National Wealth Fund

Monday 14th October 2024 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

This Government have been clear: our No. 1 mission is driving economic growth to improve the lives of the British people. To grow our economy, we need more high-quality, long-term investment. This means creating a new partnership with businesses and making sure Britain is the best place in the world to invest.

The Government are today creating the national wealth fund, the UK’s new impact investor, that will mobilise billions of pounds of investment in the UK’s world-leading clean energy and growth industries, taking forward the recommendations of the NWF taskforce.

To mobilise private investment at pace, the Government are turbocharging the UK Infrastructure Bank to become more catalytic and from today it will operate as the “national wealth fund”.

As the UK’s impact investor, the NWF will have a broader mandate, extending beyond infrastructure to support delivery of the wider industrial strategy in areas where an undersupply in private finance exists, working alongside the British Business Bank. A revised mandate and future priorities will be set following legislation, planned to be brought forward later this Session.

Building on UKIB’s leadership and expertise, the NWF will go further to catalyse more private investment.

The NWF will be empowered to make investments that maximise the mobilisation of private investment with an expansion of UKIB’s offer, including an expanded suite of financial instruments such as performance guarantees and trialling new blended finance solutions, with Government Departments, that take on additional risk to facilitate higher impact in individual deals.

The NWF will have a total capitalisation of £27.8 billion to catalyse investment that would not have otherwise taken place. It will inherit UKIB’s existing capitalisation and have an additional £5.8 billion, which will be committed over this Parliament. The Government previously announced that £7.3 billion additional funding would be allocated through the NWF—the remaining £1.5 billion has been reserved to maintain flexibility in how the Government can best deliver against our aims for the NWF. At least £5.8 billion of the NWF’s capital will focus on the five sectors announced in the manifesto: green hydrogen, carbon capture, ports, gigafactories, and green steel.

The NWF will have a larger amount of economic risk capital to free it from previous constraints. This will be used to direct the NWF’s investments towards having greater economic impact by taking risk in service of the Government’s industrial strategy, clean energy mission and growth mission.

The NWF will adopt a proactive approach, with increased resources and focus on conducting more outreach to identify expanded project pipelines and structure innovative transactions with project sponsors, industry, local authorities and Government Departments.

The NWF will have a strong regional mandate to unleash the full potential of our cities and regions to be reflected in its statement of strategic priorities and how it measures success. It will work in close partnership with Mayors to support investable propositions in their local growth plans, devolved Governments, and other local leaders to support their investment plans and priority sectoral clusters across the UK.

Finally, the NWF will review its range of success measures to demonstrate the impact of its additional capital and realising of investment, impact and outcomes across the economy.

Together, these changes will ensure that the NWF can catalyse additional investment and address the key barriers identified by the taskforce. This will result in the delivery of impactful projects that otherwise would not have happened, unlocking growth opportunities across the UK.

British Business Bank

Alongside this, the Chancellor, together with the Secretary of State for Business and Trade, announced that the Government are strengthening the British Business Bank’s ability to support the UK’s fastest growing, most innovative companies by establishing the British growth partnership.

The British growth partnership is a new, pathfinder approach to the partnership between the British Business Bank and institutional investors that will further the Government’s goal, as set out in the pensions investment review, of encouraging more UK pension fund investment into UK growth assets.

Additionally, we will implement a set of reforms to the British Business Bank’s financial framework that will increase its impact and increase its ability to respond flexibly to the market, including by putting the British Business Bank’s £7.9 billion set of commercial programmes on a permanent footing.

The British Business Bank, the UK’s largest domestic venture capital investor, will launch this new fund, the British growth partnership, to attract pension and institutional investment into venture capital and innovative businesses. These long-term investments will be made independently of Government on a fully commercial basis, leveraging the British Business Bank’s market expertise. The British Business Bank will in the coming months seek to raise hundreds of millions of pounds of investment for this model, supported by a cornerstone Government investment, with the aim of making investments by the end of 2025.

In parallel, the Government can announce that we expect both successful bidders of the Long-term Investment for Technology and Science competition, Schroders and ICG, to begin making investments via their new funds in late 2024, supported by pensions capital from Phoenix Group, with the aim of generating over a billion pounds of investment into UK science and technology companies.

Through LIFTS and the British growth partnership, the Government are acting to make the investment of UK institutional capital into high-growth companies easier. This is set to unlock greater wealth for future pensioners and higher growth in the economy.

[HCWS130]