The UK Government has announced plans to align key institutions under a new National Wealth Fund which it says will boost growth and unlock investment.
The Chancellor Rachel Reeves and the Business Secretary, Jonathan Reynolds, have instructed officials to immediately begin work to align the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund that will invest in “the new industries of the future”.
The news came as Reeves and Ed Miliband, Secretary of State for the Department for Energy Security and Net Zero, convened a meeting of the National Wealth Fund Taskforce at No11 Downing Street.
Chaired by the Green Finance Institute, the Taskforce includes former Bank of England Governor Mark Carney, Barclays CEO C.S Venkatakrishnan, Aviva CEO Dame Amanda Blanc and large institutional investors.
The Government says the National Wealth Fund will “mobilise billions more in private investment and generate a return for taxpayers”.
£7.3 billion of additional funding will be allocated through the UK Infrastructure Bank so investments can start being made immediately, focusing on further priority sectors and catalysing private investment. This funding is in addition to existing UKIB funding.
The Government said that as part of the National Wealth Fund, reforms will be made to the British Business Bank, which is overseen by the Department for Business and Trade, to ensure it can mobilise the UK’s deep pools of institutional capital by harnessing its pipeline of investments and track record as the UK’s largest investor in venture capital.
It says this will unlock billions of pounds of investment in the UK’s world-leading green and growth industries.
Chancellor of the Exchequer Rachel Reeves said:
“I have previously committed to establishing a National Wealth Fund. I am now going further by bringing together key institutions.
“We need to go further and faster if we are to fix the foundations of our economy to rebuild Britain and make every part of our country better off.
“That is why in less than a week we are establishing a new National Wealth Fund and bringing together the key institutions that will help unlock investment in new and growing industries.”
Energy Security and Net Zero Secretary Ed Miliband said:
“Our National Wealth Fund will help create thousands of jobs in the clean energy industries of the future to boost our energy independence and tackle climate change.
“We’re acting immediately, wasting no time and working in lock-step with industry to unleash private investment and grow our economy.”
Dr Rhian-Mari Thomas, Chair of the Taskforce and CEO of the Green Finance Institute, said:
“The Taskforce recommendations set out how a combination of catalytic capital, deployed in partnership with a Government delivering policy certainty, can make the UK the destination of choice for global investment.
“The National Wealth Fund will reshape the way we approach public, private risk-sharing, providing private investors with the confidence needed to fund the technologies and infrastructure needed to drive growth and create new jobs across the UK.”
Mark Carney, former Governor of the Bank of England, said:
“This new Government has rightly identified infrastructure investment as a core enabler of building high value, low carbon, competitive industries.
“The smart use of public investment via the National Wealth Fund can kick start economic growth and crowd in private capital to vital sectors including ports, heavy industry and manufacturing.”
The Chancellor has tasked the Treasury to engage with industry, Government departments and the UK’s public finance institutions to set detailed plans in motion.
Further detail will be set out ahead of the Government’s international investment Summit later in the year.
The Government said that the UK’s public finance institutions have proven track records in crowding in private investment and generating returns for the taxpayer. Since it was established three years ago, the UK Infrastructure Bank has committed £3.3 billion and unlocked nearly £11 billion in private investment.
The British Business Bank, which supports SMEs to grow by improving their access to finance, has unlocked £12.4 billion of finance, and in 2023 funded more than 23,000 UK businesses supporting the creation of over 39,000 jobs.
