Out-Law News 1 min. read
25 Nov 2020, 3:58 pm
The UK government is to set up a National Infrastructure Bank to finance major new investment projects, chancellor Rishi Sunak has announced in today’s Spending Review.
The bank is being set up as part of the UK government’s National Infrastructure Strategy and the launch of a £4 billion ‘levelling up fund’ to invest in local infrastructure.
Sunak said the bank would be headquartered in the north of England and would work with the private sector to fund new investment projects across the UK.
Planned infrastructure projects unveiled in the Spending Review include over £58bn investment in road and rail, as well as investment in houses, hospitals and schools.
Finance and projects expert Michael Watson of Pinsent Masons, the law firm behind Out-Law, said the bank was key to the future success of the UK economy and the government’s aim of ‘levelling up’ the national economy to reduce regional disparities.
“The National Infrastructure Bank has the opportunity to make significant strides towards the government's levelling-up agenda but it cannot simply be treated as a replacement for the European Investment Bank. The financing and funding of new technology at scale needs to be its number one priority to kick-start the UK economy and take proactive steps towards net zero goals,” Watson said.
“The bank could at least, in part, effectively act as a large scale venture capital fund – at a pivotal time when the infrastructure and energy sectors are at an inflexion point and intervention is needed to accelerate change and galvanise new technologies which support the transition to net zero. It could 'crowd in' finance from the private sector” Watson said.
Watson said the bank’s launch needed to come amid a wider commitment to attracting private sector investment to achieve the government’s aims when it comes to infrastructure development.
“While it was unlikely we were going to see the government’s position on private finance today it is absolutely clear that the UK will need to attract private investment at scale to support the 'build back better' agenda – which can be achieved,” Watson said.
“The UK is a market leader globally in developing support mechanisms to attract private investment and lending and in many cases these models have been copied elsewhere, including renewable support mechanisms, private finance initiatives, and regulated industries. Given the positive impact infrastructure investment and development has on stimulating economic growth all eyes will be on the government’s next steps on how it encourages private funding,” Watson said.
The establishment of a National Infrastructure Bank follows support for the concept from parliament and industry groups. In February 2019 the House of Lords EU Financial Affairs sub-committee said a UK infrastructure bank could plug the gap left by loss of access to the European Investment Bank (EIB) after Brexit. That call was echoed by the CBI in September this year.
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