On 24 May 2022, the House of Lords is scheduled to debate the second reading of the UK Infrastructure Bank Bill.
The aim of the bill is to place the UK Infrastructure Bank, currently operating on an interim basis, on a statutory footing. The bank’s purpose is to invest in infrastructure projects using both public sector funds and private sector funds that it will seek to attract. It has two strategic objectives: to use its investments to help tackle climate change; and to support regional and local economic growth.
The bill’s provisions would:
- define the objectives and activities of the bank
- set out how the government can alter the bank’s strategy or intervene to give it directions
- describe some aspects of the financial relationship between the bank and the government
- specify certain administrative arrangements for the bank
- require reviews of the bank’s operations at specified intervals
In 2018, the National Infrastructure Commission (NIC) recommended establishing a UK national infrastructure bank to replace the functions of the European Investment Bank (EIB) after Brexit. A government consultation between 2019 and 2020 also found support for such a body. Responding to the consultation, the government set out a new national infrastructure strategy that included a commitment to establishing a “major new national infrastructure bank”. The bank would operate with a “high degree of operational independence” but within a mandate set by government.
In 2021 and 2022 a series of documents fleshed out the bank’s mandate and design. Proposals included setting its financial capacity at £22bn, consisting of £5bn of equity, £7bn of debt and £10bn of guarantees. Alongside this public funding, the bank is expected to attract £18bn of private sector finance. It is also required to provide advice to local authorities on developing and funding infrastructure.
Initially, the bank’s objectives covered investments in a range of sectors. Since the Russian invasion of Ukraine, the government has asked it to give priority to projects aimed at increasing the security of the UK’s energy supply.
The Labour Party has also called for a national infrastructure bank although it argues the existing proposal is not sufficiently ambitious. Other commentators have also discussed the appropriate size of the bank. Other issues debated include whether its mission should encompass delivering a ‘just transition’ to net zero and what parallels can be drawn from a previous public infrastructure investment institution, the Green Investment Bank.
