Canada is investing in Britain’s future – why aren’t we?
Foreign capital is helping to drive UK growth – yet too much of our own pension funding remains on the sidelines, says Tony Dalwood
Canada is betting billions on Britain’s future. One of the world’s most influential pension investors, CDPQ, has committed more than £8bn to UK infrastructure and energy transition projects over the next five years. The C$400bin fund praised Britain’s “clarity, transparency and deal readiness,” placing us “top of the list” globally for capital deployment.
This vote of confidence from overseas should be a wake-up call at home. While international investors double down on the UK, our own institutions are largely sitting on the sidelines. Despite repeated policy pledges and growing support for private markets, UK pension capital remains focused on low-yielding, low-impact assets. The opportunity cost – for innovation, jobs and decarbonisation – continues to rise.
That’s why the UK government’s Pensions Investment Review, published this week, is a step in the right direction. With its focus on value, scale and productive investment, we are seeing a clear shift to more consolidated schemes focused on generating higher returns and supporting longer-term national and regional economic priorities.
Pensions as an engine of growth
But if we want to turn pensions into a true engine for growth, delivery now matters more than design. Britain has no shortage of investment needs – from fibre broadband and clean energy to local business growth and biodiversity restoration. What’s needed is targeted primary capital, delivered with urgency and precision.
At Gresham House, we are already deploying primary capital into these areas – from sustainable forestry and battery storage to biodiversity-led land management. These sectors don’t just generate attractive long-term returns; they create local jobs, support national climate goals and strengthen energy security.
The problem is timing. Too often, capital arrives too late – or not at all. Between 2011 and 2021, nearly half of UK tech scale-up exits were acquisitions by foreign buyers, with this trend more pronounced among companies that had received overseas investment. This pattern reflects the challenges posed by inadequate domestic growth-stage funding.
To avoid repeating that pattern, a meaningful share of pension allocations must be channelled through UK-based managers with proven experience in early and growth-stage investing. High-potential opportunities under £50m – often overlooked by global investors chasing scale – must not be ignored. The government’s call for strategic partnerships is welcome, but delivery depends on experienced, specialist investment managers who have track records and cultural alignment to such partnerships that can generate additional long-term value for pension members.
CDPQ provides a valuable blueprint – not just through its UK investments, but in how it invests globally. It partners with specialist managers in clean tech, infrastructure and early-stage ventures. In Quebec, its CDPQ Direct platform supports local SMEs. This is long-term capital in action – investing in the industries of the future while delivering value at home.
Uncertainty is slowing progress
Meanwhile, in the UK, progress risks being slowed by uncertainty. Plans to consolidate 86 LGPS funds into six larger pools may make sense over time, but for now they are paralysing decision-making. Many funds are in limbo, unsure of future mandates or governance structures – and that’s delaying the deployment of capital that could already be working.
There is also a real risk that these new mega-pools prioritise size over substance – investing abroad rather than supporting the smaller, high-impact domestic opportunities they were designed to unlock.
Britain is already well-positioned to lead in areas such as nature-based solutions, energy transition and regional infrastructure. The investment pipelines exist. What’s missing is better coordination and greater resolve. We don’t need more frameworks – we need government to align incentives, co-invest alongside experienced managers, and get primary capital moving into investment-ready projects.
We don’t lack ambition in Britain. But unless we match our global appeal with homegrown confidence, we’ll keep watching others invest in our future while we hesitate on the sidelines.
Tony Dalwood is CEO of Gresham House