London (Parliament News) – The chancellor, Rachel Reeves, is establishing a £7.3bn national wealth fund, as part of a campaign by the newly elected Labour government to draw billions of pounds of private sector cash for major infrastructure projects across the UK.
What is the Purpose of the £7.3bn National Wealth Fund?
The NWF, which Reeves stated would be formed “in less than a week”, is designed to help tasks such as ports, gigafactories, hydrogen and steel schemes attract a mix of investment, seeking roughly £3 of private funds for every £1 of taxpayer cash.
Who Will Oversee the National Wealth Fund Investments?
Reeves informed reporters that the fund would effectively operate as a “concierge service for investors and companies that want to invest in Britain, so they know where to go”. The investments will then be governed by the existing UK Infrastructure Bank, led by ex-HSBC chief executive John Flint, with backing from a revamped British Business Bank, best understood for running the Covid business loan schemes.
Reeves revealed No 11 Downing Street on Tuesday, after assembling with top City bosses who made up a specialised task force spearheading the scheme. Participants included the Aviva chief executive, Amanda Blanc; the NatWest chief executive, Paul Thwaite; the Barclays chief executive, CS Venkatakrishnan; and the former Bank of England governor Mark Carney.
Labour has been preparing the NWF for months, having established the task force back in March to start thrashing out precisely how it would deliver what became a core manifesto commitment for the party in the run-up to last week’s election.
How Does Labour Plan to Secure Private Sector Cash?
Reeves stated the new Labour government was in a prime standing to attract investment, amid ongoing political tension in other major Western economies. That includes the US, where Donald Trump is due to contest an under-fire Joe Biden in the November presidential polls, and France, where elections resulted in a hung assembly.
“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 a clear mandate in the election. And that’s different from some other countries around the world today,” Reeves informed journalists.
The NWF will soon be specified formally in UK law, making it a “permanent association at the heart of the country’s long-term development and prosperity”, the Treasury described. Further particulars will be set out before an international investment conference to be hosted by the chancellor later this year.
What Are the Key Priorities for Labour’s New Wealth Fund?
The statement came after Jonathan Reynolds, the new business and trade secretary, hosted a call with more than 170 senior executives from businesses and trade unions around the UK on Tuesday morning.
He outlines his four critical priorities, according to a departmental source: providing an industrial strategy, which will be the cornerstone of the government’s development mission; backing small businesses, defined as the “beating heart” of our high streets, communities and economy; resetting trade connections and supporting British exports; and compelling work pay.
Reynolds briefed business leaders that decarbonisation did not indicate deindustrialisation. He is aware that a fundamental challenge for companies is connectivity and the grid and pledged a cross-government priority on tackling this. Sarah Jones’s joint function with the Department for Energy Security and Net Zero, as minister for industry and decarbonisation, will be a component of delivering on this agenda.