RACHEL Reeves has confirmed plans for a new national wealth fund to back private investment with public money – expected to be funded by a raid on Scotland’s oil and gas sector.

In her first press conference as Chancellor, Reeves confirmed election commitments to abide by Tory fiscal rules and ruled out increases in national insurance, income tax or VAT.

But she said that a task force headed by former Bank of England governor Mark Carney (below), commissioned in March to explore options for a national wealth fund, had reported back to her on the project.

She said the full details would be revealed “in short order”. According to Labour’s manifesto, the £1.5 billion policy would be funded in part by the windfall tax on oil and gas giants.

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The manifesto said the tax was expected to bring in around £1.2bn with the rest made up with borrowing, which is allowed under Reeves’s fiscal rules because it funds investment.

Speaking at a press conference in London on Monday, Reeves said: “Before the election, I announced Labour’s plans to launch a new national wealth fund, with a remit to invest and so to catalyse private sector investment in new and in-growing industries.

“In March, the former governor of the Bank of England, Mark Carney, agreed to lead a task force on the establishment of a new national wealth fund.

“I can tell you today, that I have received the report from that taskforce and I will be announcing the next steps in short order.”

She defended her sense of “caution” towards the public finances and hit back at those within the Labour ranks who would call for taxes to be raised or the fiscal rules abandoned.

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Reeves said: “Now I know that there are some who will argue that the time for caution is past, who hold that the platform on which we were elected, the platform that the British people voted for last week, can now be swiftly forgotten, that we can toss aside those fiscal rules or renege on pledges, that a large majority in parliament means we have licence to row back on the principles of sound money and economic responsibility.

“I know that many of you aren’t used to hearing this after recent years but I believe that the promises that a party is elected on should be delivered on in government and we will do so.”

In another major development for English planning rules, Reeves announced the country’s effective ban on onshore wind farms was to be scrapped. This brings the country into line with Scotland.

Responding to Reeves's announcement on the national wealth fund, the Scottish Greens warned that the UK Government "must ensure the public does not get lumbered with all of the risk without getting a decent proportion of the returns". 

MSP Maggie Chapman said: "There is an urgent need for a state-led approach to invest in our common future. The UK Government should be mobilising society as well as the private sector to build cleaner, greener industries.

“The new Labour Government must ensure that, with public sector investment, the public does not get lumbered with all of the risk without getting a decent proportion of the returns.

"We need returns on investment like cheaper energy bills, clean energy countrywide and secure jobs into the future. 

“I believe that Government equity stakes should be a part of their national wealth fund strategy to ensure the state continues to benefit from investments after their completion. These benefits must then be directed for public good.”