UK Infrastructure Bank Bill [Lords]

Richard Fuller Excerpts

2nd reading
Tuesday 1st November 2022 Commons Chamber

[John Glen]

I will not be able to comment on specific investments. As I said, a series of investments have been made in the last 12 months, and I would be happy to correspond with my right hon. Friend and put him in touch with the bank so that the logic behind that decision can be explored with him.

[Richard Fuller (North East Bedfordshire) (Con)]

May I broaden out the question the Chief Secretary has just answered? Can he explain the oversight of the bank? There will be a report after a certain number of years, but will it be regulatory oversight, oversight by Parliament or oversight by the Treasury?

[John Glen]

I am grateful to my hon. Friend for the work that he did in the Treasury in recent months as my successor as Economic Secretary.

The board of the bank has been filled over the summer so that the right expertise has come in to oversee the investments and metrics for success. They will be accountable through normal processes and accountable to Parliament. Indeed, the chairman and chief executive of the bank have made themselves available to Parliament through the process of this legislation, and I attended meetings with them earlier this year with Members of the House of Lords. I know that they are willing to be scrutinised on the logic of their evolving processes and remit so that they can capture the wisdom of this House and the other place.

With regard to the climate change objectives, significant public and private investment will be needed to achieve the UK’s infrastructure policy goals, and low-carbon investment will need to be significantly scaled up to deliver net zero. That is highlighted by the fact that the UK’s core infrastructure—power, heat and transport networks—account for more than two thirds of UK emissions. Without the bank, the private sector is likely to focus its investment on lower-risk technologies and sectors, and we will not achieve regional and local economic growth without better infrastructure in every region of the country.

Disparity in infrastructure across the country has been identified as a key driver of economic inequalities, and central to the Government’s ambitions to level up is setting up new institutions boosting productivity, pay, jobs and living standards. The bank will help to grow the private sector and support it to deliver opportunities in parts of the country where they are lacking. Without intervention, the private sector is likely to continue to target geographic areas that have historically received higher levels of private capital. Targeted advice, support and challenge from the bank can help raise ambition and boost the capability of regional and local government as they tackle complex infrastructure projects.

Finally, the NIC recommended that the bank be set up in 2021. As I have already mentioned, the bank has been operational since last summer and has £22 billion of capacity. The bank is also operating across the UK and has already invested in each of our four nations. I am pleased that each Government have supported the bank, and discussions for a legislative consent motion are progressing well.

In that context, I come to the provisions of the Bill. It will complete the setting up of the bank as an operationally independent institution. It is a short Bill of 11 clauses, broadly split across three areas. First, the Bill enshrines the bank’s objectives and activities in legislation to provide clarity for the bank and the market on the bank’s long-term purpose. That is covered in clause 2, which includes the bank’s core objectives; its activities, including providing finance for the private sector and public authorities; and a definition of infrastructure.

The definition of infrastructure is inclusive and based on existing definitions in the Infrastructure (Financial Assistance) Act 2012 and the United Kingdom Internal Market Act 2020. Crucially, given the bank’s scope, we have focused the definition on economic infrastructure. As a result of the Bill’s passage through the Lords, we included energy efficiency in the definition to clearly signal policy intent. I am sure that we will discuss that further in this debate and in Committee.

I highlight that we have taken a power to amend the activities and definition of infrastructure to allow the bank to keep pace with an innovative market. We have not, however, taken the same power to amend the bank’s objectives. That is vital in providing clarity to the market and to ensure that the bank is not fundamentally changed without further primary legislation.

Secondly, the Bill will allow the bank to provide financial assistance to the private and public sector including, crucially, giving the bank the power to lend directly to local authorities in Great Britain and to the Northern Ireland Executive. That is covered under the bank’s activities in clause 2 and further defined in clause 10 and clause 5, which allows the Treasury to put the bank into funds.

It is important to note that the bank will be able to lend directly to each UK nation, including their local authorities. In the case of Northern Ireland, we have designed the bank to be able to lend directly to local authorities and the Northern Ireland Executive. That accounts for the fact that the Northern Ireland Executive hold responsibility for most capital infrastructure projects that would be the responsibility of local authorities in the rest of the United Kingdom. As I said at the beginning of my remarks, this is a Bill for the whole UK.

