UK Infrastructure Bank Bill [HL]

Baroness Young of Old Scone Excerpts

2nd reading
Tuesday 24th May 2022 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, I always like following the noble Baroness, Lady Noakes, who I have disagreed with—I was just working it out on the back of an envelope—for 44 years. I declare my interests as chair, vice-president or commissioner of a range of conservation and environmental charities as listed in the register.

I welcome the establishment of the UK Infrastructure Bank and the opportunities it provides for building back better across the UK regions. As many noble Lords have said, the dual mission to enable investment for net zero and for the levelling-up process is good, but I agree entirely with the noble Lord, Lord Teverson, and others that the Bill is lacking, since it fails to task the bank with supporting wider environmental goals, specifically the Government’s environmental flagship target of recovering species by 2030. I call on the Government to add this vital third objective of species recovery to the bank’s objectives in the Bill and to ensure that it is strategically equipped to help deliver the Government’s nature recovery objectives.

Giving the bank a role in broader environmental delivery would also help support the other two objectives that it already has. It is universally recognised internationally and in the UK that climate change and biodiversity decline are two sides of the same coin and need to be tackled in an integrated way; net zero cannot be achieved without fixing biodiversity decline and biodiversity decline cannot be reversed without fixing net zero. Investment in both net zero and biodiversity recovery projects delivers jobs and improvements in the quality of place that are necessary for the levelling-up agenda. The whole thing is inextricably linked, and we need these three objectives to work together.

I will give noble Lords some examples of where biodiversity improvement and climate change action help with the levelling-up agenda. Projects to improve woodland, peatland and parks could not only deliver climate change and biodiversity benefits but support over 16,000 jobs in the 20% of UK constituencies with the worst labour market outcomes, such as Copeland, County Durham, Wolverhampton and Ashfield. Restoring the UK’s coastal environment could result in benefits, both in adaptation and mitigation, worth £50 billion by 2050 and create over 100,000 new jobs. We need all those objectives to be part of the bank’s role. The Bill’s Explanatory Notes mention opportunities for investing in nature, but Explanatory Notes are not enough. This needs to be not just in the background as a hope but in the foreground as a third statutory objective.

The Minister kindly arranged a briefing with the chief executive officer and staff of the bank yesterday, for which I thank her, although I took part from a Costa café at Blackfriars, which was slightly unsatisfactory. At the briefing, we were told that the Treasury did not want to give the bank such a third objective on the grounds that the bank’s task was to fill gaps in the market and at the moment there is no established market in biodiversity delivery. The Minister said there might be a reconsideration of objectives if natural capital markets emerged, but she has just told us that that would require primary legislation—so I put that in the “too difficult” box. We need the objective now. The Bill is clear that the bank will have a role in crowding in private funding, developing markets where they are insufficient and applying covenants and conditions in its lending to help drive markets, so I believe that it should have a statutory role in market development in tackling biodiversity decline as well as climate change.

We also heard about the Treasury’s strategic steer. I must admit that I am slightly nervous about strategic steers from the Treasury. It mentions natural capital and biodiversity, but, if that is important enough to be in a strategic steer, why is it not important enough to be a statutory objective? It is intended that the strategic steer will be revised approximately once per Parliament and will be used by the bank to inform its strategic plan. Steers can alter from time to time and from Government to Government, while statutory objectives are less easy to quietly lose sight of. The bank is due to publish its strategy next month. We will be able to judge from that strategy the proof of the bank’s reflection on the Treasury steer in its commitment to biodiversity. Can the Minister gee up the publication of the strategy a bit to allow the House to judge the effectiveness of the steer process so far, before the House needs to reach a final view on whether such a third statutory objective is vital, as I believe it is? Let us see the strategy and what it says about biodiversity.

We also heard at yesterday’s briefing that the bank already has a principle of doing no net harm to climate change objectives in fulfilling its levelling-up objective. That is another reason why having biodiversity under broader environmental objectives is important. Can the Minister assure us that the bank will have a principle of doing no net harm to biodiversity and the broader environment in pursuing its statutory objectives? It must not fund projects which impede the delivery of the Government’s climate change or biodiversity targets, as enshrined in the Climate Change Act and the Environment Act. I believe that these no net harm principles should be statutory rather than just reliant on Treasury guidance or the bank’s sense of duty, which could evaporate. In the light of all this, should the Bill’s definition of “infrastructure” also be reviewed, as other noble Lords have said, to include nature-based solutions and enable the bank to consider these types of investments as part of its strategy to meet climate change and adaptation goals?

