UK Infrastructure Bank Bill [HL]

Lord Bourne of Aberystwyth Excerpts

2nd reading
Tuesday 24th May 2022 Lords Chamber

[Lord Bourne of Aberystwyth (Con)]

My Lords, I declare my interests as set out in the register. I am, of course, a member of Peers for the Planet. It is a great pleasure to follow the noble Lord, Lord Teverson. We have been on the legislative barricades on the subject of Cornwall before, but I agree with much of what he said about the Bill, and I will go into that.

First, however, I very much welcome the Bill, although I think it can be strengthened, and I shall be setting out some questions for the Minister. The Bill’s aim, as stated, is to put the infrastructure bank on a statutory footing and to ensure that it is an independent institution. I shall have something to say about that, too. It is a company wholly owned by the Government—a registered company under the Companies Act 2006. It has a dual-track approach, to be entirely fair: it is not just about tackling climate change, although that is central; it is also about supporting local and regional growth. I agree with both aims, which are key. Net zero by 2050 is central to everything we need to do as a Government and a country, and for the bank to have a leadership role in that it is important, as it is on levelling up. To have public sector finance with leverage-in of private sector finance is very valuable.

I very much agree with what the noble Lord, Lord Teverson, said, about the need to address the climate change goal on a broader front—by addressing nature challenges. The Climate Change Committee set those out very clearly in its independent assessment in 2021. We are near an ecological tipping point and we need a nature-positive economy. The report of the Dasgupta review, which the Treasury asked for, is seminal in that regard and much of the principle contained there should be in the Bill, front and centre. A basic difficulty I have with the legislation is that, on the one hand, there is not enough at the front of the Bill and, on the other, we are told that directions are coming forward under Clause 4 from the Treasury, independently of Parliament. We seem to be getting the balance wrong there and I should be interested to hear what the Minister has to say about that.

Moving on, the Bill’s definition of infrastructure under Clause 2(5) is not exclusive but, I think, needs to be more all-encompassing. For example, it includes gas and sewerage but not energy efficiency. Why not? It would be simple to include it and I think we should. We need to accelerate what we are doing on energy efficiency to be anywhere near getting to the net-zero goal in 2050 and I cannot see any compelling argument why it should not be in Clause 2(5). We need more detail on that.

I also press the Minister on the nature of the bank’s objectives and activities. I understand that the objects are set out in the company’s constitution and that can be altered only by primary legislation, as the Bill makes clear—that is absolutely right—and infrastructure can be altered only by an affirmative piece of secondary legislation. I go along with that as well. So far, so good, but Clause 4 allows the Treasury to give a specific or general direction to the bank about how to deliver its objectives. If that were limited to the issue of devolution, to which I will come shortly, all well and good, but I do not think it is. It does not appear to be under the legislation.

What is the interaction between objects, which can be altered only by primary legislation, and directions under Clause 4, which can be altered by the Minister—the Minister, incidentally, who also appoints all the directors? There is double control there, and it seems to me to get the balance wrong, particularly if we are stressing the importance of the bank’s independence, as the Minister rightly did. At the same time, Clause 4 says:

“The Treasury may give a specific or general direction to the Bank about how it is to deliver its objectives.”


As I said, that is the same person who was appointing all its directors. It does not look that independent to me.

I will also ask about the financial capacity. Twenty-two billion pounds sounds like a lot of money; it is made up of equity, debt and guarantees. it is a lot of money, but it does not seem as much when compared with other countries, such as Germany. Are we convinced that £22 billion is sufficient? I am also interested in hearing how that sum was arrived at, what evidence was taken and how that was assessed.

As I said, I am also interested—I am sure other noble Lords will be too—in the territorial extent and application, and the interaction with Wales, Scotland and Northern Ireland. I am pleased that the Government are quite clear that there is a devolved aspect to be dealt with. In fairness, Annexe A in the Explanatory Notes is helpful in that regard, indicating which matters are reserved and which are devolved. Of course, there is inevitably a grey area. This is the physics of it. What is also important is its chemistry: what provision are we making for discussion with the Welsh Government in the Senedd, the Scottish Government in Holyrood and the Northern Ireland Executive in Stormont? I hope that there are some measures which will be taken to ensure that, as a union, we protect all parts of the country in relation, not least, to the levelling-up part of the aims of the bank. I would be grateful if the Minister could indicate how she expects the interplay between the four parts of the United Kingdom to play out.

I have just two more points. First, on any potential conflict between aims, the Government have said—understandably and rightly—that energy security is important. We must look at energy security in terms of the operation of the bank. How does that interplay, though, with the need to ensure that we protect against high-carbon projects? Again, this perhaps comes back to the point of needing something in the legislation about a “do no harm” principle so that we can ensure that both aims are protected and one does not prevail over the other—otherwise, there is danger there.

Finally, I very much approve of the levelling-up part of the agenda in relation to the bank. The headquarters in Leeds is very welcome. It is a much more constructive move than the somewhat childish suggestion that the House of Lords goes to Stoke-on-Trent; it seems much more realistic and in line with what we should be doing. I am pleased about some of the earlier decisions on investment, which seem to be spread in south Wales, Teesside and so on—that, too, is valuable.

I am sure there will be many more points as we go through Committee and Report, but that was an overall view of the objectives and some general questions to my noble friend the Minister.

UK Infrastructure Bank Bill [HL]

Lord Bourne of Aberystwyth Excerpts

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

Those are the bases for the amendments we have put forward, but I shall listen with interest to other Members of the Committee who will be speaking on them.

