UK Infrastructure Bank Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

2nd reading
Tuesday 24th May 2022 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I too welcome this Bill and agree with much of what has been said by the noble Lords, Lord Bourne and Lord Teverson, on two issues: first, the need to clarify the relationship on devolution and, secondly, the broadening of the objectives so that they really do cover environmental aspects beyond climate change. However, other noble Lords are much more expert than me on those matters, so I want to direct my observations to three specific points.

First, to take up a point made by the noble Lord, Lord Bourne, it is very important that we clarify what is meant by “directions” under Clause 4. I welcome the idea of the Bank’s independence. If you are looking after future generations, you must have a body not subject to political pressures. The Climate Change Act, in its balance, has at least provided a mechanism for doing that. What is meant by “directions” and, more specifically, what is meant by a “specific” direction? Does this mean that when the bank wants to invest in a project, it can be told that it must not do it by the Treasury? I very much hope, therefore, that the Minister can clarify this; otherwise one will have to look for some means of defining what is meant by “specific”.

The second point, which again has been touched on, relates to the appointment of directors. I am delighted to see that the Government accept that this Bill, when enacted, will be part of environmental law. The Treasury loves to appoint people with complete discretion—one can see that in the lack of restrictions on whom it can appoint to various boards—but now that we are dealing with environmental law, can Her Majesty’s Treasury not look at the Climate Change Act and the Environment Act and see that the board as a whole needs a range of qualifications? I particularly urge the Minister to have regard to Schedule 1 to the Climate Change Act and Schedule 1 to the Environment Act—I do not want to take up time reading them out —which require the board as a whole to have certain of the qualifications necessary to ensure that it has the expertise to carry out its functions. I do not see how a board that has the twin objectives of dealing with climate change and perhaps broader environmental issues, and the development of regional infrastructure—within that I include development in the devolved nations—can do that without people with specific expertise. It plainly needs financial expertise, but in the case of the non-executive directors, in particular, whom the Treasury can appoint, there should be a model that is consistent with environmental law, not with the Treasury’s general attitude, which is that it loves to control everything. I think it ought to realise that there is now a greater force than it.

Finally, I turn to Clause 8. The Explanatory Notes dryly explain that:

“This clause is intended to ensure that the duties imposed upon the Bank by the Bill are technically enforceable as a matter of law.”


In looking at environmental legislation—this is true in every country in the world—we have long learned that there is an inherent conflict of interest between the short-term and the long-term, and plainly in this Bill there is also a potential conflict of interest between economic development, and climate change and environmental protection. Indeed, this is recognised in paragraph 4.2 of the framework document:

“The Company’s dual objectives of investing in projects to help mitigate and adapt to climate change, and to support regional economic growth across the UK have huge potential synergies. But occasionally these objectives will be in tension with each other, especially in the near term”,


which is a way of the Government conceding, in careful language, that there is an inherent tension in what is to be done by this bank.

Therefore, I return to the point raised by the noble Lord, Lord Teverson: how do we ensure that the bank meets its legal duties? The Explanatory Notes explain that Clause 8 is to do with ensuring that the articles of the company are consistent with what the Bill provides. I find it astonishing that we need a clause for that purpose, bearing in mind the control the Treasury has over the bank, but that is conceded when the notes state:

“It is not envisaged that these provisions will be needed in practice.”


However, we do need these provisions in practice: we need something to ensure that the duties of the bank are not merely aspirational, which is so much of what is said these days, but enforceable.

There are various mechanisms of enforcement. The Climate Change Act contains one; a legal duty enforceable in the courts is another. For example, one could think of giving the Office for Environmental Protection some role in enforcing the obligations of the bank. However, one cannot buy a share in this bank and go to a shareholders’ meeting, and one cannot bring an action as a shareholder against the directors, because there will not be any shareholders. The only people who can enforce this are Parliament—and I shall not make any observations about that—or the Treasury, which has an inherent conflict of interest: the short-term and long-term considerations.

Therefore, I very much hope that we look particularly at Clause 8. It is a very good clause in one sense, but we need to put something in the Bill to ensure that the bank’s duties are not simply aspirational but are actual duties in a legal sense and can be enforced by someone with a motivation to enforce them.