UK Infrastructure Bank Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Report stage
Monday 4th July 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to speak in particular to my Amendment 9, and I thank the noble Lord, Lord Teverson, for his support. I very much agree that climate change means that we cannot be building new roads, although big issues of air pollution are of course also addressed in this group.

I have to begin, since I do not get the chance to do it very often, by commending the Government on their amendment on energy efficiency. It demonstrates the sentiment of our debate in Committee—and indeed throughout the House and the country—and shows that campaigning really does work. Let us see lots more of it.

Essentially, I agree with everything the noble Baroness, Lady Hayman, and the noble Lord, Lord Teverson, have said, so I will not repeat those points. However, we are increasingly hearing from the Government about the importance of biodiversity and the state of nature. Indeed, I had the pleasure recently of attending an event at the Groundswell Regenerative Agriculture Show & Conference, at which the Government and Members of this House and the other place expressed their concerns and spoke of the importance they place on restoring nature. Surely, the Infrastructure Bank should be explicitly directed to do that.

As the noble Baroness, Lady Hayman, said, we are talking about sending a message to the bank and to the country about the importance of biodiversity in nature, and we can also look to the international stage. We see reports expressing grave concern about the state of the COP 15 biodiversity talks, and the entire nature community is screaming out for leadership in those talks. Clearly, as the chair of COP 26, it should be our responsibility to lead the way. As the noble Baroness said, if the Government are saying, “We already mean this anyway”, what is the harm in including such a provision in the Bill and sending that message out to the international community as well as to the country?

On the circular economy amendment, in Committee I tabled an amendment calling for a reduction in resource use. In the interests of efficiency and time—and given that I was not getting many positive signals from the Government—I did not table it this time, but I think the Government will come back to this issue so that we can make at least some progress on it. Explicit support for a circular economy, which is a necessary but not a sufficient condition, given that we continue to treat the planet as a mine and a dumping ground, is essential in order to see some progress. We will certainly see the other place pushing on the question of resource use.

My Amendment 9 is a modest amendment, and it is perhaps worth making clear what I mean by it. I am very happy if the Government want to look at using different terminology, but I point out that what I mean by “roads” is major stretches of roadway. I do not mean tracks up to new onshore windfarms, government enthusiasm for which we are finally seeing signs of in the media, which is greatly encouraging. If the Government wish to find another form of wording, I point out that, clearly, what I am referring to is major road infrastructure. As the noble Lord, Lord Teverson, said, the climate emergency does not allow that. This issue crosses over with the clean air amendments in this group, and the issues of disadvantage that we are going to discuss in the next one. Broadly speaking, air quality is worst in the poorest, most disadvantaged areas of the country. New roads are the last thing those areas need, as they would make the air quality even worse.

To say that the Infrastructure Bank is not for roads but for mass transport should be considered uncontroversial. It is not my intention to put the amendment to a vote, but this is a debate that will continue in the other place. I commend all these amendments to your Lordships’ House.

[Lord Holmes of Richmond (Con)]

My Lords, I rise to speak to Amendments 7 and 10 in my name, but before I do I join others in congratulating my noble friend the Minister on tabling the government amendment on energy efficiency. It speaks to an amendment that I and others tabled in Committee, and it is certainly welcome that it will now, rightly, be included in the Bill.

Amendment 7 would insert just three words: “nature-based solutions”. There is a lot in the Bill about climate and carbon, but the reality is, as noble Lords are well aware, whatever we do and must do on that front, we will still be left with a pressing, urgent need for nature-based solutions. As other noble Lords have mentioned, we have “roads” in the Bill. As the noble Baroness, Lady Bennett, has just pointed out, I do not think anybody would necessarily be against roads as a secondary, tertiary or lower-level aspect of an infrastructure project—to get to the shoreline for offshore wind, to give another example. However, that is at best a tertiary part of the bank’s investment, or of that particular infrastructure project, yet it is in the Bill. If “roads” can be there, surely “nature-based solutions” has at least an equal place in the Bill. Would my noble friend consider including “nature-based solutions” and, in exchange, taking “roads” out of the Bill? That would be a thoroughly good thing.

Finally, in similar terms, my Amendment 10 would insert “clean air”—perhaps one of the most significant, precious and essential parts of our infrastructure. Does my noble friend the Minister agree that it would not be difficult or controversial, and that it would be a thoroughly good thing, to have “clean air” on the face of our infrastructure bank Bill?

--- Later in debate ---

[Lord Ravensdale (CB)]

My Lords, Amendment 5 is in my name. I declare my interest as a project director working for Atkins and note that I am co-chair of the Midlands Engine APPG. First, I thank my supporters on this amendment; I thank the right reverend Prelate the Bishop of St Albans for all his help in crafting it, and the noble Lord, Lord Tunnicliffe, for his support. My remarks are equally applicable to Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, to which I have added my name.