[Richard Fuller]

One of the objectives is that the bank should make a positive financial return. Can my right hon. Friend explain to the House why that is not in the Bill?

[John Glen]

I would be very happy to look into that matter and respond to my hon. Friend at the end. It is probably deemed to be unnecessary, but I will give absolute clarity, or the Exchequer Secretary will when he closes.

Thirdly, the Bill supports the operational independence of the bank by setting out clear governance and accountability in how it will be run. That is covered by the remaining clauses, including board requirements in clause 8, reporting requirements in clause 6, a review of the bank that will also look into its additionality in clause 9, and the ability for the Treasury to issue a strategic steer in clause 3 or a direction in clause 4.

Although the bank is still in its infancy, it is already taking a leading role in the clean infrastructure market. Over time, we expect the bank to catalyse new markets of infrastructure by crowding in private capital to help meet our climate change ambitions and level up across the UK. In much the same way that the EIB helped to catalyse the offshore wind market, where the UK is now a global leader, the UKIB will help to catalyse the infrastructure markets and technologies of the future.

Indeed, the Bill will be at the heart of our focus on our long-term energy security. It will help the Government to deliver more renewables, including more offshore wind. I have no doubt that the bank will grow to be a sophisticated and adaptive tool, which will allow the Government to quickly place capital behind the projects that this country needs. I reiterate to hon. Members on both sides of the House and to the wider public that we have designed the bank to endure and be a long-lasting institution that will deliver the long-term priorities on which we all depend. I greatly look forward to this afternoon’s debate and to drawing on the expertise of hon. Members on both sides of the House.

[James Murray (Ealing North) (Lab/Co-op)]

I will set out the views of the Opposition. We will not oppose the Bill today, as it seeks to put the UK Infrastructure Bank, which has been operating on an interim basis since June 2021, as we heard, on a statutory footing. We support the establishment and strengthening of the bank, and we want the new institution to play its part in tackling climate change and supporting regional and local economic growth.

The need for economic growth is central to the challenges our country is facing today, and it comes after 12 years of low growth under the Conservatives. During the last Labour Government, despite the global financial crisis, the economy grew by 2.1% a year. Since 2010, however, the Tories have grown the economy by just 1.5% a year. The outlook under the Tories now is even worse, with growth forecast to be the worst in the G7 over the next two years. As the previous Chancellor recently admitted, under the Conservatives we have been stuck in a “vicious cycle of stagnation”.

That stagnation in our economy has seen real wages fall and the tax burden rise for working people in this country. Even before the disastrous mini-Budget, working people were paying the price for the Conservatives’ record of failure on the economy. What the then Chancellor announced on 23 September poured petrol on the fire, as Ministers unleashed a discredited and reckless economic approach on the British public. Trickle-down economics, unfunded tax cuts and an ideological slashing of protections for workers and the environment—no wonder the former Prime Minister and Chancellor were removed from office so quickly, and no wonder the current Chancellor has had to U-turn on almost every measure. The truth is that this economic crisis was created in Downing Street. The damage has been done, and working people will be paying the price for years to come.

Part of the reason for the Conservatives’ failure to grow the economy as it could have been growing over the last decade has been their failure to invest in the infrastructure our country needs. As we look ahead to the coming decade, investment in our country’s response to the climate emergency could not be more critical, both to protect the environment and to grow the economy.

That is why Labour’s green prosperity plan is so important. Under our plan, we would invest in wind, solar and nuclear power to make our electricity system zero-carbon by 2030, we would insulate 19 million homes across the country, bringing down carbon emissions and people’s home energy bills, and we would invest in new jobs in industries of the future, from electric vehicles to clean steel.

We recognise that the UK Infrastructure Bank can play an important role in supporting essential investment. We therefore welcome the fact that one of its objectives, set out in clause 2 of the Bill, is to help tackle climate change. But setting up the bank is not enough on its own; we need a Government who will drive forward the agenda of green investment that we need. Sadly, the Government’s record makes it clear that they will fail to rise to that challenge.

