Some of the UK's largest pension providers are exploring the creation of a new £1 billion investment fund designed to back high-growth British science and technology companies, in a move the Government says could help strengthen the economy while delivering long-term returns for pension savers.
The proposed UK Scale-up Fund would bring together major pension investors to provide growth capital for promising British businesses looking to expand, commercialise new technologies and create skilled jobs across the country. The initiative is being supported by the British Business Bank and the Office for Investment, which will work alongside participating pension providers as plans for the fund are developed.
Prime Minister Andy Burnham described the proposal as a vote of confidence in British innovation.
He said:
"Today sends a clear message: this is a vote of confidence in British business, British talent and British ambition.
This new fund would help unlock good growth in every postcode, connecting pension investment with the entrepreneurs and technologies that will reindustrialise Britain and create the jobs of the future."
Business Secretary Jonathan Reynolds said the Government wanted more innovative British businesses to be able to start, scale and succeed in the UK, rather than looking overseas for investment.
He said the proposed fund would help pension savers share in the success of Britain's next generation of science and technology companies while supporting long-term economic growth.
Chancellor John Healey said Britain has a strong record of creating innovative businesses but has not always succeeded in helping them grow with British investment.
He said:
"We create great companies in Britain but don't do enough to grow them with British capital and keep profits in the UK."
He added that the proposed £1 billion fund could provide more domestic investment for British scale-up companies while delivering stronger returns for pension savers over the long term.
According to the Government, the fund would seek to invest in companies developing cutting-edge technologies in sectors such as science and innovation, helping businesses remain and grow in the UK rather than seeking overseas funding. The ambition is also to create more skilled jobs and strengthen regional economic growth.
The announcement does not mean the fund has yet been established. Instead, participating pension providers have committed to exploring the creation of the investment vehicle, with discussions continuing over its structure, governance and investment strategy.
The proposal forms part of the Government's wider efforts to encourage greater long-term investment from UK pension funds into British businesses, while maintaining the expectation that pension providers continue to act in the best interests of their members.