Investing in North's nuclear expertise through a sovereign wealth fund could make UK a world leader, says Northern Policy Foundation's Tom Lees

Ahead of the Budget, Tom Lees said the UK has had a "longstanding lack of so-called 'patient capital' taking higher risk, higher return bets in truly transformational schemes, businesses and technologies" despite being a global financial centre since the 1980s.

Last March Chancellor Rishi Sunak announced the creation of the UK Advanced Research Projects Agency with at least £800m of funding for advanced and pioneering science.

This would be "run ruthlessly away from day-to-day politics to invest in UK projects and businesses in which we have a global competitive advantage and need longer-term funding for higher-risk projects than generally offered by the market".

A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country's surplus reserves.

Mr Lees said: "By taking equity stakes in these projects and companies those that do well will more than pay back what they were lent and cover the losses of bets that don't work out. Like a pension, over time the fund will compound and grow while supporting jobs and exports today."

He cited the example of small modular nuclear reactions, which allow energy developers to build smaller nuclear plants than conventional construction would as parts would be fabricated at factories and assembled on site, minimising costs.

Despite widespread interest, there are currently only four SMRs in construction; in Argentina, China, and Russia.

Mr Lees wrote: "In 1956 with the opening of Calder Hall, Britain became the first country in the world to produce nuclear energy at an industrial scale safely. Today, the North retains unparalleled expertise in nuclear energy with Sellafield, Hartlepool, Barrow, Heysham and others.

"Much easier to deliver, SMRs are crucial if the world is to achieve the Net Zero carbon target while providing a reliable energy supply. Rolls-Royce have been building SMRs safely for use in submarines for decades but domestic use is yet to be proven making large scale commercial funding potentially more challenging.

"The UK’s Sovereign Wealth Fund could throw its weight behind SMRs giving the UK a ‘first-mover advantage’ and capturing more than £250bn of exports and leading the world in its energy transition.

"While politicians would need to be patient to see and reap the rewards, this is just one illustration of the long-term transformation potential for our economy of such investments which will leave future generations in a far better position than the last."