Since 2008, the question of inequality has been racing up the political agenda. The surge in inequality in the UK has been driven by a rise in the share of national wealth that is privately owned, and by the increase in the concentration of that private wealth. Less than a tenth of the UK’s national wealth is communally owned – compared with a quarter in the post-war decades – while the wealthiest tenth of UK households own 45% of total private wealth and the least wealthy half hold a mere 9%.

Ultimately, tackling what Thomas Piketty has called the “fundamental force for divergence” requires a more even spread of the ownership of capital and its rewards. One of the most effective instruments for tackling such in-built inequality would be the creation of one or more citizen’s wealth funds. These are collectively held financial funds, communally owned, and used for the wider benefit of society. By giving all citizens a direct stake in part of the economy, such funds would act as a ‘new force for convergence’.

By increasing the share of national wealth that is held in common, such funds have an equality bias. They offer governments a potentially powerful new economic and social instrument, and a progressive way of managing part of the national wealth. They could play a key role in the construction of a new model of shared capitalism which ensures that at least part of the gains from economic activity are pooled and shared among all citizens and, crucially, across generations.

As well as locking in the gains from part of growth for all citizens, they inject a stronger element of long-term thinking into economic management and, crucially, bring greater equity between generations. Such funds offer a 21st century alternative to old-style nationalisation and new-style privatisation. They should be a central element of any plan for radical reform of Britain’s inequality-driving and growth-sapping economic model, and for achieving inclusive growth.

Variants of such funds are widely used elsewhere, with the most successful models enjoying high levels of public buy-in. The state of Alaska has used the proceeds of oil for a Permanent Fund paying a highly popular annual citizen’s dividend since the early 1980s. The giant Norwegian sovereign wealth fund – also funded by oil – acts as an active investor.  The Australian Futures Fund – with an impressive return since launch in 2006 – was funded from the sale of the country’s publicly owned telecoms giant, and helps fund disability care costs and medical research.

A number of countries have established national wealth funds  – holding companies of public assets – with the largest and most successful being Singapore’s Temasek. The evidence is that this approach to managing the family silver, independently of the state, can secure high returns to be used for the social good.

The UK has had two golden opportunities to take this path. A North Sea oil-based fund created in the 1980s would be worth over £500bn today, turning the public sector net worth (total public assets minus the national debt) from negative to positive. Instead of the rolling programme of privatisation, the UK could have followed the lead of countries like Singapore to pool public assets into a single, ring-fenced fund.

The potential of such funds is now being acknowledged. The Conservative Party Manifesto  promised to create a number of “Future Britain Funds” while the Labour Party is considering their potential. But the idea could be turned into a much more substantial initiative.

The UK’s remaining public asset base – worth some £1.5 trillion – could be used to establish a national wealth fund.  Although the UK has spent most of its oil revenue, a financial fund could be established using other sources of income including the dividends from other natural resources such as minerals, urban land and the electromagnetic spectrum, and occasional one-off taxes on windfall profits such as those levied in the past on banks and energy companies. More radical options might include a direct charge on those financial and commercial transactions – such as merger and acquisition activity – which contain a high element of rentier activity.

One of the most radical approaches would be to create a fund through the dilution of existing capital ownership, paid for by an additional, modest annual levy on share ownership. Such a pro-equality measure was first advocated in the 1960s by the Nobel Laureate, James Meade. In this way, part of the privately owned stock of capital would be gradually transferred into a national fund to be used for explicit public benefit. Such a model was implemented in Sweden in the 1980s – and grew to own 7% of the economy – before it was closed in 1991.

Citizen’s wealth funds offer a direct way of tackling two key fault-lines of the British economic model – ever-rising inequality and decades of under-investment.  Drawing on the overseas experience, it’s time UK political leaders embraced these well-tested instruments and started to walk the anti-inequality talk.


Stewart Lansley is a visiting fellow at London’s City University. He is the author of a Sharing Economy, Policy Press, 2016 and Breadline Britain, Oneworld, 2015 (with Jo Mack).

He will be speaking with Lord Stewart Wood, former adviser to Ed Miliband,  on hoe to tackle inequality at the ’10 years after the Crash’ conference event, 14 September , 11.00 at RSA, 8 John Adam Street, London WC2N 6EZ.

About Stewart Lansley:

Stewart Lansley is a visiting fellow at London’s City University and at the University of Bristol. He has written widely on inequality, wealth, poverty and austerity,  and is the author of A Universal Basic Income: An Idea Whose Time Has Come? ( with Howard Reed ), Compass, 2016.  He is also the author of A Sharing Economy, How Social Wealth Funds Can Tackle Inequality and Help Balance the Books, Policy Press, 2016, Breadline Britain, Oneworld , 2015 ( with Jo Mack ) and the Cost of Inequality, Gibson Square, 2011.

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