In a speech to some of the world’s biggest businesses and investors, Rachel Reeves revealed that restoring fiscal stability will be at the centre of her first Budget on 30 October. She made the case that it is the only way to ensure government and business can invest with confidence.
The Chancellor went on to set out how two new bodies will drive long-term investment in Britain as the government works hand in hand with business to create new high skilled jobs right across the UK, helping make people better off.
Chancellor of the Exchequer Rachel Reeves, MP said:
When we said we would end instability, make growth our national mission and enter a true partnership with business we meant it.
The decisions which lie ahead of us will not always be easy. But by taking the right choices to grow our economy and drive investment we will create good jobs and new opportunities across every part of the country. That is the Britain we are building.
The first announcement from the Chancellor was that from today the UK Infrastructure Bank will operate as the National Wealth Fund (NWF), with its headquarters in Leeds.
The National Wealth Fund will catalyse tens of billions of pounds of private investment into in the UK’s clean energy and growth industries, including green hydrogen, carbon capture and gigafactories.
Building on UKIB’s leadership and expertise, the NWF will go further, able to make investments that maximise the mobilisation of private investment. This will include the ability to trial new blended finance solutions with government departments that take on additional risk to facilitate higher impact in individual deals and performance guarantees.
The National Wealth Fund will have a total of £27.8 billion and will work with key industry partners, including mayors, to support delivery of their investment plans.
The Government will also bring forward legislation to give the NWF a broader mandate than just infrastructure, ensuring it is a permanent part of government’s investment offer.
John Flint, CEO, at the National Wealth Fund said:
It is a huge privilege to be entrusted with the responsibility of leading the National Wealth Fund. Building on the strong foundations we have laid as UKIB, we will hit the ground running, using sector insight and investment expertise that the market knows and trusts to unlock billions of pounds of private finance for projects across the UK.
With additional capital to deploy against a bigger mandate, we stand ready to help the market invest with confidence, in support of the Government’s growth ambitions.
Alongside this the Chancellor, together with Secretary of State for Business and Trade Jonathan Reynolds, announced a new British Growth Partnership as part of the British Business Bank (BBB).
The BBB already supports the UK’s fastest growing, most innovative companies deploying £3.5bn to support over 23,000 businesses last year.
The British Growth Partnership will allow it to do more by creating a new way for the British Business Bank and institutional investors to invest in innovative companies together.
Leveraging the British Business Bank’s market expertise, these long-term investments will be made independently of government on a fully commercial basis. In the coming months, the British Business Bank will seek to raise hundreds of millions of pounds of investment for this fund, with the aim of making investments by the end of 2025.
Additionally, the government will implement a set of reforms to the British Business Bank’s financial framework that will increase its impact and increase its ability to respond flexibly to the market, including by putting the British Business Bank’s £7.9bn set of commercial programmes on a permanent footing.
Louis Taylor, CEO, British Business Bank said:
Today’s announcement is a strong endorsement of the British Business Bank’s 10-year track record, market access and capabilities. By establishing the British Growth Partnership, the Bank will encourage more UK pension fund investment into the UK’s fastest growing, most innovative companies.
In addition, reforms to the Bank’s financial framework, putting our £7.9bn commercial programmes on a permanent footing, means we can flexibly re-invest our investment returns over the long term to increase growth and prosperity across the UK.
Today’s measures follow the Government announcing more than £24 billion of private investment for pioneering energy projects and thousands of jobs in the green industries secured ahead of International Investment Summit.
This adds to the announcement last week that up to 500 UK manufacturing jobs are set to be supported as bus operator Go Ahead confirms a major £500 million investment to decarbonise its fleet. This includes creating a new dedicated manufacturing line and partnership with Northern Ireland-based UK bus manufacturer Wrightbus.
And it also builds on the Government confirming funding to launch the UK’s first carbon capture sites in Teesside and Merseyside. Two new carbon capture and CCUS enabled hydrogen projects will create 4,000 new jobs, in a boost for the economy and British industry, helping remove over 8.5 million tonnes of carbon emissions each year – the equivalent of taking around 4 million cars off the road.
