Burnham backs plan to pump £1bn pension funds into start-ups
Andy Burnham’s government is set to spearhead a new £1bn fund that will channel cash from some of the country’s biggest pension schemes into start-ups.
Pension funds including Nest, the workplace scheme set up by the government, Railpen, Border to Coast and the Local Pensions Partnership Investments (LPPI) are set to back the new government-led investment intitiative.
Given the title of the UK Scale-up Fund, the investment vehicle would look to support tech, life sciences and other innovative businesses taking on more work and employing more staff.
The British Business Bank and the Office for Investment, which is a body within the Treasury, will back the new fund with cash and support.
The government will now seek to appoint a manager to lead the proposed fund.
Pension funds called to help
Andy Burnham said the vehicle would help “reindustrialise Britain and create the jobs of the future”.
Business secretary Jonathan Reynolds said: “The ambition of major pension providers to back the next generation of British success stories is an important vote of confidence in UK innovation.
“By investing in innovative UK companies, they can help drive long-term growth while helping pension savers share in their success. Our message is clear. Britain is open for business, open to investment and determined to put science, technology and innovation at the heart of our economic future.”
The fund would look to build on the government’s industrial strategy, which picked out sectors that would drive growth across the country.
British firms have long struggled to scale-up domestically and have been forced to turn to American and European investors to finance their growth plans.
Several industry bosses including Arm’s Rene Hass have criticised a lack of risk-taking in the UK. Some economists, including former Bank of England deputy governor Andy Haldane, have called on the government to create domestic biases to push funds to invest in the UK.
Pension funds have also come under fire as the proportion of domestic assets held by them have dropped in over 30 years from around half of UK shares to under five per cent.
Former Chancellors Jeremy Hunt and Rachel Reeves struck agreements with pension funds to develop investments in private assets and UK-based equities over the last three years.
The Labour government, however, also clashed with major pension fund managers as it looked to grant itself powers to force pension funds to back British companies. These powers were capped according to the terms of an agreement struck in 2025.