(Bloomberg) -- The UK government is considering copying the Canada Growth Fund to help channel investment into green technology and fast-growing businesses in a bid to boost the economy.

The Treasury could announce plans for a similar vehicle in next month’s Autumn Statement, according to two people familiar with the matter. Treasury officials have formulated a paper on the topic and are testing the idea with external experts, the people said.

A UK growth fund could be managed by the British Business Bank, the state-owned entity which lends and takes equity stakes in businesses around the UK. Both the ruling Conservative Party and the opposition Labour Party are considering giving a bigger role to the institution as part of plans to boost investment in startups and to try to revive listings on the UK stock market. 

Spokespeople for the Treasury and British Business Bank declined to comment.

The idea for a growth fund has been debated inside the Treasury for weeks and no decision has been taken, according to the people. There is concern from some about its potential cost, according to one of the people. 

The Canadian fund was launched in 2022 with $15 billion Canadian dollars ($11 billion), with the aim of speeding up investment in the green transformation and encouraging more private funds into emerging technologies. It followed America’s Inflation Reduction Act, which offers financing primarily for green projects.

The UK’s financial commitment would be lower than Canada’s, one of the people said, with any potential fund likely to be in the range of £500 million ($610 million) to £2 billion. Officials have been considering a range of options including offering loan guarantees and debt and equity structures, the people said. 

A smaller fund could still help with seed capital and could attract co-investment from UK pension funds and other private investors, the people said. A more modest commitment may also be more palatable for Chancellor Jeremy Hunt as it could avoid clashes with the right of his party that might want funds to be used to pay for tax cuts ahead of next year’s general election, one of the people said.

A new fund would follow recent initiatives by the government to work with the private sector, such as the opening of the UK’s biggest electric vehicle charging hub in Birmingham, and more than £50 million awarded to manufacturing projects including self-driving cars. 

The growth fund is one of several ideas being considered by the Treasury as a way to attract more investment in new technology companies while also encouraging UK pension fund to direct larger amounts of savings into higher growth investments. 

The discussions come after a group of pension providers signed up to Hunt’s “Mansion House Compact” this summer. Under the plan, the group agreed to allocate 5% of assets to growth investments by 2030, part of a plan to inject £50 billion into the economy.

The agreement followed months of wrangling and was viewed as a win for Hunt and the Lord Mayor of London Nicholas Lyons, who campaigned for the move. But there was also a feeling that it might have a limited impact, especially as it did not require the assets to be invested in UK startups. A growth fund could be focused on the UK, the people said.

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