A pioneering new citizens’ wealth fund in the UK could provide a universal annual cash dividend and eventually a weekly basic income, a new report has claimed.
According to research by City, University of London and the Friends Provident Foundation the UK government should create a citizens’- owned investment fund to pay for an annual cash payment to everyone in the country.
The report says the fund would be a powerful new anti-inequality instrument, allowing a dividend of £430 per person after ten years which would rise to £765 after 20 years.
Significantly, the fund would be large enough after 25 years to pay all citizens an income of between £40 and £60 per week.
The authors say the “citizens’ dividend fund” could be paid for by new levies on capital and privately owned wealth, small annual payments from the UK’s top 350 companies, a 1p increase in National Insurance contributions, with an initial endowment from government assets and borrowing.
The fund would be independently managed and would increase in value over time at an annual target rate of 4 per cent (in real terms after inflation) through global investment in assets of various types.
On the most generous funding option, it could be worth £700 billion in ten years, rising to £1.7 trillion after 30 years.
One of the co-authors, Senior Research Fellow Stewart Lansley, said: “A UK citizens’ wealth fund would give all citizens a direct and growing stake in the economy. A powerful new pro-equality instrument, it would reduce the UK’s extreme concentration of wealth, and build more secure household finances.”
The report – Remodelling Capitalism: how social wealth funds could transform Britain – will be launched at an event in London on Thursday 10th May 2018.
In addition to a “citizens’ dividend fund”, the report examines other possibilities: a “social care trust fund” and a series of trusts to tackle the housing crisis.
Project leader Professor Steve Schifferes said: “Social wealth funds are powerful tools that can transform the economy by boosting public assets, strengthening the public finances and tackling inter-generational inequality.”
There is growing support for creating publicly owned funds from across the political spectrum.
The authors argue that the UK is well behind other countries in developing such funds, and there are many successful examples abroad.
They point to the Alaska Permanent Fund in the USA – established in the late 1970s from oil revenues – which has paid an annual average cash dividend of $1,159 to all citizens since 1982, helping to make Alaska the most equal of all US states.
Three proposals for a social wealth fund
The principles of a social wealth fund could be applied to meet other key social needs.
One such fund would use the dividends to ensure adequate future funding for universal basic services. The report demonstrates how, under this approach, social care could become a universal, free basic service within a decade.
In addition, the principles could also be applied at the local level to create “urban land trusts”, which would acquire all public development land to increase the supply of land for new houses, tackling the housing crisis and increasing the supply of social housing.
Duncan McCann, a Junior Research Fellow at City, said: “These are radical, but feasible proposals that would transform the way we own and manage national wealth. At the local level, they would ensure that land for development remained in public ownership while dramatically boosting the supply of new housing.”