Britain does not have a shortage of capital. It has a shortage of the will to point that capital at its own future. The country holds several trillion pounds of long-term pension and insurance money, a large pool of patient capital by the standards of the developed world. The growth problem is not that the money is missing. It is that almost none of it reaches the places and companies that would turn it into jobs.
This distinction matters, because it changes the whole conversation. If you believe Britain is short of money, every debate becomes about borrowing, taxing and cutting. If you accept that the money is already here, the debate becomes about allocation: the rules, defaults and incentives that decide where a pension pound ends up. That is a far more hopeful problem, because it is one policy can actually solve without asking the markets for permission.
Where the money went instead
For thirty years the safe answer was London. Big projects in the capital worked, they were rewarded, and so more capital followed. The same happened in venture funding, where the overwhelming share of investment clusters in a small triangle of the South East. None of this was a conspiracy. It was the rational behaviour of institutions doing what had paid off before. The trouble is that rational behaviour, repeated for decades, hardens into a country that grows in one corner and stalls everywhere else.
Meanwhile a large part of that long-term money went abroad, chasing returns in the United States and beyond. When a British company like the chip designer Arm is built here, listed here, then sold on and grows into a giant abroad, the overwhelming majority of the gain flows to overseas shareholders. We grow the businesses and hand away the upside. Over a long enough period, that is not bad luck. It is a design fault.
Allocation is a policy choice
The encouraging part is that allocation responds to policy. In May 2025 seventeen of the largest workplace pension providers signed the Mansion House Accord, agreeing to put at least 10 per cent of their defined contribution default funds into private markets by 2030, with half of that inside the United Kingdom. Around 252 billion pounds of savings sits within scope. It is voluntary, and the government has kept the power to require allocations if the pace disappoints, but the direction is right: a nudge that moves patient money toward patient projects.
I would go further, and treat this as the start rather than the finish. The same logic that built automatic enrolment can steer a defined share of default pension money into growth across the whole country, not only into the usual private-equity funds that themselves concentrate in the South East. The saver keeps the choice to opt out. Most will not, because most people sensibly leave their pension in the default. That is exactly why the default is where the decision really gets made.
The prize, and the discipline
Get this right and the numbers are large. Even a single-digit percentage of national pension and insurance capital, redirected patiently into regional infrastructure, housing and scale-ups, would dwarf anything the Treasury can fund from a stretched budget. It would also be invested, not spent, which means it should earn a return for the savers whose money it is. This is the point centre-right politics should own: not subsidy, but ownership; not handouts, but a fair share of the growth.
The discipline is honesty about risk. Patient capital is not free capital, and not every project deserves it. The answer is to back places and plans that can carry an informed, rewarded risk, and to be candid about the ones that need public support instead. But the starting assumption should flip. We should stop asking whether Britain can afford to invest in itself, and start asking why it has chosen for so long not to.
Sources: Capital Markets Industry Taskforce, Delivering Over £100bn of New Capital into the UK Economy Every Year, 6 September 2024, on the six trillion pounds; HM Treasury, Pension schemes back British growth, 13 May 2025, on the Mansion House Accord and its terms; Pensions UK, Mansion House Accord, 13 May 2025, on the signatories; legislation.gov.uk, Pension Schemes Act 2026, section 40, 2026, on the reserve power; British Business Bank, Small Business Equity Tracker 2026, 2 July 2026, on London's share of equity investment; Arm Holdings plc, Form F-1 registration statement, 2023, on Arm's founding, listings and takeover; SoftBank Group, Completion of acquisition of ARM, 5 September 2016, on the sale; The Pensions Regulator, Written evidence PSL0043 to the Work and Pensions Committee, February 2022, on savers who stay in the default fund.