[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.

--- Later in debate ---

I end by saying, if I may, that I was really very impressed by the immediate response of the Minister to the question about parliamentary scrutiny. I did not know what she was going to say and I thought it was brilliant. Unfortunately, it is not parliamentary scrutiny. It was remarkable; I shall remember it for some time and quote it as something from the Dispatch Box that showed real class. It was really good, but what we mean by parliamentary scrutiny is that people have to come back here and explain themselves: that is what parliamentary scrutiny is and I am very concerned about that. I therefore have three points: let us add in the things we need, let us be bit reticent about overdoing it and let us make sure that that there is proper parliamentary scrutiny.

[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.

UK Infrastructure Bank Bill [HL]

Lord Bourne of Aberystwyth Excerpts

Consideration of Commons amendments
Tuesday 14th March 2023 Lords Chamber

[Baroness Hayman (CB)]

I declare my interest as co-chair of Peers for the Planet and rise to speak to my Motion 3A, which as the Minister said would reintroduce nature-based solutions into the definition of infrastructure in which the UK Infrastructure Bank may invest.

We had some very helpful conversations after Report and the debates in the other place, and I think we have now reached a highly satisfactory position on this amendment, in no small part due to the Minister’s customary constructive approach to the debates that have taken place in this House, for which I am very grateful.

Of course, the original amendment included the “circular economy”, and I know that there will be some disappointment that that is not included now, but the bank’s strategy is reassuring on that issue. Anyone who listened to the item on the “Today” programme this morning about data centres using the heat they normally have to dispose of to heat up the water in local swimming pools will have heard a lovely example of how we need to put those sorts of issues together.

I thank all the Members of this House who have taken part in the debates, and in particular those who signed the various iterations of my amendment, including the noble Lord, Lord Bourne of Aberystwyth, the noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Teverson. This amendment has had significant cross-party support because of the increased recognition that nature-based solutions have a critical role to play in the fulfilment of the bank’s objectives. The Chancellor’s strategic steer in 2022 encouraged the bank to

“explore early opportunities in nature-based solutions”

and aim to have

“a positive impact on the development of the market”.

The bank has since published a discussion paper setting out its initial thinking on how it can invest in and support the growth of natural capital markets, and I look forward to the results of this consultation.

The discussion paper clearly explains the importance of natural capital as a form of infrastructure and the vital contributions it makes to our society and economy, often in ways which are more cost-effective to the taxpayer. Carbon removals through creating and restoring woodlands, wetlands and peatlands, flood mitigation measures, providing “clean and reliable” water supplies, underpinning our food security and bolstering our resilience to climate change: these constitute numerous examples of how we can deploy nature-based solutions to support our infrastructure and provide social, economic and environmental benefits. There is also an ever-increasing recognition of the key role that nature can play in solving climate change, nature being our biggest asset with which to fight it. Nature-based solutions also provide significant co-benefits, such as jobs and good health and well-being outcomes, with considerable economic advantages.

I welcome that the UK is leading on the Taskforce on Nature-related Financial Disclosures, but there is an average $700 billion funding gap for protecting and restoring nature globally, and evidence that more needs to be done to help market participants mainstream and scale these products alongside growing investor demand. This simple addition to the definition of infrastructure in the Bill sends a strong signal to the markets that the UK recognises this and the Government are serious about taking action to help build and develop this nascent market. It also provides certainty to the bank, which recognises that it has a role in developing capacity towards a pipeline of investable projects and is poised to act. It will encourage others to do the same and further develop the UK finance sector’s position as a leader in this important emerging new market.

As I said, I am very grateful to the Minister and her officials for the support they have given and the resolution that I think we have reached.

[Lord Bourne of Aberystwyth (Con)]

I support the noble Baroness, Lady Hayman, in her proposed amendment and congratulate her on her tenacity in pursuing this issue. She has achieved something notable, and I thank her very much indeed. Account being taken of nature-based solutions improves the Bill and, on that basis, I also congratulate the Minister. My noble friend has proved herself to be a listening Minister, and the Government have taken a very common-sense approach, which improves the Bill. It was previously a good Bill, and it is now a better Bill after changes made in this House and the approach of the Minister and the Government.

I do not propose to detain the House, except to say that I agree with much of what the noble Lord, Lord Teverson, said in Committee and at Second Reading. I regret that we have not gone a bit further, but at least we have an improvement in this legislation. On that basis, I once again congratulate the Government.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I join in the congratulations to the noble Baroness, Lady Hayman, who is both a force for nature and a force of nature in your Lordships’ House. I thank everyone else who has joined in getting this progress on nature-based solutions, although we should not look at those solutions as an alternative to cutting our carbon emissions. Both those things have to be done.

I was not going to speak but, given something the Minister said in her introduction, I feel forced to ask her a question. In justifying the exclusion of “circular economy” in the Commons amendment, she said that it was “not a precise term”. Does the Treasury understand the term “circular economy” and its essential nature in delivering the sustainable society we need? If the Minister wants a source for this, I point to a government paper entitled, Circular Economy Package policy statement, from 30 July 2020, which was put out jointly with Wales, Scotland and Northern Ireland and which defined “circular economy” as

“keeping resources in use as long as possible, extracting maximum value from them, minimizing waste and promoting resource efficiency”.

Will the Minister confirm that the Treasury recognises that the circular economy is an acknowledged term and is urgently needed?