The UK government is moving forward with plans to unlock investment opportunities for the country’s businesses. The payments and fintech sectors could benefit from these schemes, should the initiatives prove successful.
Rachel Reeves, the Labour government’s Chancellor of the Exchequer, announced the creation of the National Wealth Fund (NWF) and British Growth Partnership at the International Investment Summit.
The creation of these two entities is part of the government’s plan to unlock private pension fund investments as a means of generating growth. So far, clean energy and ‘growth industries’ have been highlighted as the main targets for investment.
However, the wider financial services and payments sector can still play its part. The NWF, for example, has set a goal of trailing with the NWF aiming to trial new blended finance solutions with government departments.
“When we said we would end instability, make growth our national mission and enter a true partnership with business we meant it,” Reeves remarked.
“The decisions which lie ahead of us will not always be easy. 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. That is the Britain we are building.”
The NWF will be headquartered in Leeds, operated by the UK Infrastructure Bank (UKIB), and totals £27.8bn. The fund will be tasked with leveraging private investment to support UK business growth projects and working with what the Treasury calls ‘key industry partners’.
Mayors have been noted as industry partners the fund will work with – potentially unlocking investment opportunities for regional fintech scenes in cities like Manchester and Edinburgh. Payments and finance stakeholders may find themselves working with the NWF as ‘key industry partners’ further down the line.
“It is a huge privilege to be entrusted with the responsibility of leading the National Wealth Fund,” said John Flint, CEO of the National Wealth Fund.
“Building on the strong foundations we have laid as UKIB, we will hit the ground running, using sector insight and investment expertise that the market knows and trusts to unlock billions of pounds of private finance for projects across the UK.
“With additional capital to deploy against a bigger mandate, we stand ready to help the market invest with confidence, in support of the Government’s growth ambitions.”
The Growth Partnership, meanwhile, will sit under the remit of the British Business Bank (BBB). The government wants the initiative to create new ways for the BBB and other institutional investors to direct funding to innovative companies.
Supporting a British success story?
Labour plans for long-term investments to be made independently of the government on a commercial basis. The BBB has set a goal of making investments by the end of 2025, supported by the raising of hundreds of millions of pounds in investment for the fund over the coming months.
Unlocking investment opportunities is often critical for fintech and payments companies to find success. Many secure this investment by partnering with, or even being fully acquired by, prominent retail and high-street banks – some banks such as NatWest have outlined to Payment Expert on prior occasions that they actively seek to work with fintechs.
Securing cash through funding rounds is of course also a common practice, however. Clinching these funds is often critical in the startup stage. The government may hope that the reforms it has announced this week will help achieve its goal of seeing continued growth in the UK financial service sector, something it has labelled a British success story.
Louis Taylor, CEO of the British Business Bank, said: “Today’s announcement is a strong endorsement of the British Business Bank’s 10-year track record, market access and capabilities.
“By establishing the British Growth Partnership, the Bank will encourage more UK pension fund investment into the UK’s fastest growing, most innovative companies.
“In addition, reforms to the Bank’s financial framework, putting our £7.9bn commercial programmes on a permanent footing, means we can flexibly re-invest our investment returns over the long term to increase growth and prosperity across the UK.”
