The chancellor, Rachel Reeves, is launching a £7.3bn national wealth fund (NWF), as part of a drive by the newly elected Labour government to attract billions of pounds of private sector cash for big infrastructure projects across the UK.
The NWF, which Reeves said would be established “in less than a week”, is designed to help projects such as ports, gigafactories, hydrogen and steel projects to attract a mix of investment, aiming for roughly £3 of private funds for every £1 of taxpayer cash.
Reeves said the fund would essentially operate as a “concierge service for investors and businesses that want to invest in Britain, so they know where to go”.
The investments will then be managed by the existing UK Infrastructure Bank, headed by the former HSBC chief executive John Flint, with support from a revamped British Business Bank, best known for running the Covid business loan schemes.
Reeves made the announcement at No 11 Downing Street on Tuesday, after meeting with City bosses who made up the specialised taskforce spearheading the project. Participants included Aviva’s chief executive, Amanda Blanc; NatWest’s chief executive, Paul Thwaite; the Barclays chief executive, CS Venkatakrishnan; and the former Bank of England governor Mark Carney.
Labour has been crafting the NWF for months, having appointed the taskforce in March to start thrashing out exactly how it would deliver what became a core manifesto pledge for the party in the run-up to last week’s election.
The chancellor insisted there would be a clear distinction between the NWF and GB Energy, another publicly owned company proposed by Labour. While GB Energy will focus on the “production of clean, low carbon energy”, investment made via the NWF will seek to deploy £1.8bn to ports, £1.5bn for gigafactories including for electric vehicles, £2.5bn to clean steel, £1bn for carbon capture and £500m to green hydrogen.
Reeves said the new government was in a prime position to attract investment, amid ongoing political uncertainty in other major western economies. That includes the US, where Donald Trump is due to challenge an under-fire Joe Biden in the November presidential elections, and France, where elections resulted in a hung parliament.
“I think for the first time in a long time investors will look at Britain and say it’s a country with a stable government. It’s got a clear plan, but clear mandate in the election. And that’s different from some other countries around the world today,” Reeves told journalists.
The NWF will soon be established formally in UK law, making it a “permanent institution at the heart of the country’s long-term growth and prosperity”, the Treasury said.
A formal head of the NWF is yet to be appointed, though the government said further details would be set out before an international investment summit to be hosted by the chancellor later this year.
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The announcement came after Jonathan Reynolds, the business and trade secretary, hosted a call on Tuesday morning with more than 170 senior leaders from businesses and trade associations around the UK.
He set out his four key priorities, according to a departmental source: delivering an industrial strategy, which will be the cornerstone of the government’s growth mission; supporting small businesses, described as the “beating heart” of high streets, communities and economy; resetting trade relations and championing British exports; and making work pay.
Reynolds told business leaders that decarbonisation did not mean deindustrialisation. He is aware that a key challenge for businesses is connectivity and the grid, and promised a cross-government focus on tackling this. Sarah Jones’s joint role with the Department for Energy Security and Net Zero, as minister for industry and decarbonisation, will be part of delivering on this agenda.
Business leaders asked about streamlining their engagement with Whitehall, opportunities to increase exports, and the importance of digitalisation. Reynolds promised to be “the most accessible” business secretary, with an email address coming shortly to “tell Jonathan”.