Labour’s National Wealth Fund slammed for ‘completely misleading’ rebrand
The government has been accused of “gaslighting the British public” over its National Wealth Fund as the Treasury committee announced on Monday it had launched an inquiry into the new body.
Originally a fixture of Labour’s 2024 manifesto – the National Wealth Fund was to consolidate the British Business Bank and the UK Infrastructure Bank, which launched under Rishi Sunak’s Chancellorship in 2021.
However in October, Rachel Reeves announced the UK Infrastructure Bank (UKIB) would “become” the National Wealth Fund (NWF).
Shadow Financial Secretary Gareth Davies told City AM the transformation was “completely misleading” and “didn’t need to happen”.
Davies, who worked closely with the UKIB during his tenure as Exchequer Secretary at the Treasury, supported the initial proposal of one consolidated institution, but has since criticised the Treasury for changing course.
He blasted: “The UKIB didn’t need a rebrand just to satisfy the need for Labour to say they’ve done something.”
The UK Infrastructure Bank’s executive summary in 2022 outlined its five key sectors of investment as clean energy, transport, digital, water and waste.
In the Chancellor’s strategic steer published on March 19, the priority sectors for the National Wealth fund were listed as clean energy, digital and technologies, advanced manufacturing and transport.
Additionally, the third and fourth principle of each institution focused on “positive financial returns” and “crowding in significant private capital”.
Davies said: “We’ve come to the conclusion that it’s not a National Wealth Fund or a sovereign wealth fund, it is a bank – a UK Infrastructure Bank.”
‘It is a complete and utter waste’
Figures obtained under a Freedom of Information Request by City AM reveal the rebrand of the UKIB cost £87,212.
The National Wealth Fund said £5,500 of the costs came from ‘re-branding’ which included the design of a new logo, updating brand guidelines to reflect the logo and the creation of a new digital suite.
The changes to IT infrastructure, including changing domain names, contributed to a lump of the fees, totalling £68,000.
The location of the National Wealth Fund’s headquarters remains in Leeds in the same space originally used by the UKIB, with £1,632 listed for new signage.
Labour pledged an additional £5.8bn to the £22bn inherited from the UKIB, which Davies questioned amidst the backdrop of the ‘£22bn blackhole’.
“It is a complete and utter waste when you say you need every penny.
“And it is a missed opportunity to enhance the good work of the UKIB with an enhanced mandate and bringing in the British Business Bank.”
Treasury Committee: Can NWF ‘drive meaningful growth?’
This fresh row comes as the Treasury Committee announced on Monday that it had launched an inquiry into the National Wealth Fund.
The committee said it aimed “to understand whether it has the tools and backing to drive meaningful growth in the UK economy.”
Dame Meg Hillier, Chair of the Committee, said: “A sovereign wealth fund which can encourage private investors to back projects and funnel capital into emerging sectors is a logical way of trying to move the dial on economic growth.
“However, if the National Wealth Fund veers off course by choosing the wrong sectors for investment, making operational errors or misjudging the appetite of the private sector, it can also end up being an extremely poor use of taxpayer money at a time when the public purse is incredibly stretched.
“We must get this right and our committee will be pressing the government to make sure they are on firm footing.”
The terms of reference the committee will be observing include the distinctions between the National Wealth Fund and the UKIB and what lessons the new institution can learn from its predecessor.
A spokesperson for the Treasury told City AM they “rejected” the characterisation of the National Wealth Fund as “misleading”.
“The National Wealth Fund is the UK’s new flagship public investor that is unlocking over £70bn in private investment to kickstart economic growth across the country.
“Building on the strengths of the UK Infrastructure Bank, it more flexibly deploys its support beyond infrastructure projects, investing in sectors of national importance like clean energy and defence, and takes on more risk to boost projects with an undersupply of private finance.”
The Treasury cited key differences between the two institutions as the National Wealth Fund’s higher risk appetite, after increasing economic capital limit from £4.5bn to £7bn and its investment beyond infrastructure into areas of “national importance”.
It added secondary legislation had been brought forward to introduce performance guarantees, which would include protection against risks like performance of construction companies on infrastructure.
A spokesperson for the National Wealth Fund told City AM: “We welcome the Chancellor’s recent strategic steer which clearly sets out the changes that have been made to our organisation.
“This includes the scope to move beyond infrastructure to support the industrial strategy, and increasing our capacity for risk, all while crowding in private capital to drive growth and the clean energy transition.”