Regionally focused and seeking to “crowd in” private investment, Public Finance Institutions (PuFins) and Andy Burnham’s vision for Britain appear a perfect pair.
The Prime Minister has committed himself, both before and since entering Number 10, to devolving decisions and promoting partnership with the private sector. In a key speech in June 2026, Burnham placed “strong partnership between all sectors” as central to the “Greater Manchester way” that he champions.
Speculation remains over whether Burnham can meet already substantial spending commitments while delivering on his new policy aims. Complicating any additional ambitions, Burnham and new Chancellor, John Healey, have stated their spending will not breach Rachel Reeves’ tweaked fiscal rules.
In this context, PuFins prove an interesting example of how state and industry could collaborate to support the devolution agenda and promote regional growth.
To meet both his new policy commitments and the fiscal rules, Burnham may further mobilise organisations such as the National Wealth Fund (NWF) and the British Business Bank (BBB), expanding the remit of public capital to support private investment.
He has already indicated his intention to use these mechanisms to drive investment in industry.
Aside from boosting the funding base of these institutions, there are a range of possible pathways for the Government to take with PuFins. The Burnham Government may seek to expand their remit, promote more frequent and intentional collaboration, or launch further PuFins to encapsulate other sectors.
This blog will focus mainly on the NWF and BBB as key examples of how public finance can be deployed to incentivise private sector action. It will explore how Burnham and Healey may use and adapt the public finance environment, as these institutions have the capacity to help the new Prime Minister achieve key policy objectives, all while honouring the fiscal rules.
What is a PuFin?
Put simply, Public Finance Institutions mobilise public capital to “crowd in” private investment.
They deliver investment by targeting specific market areas and offering loans, grants, guarantees and equity finance. Currently, the UK’s PuFin environment consists of a range of bodies that span housing, capital intensive assets, and SME funding.
The UK was eligible to receive loans and equity from the European Investment Bank (EIB) until 2020, but it was the launch of the UK Green Investment Bank (GIB) in 2012 that signalled the official start of the UK’s PuFin journey, before GIB was acquired by the private sector in 2017.
The introduction of the British Business Bank in 2014 showed the UK Government increasingly understanding and employing the value of PuFins. As Shadow Chancellor and then as Chancellor, Rachel Reeves continued this endorsement, which resulted in the creation of the NWF in 2024. It was formed from the refocusing of the UK Infrastructure Bank, which expanded its remit to include investment in capital-intensive supply chains.
The NWF was established as the UK Government’s “principal investor and policy bank” and has been capitalised with £27.8bn to fund capital intensive projects and technology in later stage development, focusing specifically on clean energy and transport, as well as digital and technology projects. Examples of NWF-spearheaded projects include a £62m loan to Orkney Islands Council to generate clean energy, a £25m investment in Bristol-based defence company, Rowden, and a commitment of up to £200m in equity for an energy storage facility in Doncaster.
The National Wealth Fund’s policy documents highlight its extensive risk appetite, on account of a £7bn economic capital limit. With the NWF able to invest ahead of full policy certainty and accept greater revenue risk in less developed markets, it can subsequently take on greater risk than commercial banks.
As banks have proven reluctant to take on excessive risk and use capital buffers to support lending in high risk but potentially high growth sectors, mobilising ventures such as PuFins appears a natural next step for the Government looking to support high growth sectors, when those sectors have few alternatives for capital.
Indicative of the Government’s attitude towards large-scale spending projects is the 2025 Industrial Strategy, which outlines an approach that prioritises investment into high growth areas, including financial services, digital and technologies and advanced manufacturing. The Government has proven willing and able to channel funding into select areas where high returns are forecasted, as exemplified by the 2025 June spending review, which included substantial investment in health, defence and security and clean energy. It included considerable Government spending on nuclear energy, as well as investing in city-region transport spending, including zero emission buses, trams and local rail.
The 2025 Industrial Strategy further reflects government efforts to harness PuFins, including promoting collaboration between organisations through a new Strategic Public Investment Forum. A new “strategic steer” for the NWF was highlighted, that would seek to prioritise investments in clean energy, digital and technologies, advanced manufacturing, and transport. The BBB was also uplifted with an additional £4bn of capital, intended to support investment in the eight growth sectors identified within the Industrial Strategy.
Therefore, PuFins can act, have acted, and will likely continue to function as a vehicle to implement the Government’s industrial strategy, which is oriented towards the picking and prioritisation of perceived winners. Reeves established in her 2024 Mais lecture the importance of identifying industries in which the UK has a comparative advantage and forming an assessment of the industries which will be “critical in determining our future.” This mentality has underpinned the Labour Government’s approach to industry and is likely to feature heavily in Burnham’s economic agenda.
Burnham’s economic vision for Britain, at least rhetorically, centres on a collaborative and innovative economic system, supportive of the devolution of economic powers to cultivate regional growth. Therefore, PuFins have the potential to act as a major vehicle for change.
The fiscal rules
Crucial to understanding government spending are the fiscal rules.
These commitments were tweaked by Reeves in October 2024, to change the government debt measure, that the Treasury would seek to reduce, from Public Sector Net Debt (PSND) to Public Sector Net Financial Liabilities (PSNFL). This measure captures a broader range of financial assets, including government loans and equity investments.
Under this, government investment in the NWF and BBB is characterised as an investment, and therefore a net asset, meaning it wouldn’t increase government debt. This change allows greater space for investment in areas where high growth is predicted, while adhering to debt rules. Injections of investment channelled through PuFins would likely prove more politically viable than ad-hoc spending commitments.
