Source · Select Committees · Treasury Committee
Recommendation 4
4
Accepted
National Wealth Fund's name is misleading; its limited size may hinder strategic economic impact.
Conclusion
The NWF is not a conventional sovereign wealth fund that invests wealth generated from natural resources to benefit future generations. Therefore its name, the National Wealth Fund, could be misleading. The NWF is financed by the Government from taxation and borrowing, which means that its investments are likely to attract public, political and media scrutiny and that the Government may face pressure to privatise it. Despite those challenges, the success of the NWF’s forerunner, the Green Investment Bank, in stimulating the offshore wind market while generating returns provides 20 a reason for cautious optimism that the NWF will deliver its investment priorities in relation to clean energy. However, the current NWF’s size could limit its strategic impact on economic growth. (Conclusion, Paragraph 31)
Government Response Summary
The government explains how the NWF already aligns its investments with government strategies and focuses on priority sectors, aiming for a triple bottom line. It also notes the NWF's Strategic Plan will detail its focus and mentions initiatives to leverage pension capital and other investment.
Government Response
Accepted
HM Government
Accepted
The government agrees the NWF should align its investments with government strategies to ensure it can most effectively deliver on its mandate. As set out in the Statement of Strategic Priorities, the NWF must deliver against a triple bottom line, ensuring every investment helps deliver government policy, alongside a financial return and additionality. HM Treasury works closely with the NWF and departments on a day-to-day basis to integrate finance into the policy development process. The NWF supports the Industrial and Infrastructure Strategies, with a focus on sectors where access to finance is a key barrier to growth. It prioritises the Industrial Strategy sectors of clean energy, digital and technologies and advanced manufacturing—alongside transport—and considers investment in dual-use technologies and supply chain resilience across these to bolster the UK’s defence and security. These priority sectors support the government’s growth and clean energy missions and the NWF has been identified as a key lever to mobilise private capital into them so they can meet their full potential. The NWF also considers projects that support the delivery of the wider Industrial and Infrastructure Strategies, as referenced in the Statement of Strategic Priorities. In accordance with the Industrial Strategy’s place- based approach, it invests in city regions and high potential clusters to drive productivity on a regional and national level and create high quality jobs across the country. The NWF retains the flexibility to invest in projects beyond these sectors where financing gaps exist to ensure it can respond swiftly to emerging government priorities and changing market conditions. In line with the Pensions Investment Review, the NWF will work collaboratively with the Local Government Pension Scheme and defined contribution pension schemes to increase investment in a wider range of strategically significant UK assets, including infrastructure. The NWF’s Strategic Plan will set out more details on how and where it will focus activity to deliver on the government’s ambitions. Complementing this activity, the BBB is crowding-in pension capital into UK venture capital (VC) and innovative companies through its new investment vehicle, the British Growth Partnership (BGP). The BGP has commitments from Aegon UK, NatWest Cushon and M&G, and is targeting a £200 million first close by the end of the financial year. At Budget 2025, the government announced Venture Link, a new service where the Bank will publish information about their VC investments to support pension funds to understand and invest in this asset class.