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National Wealth Fund (United Kingdom)

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National Wealth Fund
FormerlyUK Infrastructure Bank (2020-2024)
Company typeSovereign Wealth Fund
IndustryFinancial services
FoundedJune 2021
HeadquartersLeeds, England, UK
Area served
United Kingdom
Key people
AUM£27.8 billion (October 2024)
OwnerGovernment of the United Kingdom
Websiteuknwf.org.uk

The National Wealth Fund (NWF), formerly the UK Infrastructure Bank, is the sovereign wealth fund of the United Kingdom. The fund is publicly owned with its sole shareholder being the Treasury Solicitor in the capacity of HM Treasury. The goal of the fund is to invest alongside the private sector in projects within the United Kingdom. The bank has a total capitalisation of £27.8 billion. The fund is a "strategic" sovereign wealth fund, targetting non-financial objectives such as development goals.[1] However, the fund's classification as a sovereign wealth fund is contentious.[2][3][4][5]

History

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2020–2024: UK Infrastructure Bank

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Chancellor Rishi Sunak visits the UK Infrastructure Bank in Leeds
The UK Infrastructure Bank logo

Following the United Kingdom’s decision to leave the European Union, access to financing from the European Investment Bank (EIB) was expected to be lost. In July 2018, the National Infrastructure Commission, recommended that if access to EIB financing was lost, “a new, operationally independent, UK infrastructure finance institution should be established by 2021.”[6]

Under the premiership of Boris Johnson, infrastructure emerged as a central focus of government policy. According to Anthony Seldon, “Johnson’s vision to transform Britain’s infrastructure was one of his animating spirits.”[7] An infrastructure bank would become part of the government's levelling-up policy.[8] The government also saw the bank as a way to enhance the quality of infrastructure projects undertaken by local government, and was intended increase the scrutiny of their investment proposals.[6] Additionally, the bank was intended to help with the government's legal obligation to reach net-zero carbon by 2050.[9][10]

In November 2020, Chancellor Rishi Sunak presented a spending review to parliament. The review specified the creation of a new national infrastructure bank in the north of England. The bank would invest in infrastructure alongside private investment.[11][12] The bank would be given two strategic objectives. Firstly, to help tackle climate change. Secondly, to support economic growth.[6][13]

Four months later, Chancellor Rishi Sunak presented the March 2021 budget to Parliament. The budget included further plans for the bank. The bank would be headquarted in Leeds, to support local growth and to help close the north–south divide. The new UK Infrastructure Bank was given initial capital amounting to £12bn, and was able to offer up to £10bn of government guarantees, with its final capacity being £22bn.[14][15][16] In June 2021, the Leeds headquarters were opened, and in September, John Flint was appointed to be the first CEO.[8][17]

In May 2022, the UK Infrastructure Bank Act was introduced to parliament. The bill intended to address concerns that the bank could be later sold off, like the Green Investment Group.[18] The UK Infrastructure Bank Act stipulates that the bank must publicly publish annual reports, and present them to parliament.[19] The UK Infrastructure Bank Act received royal assent in 2023.[19][20] In January of that year, a Public Accounts Committee released a report analysing the bank's performance after its first 18 months in operation. The report concluded that while the UK Infrastructure Bank had made initial progress in deploying capital and piloting advisory functions, it faced significant challenges in recruitment, governance, and operational independence.[21][22]

2024: National Wealth Fund

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The National Wealth Fund Taskforce convenes

In September 2022, during a Labour Party conference, Shadow Chancellor Rachel Reeves introduced plans for a National Wealth Fund.[23][24] The "National Wealth Fund Taskforce" was created to provide recommendations for the funds development.[25]

Ahead of the July 2024 election, the Labour Party had pledged to launch a National Wealth Fund as part of their election manifesto.[26][27] After winning the election, Chancellor Rachel Reeves announced plans to align the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund. The new fund would receive £7.3bn in funding.[28][29] Shortly after, the National Wealth Fund Taskforce published their recommendations. One of the main recommendations was that the fund should be based inside an existing institution, such as the UK Infrastructure Bank.[25]

In October 2024, the UK Infrastructure Bank became the National Wealth Fund. The mandate of the fund was expanded beyond infrastructure to include a wider industrial strategy.[30][31] The fund was advised to work 'in close partnership' with the British Business Bank. The fund received a scaled back cash injection of £5.8bn. This was £1.5bn less than the £7.3bn initially planned.[32][33]

