10 July 2024

The UK Government has unveiled plans to align major financial institutions under a new National Wealth Fund aimed at stimulating economic growth and unlocking private investment.

This initiative, spearheaded by Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds, will integrate the UK Infrastructure Bank and the British Business Bank to invest in emerging industries.

Chancellor Reeves and Energy Security and Net Zero Secretary Ed Miliband have initiated the National Wealth Fund Taskforce. Chaired by the Green Finance Institute, the task force includes prominent figures such as former Bank of England Governor Mark Carney, Barclays CEO C.S. Venkatakrishnan, Aviva CEO Dame Amanda Blanc, and other leading institutional investors.

Chancellor Rachel Reeves emphasised the urgency of economic growth: “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.

“That is why in less than a week we are establishing a new National Wealth Fund and 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.”

Mobilising private investment
The National Wealth Fund aims to present an attractive investment opportunity that will mobilise billions in private capital while generating returns for taxpayers. An additional £7.3 billion will be funnelled through the UK Infrastructure Bank to begin immediate investments in priority sectors, complementing existing funding.

Reforms to the British Business Bank, overseen by the Department for Business and Trade, will enable it to better leverage the UK’s substantial institutional capital. This is expected to unlock significant investments in the country’s green and growth industries.

Accelerating decarbonisation
“Our Mission to make Britain a clean energy superpower is about investing in Britain,” explained Energy Security and Net Zero Secretary Ed Miliband. 

“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.

We’re acting immediately, wasting no time and working in lock-step with industry to unleash private investment and grow our economy.”

Mark Carney, former Bank of England Governor, praised the initiative: “The smart use of public investment through the National Wealth Fund can ignite economic growth and attract private capital to key sectors like ports, heavy industry, and manufacturing.”

Other business leaders, including Aviva, Legal & General, NatWest Group, and organisation Just Climate, echoed support for the National Wealth Fund, recognising its potential to drive the green economy, create jobs, and support regional growth.

Paul Thwaite, CEO of NatWest Group, highlighted the importance of the Government working with industry and businesses to achieve net zero goals: “The National Wealth Fund has the potential to accelerate the transition and address some of the fundamental barriers that have existed to date,” Thwaite said. 

“As the UK’s leading bank for business, we will … ensure it delivers on its objectives to drive the green economy whilst also supporting communities, businesses and industry across the regions and nations of the UK.”

Immediate action and legislative plans
Recognising this, the Chancellor has directed the Treasury to collaborate with industry and public finance institutions to implement detailed plans for the fund. Legislation will be introduced to establish the National Wealth Fund as a permanent fixture in the UK’s economic strategy.

The National Wealth Fund will work with local partners to support tailored financial and investment needs. On 9 July, the Prime Minister and Deputy Prime Minister met all regional mayors at 10 Downing Street, to ‘reset’ the relationship between central and local government, and discuss unlocking growth across the UK.

What’s next?
Further details will be revealed ahead of the Government’s international investment summit later this year, with the National Wealth Fund poised to play a central role in driving long-term economic prosperity across the nation.