Calls for next government to unlock private investment to drive growth & reduce poverty
Melanie May | 5 April 2024 | News
In a letter published today in the Financial Times, Big Society Capital, Big Issue Invest and 34 other organisations are calling for the next government to implement proposals which would direct £billions of private investment into driving growth and eliminating poverty across the UK.
In the letter, the 36 organisations note that last month, the FT reported on the fastest rise in the share of children in absolute poverty in the UK for 30 years, and state:
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“…all parties will agree that it is a priority to generate economic growth in ways that remedy this unacceptable and worsening situation.
“To achieve this, there must be more private as well as public investment, both of which are chronically low as a share of UK GDP.”
Action needed
The organisations call for a number of actions to provide more ways for private investors to use their capital for national good alongside taxpayer revenues. These include the launch of a national growth fund to attract institutional investment into critical sectors and places for the UK’s future prosperity, and of a Local Community Growth Fund to attract private investment into opportunities identified by communities across the UK.
They call too for the introduction of incentives which encourage investors to invest for long-term sustainable and inclusive growth. These include a revision of guidance on fiduciary duty, to allow and encourage institutional investors such as pension funds to direct more of their assets into inclusive growth opportunities across the UK. They also suggest active encouragement of trusts and foundations to invest a percentage of their assets in investments to encourage long-term economic and social value, and a financial return.
In addition, the letter asks for a Financial Inclusion Taskforce to be established, to improve financial inclusion and access to fair banking, and for smarter spending to mobilise private investment for more cost-effective delivery of public services, for example to reduce NHS waiting lists.
Nigel Kershaw OBE, Chair of the Big Issue Group and co-founder of Big Issue Invest commented:
“There are currently more than 13 million people living in poverty, 1 in 5 of the UK population. Of these, nearly 4 million are classed as ‘destitute,’ meaning they do not have access to basics like shelter, food, clothing, or toiletries. It is time for our next government to focus on prevention, in order to remedy this unacceptable and worsening situation through more private as well as public investment.”
Stephen Muers, Chief Executive of Big Society Capital, said:
“The UK desperately needs more investment, which is chronically low compared to our competitors. There is a huge opportunity to channel more private as well as public money into investments which improve people’s lives across the UK and drive genuinely sustainable and inclusive growth, as well as delivering a financial return.”
Based on calculations of institutional investment available, as well as the track record on projects delivered by Big Society Capital and Big Issue Invest over the last two decades, they estimate that the measures proposed could mobilise up to £50bn of new private investment into driving growth in the first decade of a new government, increasing opportunity and tackling poverty.
Implementing these measures, they say, would not only grow the economy and save taxpayers money but would also benefit communities in multiple ways, including by creating thousands of jobs where they are most needed, preventing thousands of children from going into care and keeping families together, and helping hundreds of thousands of people at risk of developing long-term health conditions.
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.