Work has begun to align the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund that will invest in the industries of the future.
Under the new government’s plans, the National Wealth Fund will bring together key institutions and offer a compelling proposition for investors. This will mobilise billions more in private investment and generate a return for taxpayers, the government says.
£7.3bn of additional funding will be allocated through the UK Infrastructure Bank (UKIB) so investments can start being made immediately, focusing on further priority sectors and catalysing private investment at an even greater scale. This funding is in addition to existing UKIB funding.
As part of the National Wealth Fund, reforms will be made to the British Business Bank – which is overseen by the Department for Business and Trade – to ensure it can mobilise the UK’s deep pools of institutional capital. This will be done by harnessing its pipeline of investments and track record as the UK’s largest investor in venture capital, with the aim of unlocking billions of pounds of investment in the UK’s green and growth industries.
When announcing the creation of the fund, UK Chancellor of the Exchequer, Rachel Reeves, said: “This new government is getting on with the job of delivering economic growth. I have been clear that there is no time to waste.
“I have previously committed to establishing a National Wealth Fund. I am now going further by bringing together key institutions. 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.”
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By GlobalData
In response to the Government’s announcement of the fund, ICAEW head of corporate finance, David Petrie, said that using state funds to support investment in new and growing green industries as the UK transitions to net zero was a laudable aim, and would help the UK’s international competitiveness.
However, he emphasised the importance of ensuring that the National Wealth Fund delivers value for taxpayers, stressing that the fund should be allocated exclusively to investments that bolster Britain’s international competitive advantage through the development of infrastructure and energy production.
Petrie said: “We’re concerned that institutions could use this funding to reduce their capital costs and mitigate risk, potentially crowding out private investment.”
