Chancellor Rachel Reeves has shaken up the mandate of two state-owned development banks today as part of efforts to divert billions of pounds of investment into high-growth British start-ups.

In an announcement during the government’s International Investment Summit, Reeves said the UK Infrastructure Bank, set up by Boris Johnson’s government in 2020, will be transformed into the National Wealth Fund (NWF) in a bid to “catalyse tens of billions of pounds of private investment into the UK’s clean energy and growth industries”.

The British Business Bank, founded during the coalition years in 2012 and owned by the government, will also launch a new “British Growth Partnership” designed to coax pension funds into investing more in domestic companies.

While Reeves first revealed plans to launch a National Wealth Fund days after taking power in July, the structure of the vehicle has been uncertain until today.

Under the plans, the NWF will handle a total of £27.8bn of state money to be invested in partnership with private sector investors and local government figures, such as city mayors. Former HSBC boss and UKIB chief, John Flint, will become its chief executive.

“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,” he said in a statement.

“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.”

British Growth Partnership will operate alongside the NWF and has been designed to “crowd-in” cash from UK pension funds to venture capital funds and high-growth start-ups.

Details of the fund came as the government looks to shore up its business credentials following a shaky few weeks in which rumours over its tax plans have dented business confidence. Reeves and Prime Minister Keir Starmer have been buoyed by a flood of commitments from international investors to inject cash into Britain at the investment summit.

Senior business figures including London Stock Exchange chief, Julia Hoggett, and the chief executives of Aviva and Legal & General welcomed the move to tear up the mandate of the two development banks today.

“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,” Hoggett said in a statement on the changes to the British Business Bank.

Amanda Blanc, CEO of Aviva, said the company “stands ready to invest even more to help boost growth, create jobs and deliver net zero”. 

“Today’s National Wealth Fund announcement is a significant step in the right direction,” Blanc added.