UK Infrastructure Bank has £5bn pipeline of investments one year after launch

HM Treasury launched the bank in June 2021 to fund projects that will help tackle climate change and boost regional economic growth. In particular it has been asked to prioritise five sectors: clean energy, transport, digital, water and waste.

Headed up by former HSBC chief executive John Flint, it was created partly in response to the UK’s exit from the European Investment Bank infrastructure following Brexit. It has been allocated £22bn in public funds for the first five years of its life for equity investments, loans, and guarantees to support infrastructure projects.

The NAO found that the Treasury had “truncated some important elements of the usual process or deferred them until after launch” in order to set up the bank as quickly as possible. It is therefore relying on temporary staff while it recruits for permanent positions.

It has also not yet set a go-live date for one of its key functions, which is to advise and support local authorities. The Treasury said that this would be ‘phased in’.

In its report, the NAO recommended that the Bank further develops its analytical functions in order to improve its understanding of where infrastructure needs are greatest to inform future investment decisions.

Gareth Davies, the head of the NAO, said: “The UK Infrastructure Bank was set up quickly, and there is more work to do before it is fully operational and is able to support the government’s aims in achieving net zero and supporting local economic growth.

“It should continue to improve how it assesses investment needs and evaluates its impact, so that it can ensure it is targeting investment where it is most needed and demonstrate it is using public money in the most effective and efficient way.”

The Treasury has set targets for the bank, including expectations of an annual return of between 2.5 and 4 per cent on its equity investments by 2025-26.

In May of this year, research from the Resolution Foundation found that the government’s ‘levelling-up’ plans could be bolstered with net-zero investments that help to drive growth in lower-productivity areas of the UK outside London and the South East.