Key facts
- A new £1 billion UK Scale-up Fund will invest in start-ups.
- Pension funds like Nest, Railpen, Border to Coast, and LPPI are set to back the fund.
- The fund will focus on tech, life sciences, and innovative businesses.
- The British Business Bank and the Office for Investment will provide support.
- The initiative aims to boost domestic investment in UK companies.
The UK government is set to launch a new £1 billion fund, the UK Scale-up Fund, designed to channel investments from major pension schemes into start-ups. This initiative aims to support growth in sectors like technology and life sciences, fostering domestic investment and job creation.
Several large pension funds, including Nest, Railpen, Border to Coast, and the Local Pensions Partnership Investments (LPPI), are expected to back the fund. The British Business Bank and the Office for Investment will provide financial and operational support. The government is currently in the process of appointing a manager to oversee the fund's operations.
This move aligns with calls from industry leaders and economists for greater investment in UK businesses, addressing a long-standing issue where British firms often seek funding from American and European investors. Figures like Arm's Rene Hass have highlighted a perceived lack of risk-taking in the UK, while former Bank of England deputy governor Andy Haldane has advocated for policies that encourage domestic investment.
Concerns have also been raised about the declining proportion of domestic assets held by UK pension funds, which has fallen from approximately half of UK shares to under five percent over the last three decades. Previous agreements, struck by former Chancellors Jeremy Hunt and Rachel Reeves, have aimed to encourage pension funds to increase their investments in private assets and UK-based equities. The Labour government had previously sought powers to compel pension funds to back British companies, though these powers were capped through an agreement in 2025.