To briefly reiterate the issue, the current levelling-up objective of the bank, set out in Clause 2, is not clear enough to articulate the levelling-up purpose of the bank in the Bill. Indeed, I would question what the words

“support local and regional economic growth”

really add to the Bill. Almost any conceivable infrastructure investment will meet this objective for the area in which it sits.

As the Minister has previously stated, we have the strategic steer in the form of a letter from the Chancellor, which clearly sets out levelling-up objectives. However, levelling up is a long-term, generational project—as is this bank—and the strategic steer will not bind it in the long term. Ultimately, if nothing is done because of the lack of clarity in the Bill, the bank and the Government may drift away from the levelling-up purpose expressed in the strategic steer and may not undertake the vital work of helping disadvantaged areas in the long term.

This is particularly the case because the effects of agglomeration work against infrastructure spend outside the metropolis. The economic return is simply much better in areas that already perform well, so those projects have a much better chance of proceeding. Inequality becomes entrenched and self-fulfilling. That is why it is so important that, for an infrastructure bank still focused on making a return, levelling-up objectives are clear in the Bill. This can be solved via the simple amendment we have set out. It takes on board feedback from the Minister in Committee to avoid any complicated definitions of disadvantaged areas. It does this by using similar comparative wording to a recent government amendment to the Subsidy Control Act. The amendment would mean that Clause 2(3)(b) read:

“to support regional and local economic growth, with an emphasis on reducing social or economic disadvantages within the United Kingdom.”

I am very grateful to the Minister and her team for meeting me and for their efforts in investigating this issue. I know that the Minister is concerned about legal challenge and whether the wording would cause the bank to be too cautious in its approach, but this wording captures the very fundamentals of levelling up. Given the guidance for the bank in the strategic steer, all its investments should be compliant with the wording in any case, so I do not believe that this would limit the bank in any way.

Amendment 12 provides the same clarity in a slightly different way, by ensuring that the first mission in the levelling-up White Paper—the key mission of relevance for the bank—is written into the bank’s objectives. Ultimately, both amendments address the same issue: we want to be confident that there is some permanence to the bank’s objectives on levelling up and focusing on disadvantaged areas. The strategic steer and a letter to the bank do not offer this permanence, so I hope the Government will agree that something needs to be done to ensure that the bank will deliver in the long term for disadvantaged areas, deliver for the levelling-up agenda and fulfil its potential to make a real difference to the lives of people in those left behind communities all across the country.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Ravensdale. It was particularly useful that he spoke before me because I have taken some of the words that he and his supporters put down in their amendment but made an additional change, taking out the words “economic growth”. But I agree entirely with everything the noble Lord just said about the need to focus on reducing disparities and tackling economic and social disadvantages. As he said, that takes the wording from the Government’s own approach in another place and it would be very hard for the Government to argue against that.

I argued extensively in Committee about why economic growth as a target in its own right has failed and, indeed, is undeliverable, because you cannot have infinite growth on a finite planet. I will not go over those arguments again now, but I think it is very clear from the fact that we are back here again, after an extensive debate in Committee from all sides of your Lordships’ House, simply saying that the bank will work for regional and local growth. As was said in Committee, that could be regional and local growth in Chelsea and the wealthiest 10 wards in the whole country, which is surely not the purpose, and it therefore needs to be clarified in the Bill. As was said in our earlier debate when we were talking about the environment, we have seen acknowledgement of the need to change the Bill already. This is surely another crucial change.

I was pleased to attach my name to Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, and backed by the noble Lord, Lord Ravensdale, and the noble Baroness, Lady Kramer. This is again putting levelling up in the Bill. It is what the Government say the Bill is for. Surely, it has to be specified in it.

[Baroness Kramer (LD)]

My Lords, I am going to be exceedingly brief because so much has been said which I support. I want to make a couple of comments on Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, and others, that I have been pleased to sign. I want to make a point that I think has not been hit on. It is really important because it signals to those who put together projects and then turn to the investment bank and look for resources and funding that they are going to have to meet tests such as improving productivity and making sure that they are delivering well-paid jobs.

Putting that in the Bill would take it away from being a passive measure by which the bank looks at and decides whether to support projects and moves it into the active category. Those who are going out and investing will look closely at whether they are delivering against those various tests. There is so much that is good in the various amendments within this group—I very much support my colleague on Amendment 2—but I particularly wanted to underscore the message-signalling that is deeply inherent in Amendment 12.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, it was not my intention to speak on this group but, given that all the non-government speakers have been from the other side of the House, I felt I should offer an argument from this side of the House that is perhaps 180 degrees opposite to that presented by the noble Baroness, Lady Noakes, but, none the less, makes an argument for either Amendment 6 or Amendment 24.

The noble Baroness, Lady Noakes, suggested that she preferred private bankers to public bankers. Private bankers have been left to provide the direction for our economy and society over the past few decades and look where that has got us: we are having to talk from all sides of the House about the urgent need to level up and to tackle poverty, inequality, our climate emergency and the nature crisis. Therefore, we need to make sure that the bank is not crowding out private finance. If it is, it is spending money in the wrong places. It needs to be doing things that are innovative and different from what we have been doing up to now. That is why I encourage either the mover of Amendment 6 or those speaking to Amendment 24 to consider testing the opinion of House, and I offer them Green support.

