Labour’s new National Wealth Fund will help create 650,000 new jobs over the course of the next parliament, Shadow Chancellor Rachel Reeves said today.
The National Wealth Fund will invest £7.3bn to accelerate the green transition and help Britain re-industrialise over the next five years. The Fund will be required to crowd in at least £3 from the private sector for every £1 invested.
Earlier this year, the Shadow Chancellor announced the creation of a taskforce of experts to provide advice on crowding in private sector investment.
The taskforce includes former governor of the Bank of England Mark Carney and current Barclays boss CS Venkatakrishnan. It will be asked to report back shortly after the general election to support a future Labour government.
Labour’s manifesto outlined its initial plans for where the National Wealth Fund will invest. The largest single investment, worth £2.5bn, will go towards rebuilding Britain’s steel industry, while a further £1.8bn will be invested in upgrading ports and supply chains in the UK.
A total of £1.5bn has been earmarked for gigafactories, £1bn to accelerate carbon capture technologies and another £500m to support manufacturing of green hydrogen.
Labour said the jobs which will be created through these investments will be concentrated in Britain’s “industrial heartlands”. However, the party estimated that 68,000 would be created in London and a further 77,000 in the south east.
The National Wealth Fund forms a core part of Labour’s plan to work together with businesses to drive economic growth. Reeves has pledged that the next government will be the UK’s most “pro-business” government in history.
Business investment in the UK has long lagged behind other G7 economies, with knock-on consequences for productivity and growth. Encouraging investment is widely seen as a crucial route to generating growth.
Private sector investment is also all the more important when the government is unable to go through with big public investment programmes itself due to the difficult fiscal situation.
“The next Labour government will work hand in hand with the private sector to bring investment to Britain’s industrial heartlands and I have been clear that our National Wealth Fund will be a crucial tool in the armoury to deliver on this ambition,” Reeves said.