Further quotes:
Dame Julia Hoggett, CEO, London Stock Exchange Plc said:
It is critically important for the growth of the UK economy that home grown companies are able to access the investment they need to grow, scale and stay in the UK.
Access to meaningful UK capital at the scaling phase has been a long-recognised challenge and so we are delighted that British Growth Partnership is being established to help address this problem. This will also facilitate more investment by UK pension schemes into scaling UK companies, providing greater returns for their savers and giving UK investors a greater stake in the UK economy.
Sir Nicholas Lyons, Group Chair, Phoenix said:
The UK needs scale and skills to convert our brilliant science and technology start-ups and university spinouts into the successful and sustainable companies of tomorrow. British Growth Partnership will complement the private sector DC pension industry’s undertakings under the Mansion House Compact to expedite this, directing investment to deliver the best returns for our pension savers.
Professor Sir John Bell, President, Ellison Institute of Technology said:
Making sure the best innovative British companies can access the capital they need to scale and stay in the UK is critical for the future of the economy. The Chancellor’s announcement today of the new British Growth Partnership, in addition to confirming £7.9bn of permanent capital for the British Business Bank, are both very welcome and significant steps forward in solving this problem
Sir Jonathan Symonds CBE, Non-Executive Chair, GSK said:
This is a welcome step; encouraging institutional investment into the UK’s high-growth-potential companies can provide a real boost to the economy and generate better returns for individuals’ pension investments
Brent Hoberman, Chairman and Co-Founder, Founders Forum Group, Founders Factory, firstminute capital said:
It’s great to see the new government taking concrete steps to amplify the Mansion House reforms. This new British Growth Partnership should help UK startups access further scale up capital to create more world leaders.
Saul Klein, Co-founder, Phoenix Court and Member of the Council for Science and Technology said:
The UK has more than 750 venture backed companies generating more than $25m in revenue – this is more than France, Germany, Sweden and the Netherlands combined. These companies have created over 200,000 new jobs and continue to grow but the UK still has $35bn less scale up capital to support these companies than the United States’ Bay Area alone.
The government’s continued support for the British Business Bank and its focus on addressing this scale up opportunity will be very much welcomed by these 750 companies as well as the cohorts coming behind them.
Peter Harrison, Group Chief Executive, Schroders plc said:
These are further helpful initiatives in creating an environment where risk capital can flow into strategically important industries. Every step is welcome in supporting future economic growth.
Edward Braham, Chairman, M&G said:
We welcome the creation of the British Growth Partnership which should unlock much needed investment into the UK’s high growth innovative businesses.
The combination of private and public sector partnerships, underpinned by long term patient capital, is essential to create the conditions for sustainable growth.
As a leading international investor, M&G has a proud history of supporting the progress of businesses and communities across the UK, investing in new innovative companies and private assets such as housing, hospitals and transport.
Steve Bates OBE, CEO of the BioIndustry Association, said:
Our world-leading, innovative life sciences and biotech sector is a unique competitive advantage for economic growth. The sector attracts expert global investors but a lack of investment from UK-based institutional investors means the economic and social returns are too often lost overseas.
The British Growth Partnership will help turbo-charge innovative businesses with fresh UK-based capital, enabling them to scale in the UK and deliver more returns to the British economy, and to ordinary people saving for their retirement. This is a win-win-win for UK life science businesses, for UK pension savers and for the forward-thinking financial services sector.
Kate Bingham, Managing Partner, SV Health and Former Chair UK Vaccine Taskforce welcomed the announcements saying:
The UK has the potential to be a global leader and hub for healthcare breakthroughs with its strong entrepreneurial and academic base, together with our expertise and innovation in data science and artificial intelligence.
Making the British Business Bank independent of government as well as launching the British Growth Partnership enables the Bank to catalyse institutional investment, including from pension funds, into brilliant UK companies that are supercharging the development of revolutionary medical treatments including smarter medicines for cancer, Alzheimer’s and blindness.
Dom Hallas, Executive Director, Startup Coalition said:
Tech startups and scaleups need a stable and improving funding environment to compete globally. The British Business Bank’s role in helping create that landscape is critical and today’s announcement will help the UK continue to build VC-backed tech companies across the country that are ready to compete with the very best.
