Chancellor unveils £7.3bn National Prosperity Fund to boost private sector investment

Chancellor of the Exchequer Rachel Reeves has announced the creation of a £7.3 billion National Wealth Fund (NWF), a key step by the newly elected Labour government to boost private sector investment in key infrastructure projects across the UK.

The initiative, which aims to attract an estimated £3 of private funding for every £1 of taxpayers’ money, aims to boost sectors including ports, gigafactories, hydrogen and steel.

Reeves, speaking at No 11 Downing Street after convening a meeting of leading City figures, stressed the urgency of the initiative. “This new government is taking on the job of delivering growth,” Reeves said. “We need to go further and faster if we are to repair the foundations of our economy, rebuild Britain and make every part of our country better off.”

NWF will bring UK Infrastructure Bank and British Business Bank under one umbrella, streamlining investment and providing a coherent proposition to investors. UK Infrastructure Bank, led by former HSBC CEO John Flint, and British Business Bank, known for its strong support for SMEs, will play a key role in managing and deploying these funds.

Strategic cooperation and expert recommendations

The NWF Taskforce, chaired by the Green Finance Institute, includes distinguished figures such as former Bank of England Governor Mark Carney, Barclays CEO CS Venkatakrishnan and Aviva CEO Dame Amanda Blanc. Their collective expertise is expected to drive NWF’s success by ensuring that investments are strategically targeted to deliver maximum economic and environmental benefits.

Carney supported the initiative, stating that “wise use of public investment through the National Wealth Fund can spur economic growth and attract private capital to key sectors, including ports, heavy industry and manufacturing.”

Industrial strategy and green growth

Working with the NWF, the Labour government has underlined its commitment to becoming a world leader in clean energy. Energy Security and Net Zero Secretary Ed Miliband has highlighted the twin goals of increasing energy independence and tackling climate change.

“Our National Prosperity Fund will help create thousands of jobs in the clean energy of the future to increase our energy independence and tackle climate change,” Miliband said.

The government has earmarked specific funding under the NWF: £1.8bn for ports, £1.5bn for gigafactories, £2.5bn for clean steel, £1bn for carbon capture and £500m for green hydrogen projects. This diverse investment approach aims to provide robust support across a range of key sectors.

Industry Responses and Future Steps

Industry leaders welcomed the announcement. Louis Taylor, CEO of the British Business Bank, described the NWF as a strong endorsement of the Bank’s capabilities and track record. “We expect the National Wealth Fund to deliver a single, coherent government proposition for businesses and a compelling proposition for investors,” Taylor said.

Paul Hamalainen, director at Forvis Mazars, noted the importance of regulatory stability to complement the NWF. “Financial firms will need regulatory stability and certainty to be able to invest confidently over the long term,” Hamalainen noted.

The Chancellor also highlighted the importance of the NWF as a permanent fixture in the UK’s economic landscape, with plans to introduce it into law later this year. Further details, including the appointment of a formal NWF chief, are expected to be announced ahead of the international investment summit.

As the Labour government implements this ambitious plan, the focus will be on turning these strategic initiatives into tangible projects that will drive economic growth and sustainable development. The NWF is a significant step towards revitalising the UK’s infrastructure and making it a world leader in green and growth industries.