The UK National Wealth Fund will not have the defence industry as one of its priority sectors, despite the government’s efforts to accelerate rearmament efforts.
Chancellor Rachel Reeves on Wednesday said she wanted the government vehicle, which will have a budget of about £28bn by the end of the current parliament, to consider investments in “dual-use technologies” and to boost “supply chain resilience” in support of UK defence and security.
But laying out its strategy to John Flint, NWF chief executive, the Treasury did not list defence as one of the handful of key sectors on which it should directly concentrate. Instead the finance ministry named clean energy, advanced manufacturing, digital technologies and transport.
The decision comes even as the UK seeks to increase military spending as European countries come under mounting pressure from US President Donald Trump to step up their own defence efforts ahead of a Nato summit later this year.
Britain is funding an increase in defence spending from 2.3 per cent to 2.5 per cent of GDP through aid budget cuts, but Prime Minister Sir Keir Starmer has signalled he wants to lift spending further to 3 per cent of GDP.
In an interview with the Sunday Times this month, Reeves said she thought the NWF could do more to “boost security and defence”.
She added: “Obviously, it is important that we leverage in private sector money as well as public spending, but if we’re going to be spending billions extra every year on defence, I want to see that create good jobs, paying decent wages in the UK.”
The Treasury said on Wednesday it wanted to help direct investment to the industries on which the defence sector relied, advanced manufacturing and digital and dual-use technologies. Dual-use technologies are those that can be used both in civilian and military applications.
Asked about the role of defence, the Treasury said in a statement that the “NWF can invest directly in defence projects”.
The finance ministry’s strategy said: “The NWF should consider the role it can play in supporting the delivery of the wider industrial strategy, including in defence, life sciences, and creative industries; and the infrastructure strategy, including in the water and waste sectors.”
Labour promised in its election manifesto to set up a new freestanding wealth fund to invest in areas such as green steel and gigafactories, with £7.3bn of new funding.
But in October last year Reeves abandoned the plan, announcing that the existing UK Infrastructure Bank would be renamed the NWF and given an extra £5.8bn, some £1.5bn less than originally proposed.
Speaking on Wednesday, Reeves said: “I am determined to go further and faster to get our economy growing. By directing tens of billions of pounds into the UK’s industrial strengths, we’ll deliver the high-skilled, high-paid jobs of the future in every corner of the country.”