There is evidence of that failure littered throughout the past 12 years. Ten years ago, the Government set up the Green Investment Bank. Five years later, they sold it off to a private equity group. The Public Accounts Committee said that the bank had

“failed to live up to original ambitions”.

The Committee was clear that, in selling it off, the Government had been focused on

“how much money could be gained from the sale over the continued delivery of GIB’s green objective.”

Supporters of the current Prime Minister on the Conservative Benches may remember that, two years ago, the then Chancellor published a video on his YouTube channel titled: “Rishi Explains: Green Home Grants”. In that video, the now Prime Minister excitedly announced that the brand-new green homes grant scheme was open for applications. However, I was not able to find any videos of him explaining why the green homes grant scheme closed six months later and saw £1 billion cut from its budget. Although he seems to have forgotten to make a video explaining that, the Environmental Audit Committee was happy to set out its views. In its report, “Energy Efficiency of Existing Homes,” it concluded that the scheme had been

“rushed in conception and poorly implemented”

and described its administration as “nothing short of disastrous”.

[Richard Fuller]

The Opposition spokesman talks about the importance of sticking with plans and of permanence. That is quite right; this is infrastructure, which lasts a long time. Will he therefore use this opportunity on the Floor of the House to give the assurance that, should Labour form a Government in the near future, it will make no changes to the objectives listed in the Bill?

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[Richard Fuller (North East Bedfordshire) (Con)]

It is a pleasure to welcome this sensible Bill, which puts the operations of the UK Infrastructure Bank on a statutory footing. It is pleasing that the Opposition will support the Bill, but it was somewhat worrying to hear the Opposition spokesperson, the hon. Member for Ealing North (James Murray) say that the Labour party was not committed to its objectives. That will send a worrying signal to investors in infrastructure, who want to see a long-term view from both sides of the House on the plan for UK infrastructure. Perhaps he might clarify in his closing speech that Labour will commit today to make no changes whatsoever to the Bill’s objectives. It would be helpful for him to make that indication.

It is right that amendments were made to the Bill in the House of Lords to include issues to do with the circular economy and nature-based solutions. That will broaden its aspect and applicability.

In opening, my right hon. Friend the Minister referred to the European Investment Bank. It is true that the UK used to benefit significantly from investment funds coming from the EIB, but those really came to a close in 2016-17 and, as that was five or six years ago, we should be honest about the need to get the bank moving. I am not trying to push for quicker movement, but this is an opportunity to start getting to the £5 billion or £8 billion that the UK Investment Bank said was its objective in its strategic plan this summer.

I turn to crowding in, which is one of the three parts of the bank’s “triple bottom line”, as it calls it. That is absolutely the right thing. There is plenty more that we can do, and I know that the Government are focused on that. With Solvency 2 and pension fund money being made available for more infrastructure expenditure, will the Minister update the House on the Government’s thinking about that?

The City of London and the Government have made tremendous strides in promoting green finance and London as a centre for that. Again, it would be useful to hear an update from the Minister on the UK’s leadership position, which the bank could play a significant part in helping us to deliver.

One of the most important parts of the 2019 review of infrastructure finance was about how the Government can provide a reliable delivery pipeline. That means that they are clear about the projects that they wish to promote and have a timetable that paces them out over a number of years. The National Infrastructure Commission can—it does not always—do a good job of that. Perhaps we will hear more about that in the near future.

I return to the point that I put to the Minister about another part of the triple bottom line: generating

“a positive financial return”—

which it says is

“in line with the Bank’s financial framework.”

Perhaps that is the answer to why it is not in the Bill, but it would be helpful to have a little more transparency about what the financial framework would be and how it will be brought to the House for some regulatory oversight. Will that be through hearings of the Treasury Committee or other reports that may be made to the House from time to time?