[Baroness Kramer (LD)]

My Lords, my motivation here is somewhat different: I want to see the bank move along the risk spectrum. There is a temptation, due to the structure of the bank, for it to stay within the range of fairly safe investments. It has to produce a return and it has a very small risk capital base, but I would like it to maximise that to move along the risk spectrum. I see no other way to accelerate the innovative technologies that we need, or development in disadvantaged areas where people have typically turned their backs, unless the bank is willing to take on that much higher risk profile. The various additionality amendments seem to create that kind of pressure to move UKIB much further down the risk spectrum than it might otherwise feel comfortable in doing, meaning that it therefore does not maximise the opportunities in front of it.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, briefly, I support Amendment 20 in the name of the noble and learned Lord, Lord Thomas. It is self-evident that the bank’s board should have the experience and skills that the noble and learned Lord proposes in his amendment, rather than just being Treasury placemen. The success or failure of the bank in achieving its objectives will depend entirely on the experience of the people running it, so I urge the Minister to accept this very common-sense amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I offer Green group support for Amendment 20, to which we would have attached our name had there been space.

In Committee, I suggested that the bank should not be in the hands of the Treasury at all. I got some expressions of interest but not enough support to bring it back on Report. However, it is clear that we need systems thinking, as I often say in your Lordships’ House. We need an approach that looks beyond the narrow growth in GDP to something broader and more holistic. This amendment is a step towards achieving that.

[Baroness Penn (Con)]

My Lords, I speak on this group with some trepidation; I hope I do not show the lack of humility that the noble and learned Lord, Lord Thomas, has accused my department of. I will stand up for the Treasury: in my dealings with this group of public servants, they have been bright and suitably humble, trying to work in the best interests of the country.

I will take the amendments in reverse order. The amendment tabled by the noble and learned Lord, Lord Thomas, as he explained, seeks to ensure that the bank’s board has the necessary expertise to deliver on its objectives. He is right to focus on the importance of the bank’s board in steering this nascent institution to deliver on its two wide-ranging objectives across the whole of the UK.

I reassure noble Lords that the bank’s board already contains a wealth of experience in infrastructure finance, policy-making, economics and green investments, across the public and private sectors. Collectively, its members have worked at similar national organisations, such as the Canada Infrastructure Bank, the UK Green Investment Bank and UK Export Finance, as well as leading financial services firms and central government departments. John Flint, the bank’s CEO, was chief executive of HSBC, and Annie Ropar was the CFO at the Canada Infrastructure Bank. So, in its infant form, it has already attracted some high-quality individuals to work there.

The bank’s non-executive directors were recruited in line with the guidelines set out by the Office of the Commissioner for Public Appointments, and were selected based on the skills they could bring to the board to deliver on the bank’s mandate. These appointments could be audited by OCPA in due course. OCPA’s guidelines include a principle of merit, which means

“providing Ministers with a choice of high quality candidates, drawn from a strong, diverse field, whose skills, experiences and qualities have been judged to meet the needs of the public body or statutory office in question.”

As I have said in previous groups, in drafting this Bill, we are seeking to create a high-level framework within which the bank can operate, while providing for the longevity of its objectives. Therefore, given that appointments are already recruited in line with OCPA’s guidelines, which we expect OCPA to review and which include a principle of merit, I do not think it is necessary to add greater specificity to the Bill on this point. Including these provisions could be overburdensome and prevent the bank and Treasury hiring the most appropriate people for the roles.

I spoke about the recent appointments in Committee, so do not propose to do so in detail again, but I would be very surprised if the noble and learned Lord, Lord Thomas, could find much fault with the appointees. He has also expressed an interest in the representation of the devolved Administrations and, as he spoke about on the previous group, in making sure that the board and the bank command the confidence of all four nations in the UK. As I said to him before and will happily say again, commanding that confidence is central to how the bank has gone about its business. The skills of the board will adequately represent the needs of all four nations, although, as I said on the previous group, specifics in that area are not necessarily a discussion for now, as they are part of the process of legislative consent. I therefore hope that the noble and learned Lord does not move his amendment when it is reached.

The amendment of the noble Lord, Lord Tunnicliffe, seeks to ensure that the bank always has a representative of the workers on its board. The UK Corporate Governance Code already states that a company should have one or a combination of a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director to facilitate engagement with the workforce. It also states that, if the board has not chosen one or more of these methods, it should explain what alternative arrangements are in place and why.

I give the noble Lord my absolute reassurance that the bank will comply with the UK Corporate Governance Code; however, as I have said, it is a nascent institution, with its board appointments made and the non-executive directors joining only recently. The bank has not yet had the opportunity to determine how it will meet this specific provision. It is currently establishing its governance and will report on its progress in its annual report and accounts. The noble Lord can expect an update there.