Chancellor launches £7.3bn National Wealth Fund

The government has officially launched its new National Wealth Fund.

The move sees officials begin work to align the existing UK Infrastructure Bank (UKIB) and the British Business Bank just a day after Rachel Reeves announced plans for the fund in her first speech as chancellor.

£7.3 billion of additional funding will be allocated for the fund through the UKIB so that investments can be made immediately.

The chancellor also announced reforms for the British Business Bank, which is currently overseen by the Department for Business and Trade.

The government says that these reforms will help to mobilise the UK's institutional capital by "harnessing its pipeline of investments".

Reeves and Ed Miliband, who is the country's new energy security and net zero secretary, joined a meeting with the National Wealth Fund Taskforce on Tuesday as part of the launch.

Chaired by the Green Finance Institute, the Taskforce includes former Bank of England governor Mark Carney; Barclays chief executive C.S Venkatakrishnan; and Aviva chief executive Dame Amanda Blanc, as well as large institutional investors.

Miliband put forward a particular focus on green investments, with the energy secretary saying that the Fund would help drive the government's mission to make the UK a "clean energy superpower".

He went on to say that the Fund would help create thousands of jobs in clean energy industries and help to tackle climate change.

The Taskforce also announced its ambition to allow for the review and potential simplification for existing development institutions.

Taskforce member Barclays' Venkatakrishnan welcomed this proposal in particular, saying that a move like this could make it easier for the bank's corporate and business clients to access the partnership finance necessary to get infrastructure and other net zero projects off the ground.

The Investment Association, which represents 250 investment management firms in the UK, also praised the proposal and described the National Wealth Fund as a "clear signal" that the government intends to mobilise the "much needed" capital for green investment.

"There is also significant merit to the National Wealth Fund Taskforce’s recommendation to review and simplify the landscape of UK development investment organisations to ensure that they can deliver effectively on their shared missions," said Chris Cummings, chief executive, Investment Association. "Industry and government collaboration will be critical to achieving this, and is something we strongly endorse.”

Naureen Zahid, director of investor relations at early-stage venture capital investor OpenOcean, said that it was reassuring that the government has resolved any confusion between the UKIB and the National Wealth Fund.

Earlier this week, Zahid expressed concerns about a "striking similarity" between the two structures.

But the director said that it is essential that Labour provides clear differentiation and streamlined operations to avoid "bureaucratic redundancies" that could hamper the fund’s effectiveness.

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