Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds today instructed officials to begin work immediately 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 Energy Security and Net Zero, convene a meeting of the National Wealth Fund Taskforce at No 11 Downing Street to kick-start the work.
Chaired by the Green Finance Institute, the task force includes former Bank of England Governor Mark Carney, Barclays CEO CS Venkatakrishnan, Aviva CEO Dame Amanda Blanc and major institutional investors.
Under new government plans, the National Wealth Fund will bring together key institutions and a compelling proposition for investors. This will mobilize billions more in private investment and create a return for taxpayers.
£7.3bn of additional funding will be allocated through the UK Infrastructure Bank so investment can start immediately, focusing on other priority sectors and catalysing private investment on an even larger scale. This funding is in addition to existing UKIB funding.
As part of the National Wealth Fund reforms, the Bank of England, which is overseen by the Department of Trade and Industry, will be reformed to ensure it can mobilize the UK’s deep pool of institutional capital by leveraging its investment stocks 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 industry.
Chancellor of the Exchequer Rachel Reeves said:
This new government continues the work of ensuring economic growth. It was clear to me that there was no time to waste.
I have already committed to the establishment of a national wealth fund. Now I go further and connect the key institutions.
We must go further and faster if we are to repair the foundations of our economy to rebuild Britain and improve all parts of our country.
That’s why, in less than a week, we’re launching a new National Wealth Fund, bringing together key institutions to help unlock investment in new and growing industries.
Britain is open for business – and the work to change has begun.
Energy Security and Net Zero Secretary Ed Miliband said:
Our mission to make Britain a clean energy superpower is to invest in Britain. Our National Wealth Fund will help create thousands of jobs in the clean energy industries of the future to strengthen our energy independence and tackle climate change.
We are acting immediately, wasting no time and working in concert with industry to unleash private investment and grow our economy.
Dr Rhian-Mari Thomas, Chair of the Task Force and CEO of the Green Finance Institute, said:
The taskforce’s recommendations set out how a combination of catalytic capital, deployed in partnership with a government providing political certainty, can make the UK a destination for global investment.
The National Wealth Fund will change the way we approach public-private risk-sharing, giving private investors the confidence needed to finance the technology and infrastructure needed to support growth and create new jobs in the UK.
Mark Carney, former governor of the Bank of England, said:
This new government has rightly identified investment in infrastructure as a key factor in building high-value, low-carbon, competitive industries.
Smart use of public investment through the National Wealth Fund can jump-start economic growth and mobilize private capital into 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 finance tools to attract the significant private capital needed to accelerate decarbonisation technologies and grow their economies.
Amanda Blanc DBE, Chief Executive, Aviva Group
At Aviva, we support the UK and are ready to invest even more to help boost growth, create jobs and deliver net zero. To achieve this, we need closer cooperation between government and business. Today’s announcement of the new national wealth fund is a significant step in the right direction. Now we need to work at pace to turn these good ideas into investable projects that can make a difference.
António Simões, General Manager, Legal and General Manager, said:
L&G is delighted to have contributed to the National Wealth Fund Taskforce and is building on our track record of investing to help build a cleaner, greener and growing economy. We welcome the Government’s ambition to support further institutional investment in UK assets and mobilize more private capital for the energy transformation and look forward to the next steps outlined in the report.
Paul Thwaite, Chief Executive NatWest Group.
The UK has led the world in reducing carbon emissions in recent decades, but the next phase of the transition will require significant public and private investment. This is a major challenge and working together not only on funding but also on policy is essential to deliver it in a way that supports economic growth in the UK.
A national wealth fund has the potential to accelerate the transition and address some of the underlying barriers that have existed so far. As the UK’s leading bank for business, we will continue to support the Government in developing the National Wealth Fund and ensuring it delivers on its objectives to drive a green economy while supporting communities, businesses and industry across the UK’s regions and states.
As one of her first steps, the chancellor has tasked the Treasury to engage with industry, government departments and the UK’s public financial institutions themselves to quickly put detailed plans into motion. The development of the NWF will examine the case for pooling bodies from UK public finance institutions.
Further details will be set before the government’s international investment summit later in the year. In the meantime, these institutions will continue to do what they do best – providing financing and investment for businesses and infrastructure across the country.
NWF, which plays a central role in the Government’s industrial strategy, will invest in transformation in all parts of the country, supporting thousands of good jobs and betterment for all.
The government will introduce new legislation as soon as parliamentary time permits to enshrine the NWF in statute, making it a permanent institution at the heart of the country’s long-term growth and prosperity.
NWF will also work with local partners, including mayors, to put together a funding and investment offer that supports the needs of local areas and accelerates growth in all corners of the country. This morning the Prime Minister and Deputy Prime Minister met with all the regional mayors at 10 Downing Street to renew the relationship between central and local government and discuss unlocking growth across the UK.
The UK’s public financial institutions have a strong track record of delivering on private investment and generating returns for the taxpayer. Since its inception 3 years ago, the UK Infrastructure Bank has committed £3.3 billion and unlocked nearly £11 billion in private investment.
Supporting the growth of SMEs by improving their access to finance, the British Business Bank has released £12.4bn of funding to fund more than 23,000 UK businesses supporting the creation of over 39,000 jobs in 2023 alone.
Shaun Kingsbury CBE, Co-Chief Investment Officer at Just Climate, said:
The National Wealth Fund can be a critical enabler for growth across the UK economy and an accelerator for deploying capital into sustainable businesses and projects. As private investors, we welcome this announcement by the Chancellor and look forward to supporting this initiative which will encourage public and private capital to work together.
CS Venkatakrishnan, Group CEO, Barclays:
Barclays is a committed partner in the new government’s ambition to boost economic growth in the UK. Crucial to realizing this ambition is increasing business investment – ​​both within our own domestic economy, as evidenced by our own £30bn investment in the UK, and mobilizing inward investment into Britain.
The recommendations of the National Wealth Fund Taskforce, of which I am a member, set out some important ways in which this can be achieved. In particular, I welcome the ambition to review and possibly streamline existing economic development institutions to make it easier for our corporate and corporate clients to access the peer finance that is often needed to get infrastructure and other zero-net projects off the ground.