The UK’s National Wealth Fund (NWF) must be willing to take risks and accept some failures if it is to deliver on its promise of stimulating private investment, according to a new report from the Treasury Select Committee.
The Committee’s chair, Meg Hillier, said the fund had the potential to make a “positive contribution to certain sectors and the economy more widely,” but that the government must “accept and encourage the fund to take risks, even though that might lead to individual projects failing.”
The National Wealth Fund, established in 2024 with around £28 billion of capital, is tasked with investing public money in infrastructure, clean energy, advanced manufacturing, transport and digital technology. It replaces and expands the remit of the former UK Infrastructure Bank, with a broader aim of catalysing private sector investment into strategic industries.
However, the Committee warned that the fund’s modest size, combined with its reliance on government borrowing rather than resource revenue, could limit its capacity to operate like other sovereign wealth funds. It urged ministers to maintain an arm’s-length relationship with the institution, noting that political interference in investment decisions could erode investor confidence.
The UK model contrasts sharply with large resource-based funds such as Norway’s Government Pension Fund Global, which manages more than £1.5 trillion in oil and gas proceeds, and Qatar’s Investment Authority, which holds substantial stakes in global private equity and infrastructure. By comparison, the UK fund’s capitalisation and debt-financed structure mean it will operate more as a catalyst for private capital than as a long-term savings vehicle.
The report’s emphasis on risk tolerance represents a cultural shift for public investment. British public finance has historically leaned towards low-risk, high-accountability models, particularly where taxpayer money is concerned. Hillier’s call reflects the Committee’s recognition that early-stage and high-impact projects carry inherent uncertainty — yet are essential for productivity and growth.
Analysts note that for the NWF to succeed, it must demonstrate both sound governance and clear additionality: proving it is investing in projects that the private market would not otherwise fund. Transparent metrics on job creation, regional distribution and emissions impact will also be critical to maintain legitimacy and public trust.
The fund’s priorities for the current Parliament include clean energy transition projects such as green hydrogen, carbon capture and storage, and battery gigafactories. These are sectors seen as essential to the UK’s industrial renewal and net-zero ambitions, but where private investors often hesitate without government backing.
The Treasury Committee’s findings add pressure on the government to finalise a governance framework that protects independence while ensuring accountability. As the NWF begins to deploy capital, its ability to balance risk with responsibility will determine whether it can become a cornerstone of the UK’s long-term growth strategy — or another constrained public vehicle unable to shift the investment dial.
