The boss of the National Wealth Fund has blasted the banking industry’s risk appetite and cited the lack of risk-taking as the reason for waning growth figures.
Speaking at City Week on Monday, John Flint, the chief executive of the newly-established government body, said: “The banking system is very heavily regulated and in the best possible shape to take risk… but it’s not doing it.”
“We shouldn’t be surprised we’re not growing; we’re not taking the risks,” he warned.
The ex-HSBC boss’ remarks follow another sobering growth statistic after the Office for National Statistics (ONS) confirmed on Monday that disposable income per head had dropped despite modest economic growth in the first quarter. The UK economy contracted 0.3 per cent in April as Labour’s tax raids weighed on businesses.
Waning optimism for financing net zero
Flint said he was “increasingly less optimistic” about the NWF’s ability to finance net zero ambitions due to the “incredibly rigid” organisation of the private sector’s risk appetite.
The banking industry has pioneered a green row back across the financial services industry, with top names Barclays and Natwest scrapping climate targets from bonuses and HSBC pushing its net zero target back 20 years.
“All pools of private finance don’t have the flexibility, or are not displaying the flexibility, to take the kind of risks that are going to get us there… Every time we commit capital, it’s been because the private sector wasn’t willing to be there,” Flint said.
City minister Emma Reynolds renewed calls for financial services to drive the government’s green ambitions during a speech at City Week on Monday.
Reynolds said firms’ role in green finance was set to be a key part of the Treasury’s upcoming Financial Services Growth and Competitiveness Strategy.
The NWF’s boss argued risk appetite was crucial in fufillng climate targets and the National Wealth Fund was prepared to do what the private sector “can’t or won’t”.
The government body has faced broad criticism since its transformation from the UK Infrastructure Bank in October 2024, which City AM revealed earlier this year cost just short of £90,000, with ongoing calls for “clarity” around its remit.
The Treasury Committee has commenced an inquiry into the body, where experts have described its status as a wealth fund as a “misnomer”.
John Flint is set to exit his role in the National Wealth Fund in the summer, with senior Natwest executive Oliver Holbourn rumoured to be the top choice to replace him.
