The new Labour government has launched a GBP7.3 billion National Wealth Fund which will target private capital to support the UK’s growth ambitions.
Pension funds will be major investors in the fund which government says brings together key institutions to mobilise billions more in private investment – specifically in the net zero transition – and generate a return for taxpayers.
The wealth fund aligns the UK Infrastructure Bank and the British Business Bank to invest in what Chancellor Rachel Reeves calls “the new industries of the future”.
Reeves has established a National Wealth Fund Taskforce which is chaired by the Green Finance Institute and includes former Bank of England Governor Mark Carney, Barclays CEO C.S Venkatakrishnan, António Simões, Chief Executive Officer at Legal & General and Aviva CEO Dame Amanda Blanc.
Blanc says: “At Aviva we are backing the UK and stand ready to invest even more to help boost growth, create jobs and deliver net zero. We need closer working between government and business to make that happen. The establishment of a new National Wealth Fund is a significant step in the right direction. We now must work at pace to turn these good ideas into investable projects which can make a difference.”
The National Wealth Fund follows speculation from the investment industry about how policymakers would encourage more investment from UK pension funds in domestic companies.
Among those welcoming the provision of a multi-billion-pound vehicle in which those saving for their retirement can make allocations to assets with long-term horizons, is Nigel Peaple, Director of Policy and Advocacy at the Pension and Lifetime Savings Association, who says:“In examining the role pensions might play in providing additional investment in UK growth assets, the PLSA recommended last year that the government take steps, alongside the British Business Bank, to improve the pipeline of investible assets available to pension funds.”
He adds: “We welcome the government acting decisively to set out plans for a National Wealth Fund for this purpose and look forward to working in partnership to help develop solutions that work for savers, pension funds and the economy.”
Meanwhile, the Investment Association (IA), whose members manage GBP8.8 trillion of assets in the UK, has written to Chancellor Reeves to outline how the sector can support the new government in its ambition to kickstart the nation’s growth.
Chris Cummings, CEO of the IA, says: “We strongly support the new government’s ambition to drive economic growth and build financial resilience of households up and down the country. We must act to channel more capital into thriving British businesses and infrastructure projects.”
However, Cummings adds a word of caution, noting: “We must find the right balance between risk and safety across the system, and between necessary change and the stability needed for long-term decision making.”
