The National Wealth Fund rejected criticism it says it has received from some metro mayors that it does not take enough risk in the projects it backs.
The fund, which is owned by the Treasury but operationally independent, has £27.8bn of finance to “partner with the private sector and local government to support projects which help crowd in private investment and drive growth across the UK”.
The government announced in January that the fund, which had previously been known as the UK Investment Bank, would be expected to work more closely with local leaders, and last month the chancellor said its priority areas would be clean energy, digital and technologies, advanced manufacturing and transport.
However, Lorna Pimlott, the fund’s managing director, local authority advisory and lending, told last week’s LGC Investment Seminar “there has been, of late, some criticism of the organisation from some of the mayors, that we might not take enough risk”.
She added: “Actually we take a huge amount of risk as an organization: four times the amount of risk as a commercial bank, double the amount of risk as the [European Investment Bank].
“And we are dealing with technologies that some will work, some won’t. The more we take risk, the more some of them will not come through. And we have to work with a pool of the successes, or carry the losses.
“But as an organization and an arm’s length body of government, there has to be a realization that that is the world that we’re entering into.”
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She described the UK as “very risk adverse” and said that to deliver the government’s growth mission “we are all going to have to take more risk, and we have to stop expecting others to go in first and take more than we do, and [saying] if they go in first, we’ll come in after”.
Ms Pimlott said the fund’s purpose was to crowd in funding for projects, rather than compete with other potential funders.
She added: “If we’re not needed, we won’t be there. But if somebody needs to actually go in earlier and take more risks, that is also the purpose of the National Wealth Fund. We will take more risk, although there’s probably a whole debate to be had separately with regards to how.”