That is an important factor in the UK Investment Bank’s goals and the role that it can play in helping the UK to achieve net zero. Let us be frank: when, I think, four or five years ago, the House committed to achieving net zero in a certain timeframe, there was no price tag attached. It was the biggest commitment ever made without a price tag attached for the British taxpayer. The UK Investment Bank can play a role in making sure that that price tag gets smaller and smaller. In fact, one objective the UK Infrastructure Bank says it wishes to focus on is the transition to subsidy-free models. That is absolutely essential to some key aspects of how we achieve net zero, in particular the decarbonising of home heat where we will need to attract private sector capital and long-term, patient capital. We will need the Government, through the UK Infrastructure Bank, to provide some catholic investment and, most importantly, the product structures that enable drawing in of that capital behind the most effective way, while also being able to show how we get out of the taxpayer funding it all. We cannot afford to make unfunded pledges again and again on not only this generation of taxpayers, but on future generations of taxpayers. That is why I am particularly keen on pressing the Minister and, should I be fortunate enough to sit on the Public Bill Committee, investigating further—[Interruption.] I guess that is a straight no, Mr Deputy Speaker—how we can ensure that the commitments to a positive financial return and to transitioning from subsidy-free models are given more weight in the structure of the UK Infrastructure Bank.

Finally, I draw the attention of those on the Treasury Bench to clause 4, on the power of direction. This is a familiar topic, I think, in various parts of the Treasury at the moment. I would be interested if in his winding-up speech the Minister provided us with a little more of his thoughts. There was a debate on that in the other place. It might be helpful if the Minister updated us on what further thinking there has been on the power of direction.

This is a very sensible Bill. It confirms what is already the case and I am sure it will go through the House with very great speed.

[Mr Deputy Speaker (Mr Nigel Evans)]

The Whip on duty has made a note of your enthusiastic application to sit on the Committee.

UK Infrastructure Bank Bill [ Lords ] (First sitting)

Richard Fuller Excerpts

Committee stage
Tuesday 22nd November 2022 Public Bill Committees

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to serve under your chairmanship, Mr Davies. I thank Members for their work on the Committee this morning. Clause 1 is a technical clause that outlines that the company incorporated as the UK Infrastructure Bank will be referred to as “the Bank” for the purposes of the Bill, and links it in legislation to its company registration number. The clause is essential to ensure that the Bill refers to the correct legal entity. I recommend that it stand part.

Clause 1 ordered to stand part of the Bill.

Clause 2

Objectives and activities

[Richard Fuller (North East Bedfordshire) (Con)]

I beg to move amendment 10, in clause 2, page 1, line 14, at end insert

“, and

‘(c) to create long term financial returns to its shareholder(s).”

It is a pleasure to serve under your chairmanship, Mr Davies, and to be the first Member, other than the Minister, to speak. As hon. Members look down the amendment paper, they will see that I have tabled a number of amendments. It is such a pity that so few Labour Members have bothered to show up to the Committee on such an important issue. I always thought that the Labour party thought that it was important to invest in green technologies and to level up. Clearly, the absence of Labour Members shows that that is just a paper commitment, not a real one.

This is an important Bill. Of course, in a certain regard it formalises what is already extant; however, it is important that we, as Members of Parliament, ensure that we provide the right objectives and activities to which the board and directors of the UK Infrastructure Bank should subsequently pay attention. In that regard, I have tabled two amendments to clause 2: amendments 10 and 11. If it is convenient with you, Mr Davies, I shall also speak to amendment 11.

[The Chair]

That is all right.

[Richard Fuller]

Amendment 10 would add paragraph (c) to subsection (3), with a requirement that bank objectives should include long-term return to shareholders. To be clear, the shareholders are UK taxpayers.

Amendment 11 would add paragraph (c) to subsection (6) on the importance of the bank having regard to its role in additionality. That refers to the role of the bank in using taxpayers’ money or the power of the UK Government’s balance sheet in attracting private capital.

Why are those two amendments so important? Let us be honest. Parliament passed the Climate Change Act 2019, containing the net-zero policy, which has the potential to waste billions of taxpayers’ money. It is a policy objective with no price tag attached. It is also the case that technologies are evolving, and economies of scale can be elusive.

