Arise The Crown Estate - become our Sovereign Wealth Fund

Every insurer that risks capital relies on investment returns to offset the risk it mispriced its products. The Insurer of State may not be the same as a private insurer - but the theory of it underpinning a new mode of investment for the British state is absolutely relevant.

The Crown Estate - our ready-made Sovereign Wealth Fund

Many labour under the false belief that we lack a Sovereign Wealth Fund. But we have one - it's called The Crown Estate. When the Insurer of State's balance sheet is created, huge potential sums of capital can also be created. If all of that capital is placed into "government -as-usual" fiscal headroom we - the convenors - fear it could lead to an historic missed opportunity to create a non-tax income buffer for the taxpayers of the country.

Let us consider for a moment how a private insurance company works. Unlike a bank, it faces all of its exposures without a current "insurer of last resort". This means it operates in a fundamentally anarchic market - facing down relative unknowns across the risk spectrum. That makes it an exciting industry to work in, no doubt.

Insurers, depending on their size, will either operate an in-house investment team or place their funds with a specialist fund manager like Schroders, Park Square Capital or Pemberton Asset Management. These firms, using the chosen risk strategy of their client, will maximise investment returns generating float for the insurers to use as cashflow.

These funds can often make the difference between a profitable year of growth, and a loss-making year of toil. They are also absolutely essential for the wider economic prosperity of the United Kingdom. Their investments ranging from bonds to infrastructure - where large sums of capital are required, but steady returns expected.

In The Crown Estate, as you'll see from the fact sheet below, the country has the perfect vehicle with which to entrust much of this newly created capital. The strategic goal of such a transaction is clear: to generate non-tax income for the state and increase British prosperity.

A 7% return - could mean tens of billions less in tax

Through The Crown Estate, the government already yields a whopping £1bn of extra income (drawn from income on its Assets Under Management [AUM]) that it does not have to draw from tax across the economy.

Let us pause for a moment and consider the potential.

The Insurer of State has the potential to be used for "at least" £400bn of fiscal capacity. Let's assume that half of this went to HM Treasury (via the DMO) and the other half, some £200bn, went to the Crown Estate.

If The Crown Estate continued to yield 7% on its AUM, that would approximate some £14.2bn of extra non-tax income for the Government's balance sheet. Nothing to be scoffed at, and of course, entirely plausible.

Supplement that with the requirement that all UK insurers are required to lodge a sizeable portion of their own investment funds with The Crown Estate - and the AUM figure could become incredibly potent, and highly credible for global and domestic sentiment, too.

Investments would prudently be made, not just across the UK economy, but also around the world - in British Trade Zones and other such strategic mechanisms. This would make for a domestic growth stimulus and good old fashioned soft power production.

The Insurer of State is not merely a mechanism to absorb shocks to the UK economy. It is, quite literally, a refinancing event. A once-in-a-generation opportunity to trigger conditions that could usher in a Golden Age for the beleaguered peoples of these isles - who've faced nothing but pessimism since the Great Recession.

It's time we put those days behind us and played to our strengths. Thankfully - in the form of the UK insurance industry - we have a great strength. It transpires that, despite its naysayers, the Monarchy more than pays for itself. It has also developed a team with a canny knack for generating value for our great nation. If that isn't a strength to wield in building this new institution, what is?

God Save The King! And may he save we, his subjects, piles of tax.

(Readers will note and doubtless expect, we have approached The Crown Estate's Corporate Affairs team to request their insight and advocacy for this project.)

Supplementary information: The Crown Estate (UK)

(Drafted by AI, fact-checked by another AI)

Overview

The Crown Estate is an independent commercial business established by an Act of Parliament. It manages a diverse portfolio of land, property, and assets across the United Kingdom. While belonging to the reigning monarch "in right of the Crown," it is not private property, and its revenues are directed to the UK Treasury to support public spending.

Key Facts

• Ownership: Owned by the monarch in a corporate capacity; managed independently.
• Assets Under Management: Approximately £15.5 billion as of the 2023/24 fiscal year.
• Revenue: Generated a record net revenue profit of £1.1 billion in 2023/24, all of which was delivered to the Treasury.
• Sovereign Grant: A percentage of Crown Estate profits funds the monarchy; this percentage is subject to periodic review by the government.
• Governance: Operates under the Crown Estate Act 1961, with a Board and CEO accountable to Parliament.

Portfolio Highlights

1. Urban Portfolio
   • Major holdings in central London, including Regent Street and St James’s.
   • Commercial and retail spaces valued at billions.
2. Rural & Coastal
   • Approximately 286,000 acres of agricultural and forestry land.
   • Includes Windsor Estate and parts of the Scottish Highlands.
3. Marine Estate
   • Manages the seabed around England, Wales, and Northern Ireland.
   • Grants leases for offshore wind farms, tidal energy projects, and other marine activities.
   • Plays a significant role in the UK's renewable energy strategy.
4. Windsor Estate
   • Encompasses Windsor Great Park, a working estate open to the public.

Strategic Importance

• Renewable Energy: Facilitates offshore wind development, contributing to the UK's net-zero carbon emissions goals.
• Economic Impact: Supports thousands of jobs and regional economies through its diverse property holdings and development projects.
• Public Finance: Profits support national expenditure via contributions to the Treasury.
• Sustainability Focus: Committed to environmental stewardship, including initiatives for nature recovery and biodiversity.

Challenges & Future Outlook

• Balancing commercial returns with public benefit.
• Expanding green energy initiatives while preserving marine ecosystems.
• Managing scrutiny over the use of royal and public assets.
• Adapting to evolving urban and marine development needs in a changing economic landscape.

Sources:

• The Crown Estate Annual Report 2023/24.
• UK Government publications.