With a desire to prove his own fiscal credibility following controversial comments about Britain being “in hock” to bond markets, the new Prime Minister will be able to remain within debt targets by boosting investment in PuFins and achieving his policy goals of helping regions develop clear industrial ambitions and deliver tangible outcomes.
However, the Prime Minister will likely want to avoid being seen using the revamped fiscal rules as a loophole to cover up excessive spending, meaning that adhering to these requirements will still need to be treated with caution.
Public finance in every postcode?
During his tenure as Mayor of Greater Manchester, Burnham was a proponent of public finance institutions, leading a partnership with Great British Energy (GBE) which backed local renewable energy developments.
GBE’s mission is not just confined to investment in clean energy, but seeks to connect skills and expertise to promote dynamism within the energy sector.
This holistic approach could be utilised by the government as part of ongoing plans for PuFins, allowing for further efforts to promote skilled technical employment pathways.
The National Wealth Fund operates a range of strategic partnerships, exemplifying the regional growth agenda so central to Burnham’s philosophy.
These agreements offer commercial expertise and dedicated investment experts to support infrastructure projects, and are currently in place with Glasgow City Region, West Yorkshire Combined Authority, West Midlands Combined Authority and Greater Manchester Combined Authority. The NWF already plans to expand these partnerships to encapsulate other strategic authorities and city regions. The Prime Minister would likely support this as part of his drive to move decisions outside of Westminster.
PuFins do more than merely providing capital for infrastructure projects and can therefore serve as a cornerstone of the Prime Minister’s devolution and skills agenda.
Expansion under Burnham
The remit of PuFins is already extensive. However, Burnham could expand both the remit of these institutions and the funding available to deliver his desired programme of industrialisation and regional growth.
Perhaps the simplest way Burnham could leverage PuFins to achieve his policy goals would be through expanding the financial capacity of these institutions. Upon its creation in 2024, the NWF inherited the UK Investment Bank’s capitalisation, as well as an additional £5.8bn committed over the course of the Parliament, meaning that the impact investor boasts a total capitalisation of £27.8bn. As of 1 June 2026, the NWF had committed £10.1bn of this, leaving the remaining capitalisation at £17.7bn.
Current commitments do not make specific annual allocations for NWF spending, and instead aim to use all remaining capital by 2029/30. A substantial portion of the NWF’s funding could therefore be deployed in a targeted program of investment or indeed redirected towards other priority industries.
The NWF’s investment deployment recently tripling reflects an increasingly confident institution, adept in connecting regional growth projects with capital. As a result, the new Prime Minister could choose to expand the capital offering of the fund before 2030 to signal a continued commitment to crowding in private investment for long-term infrastructure projects.
Coordination between PuFins
Another possible direction for Burnham’s interactions with PuFin’s may be in fostering further collaboration between the different institutions, aiming to forge a more holistic public investment landscape.
Although this approach is already used to an extent within the current public investment landscape, there is scope for expansion.
Recently, the announcement of a joint scheme between UK Export Finance (UKEF) and the BBB that would help SMEs access finance and export, represented this collaborative element. Within this agreement, the BBB manages lenders and UKEF guarantees part of the losses if SMEs default on loans related to exports.
Further collaboration between PuFins has worked to invest in electric vehicle supply chains, the scaling of high growth firms, and sustainable packaging.
However, Burnham could push further, channelling his ambitious social housing building programme through Public Finance Institutions. Homes England, another PuFin has already committed £27bn over 10 years to delivering affordable housing, and functions through collaboration with developers and landowners. Housebuilding has the potential to become a joint venture, as large scale housing developments would require the transport, infrastructure and electricity projects financed by the NWF.
PuFins and Pensions
Liam Byrne, Chair of the Business and Trade Committee, has suggested that the scaling-up of PuFins has been key in unlocking growth in recent years.
He further argued that PuFins should work with pension funds to support regional infrastructure projects. Debates around mandation and the feasibility of encouraging the investment of pension funds in UK assets surrounded the passage of the 2026 Pension Schemes Bill.
Critics, including the Conservatives, suggested that requirements to direct pension funds into certain investments would breach both the voluntary nature of the Mansion House accord, as well as trustees’ fiduciary duties to act in the best interests of members.
As established, PuFins de-risk investments, meaning that pension funds may become more willing to invest in domestic infrastructure and regeneration where a PuFin exists as a co-investor.
As the NWF and BBB focus on long-term investment pipelines, they could provide a steady stream of investment opportunities that see pension investment aligned with industrial progress.
PuFins and policy objectives
“Manchesterism” has become a defining feature of Burnham’s stated ideology and his priorities for the nation. Consistent with this vision is his support for greater public ownership, pledging that the public should have control over “the essentials of life.”
With Burnham’s pre-leadership comments about potential public ownership of water companies and Thames Water being placed into special administration, heightened government intervention in key utilities could prove to be another tool in the Prime Minister’s belt for his fight against the cost-of-living crisis. While PuFins and public ownership differ considerably, Burnham’s position on encouraging efficiency in utilities appears consistent with the public-private cooperation facilitated by organisations such as the NWF.
Conclusion
Burnham’s rhetoric before becoming Prime Minister centred on partnership between the public and private, and so rightfully raised suggestions of a government that would seek to mobilise PuFins.
Since entering Downing Street, Burnham’s stated aims have proved even more compatible with the expansion of these programmes. We can expect to gain more clarity on how heavily PuFins will feature on the economic agenda through both the 10-year plan promised later in the year, as well as in the Autumn Budget, which will take place on 28 October.