UK urged to strengthen financial muscle of national wealth fund to aid economy

Unions, thinktanks, environmental groups and charities have come together to call on ministers to boost the financial firepower of the national wealth fund to empower it to invest more in Britain and rebalance the country’s economy.

Lower energy bills, the revitalisation of the UK’s industrial heartlands and the provision of more high-quality jobs could all be unlocked by scaling up the NWF, according to a statement from organisations including the TUC, Greenpeace, WWF and the New Economics Foundation.

The statement calls on the government to overhaul the NWF by turning it into a “world-leading national development bank capable of delivering the investment Britain needs”, while insisting this would be consistent with the government’s existing fiscal rules.

The NWF was launched in July 2024 by the then chancellor, Rachel Reeves, with the aim of attracting billions of pounds of private sector money for large infrastructure projects.

It was a manifesto promise and aimed to attract a mix of investment – roughly £3 of private funds sought for every £1 of taxpayer cash in schemes such as ports, gigafactories and hydrogen and steel projects.

The NWF is not a sovereign wealth fund, such as those owned by Norway and Saudi Arabia, which manage cash generated by the government through state-owned natural sources such as oil, and surpluses from international trade, bank reserves or privatisation projects.

Instead, it is designed to boost investment in key industries while giving investors the confidence to park money in the UK by showing the government is willing to share the financial risk of large infrastructure projects.

The call to expand its scope comes just before the Labour party gathers for its first conference since Andy Burnham became prime minister and as John Healey draws up his first budget as chancellor, scheduled for 28 October.

The group’s statement praises the “important role” played by the NWF in “steering private investment to support clean energy, modern infrastructure and regional growth – for example, through its £500m partnership with the Manchester Good Growth Fund”.

However, it calls on such public banks to do more, comparing the £5.5bn available for the NWF to invest each year for the next five years with the €62bn (£53.5bn) lent by Germany’s public investment bank KfW to households, businesses and municipalities in 2025 alone, almost 10 times higher.

The statement lays out several ways a scaled-up NWF could benefit Britain, including:

• Turbocharging the retrofitting of homes and buildings.

• Giving the public a bigger stake in critical infrastructure through taking part-ownership stakes in key projects.

• Launching a targeted investment programme to bring new green industries to communities hit hardest by deindustrialisation.

• Supporting a network of regional banks to funnel money into the small businesses that hold up local economies.

This would require the government giving the NWF independence to raise its own finances and invest over the long term, the group said, a practice followed by other public banks around the world.

The group said this move would be consistent with the government’s fiscal rules – where ministers match day-to-day spending with their income and only borrow to invest – and would combine “fiscal credibility with economic ambition, delivering visible investment”.

Burnham has said since entering Downing Street that he would look at “any flexibility” within the government’s existing fiscal rules to help borrow billions more to invest in infrastructure.

A Treasury spokesperson said the NWF had delivered £3.9bn of investments in its first year in projects such as Sizewell C and a second gigafactory in Sunderland, as well as boosting flood defences in Wales. They added that an additional £5.25bn had been generated in private finance, while 11,500 jobs had been secured and created.

The spokesperson said: “The government remains committed to the NWF’s long-term mission to crowd in private capital and drive economic growth into every postcode in the country.”