wales)(Amendment) Regulations 2016

Debate between Gareth Thomas and John Penrose

Tuesday 7th June 2016 General Committees

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

I beg to move,

That the Committee has considered the draft Representation of the People (England and Wales) (Amendment) Regulations 2016.

I was going to start off, Sir Roger, by saying, “My, Madeleine, how you’ve changed,” but I thought better of it. It is a pleasure to see you in the Chair until Mrs Moon arrives. We look forward to making good progress under your firm and well-judged hand.

This instrument contains the first small steps towards the Government’s vision for a quicker, cheaper, more accurate, more complete and more digital system of electoral registration. The current system was designed in a pre-digital era and specifies analogue processes in huge detail rather than outcomes, which local councils could achieve far more effectively if they were allowed to use basic modern technologies such as email, or data that they already hold on local residents about everything from council tax to parking permits and library cards.

The result is the so-called missing millions, who are not registered to vote. Everyone will, I hope, have seen the huge efforts that are being made to get people to register to vote in the run-up to the EU referendum later this month, but we need to redesign the underlying system and processes if we are to prevent the same problems from recurring in future after the referendum. The instrument contains the first step towards that new world.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

The Minister has set out his grand vision and how this instrument fits into it, but what resources will be made available to electoral registration officers to take advantage of the new processes? Without those resources, all his great efforts may come to nothing.

[John Penrose]

I plan to come to some of the cost savings that will be made by doing some things more efficiently. These changes should be pretty much self-funding. In future, when other developments are announced, we may have to have that conversation and answer that question case by case. However, these changes, at least, should be self-funding. There are substantial savings to be made by being more efficient in these cases. I will try to give the hon. Gentleman some more detail so that he can see what I mean.

First, the redesign will be achieved by amending the individual electoral registration—IER—application forms to allow applicants to identify that they are the only person aged 16 or over resident at the address, and to provide discretion to electoral registration officers—EROs—as to when canvass forms must be sent where such information has been given. That means that they will not waste time and effort—returning to the question asked by the hon. Member for Harrow West—in following up people who no longer live at a particular address.

Secondly, the regulations will modernise the system of registration by enabling EROs to send invitations to register—ITRs—and ITR reminders by electronic means if they so wish. I apologise, Sir Roger, for all the three-letter acronyms we are dealing with. The provisions aim to reduce the potential for confusion for members of the public by cutting down on unnecessary ERO correspondence and contact, and to reduce the overall cost of registration and the administrative burden on councils. It is estimated that the single occupancy provision will reduce the overall cost of individual electoral registration by about £1.1 million, and the provision regarding email invitations to register by about £7 million per year.