Chancellor Introduces £7 Billion National Wealth Fund to Encourage Green Investment
Some hope the fund will put an end to the cycle of de-industrialization and low investment, while others fear that industries like green steel are ‘hopelessly uneconomic.’
The chancellor has revealed plans for a new National Wealth Fund aimed at attracting billions of pounds in private sector investment in industries such as green steel and decarbonization.
The flagship project of the new Labour government has access to £7.3 billion in additional state funding to support the investment plan.
Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds announced on Wednesday that they have instructed officials to begin aligning the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund.
However, a former World Bank adviser has criticized the plans as “industrial subsidies, in this case, for green activities.”
National Wealth Fund Taskforce
Ms. Reeves met with a nine-person National Wealth Fund Taskforce at Number 11 Downing Street to launch the plans.
She stated that the government will initially focus investment on five industries: green steel, green hydrogen, industrial decarbonization, gigafactories, and ports.
The taskforce includes former Bank of England Governor Mark Carney, Barclays Chief Executive Officer CS Venkatakrishnan, and Aviva Chief Executive Amanda Blanc.
‘Taking Scarce Amounts of Public Money’
Mr. Carney mentioned that “this new government has rightly identified infrastructure investment as a core enabler of building high value, low carbon, competitive industries.”
A report he authored on the subject inspired Labour’s plans.
“The smart use of public investment via the national wealth fund can kick-start economic growth and crowd in private capital to vital sectors including ports, heavy industry and manufacturing.”
Mr. Carney explained, “What the report is doing is taking scarce amounts of public money and making sure they have the maximum impact in order to achieve the objectives of the country.”
He added: “They’re new types of battery factories for the auto sector. They’re taking carbon out of the atmosphere when we’re producing steel in the UK.”
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