See also

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References

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  1. ^ Nangle, Toby (2024-09-10). "Britain is building a new sovereign wealth fund — what can it learn from the others?". Financial Times. Retrieved 2024-10-27.
  2. ^ "Does Britain need a National Wealth Fund?". The Economist. 2024-07-14. Archived from the original on 2024-07-14. Retrieved 2024-10-27.
  3. ^ Worstall, Tim (2024-07-10). "Why the National Wealth Fund won't pay off". CapX. Retrieved 2024-10-27.
  4. ^ Pratley, Nils (2024-06-19). "Advice to Rachel Reeves: rename the national wealth fund". The Guardian. ISSN 0261-3077. Retrieved 2024-10-27.
  5. ^ Lim, Guanie; Li, Chen; Aweke, Wellington N. K. (2024-09-01). "The UK's New Sovereign Wealth Fund: Some Preliminary Observations". GRIPS Discussion Papers.
  6. ^ a b c "The Creation of the UK Infrastructure Bank - NAO report". National Audit Office (NAO). 2022-07-01. Retrieved 2024-10-28.
  7. ^ Seldon, Anthony (2023). Johnson at 10 (1st ed.). United Kingdom: Atlantic Books (published 2023-05-04). p. 110. ISBN 978-1838958022.
  8. ^ a b "Former HSBC boss John Flint to run new UK infrastructure bank". www.ft.com. Archived from the original on 2021-09-01. Retrieved 2024-10-27.
  9. ^ Harvey, Fiona (2021-03-05). "New infrastructure bank won't help UK reach net zero, says Labour". The Guardian. ISSN 0261-3077. Retrieved 2024-10-27.
  10. ^ Nelson, Eshe (2023-08-10). "In Global Race to Offer Green Subsidies, U.K. Prefers Slow and Steady". The New York Times. Archived from the original on 2023-10-31.
  11. ^ Ambrose, Jillian (2020-11-25). "Rishi Sunak sets out £100bn investment in infrastructure". The Guardian. ISSN 0261-3077. Retrieved 2024-10-27.
  12. ^ Ashcroft, Michael (2023-09-19). All to Play For: The Advance of Rishi Sunak (1st ed.). Biteback Publishing. p. 223. ISBN 978-1785907968.{{cite book}}: CS1 maint: date and year (link)
  13. ^ "UK Infrastructure Bank Framework Document". www.gov.uk. 3 March 2021. Retrieved 31 January 2022.
  14. ^ "Policy Design of the UK Infrastructure Bank". GOV.UK. Retrieved 2024-10-28.
  15. ^ "Budget 2021: UK Infrastructure Bank to be based in Leeds". BBC News. 2021-03-03. Retrieved 2024-10-27.
  16. ^ "UK's first infrastructure bank to boost climate goal investment". www.ft.com. Archived from the original on 2022-04-07. Retrieved 2024-10-28.
  17. ^ "Leeds' new UK Infrastructure Bank opened by chancellor". BBC News. 2021-06-17. Retrieved 2024-10-27.
  18. ^ Plimmer, Gill. "UK Infrastructure Bank criticised for investing in third party funds". www.ft.com. Archived from the original on 2022-06-23. Retrieved 2024-10-28.
  19. ^ a b "UK Infrastructure Bank Act 2023".
  20. ^ "The UK Infrastructure Bank Act 2023 has been passed by Parliament". JD Supra. Retrieved 2024-10-28.
  21. ^ Plimmer, Gill (2023-01-25). "UK infrastructure bank criticised for misdirecting project funding". www.ft.com. Archived from the original on 2023-09-25. Retrieved 2024-10-28.
  22. ^ "The Creation of the UK Infrastructure Bank". 2023-01-25.
  23. ^ "Labour conference: Rachel Reeves pledges to spend top rate tax on more nurses". BBC News. 2022-09-26. Retrieved 2024-10-28.
  24. ^ Saber, Ali (2024-01-09). "Sovereign wealth funds in a post-pandemic landscape: a UK perspective". University of Sussex: 225 – via ResearchGate.
  25. ^ a b "A closer look at the government's £7.3bn national wealth fund". www.ftadviser.com. Retrieved 2024-10-27.
  26. ^ Makortoff, Kalyeena (2024-07-09). "What is the national wealth fund and what will it invest in?". The Guardian. ISSN 0261-3077. Retrieved 2024-10-27.
  27. ^ Starmer, Keir (2024-06-22). "Economic growth is the only solution to Britain's problems – and we will deliver it". The Telegraph. ISSN 0307-1235. Retrieved 2024-10-28.
  28. ^ "Boost for new National Wealth Fund to unlock private investment". GOV.UK. Retrieved 2024-10-27.
  29. ^ "New £7bn National Wealth Fund to start green investment 'immediately'". www.ft.com. 2024-07-09. Archived from the original on 2024-07-10. Retrieved 2024-10-28.
  30. ^ Nolsøe, Eir; Price, Chris; Wallace, Tim; Jasper, Christopher (2024-10-14). "Chancellor shrinks public funding pot for Britain's new National Wealth Fund". The Telegraph. ISSN 0307-1235. Retrieved 2024-10-27.
  31. ^ "Reeves pledges end of instability as she announces new National Wealth Fund". The Independent. 2024-10-14. Retrieved 2024-10-27.
  32. ^ "National Wealth Fund: Mobilising Private Investment". GOV.UK. Retrieved 2024-10-27.
  33. ^ "Rachel Reeves cuts National Wealth Fund budget despite UK investment drive". www.ft.com. Archived from the original on 2024-10-14. Retrieved 2024-10-27.
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