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The UK Infrastructure Bank Bill 2022-23 would put the UK Infrastructure Bank on a statutory footing and clarify its powers to lend to local government.

The bill was introduced to the House of Commons on 12 July 2022 having completed its passage through the House of Lords. Second reading of the bill in the House of Commons took place on 1 November 2022. The bill was considered by a Public Bill Committee over two sittings on 22 November 2022.

This paper summarises the background and content of the bill and its House of Lords stages. The bill, and its Explanatory Notes, can be found on the Parliamentary website.

About the UK Infrastructure Bank

The UK Infrastructure Bank (‘the Bank’) was established in June 2021 and is currently operating in interim form without its full suite of staff and functions. It is a key part of the Government’s National Infrastructure Strategy.

The Bank provides finance to the private sector and local government for infrastructure projects. It will also provide advice to local governments on infrastructure projects and financing.

The Bank is a publicly owned limited company with HM Treasury as the sole shareholder. The Bank’s board manages its operations and investment decisions independently, in line with strategic objectives set by the Treasury.

The Bank’s objectives and focus areas for investment

The Bank’s strategic objectives are to:

  • help tackle climate change; and
  • support regional and local economic growth.

The bill would put these strategic objectives on a statutory footing.

The Treasury has set the Bank’s primary focus for investment as the five economic infrastructure sectors covered in the National Infrastructure Strategy: clean energy, transport, digital, water and waste. It has asked the Bank to prioritise projects that align with the government’s “renewed focus on energy security”.

How much funding does the Bank have available?

The Treasury has provided an initial £22 billion funding to the Bank over its first five years.

The Treasury has set some guiding principles for how the Bank should assess its investments. Broadly, these are that the Bank’s investments should:

  • address its policy objectives (to tackle climate change and support local economic growth);
  • generate a positive financial return; and
  • focus on areas where there is an under supply of private sector finance.

What has the Bank invested in so far?

The Bank had invested in eight deals worth £760 million and mobilised over £4.5 billion of private capital as of August 2022. These include investments in subsidy-free solar farms, green buses, gigabit broadband infrastructure and in the South Bank Quay development at Teesworks (to create a quay to service the offshore wind sector).

The Bank’s first annual Strategic Plan published in June 2022 said that while its early investments had focused on the roll-out of gigabit broadband, the Bank expects clean energy to emerge as its largest sector.

The Bank’s first Annual Report and Accounts were published on 24 November 2022. It reported that in the Bank’s first year, a £104 million profit (after tax) was achieved, representing a 30% return on equity.

Comment on the Bank

The National Infrastructure Commission welcomed the establishment of the Bank and has said that the Bank is one area where the Government was making positive progress on meeting its Infrastructure Strategy.

The Labour Party has argued that the Government’s proposals for the Bank were too small in scale and would not “plug the gap” left by the loss of European Investment Bank finance in the UK.

The National Audit Office, in its July 2022 report on the creation of the Bank, found that the Bank had been set up quickly in an “unusual approach”. It said that important planning steps had been missed but that the Treasury had put in place controls to protect taxpayers’ money.

The NAO said it was too early to say if the Bank will be a success and highlighted that managing the Bank’s approach to risk would be a key challenge for determining its value and success. Infrastructure investors have argued that the Bank needs to be careful not to “crowd out” private sector finance and should concentrate on investments that are otherwise too risky for private sector investors.

Environment and climate change campaign groups and academics have argued that the Bank’s objectives should include a commitment to a ‘just transition’ to net zero emissions.

The bill

The aim of the bill is to place the UK Infrastructure Bank on a specific statutory footing. The bill consists of 11 clauses.

The bill would:

  • set the Bank’s strategic objectives on a statutory footing that would require primary legislation to amend.
  • Set out the Bank’s activities and the definition of infrastructure. The bill includes a power for the government to change these definitions by secondary legislation.
  • Set out how the government would steer the Bank’s strategy (through issuing a statement of strategic priorities) and how it could intervene to give the Bank directions.
  • Set out the type of financial assistance the Bank would provide, including clarifying the Bank’s power to lend to local authorities.
  • Specify administrative arrangements for the Bank including appointments to the Bank’s board and publication of the Bank’s annual reports and accounts.
  • Require an independent review of Bank’s effectiveness and impact at least every 7 years.

Commons second reading and committee stage

Second reading of the bill in the House of Commons took place on 1 November 2022. The bill and the Bank received broad cross-party support in general.

The bill was considered by a Public Bill Committee over two sittings on 22 November 2022. Government amendments made during committee stage included:

  • removing the reference to “structures underpinning the circular economy, and nature-based solutions” (added during the Lords stages) from the definition of infrastructure in clause 2(5).
  • Removing clause 2(6), which reversed the amendment added by the House of Lords to require that the Bank consider levelling up metrics (reducing geographic inequalities and improving pay, productivity and living standards) when carrying out its activities.
  • Adding provisions to require consultation with the devolved nations and that at least one director on the Bank’s board must be responsible for the interests of the devolved nations.

Several opposition amendments were moved and pushed to division but did not pass. These included amendments seeking to add more specific levelling up metrics to the Bank’s objectives and to add a requirement that one of the Bank’s non-executive directors must be a workers’ representative.

The Government said it would consider returning with an amendment during report stage to reduce the 7-year time period set out in clause 9(5) for subsequent independent reviews of the Bank. This followed amendments moved by both the Opposition and Conservative MP Richard Fuller that sought to reduce the time period between reviews.

House of Lords stages

There was largely broad cross-party support for the bill in principle in the House of Lords.

Key topics of discussion during the House of Lords stages included:

  • the content of the Bank’s objectives and the definition of infrastructure, in particular the Bank’s environmental mandate and obligations;
  • whether the Bank’s operating and investment principles should be included in the bill;
  • discussion of the Bank’s governance: concerns were raised about the independence of the Bank from the Treasury, in particular the power of direction in Clause 4;
  • the role of the devolved administrations in relation to the Bank, as many areas of infrastructure investment are devolved.

Two non-Government amendments were made during report stage. These amendments:

  • added “nature-based solutions and the circular economy” to the definition of infrastructure in Clause 2(5);
  • added a requirement for the Bank to have regard to levelling up metrics when exercising its activities (now Clause 2(6)).

The Government moved an amendment at report stage to specify that energy efficiency is included within the definition of infrastructure. It also moved a series of amendments regarding the statutory reviews of the Bank (Clause 9). The changes include:  

  • requiring the reviews to be carried out by an independent person rather than the Treasury;
  • adding a requirement that the reviews consider the additionality of the Bank’s investments (that is, the extent to which the Bank’s investments have encouraged additional private sector investment);
  • changing the time period for the first review from 10 years to 7 years.

The Government amendments were agreed without division and were strongly supported by peers across the House.


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