Chancellor Rachel Reeves will launch a national wealth fund with £7.3bn of state funding in a race to “unlock investment” in UK growth industries.
The Labour government announced it would align the UK Infrastructure Bank and the British Business Bank to create the new national wealth fund, with the hope of mobilising billions of pounds of private investment into clean energy, ports, heavy industry and manufacturing.
Reeves and business secretary Jonathan Reynolds instructed officials on Tuesday to start work immediately, with the fund to be established in “less than a week”, the Chancellor said.
“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,” she added.
“We are… 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 secretary Ed Miliband, alongside Reeves, led a meeting of the national wealth fund task force at the Treasury today [Tuesday], including former Bank of England governor Mark Carney, Barclays boss C.S Venkatakrishnan, and Aviva chief Dame Amanda Blanc.
The additional state funding will be allocated through the UK Infrastructure Bank, the government said, alongside existing cash, while the British Business Bank will be reformed to help mobilise institutional UK capital.
Taskforce chairman and Green Finance Institute CEO Dr Rhian-Mari Thomas said thanks to a “combination of catalytic capital, deployed in partnership with a government delivering policy certainty” could “make the UK the destination of choice for global investment”.
British Venture Capital Association (BVCA) chief executive Michael Moore called the announcement “very encouraging” and “welcome first steps” at encouraging some £145bn of “dry powder” capital to be deployed in UK businesses.
He added: “A clearer net zero roadmap would help the 12,000 businesses backed by private capital to continue to drive that change.”
While Trade Union Congress (TUC) general secretary Paul Nowak said unions were “eager to work with the government and employers” to create jobs, adding: “Public investment is an urgent first step in boosting strategically important industries that have been neglected for the past 14 years.”
Charlotte Clark, director of regulation at the Association of British Insurers (ABI), said using public money to “crowd in private finance is exactly what is needed to unlock investment” and that the fund would act “as an assurance mechanism to de-risk investments”.
Louis Taylor, British Business Bank chief executive, called it a “strong endorsement” of the bank’s “10-year track record” as a key investor in venture capital, life sciences and deeptech.
“We expect the fund to create a single coherent governmental offer for businesses and a compelling proposition for investors that will help mobilise billions more,” he added.
The government is expected to set out further detail on the fund – and its key role in industrial strategy – ahead of a global investment summit set to be held later this year. It will also legislate to put the fund on a statutory footing and make it a permanent institution.