The Treasury has cut the budget for its National Wealth Fund, which will leverage private investment into the UK.
Yesterday, the chancellor, Rachel Reeves, announced that the UK Infrastructure Bank would be rebranded as the NWF and would help direct “tens of billions of pounds” of private investment into low-carbon projects.
However, the announcement confirmed the Treasury would allocate £5.8bn of new money to the fund – around a fifth lower than the £7.3bn pledged in the Labour Party's general election manifesto.
The UKIB rebrand marks a change of direction for the Treasury, which had said the UKIB and the British Business Bank would be “aligned” under the fund.
The Treasury had said it would “bring together key institutions” to “mobilise billions more in private investment”.
The decision to rebrand the UKIB, which is based in Leeds, follows a review chaired by former Bank of England governor Mark Carney, who said the wealth fund should be based inside an existing institution.
The new body will have a total budget of £27.8bn, including the £22bn already allocated to the UKIB.
The Treasury said the entirety of the £7.3bn originally allocated to the project will be spent on the NWF's priority areas – ports, gigafactories, clean steel, carbon capture and green hydrogen – but some of it through other means.
“We are simply making sure that the funding can best meet the needs of those sectors where the NWF’s might not be the best fit,” a Treasury spokesperson said, adding that further details will be published in next year's Spending Review.
In the foreword to a policy paper published yesterday, Reeves said the NWF will be a "cornerstone of this government’s strategy to catalyse investment into clean energy industries and to support the delivery of our new Industrial Strategy, building on the success of the UK Infrastructure Bank".
The fund will mobilise private sector capital into investments across the UK and "support the government in forging new partnerships with business so we can invest in the jobs, industries and infrastructure of the future", she said.
The fund will operate independently, "ensuring that investment decisions are driven by economic value and strategic impact, with governance structures designed to uphold transparency and accountability", she added.