The Bill also raises other questions in my mind. It has already been raised that there is a big hole in the Government’s energy policy and energy security strategy, in the lack of focus and funding on energy efficiency measures, especially the retrofitting of the current housing stock. This is a vital element in meeting the net-zero challenge, but the Bill is absolutely silent on whether the bank will be able to focus on energy efficiency. Can I urge that the bank has a clear role in developing the market and funding for this major retrofit programme, with its significant contribution to jobs and warmer homes, which are also vital for the levelling-up agenda?

Lastly, the Bill requires periodic reviews of the bank, as other noble Lords have said. but the first one is required only

“within 10 years of the Act coming into force”.

That is too long. I would not go as far as the noble Lord, Lord Teverson, and say that I want it reviewed before I die, but noble Lords will kind of get the gist. I know that the bank will need a little time to establish itself and demonstrate impact, but 10 years is a bit of a stretch of the imagination.

I was very interested in the concerns of the noble and learned Lord, Lord Thomas, about the appointment of directors. I must admit that I was a bit concerned that, as far as I can see, none of the current non-executive directors of the bank has an environment or climate change background whatever—so the noble and learned Lord has a point.

In summary, the Government have elsewhere committed to clear objectives for net zero and halting biodiversity decline, as well as to the levelling-up programme. The three are interlinked, with natural capital projects, ecosystem services markets and nature-based solutions all capable of contributing to jobs, improvement in place and social justice. It is illogical that this important bank is tasked with only two of these three interlinked objectives. We should have a greater ambition for it.

UK Infrastructure Bank Bill [HL]

Baroness Young of Old Scone Excerpts

Committee stage & Lords Hansard - Part 1
Tuesday 14th June 2022 Lords Chamber

[Lord Bourne of Aberystwyth (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Hayman, and to speak particularly to Amendment 4 in this group. I address the attention of the Committee to my published interests in the register.

I shall make a couple of general points to start with, because it occurred to me that the noble Lord, Lord Tunnicliffe, when speaking to the last group of amendments, was absolutely right when he said there is a great tendency on the part of the Government not to put stuff in the Bill, but rather to say, “Don’t worry, the Treasury will be looking at that”, “The Government will be looking at this”, “There will be a review of this and a review of that”. That ties in with what the noble Baroness, Lady Hayman, just said about the importance of having this firmly in the legislation. We live in febrile times and it is important that some of the key points that have been put forward around the Committee, and certainly were at Second Reading, are put in the legislation.

The second point that struck me very forcibly, made by my noble friend Lady Noakes, was the importance and status of this framework document. That really needs underlining and I encourage the Minister to write to all Members to stress what the nature of this document is. She referred to its legal status. Its legal status is certainly not as strong as that of a Bill and I would be interested to know what the lasting position of this framework document is, how it is to be enforced and so on. That is key to what we are looking at.

In addressing Amendment 4, the key point, as the noble Baroness, Lady Hayman, said, is about extending and clarifying the remit of the bank’s objectives. Many at Second Reading, including the noble Baroness, Lady Young of Old Scone, and the noble Lord, Lord McDonald of Salford, who are also speaking to Amendment 4, were clear about the importance of being explicit about objectives for adapting to actual and predicted impacts of climate change. As was very clearly set out by the noble Baroness, Lady Hayman, the report of the Committee on Climate Change is key in this regard, under Section 56 of the Climate Change Act. The Government have said that they are committed to this; why, then, would they resist putting it in the Bill? If they resist putting it in the Bill, it will inevitably make not just noble Lords but the community and the public in general suspicious, and I think that would be an undesirable outcome.

It is surely integral to the work of tackling the challenge of climate change that we do this. I think we also need to give the sector and the wider world the security of making the importance of the natural world clear in the Bill, following the Dasgupta review, which, again, the Government strongly supported. They commissioned it and supported it; why, then, is it not to be put in the Bill? It is an integral and holistic part of dealing with the challenge of climate change that we also deal with the dangers to the natural environment. That would mean making positive efforts in relation to, for example, peat restoration, tackling coastal erosion, tackling flood management and so on. Why should this not also be in the Bill? I would be interested to hear what my noble friend has to say on this point.

It is important for the financial sector to know that the Government are firmly behind this. At Second Reading, I recall that the noble Baroness, Lady Boycott, who is not in her place at present, reminded us that in 2018-19—the most recent statistics—the UK invested just 0.02% of GDP in restoring nature. That is clearly not good enough for a nation that purports to be in the lead and in many ways is giving a lead internationally on this. We need to do much more. I trust that the Government can match their words with some real action and look at how we can amend this Bill in this very positive way.

