The Chancellor Rachel Reeves and the Business Secretary, Jonathan Reynolds have today 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.
It comes as Reeves and Ed Miliband, Secretary of State for the Department for Energy Security and Net Zero, convene a meeting of the National Wealth Fund Taskforce at No11 Downing Street to kick start this work.
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.
Under the Government’s new plans, the National Wealth Fund will bring together key institutions and a compelling proposition for investors. This will mobilise billions more in private investment and generate a return for taxpayers.
£7.3bn 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 at an even greater scale. This funding is in addition to existing UKIB funding.
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.
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:
This new Government is getting on with the job of delivering economic growth. I have been clear that there is no time to waste.
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.
Britain is open for business – and the work of change has begun.
Energy Security and Net Zero Secretary Ed Miliband said:
Our Mission to make Britain a clean energy superpower is about investing in Britain. 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.
Lisa Quest, Managing Partner UK and Ireland, Oliver Wyman:
The National Wealth Fund will help the UK keep pace internationally with a growing list of countries using innovative public funding tools to attract significant private capital required to accelerate decarbonisation technologies and grow their economies.
Amanda Blanc DBE, Aviva Group Chief Executive Officer
At Aviva we are backing the UK and stand ready to invest even more to help boost growth, create jobs and deliver net zero. We need closer working between government and business to make that happen. Today’s announcement of the establishment of a new National Wealth Fund is a significant step in the right direction. We now must work at pace to turn these good ideas into investable projects which can make a difference.
António Simões, Chief Executive Officer, Legal & General said:
L&G are delighted to have contributed to the National Wealth Fund Taskforce, building on our track record of investing to help build a cleaner, greener and growing economy. We welcome the ambition of the Government to encourage further institutional investment into UK assets, and mobilise more private capital towards the energy transition, and look forward to engaging with the next steps set out in the Report.
Paul Thwaite, CEO NatWest Group.
The UK has led the way globally in reducing its carbon emissions in recent decades, but the next stage of the transition will require significant public and private investment. This is a major challenge and collaboration across not just the financing but also policy space is critical to deliver it in a way that supports economic growth across the UK.
The National Wealth Fund has the potential to accelerate the transition and address some of the fundamental barriers that have existed to date. As the UK’s leading bank for business, we will continue to support the government in the development of the National Wealth Fund, and ensure it delivers on its objectives to drive the green economy whilst also supporting communities, businesses and industry across the regions and nations of the UK.
As one of her first actions, the Chancellor has tasked the Treasury to engage with industry, government departments and the UK’s public finance institutions themselves to rapidly set detailed plans in motion. The development of the NWF will examine the case for bringing together bodies from across the UK’s public finance institutions.
Further detail will be set out ahead of the government’s international investment Summit later in the year. In the meantime, these institutions will get on with what they do best – delivering financing and investment for businesses and infrastructure across the country.
Playing a central role in the government’s industrial strategy, the NWF will make transformative investments across every part of the country supporting thousands of good jobs and making everyone better off.
The government will bring forward new legislation when parliamentary time allows to cement the NWF in statute, making it a permanent institution at the heart of the country’s long-term growth and prosperity.
The NWF will also work with local partners including Mayors to bring together a finance and investment offer that supports the needs of local areas and catalyses growth in all corners of the country. This morning, the Prime Minister and Deputy Prime Minister met all regional Mayors at 10 Downing Street, to reset relationship between central and local government, and discuss unlocking growth across the UK.
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 3 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 alone funded over 23,000 UK businesses supporting the creation of over 39,000 jobs.
Shaun Kingsbury CBE, Co-Chief Investment Officer of Just Climate, said:
The National Wealth Fund can be a critical enabler of growth across the UK economy and an accelerator in deploying capital into sustainable businesses and projects. As private investors we welcome this announcement by the Chancellor and look forward to supporting this initiative to encourage public and private capital to work together.
C S Venkatakrishnan, Group Chief Executive of Barclays:
Barclays is a committed partner to the new government’s aspiration to raise economic growth in the UK. Crucial to realising this ambition is increasing business investment – both within our domestic economy, as evidenced by our own £30bn investment into the UK, and by mobilising inward investment to come to Britain.
The recommendations of the National Wealth Fund Taskforce, of which I have been a member, set out some important ways in which this can be done. In particular, I welcome the ambition to review and potentially simplify the existing economic development institutions, with the aim of making it easier for our corporate and business clients to access the partnership finance that is often needed to get infrastructure and other net zero projects off the ground.