Liberal Democrat leader Sir Vince Cable wants to use a portion of a proposed £100bn UK sovereign wealth fund to boost infrastructure investment.
Sir Vince proposed creating a £100bn fund for the UK ahead of his party’s conference last month.
Speaking exclusively to Construction News, Sir Vince revealed for the first time that some of the money would be used to invest in infrastructure UK projects.
“[The wealth fund] would be professionally run by fund managers,” he said, adding that they could either invest in major projects directly or do so through infrastructure funds, which channel investors’ money into public assets and then return dividends.
This new spending would then be combined with a general increase in traditional public sector capital spending to produce a significant boost in infrastructure investment, he suggested.
Sir Vince said: “These two sources of funding for infrastructure projects big and small would give that push you need to get more projects off the ground.
“We know there are a lot of good projects out there waiting to be done.”
The former business secretary said the £100bn could be accumulated in around a decade from the sale of the government’s stake in RBS, other public asset sales, long-term bonds and a tax on what he calls “unproductive wealth” – for example, by treating capital gains on the same basis as income for tax purposes.
The UK “desperately” needs to improve its infrastructure after years of underinvestment, Sir Vince said.
“We need a big increase in government capital investment, which has been constrained for many years by the Treasury,” he said.
A major reason for the constraint was the Treasury’s fear of backing poor projects, according to Sir Vince, who served as business secretary in the coalition government from 2010 to 2015.
He suggested one of the benefits of his wealth fund would be that investment decisions would be taken away from politicians and put in the hands of people who could carry out proper analysis.
“You set up an arms-length body, we call it an investment bank based on the model of the Green Investment Bank that I set up when I was in the government, which can look at projects professionally and make proper cost-benefit assessments so that they’re not political projects,” he said.
Sir Vince suggested roads, railways and telecoms should be the main priority for new investment.
He called for the uneven geographical distribution of infrastructure spending to be addressed, pointing out that many areas where people felt “left behind” also had poor infrastructure.
However, Sir Vince rejected the former foreign secretary’s position: “It is going ahead and I don’t think it makes sense to talk about scrapping it.
“What I would be doing is building it from the North rather than the South, so that the North gets the benefit of improved connectivity first.”
He added that improving the rail network from east to west in the North should receive “equivalent priority” to HS2.
Even if funding was secured for this as well as for other projects, Sir Vince acknowledged there could be issues with the construction industry’s capacity to deliver a significant increase in work.
He has called on the government to reverse its new post-Brexit immigration position, which would see all site trade workers barred from coming to work in the UK.