The Chancellor of the Exchequer, Rachel Reeves, has announced the creation of a £7.3 billion National Wealth Fund (NWF), a pivotal move by the newly elected Labour government to catalyse private sector investment in key infrastructure projects across the UK.
The initiative, designed to attract an estimated £3 of private funds for every £1 of taxpayer money, aims to invigorate sectors such as ports, gigafactories, hydrogen, and steel.
Reeves, speaking at No. 11 Downing Street after convening a meeting with leading City figures, emphasised the urgency of the initiative. “This new Government is getting on with the job of delivering economic growth,” Reeves declared. “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.”
The NWF will align the UK Infrastructure Bank and the British Business Bank under one umbrella, streamlining investments and presenting a cohesive proposition for investors. The UK Infrastructure Bank, led by former HSBC CEO John Flint, and the British Business Bank, known for its robust support for SMEs, will play crucial roles in managing and deploying these funds.
The NWF Taskforce, chaired by the Green Finance Institute, includes prominent figures such as former Bank of England Governor Mark Carney, Barclays CEO CS Venkatakrishnan, and Aviva CEO Dame Amanda Blanc. Their collective expertise is expected to drive the NWF’s success by ensuring that investments are strategically directed to yield maximum economic and environmental benefits.
Carney endorsed the initiative, stating, “The smart use of public investment via the National Wealth Fund can kick start economic growth and crowd in private capital to vital sectors including ports, heavy industry, and manufacturing.”
In conjunction with the NWF, the Labour government has emphasized its commitment to becoming a global leader in clean energy. Energy Security and Net Zero Secretary Ed Miliband highlighted the dual goals of boosting energy independence and tackling climate change.
“Our National Wealth Fund will help create thousands of jobs in the clean energy industries of the future to boost our energy independence and tackle climate change,” Miliband said.
The government has earmarked specific allocations within the NWF: £1.8 billion for ports, £1.5 billion for gigafactories, £2.5 billion for clean steel, £1 billion for carbon capture, and £500 million for green hydrogen projects. This diversified investment approach aims to ensure robust support across various critical sectors.
Industry leaders have broadly welcomed the announcement. Louis Taylor, CEO of the British Business Bank, described the NWF as a strong endorsement of the Bank’s capabilities and track record. “We expect the National Wealth Fund to create a single coherent governmental offer for businesses and a compelling proposition for investors,” Taylor said.
Paul Hamalainen, Director at Forvis Mazars, noted the importance of regulatory stability to complement the NWF. “Financial firms will need regulatory stability and certainty so they can invest confidently for the long-term,” Hamalainen remarked.
The Chancellor also underscored the importance of the NWF as a permanent fixture in the UK’s economic landscape, with plans to enshrine it in law later this year. Further details, including the appointment of a formal head of the NWF, are expected to be revealed ahead of an international investment summit.
As the Labour government sets this ambitious plan into motion, the focus will be on converting these strategic initiatives into tangible projects that foster economic growth and sustainability. The NWF represents a significant step towards revitalizing the UK’s infrastructure and positioning it as a global leader in green and growth industries.