[Baroness Young of Old Scone (Lab)]

My Lords, I declare my interests as chairman, president and vice-president of a range of environmental organisations. I too will speak to Amendment 4, to which I have added my name.

We absolutely must not miss this opportunity to make sure that the bank’s objectives are fully in line with the two biggest global challenges: climate change—mitigation and adaptation—and biodiversity decline. This amendment, as has been outlined, highlights the importance of the bank supporting investments that enable the UK to adapt to the implications of climate change and not just to reduce carbon. There is already enough carbon out there to have significantly influenced the climate—increased storminess; higher temperatures; impacts on human health, crops and the resilience of infrastructure; and flood risks to property, energy generation and distribution networks and transport. Some 85% of all major electricity distribution substations are on the flood plain. At high temperatures, as we already know, roads and rail melt. There are some real practical issues now which the infrastructure bank could get its teeth into.

I have read the successive reports of the Adaptation Committee to the Climate Change Committee, which I was privileged to help establish. I am delighted to see the noble Baroness, Lady Brown, in her place, and I am sure she will talk with huge authority about this. To steal her quote,

“adaptation remains the Cinderella of climate change, still sitting in rags by the stove: under-resourced, underfunded and often ignored.”

It almost makes you weep. Her reports also demonstrate that the gap between the level of risk we face in the UK from climate change impacts and the level of resilience we are developing has widened rather than narrowed. The UK is not in a good place with its readiness for and resilience against the impacts of climate change, and if the world misses its net-zero targets, we will be in an even worse place. The bank has a really valuable job to do in addressing these issues. It must do so, and therefore this should be in its objectives.

As others have said, the bank also needs to embed in its objectives a role in supporting action on the Government’s other key challenge of protection and restoration of natural capital—air, land, water and especially biodiversity—which has been on a steep decline for 50 years, and which the Government have committed to reverse by 2030.

I put the House on notice that I will become a complete bore. Having got my way with the Government yesterday when they announced that they would have a land use strategy, I can now stop banging on about that. My next subject to bang on about is the need to learn the childhood game, if noble Lords remember it, of trying to pat your head and rub your stomach at the same time. We need not just to learn that but to pull off the more difficult task of walking, talking and chewing gum at the same time. Pretty well every government policy and many public institutions should have three sets of objectives for the future: the key role that they play in whatever sphere of life they operate in, the climate change objective, and the natural capital and biodiversity decline objective. We have to become better at walking, talking and chewing gum at the same time.

As we see successive bits of legislation going through, I am sure your Lordships will hear me, the noble Baroness, Lady Hayman, and many others banging on about that need. Remember when you were patting your head and rubbing your stomach: it was difficult but it was doable. We have to learn how to do this—to make sure that every single policy has measures for climate change mitigation and adaptation for biodiversity recovery included in its objectives, equal to the main function that it is there to deliver. This amendment would do that job for the infrastructure bank, and it would enable the bank to work for natural capital as priority infrastructure and as a key factor in screening its lending priorities.

There are several other amendments grouped with Amendment 4—Amendments 2, 3, 5, 15 and 20—which are all variations on the theme of environmental objectives. I personally think that ours is the most all-embracing, elegant and comprehensive, but I am sure there will be a degree of haggling to bring together some combined objective before Report.

[Lord McDonald of Salford (CB)]

My Lords, I too have put my name to Amendment 4, and I agree with the noble Baroness, Lady Young of Old Scone, that it is the most elegant in this group. At Second Reading, the Minister acknowledged that expanding the objectives of the bank to include biodiversity and the protection, enhancement and restoration of natural capital was the area that most parts of the House were most interested in promoting. More than that, the Minister said that everything that could be launched in the area of biodiversity was completely compatible with the climate change objective of the bank. But as the noble Baroness, Lady Hayman, has reminded us today, this Bill decides the DNA of the bank. So if it is not included on the face of the Bill, biodiversity and the natural environment will be essentially down-prioritised. As the noble Lord, Lord Bourne of Aberystwyth, reminded us, if it is not there, people will think that it is not important. If it is as easily incorporated as the Minister suggested at Second Reading, could we please have this explicitly on the face of the Bill?

