A group of Labour MPs want the £8.6 billion Crown Estate to be turned into a Sovereign Wealth Fund. They will make the call at the Co-operative Party’s annual conference which begins tomorrow in Edinburgh.
The Crown Estate, which dates back to 1760, manages a substantial portfolio of land and commercial property throughout the country, including prime West End assets. It is accountable to Parliament and its surplus is paid to the Treasury to cover the cost of maintaining the Royal Family.
The MPs believe that the rules governing its function should be modernised to allow it to invest in overseas property and compete with rival government backed funds which have become popular in recent years. They insist this could boost UK growth and help to reduce the deficit.
Gareth Thomas, who chairs the Co-operative Party’s group of 33 Labour MPs, said; “A British Sovereign Wealth Fund could promote co-operation with fast-growing overseas businesses, earning the UK vital income over the long term.”
In June the Crown Estate posted record profits of £252.6 million, with returns comfortably exceeding the industry benchmark. Thomas believes its potential could be maximised by freeing it up to “explore ventures into overseas property markets.” He lists China, Taiwan, Hong Kong and India among the markets that the Crown Estate might wish to invest in.
In the past five years Sovereign Wealth Funds have increased their investment portfolios by 59 per cent and now account for an estimated £18.5 trillion of global assets. Norway has the largest of the funds which is worth £460 billion. This is followed by Saudi Arabia, UAE-Abu Dhabi and China. Along with property the funds also invest in oil and other commodities.
The Treasury currently has no plans to establish a UK Sovereign Wealth Fund, although local government minister Eric Pickles is discussing the possibility of creating a ‘superfund’ comprising the UK’s pension funds.
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