Michael Moore, Chief Executive, BVCA said:
It is extremely welcome that the Government and the British Business Bank have brought this hugely significant programme forwards so quickly.
The prize is to get significant new capital into the growth equity and venture capital funds that are creating new industries and backing innovative businesses that will be the backbone of the British economy of tomorrow. The British Business Bank has a vital role catalysing institutional investment into fast growing British businesses and this announcement will boost that work substantially.
Just 3% of the pensions investment into UK led growth equity and venture capital funds is from UK pension funds. Alongside the Government’s pensions review this major new vehicle can be the start of a major shift that sees UK pensions savers get the improved retirement income that can come from backing funds which deliver active ownership and long-term investment in business.
Kerry Baldwin, Co-Founder, Managing Partner, IQ Capital said:
The launch of the British Growth Partnership and the confirmation of a permanent capital allocation for the British Business Bank are two crucial steps forward in solving the lack of access to domestic capital for the UK’s most promising growth companies.
I very much welcome the Chancellor’s announcement today, she has been hugely engaged with the venture capital and technology sector, and champions the incredible societal impact that our sector enables through investments into innovative technologies across the UK.
The British Business Bank has been at the heart of powering the next generation of UK venture and growth funds and the launch of the new fund is welcome as part of the pension reforms. This fund will enable access to world-leading science and innovative investments which increase productivity by transforming legacy industries through the adoption of novel technologies and also by providing growth capital to the next generation of globally leading frontier technologies which are solving pressing critical global issues from climate change to energy transition.
Dr Andrew Williamson, Managing Partner, Cambridge Innovation Capital, and member of BVCA Council said:
Since its formation in 2018, British Patient Capital has played a central role in the growth of the UK’s knowledge-intensive innovation ecosystem. It has built a world leading team and investment platform with a strong track record of investing in UK deeptech and life sciences companies and the venture capital funds that support these companies.
The British Growth Partnership will make the Bank’s extensive expertise available to a broader range of institutional investors, providing attractive returns for those investors and increasing the capital available for leading UK start-up and scale-up businesses.
Duncan Johnson, Chief Executive Officer, Northern Gritstone said:
We at Northern Gritstone believe that skilled partnerships that channel patient investment into long-term growth and innovation are more important than ever for the UK.
By establishing the British Growth Partnership, the British Business Bank is creating a pathway for pension funds and institutional investors to support the future today. Through investment we can create and scale the world class businesses of tomorrow in the UK which is the platform for growth for our economy over the decades to come.
Irene Graham OBE, CEO, ScaleUp Institute said:
The ScaleUp Institute has long evidenced the important role of development banks and Sovereign Wealth Funds to global scaleup economies. The Government’s placement of the British Business Bank commercial initiatives into permanency, with greater flexibility, alongside the creation of the great British Growth Partnership are very much welcome and represent significant milestones for the UK economy.
Alongside a National Wealth Fund these entities and commitments should further address structural, regional and sectoral disparities and ensure our innovative scaling businesses across the country are better connected, at all stages of growth, to the vital patient capital and institutional funds to enable their global scale and continue to foster our international competitiveness.
Lisa Quest, Managing Partner UK and Ireland, Oliver Wyman:
Today’s announcement is a significant milestone for the UK economy. The National Wealth Fund will increase investment across key sectors and accelerate the UK’s clean energy transition. I look forward to the many contributions this initiative will unlock for years to come.
Dr Rhian-Mari Thomas, Chair of the Taskforce and CEO of the Green Finance Institute said:
The NWF creates an opportunity for simplification and scale. The challenge now is to ensure it delivers private capital at the pace we need, through innovative risk-sharing transactions in new technologies.
On top of today’s announcements, the government expects both successful bidders of the Long-Term Investment for Technology and Science (LIFTS) competition, Schroders and ICG, to begin making investments via their new funds in late 2024. Supported by pensions capital from Phoenix Group, the aim is to generate over a billion pounds of investment into UK science and technology companies.