Britain's new Labour government has scrapped plans to merge the U.K. Infrastructure Bank and British Business Bank, instead unveiling a revamped version of the two firms to boost investment in green industries and startups.
Under plans announced at the International Investment Summit in London on Oct. 14, the UKIB will be rebranded the National Wealth Fund, with a focus on climate, and the BBB will remain a separate entity financing innovative young companies. Both will have abilities to deploy money from private investors.
The decision not to create a single integrated body was taken three months after the government said it would “bring together key institutions” to “mobilize billions more in private investment.” The announcement was part of a broader pitch that Britain is open for business as the government unveiled billions of pounds in investment commitments from corporations and asset managers.
Labour has previously pledged £7.3 billion ($9.6 billion) in public funds for the NWF, which will be combined with UKIB’s existing resources to take available funding to £27.8 billion, including £10 billion in noncash guarantees.
The British Business Bank will be given greater independence to raise money from pension funds for early stage investment under a new British Growth Partnership program. The BBB, which does not have a balance sheet of its own, has £7.9 billion in commercial programs.
“The decisions which lie ahead of us will not always be easy,” Chancellor of the Exchequer Rachel Reeves said in a statement. “But by taking the right choices to grow our economy and drive investment, we will create good jobs and new opportunities across every part of the country.”
Reeves had originally hoped to combine the UKIB and BBB into a single entity that offered all kinds of financing, from co-investment to guarantees. Bringing the institutions together would have been time consuming and potentially delay investment plans.
Kate Bingham, managing partner of SV Health Investors and the former chair of the U.K. Vaccine Taskforce during the pandemic, said the overhaul of the BBB “enables the bank to catalyze institutional investment, including from pension funds, into brilliant U.K. companies.”