To achieve growth Reeves’s pension reforms must back science .

This insight piece first appeared in The Times.

Rachel Reeves used her first Mansion House address as Chancellor to pool the collective might of UK pension funds – aiming to unlock £80 billion of new investment. A decisive move that offers major returns for the economy, society and savers.  

More capital for infrastructure and public sector investment is vital. But so too is channeling this capital into unleashing the UK’s secret weapon - our science and research base.

The UK is in urgent need of productivity gains, growth and to strengthen its position in the world economy. Innovations in quantum computing, Artificial Intelligence and clean technologies are undeniable game changers, and we have real competitive strengths in these areas.

Currently we’re leaving far too much on the table. But under the Chancellor’s proposals, we could have the capital to turn this expertise into industry-building ventures. Unlocking more investment at the start of the innovation cycle—before many promising ideas stall —will turn raw potential into economic power.

The prize on offer from Reeves’s measures is a bold reshaping of Britain’s investment landscape. Her plans to consolidate local government pension funds and inject capital into innovative companies could redefine UK industry for decades - whilst giving pension savers a stake in our most promising firms.

A failure to act would be pure short-termism. Many companies spinning out of universities are already finding a dearth of funding. A report published earlier this year by IP Group’s EIS fund manager, Parkwalk, revealed a troubling trend: early-stage funding for university spinouts is on the decline. This means too few of the groundbreaking ideas born in our world-renowned universities are emerging and then scaling to become transformative companies. These are businesses that should be at the center of our future economy. 

We also need to start picking winners. The UK cannot compete against the giants of the US and China on all fronts. Despite our economic pride, that game is up. What we can do is play a leading role in frontier technologies – from medical innovation to computation. Pension fund capital is a great start but we must also ensure our regulatory and policy choices enable such technologies to scale quicky and safely.

 EIS capital can help germinate the seeds of growth for hundreds of UK spinouts and early-stage firms and pension fund capital can enable them to flourish. When combined with entrepreneurial support within our universities, and the backing of research institutions, investment on the scale Reeves is targeting could usher in a new generation of wealth creators. This is vital for savers too who require greater returns.

There certainly remain valid questions for the venture industry to answer on its comparative performance. But many pension funds already recognise the value of science. IP Group has been backed by British pensions funds for years. RailPen, Phoenix and Border to Coast are key backers, among others. IP Group has now helped create four UK unicorns, including Oxford Nanopore Technologies – a pioneer in DNA sequencing. Nanopore, now scaling as a UK-listed business, recently announced a groundbreaking partnership with the NHS, supporting the Government’s mission to build an NHS ‘fit for the future’. This year, we completed record exits including the sale of Featurespace, an AI financial crime business, to Visa – generating  £134m cash for the Group. We’re living proof of why pensions can count on science.   

The Chancellor’s commitments won’t be a silver bullet for all our economic woes. But they are practical measures for getting the UK in the right shape to succeed over the long term. We need to play to our strengths, be patient, and decide where our future prosperity will come from.

Deeptech, life sciences and clean technologies are three areas that we truly can lead the world in and will make a positive impact on our future.