The Chancellor has set out a plan to channel public investment into fast-growing northern businesses by committing £150 million through the British Business Bank, as he seeks to sell an "optimistic story" for Britain’s economy ahead of his first Budget on 28 October.
What the fund will do
The new pot, drawn from money already allocated to the Government-owned British Business Bank, will target innovative firms and university spin-outs across the North of England. The fund is designed to provide individual investments of between £5 million and £15 million, with ministers hoping Treasury backing will lever further private capital into regional businesses.
"This is not sentimentality, it’s supply side economics."
The Treasury described the move as part of a wider strategy to create an "active state" that partners with private firms to spread growth more evenly across the UK.
Links to regional institutions and the National Wealth Fund
Alongside the British Business Bank commitment, the Chancellor will instruct the bank and the National Wealth Fund to do more to support investment and innovation nationwide. The National Wealth Fund has already agreed strategic partnerships with a number of mayoral and regional authorities — South Yorkshire, Liverpool City Region, the North East and the Cardiff Capital Region — giving those local leaders access to the fund’s investment expertise for infrastructure and similar projects.
- Target: innovative and fast-growing firms, including university spin-outs
- Investment per company: £5m–£15m
- Fund size: £150m, from existing British Business Bank allocations
| Item | Value |
|---|---|
| Total fund | £150 million |
| Investment range per company | £5m–£15m |
| Key regional partners | South Yorkshire, Liverpool City Region, North East, Cardiff Capital Region |
Context and constraints
The announcement arrives against a challenging economic backdrop. The source material notes a recent leap in government borrowing costs and concerns that the Iran war might push up inflation — factors that could limit the Chancellor’s fiscal headroom as he prepares the Budget. The fund itself uses existing allocations rather than fresh departmental spending, signalling an attempt to reorient existing public capital towards higher-growth businesses without immediate additional borrowing.
John Healey, who replaced Rachel Reeves when Andy Burnham became Prime Minister in July, is explicitly framing the initiative as supply-side economics rather than regional favour. But the political and economic balancing act is apparent: ministers want to demonstrate action to boost jobs and productive private investment, while also containing costs and responding to market sensitivities over borrowing and inflationary risk.
Potential consequences for business, wages and jobs
By concentrating support on scale-ups and university spin-outs, the fund targets firms that typically seek growth capital to expand headcount and commercial activity. In theory, successful follow-on private investment could increase job creation in the targeted regions, and stronger productivity in those firms could help ease wage pressures over time by raising output per worker. However, the relatively modest size of the fund — £150m spread across a wide geography — means the initiative will need to attract significant private co-investment to have broad labour-market impact.
As the Chancellor sets out this vision of an "active state" partnering with private capital, the immediate test will be whether the fund persuades institutional investors to commit alongside government-backed capital — and whether these interventions can be scaled up if borrowing markets remain volatile and fiscal choices tighten ahead of the Budget.
The Treasury will be watching closely for signs that the measure can convert public capital into measurable private investment, jobs and regional growth without widening fiscal strains prompted by higher borrowing costs and global risks to inflation.