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

My Lords, I strongly support what my noble friend Lord Deben just said and shall speak in favour of Amendment 17 on energy efficiency. In addition to the points my noble friend just made about how it is very dangerous to have a list of things but leave out something so central, which the Climate Change Committee has, quite clearly and quite rightly, been calling for in support of other strands of the Bill, it seems to me that this would not only help in fighting climate change but would help in levelling up, help create jobs and help in so many other ways. It is a mystery to me why the Government would want to leave it out.

Furthermore, it is very clear from the Explanatory Notes that the talk is only of economic infrastructure—look at paragraph 34—so the assumption is that, in stressing economic infrastructure, this is not covered. The absence of energy efficiency therefore means that people think that this is not regarded as important by the Government, despite what the Government have said in the strategic steer, which I strongly support. I hope my noble friend will come forward with some compelling reason why this has so far been omitted and will say that it will be included before Report, because it seems to me that the Government, when stating that they are so strongly in support of this could very easily put this right by putting it in the Bill before Report. I hope my noble friend will tell us that she intends to do just that.

[Baroness Young of Old Scone (Lab)]

My Lords, I also support Amendment 17 in the name of the noble Baroness, Lady Hayman, to which I have put my name. All the arguments have been laid out as to why energy efficiency is important, but I share the amazement of the noble Lord, Lord Deben, that this message does not seem to be getting over to the Government. It is a bit of a no-brainer, really: energy efficiency is vital not only in tackling climate change but as one of the easiest ways of addressing the impact of rising energy prices and strengthening our energy security. We need to urgently accelerate energy efficiency measures in this country. The net-zero carbon strategy had a blind spot about energy efficiency and we really are pussyfooting around.

I am old enough to remember conversion to North Sea gas. It was a splendid programme—admittedly, probably slightly simpler, but not hugely simpler, than making our homes energy efficient. It was a street by street effort; the whole nation went through it at the same time and one spent hours talking about it in the pub. There was a spirit of community cohesion around the whole conversion process and there was an end date that we had to hit, otherwise we were going to blow people up. We need that sort of programme to deal with our cold and leaky homes. We have the coldest and leakiest homes in Europe.

Just to give an example, when the energy price cap rises again in October to hit the £2,800 mark, average households in homes with an EPC of D or worse—about 15.3 million households in this country—will pay nearly £1,000 of that simply because their homes are inefficient. We cannot really continue in that mode. I believe the infrastructure bank has a clear role here.

To give noble Lords the last piece of government inadequacy on this, the Environment and Climate Change Committee of your Lordships’ House took evidence last week from the Minister for Energy, Clean Growth and Climate Change. To be honest, I went home and wept, because there was huge reliance on “We’ll put lots of information into the public domain; you can go to the BEIS website and get lots of help on retrofit, energy efficiency and conversion to cleaner forms of energy”. There was a statement of completely pious hope that households would miraculously see the light and take action. That simply will not be enough.

The infrastructure bank needs to go for it. It needs to get us in the pubs talking about this national mission of a focused and sustained programme for energy efficiency. I share all other noble Lords’ view that the Chancellor’s strategic steer is insufficient. I hope the Minister will rise to the occasion, show that not all of government has a blind spot on energy efficiency and let us have it as one of the definitions of “infrastructure” for the bank.

[Lord Teverson (LD)]

My Lords, I will briefly speak to my Amendment 11, which is also around energy efficiency but focuses particularly on the built infra- structure in this country, which is what most of us are probably talking about. I have no objection to the broader definition, but I like the specific issue of built infrastructure. The noble Lord, Lord Deben, is absolutely right that big boys’ toys are always the focus; big nuclear is probably the ultimate example of that, although I am quite confident that it will never be built because of financial reasons, apart perhaps from Sizewell C in his back garden.

We have a bad track record in this area; it has not only been ignored but the green homes grant, which finished last year, was described by the Public Accounts Committee at the other end as a “slam dunk fail”. A great opportunity was unfortunately missed. Built infrastructure accounts for some 25% of our emissions nationally, so this is a really straightforward way to make a difference on climate change, which is one of the main objectives of the UK Infrastructure Bank. I reinforce the messages from other Members across the House. I also very much agreed with the noble Baroness, Lady Bennett, on some of the infrastructure, such as roads.

We really need to take advantage of the most cost-effective way of achieving decarbonisation of our economy, through energy efficiency and by taking on the challenge of the built infrastructure in this country, on which the UK Infrastructure Bank can be a major player. It is estimated that we will spend some £37 billion of public money over the coming years on the energy price crisis. That money will all go on standing still; instead, we need to invest money to make sure that those energy bills come down in future and that we decarbonise the economy through energy efficiency. This bank ought to be a major part of that target.