The UK Infrastructure Bank mentioned three things in its strategic plan that it was interested in pursuing for investment. The first was the roll-out of electric vehicle charging points. Does any hon. Member, or the Minister, know how that can be done today economically? The second was the retrofit of buildings. Does any hon. Member know how that can be done, what the right technology would be and how it should be funded? Does the Minister know? The third was the scaling of storage technologies. Does anyone know the right technology to choose for that?

The answers to those questions are crucial, because we are going to devolve the decision making about how that taxpayers’ money is spent to the UK Infrastructure Bank. There are significant risks with those technologies, and the consequences for taxpayers’ money.

The bank talks a lot about its potential for crowding in money and private capital, but there is also great potential for crowding out private capital. It is very simple. We already have a significant amount of investor appetite in environmentally sound investments. The Minister has been very successful recently in his efforts with Solvency II to release potentially additional long-term, patient capital that can invest in the sorts of projects that the UK Infrastructure Bank seeks to invest in. What reassurance can we have that the UK Infrastructure Bank is doing the right thing by crowding in private capital, rather than by crowding out?

We also need to see a little more clarity from the bank about where it is going to sit on the spectrum of risk. I draw Committee members’ attention to page 26 in the UK Infrastructure Bank’s strategic plan. Under the heading “Barriers to private infrastructure investment”, it lists four segments for investing: R&D, emerging, high-growth and maturity. It then splatters itself over three of those four segments. What sort of focus for investing is that?

What does that tell us about how we should assess the way in which capital has been allocated according to risk? Should the bank be investing more in late-stage opportunities? Is the real risk that it should be investing at an earlier stage, to stimulate the growth of technologies after they have come out of research and development? It is not at all clear what the focus should be. That gets to the root of the question that I want to press the Minister on. How comfortable is he that we and the Government have control over how the bank will invest taxpayers’ money? Is he comfortable that there are sufficient constraints on the bank to prevent it from wandering off with its own sense of purpose? Should there be provisions in this Bill to tighten it a little further?

Finally, the reason for us to focus on this is the UK Infrastructure Bank itself says that it has a “triple bottom line”. Well amen to a Government body actually having a bottom line because too often public bodies do not even worry about the bottom line, but it has three: achieving policy objectives; crowding-in private capital; and generating a positive return. It is because they have stated three bottom lines, one of which was to generate a positive return, that I sought, under amendment 10, to add that to clause 2(3).

I finally make some reference to Government amendment 1, which relates to deleting references to

“the circular economy, and nature-based solutions”.

I am interested to hear what the Minister’s rationale for this is; maybe I can see a rationale but I want to hear if that is actually the Minister’s rationale. The principles of the circular economy and the principles of nature-based solutions have the merit of being quite specific in what is otherwise quite a general set of remits for the UK Infrastructure Bank. I guess that the Minister will say, “Well yes, that is right. However, there are lots of other things that it needs to focus on. If we pick those two, we should not pick others.” But I would be very interested to know the particular reasons why the Minister does not feel that those two should be included.

Finally, I note that Government amendment 2, which relates to everything I have said about the objectives around additionality and long-term returns for shareholders, would delete clause 2(6) completely. If so, I will obviously withdraw my amendment.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Good morning, Mr Davies. It is a pleasure to serve under your chairship. Good morning to the rest of the Committee. I look forward to our debate today. I think that this will be a productive conversation. I also use this opportunity to formally congratulate the new Minister.

Before I turn to clause 2, I want to say in my opening remarks that Britain has so much potential, but right now we are facing—and I want to put this on record—a Tory economic crisis that is holding us back. To get our economy growing again, we will need to see investment in infrastructure projects and create highly-skilled, well-paid jobs and tackle climate change in a modern industrial strategy, working hand in hand with businesses.

I also want to put on record my reassurance to the hon. Member for North East Bedfordshire that Labour is well represented on these issues. Members will see that through our ideas and what we are proposing today, which will strengthen this Bill. Also, it is really important that we recognise that there has been a lost decade of broken Tory promises that have left much of the UK with second-rate infrastructure. That is why Labour supports strengthening the Bill, but much of the Bill as it stands relies on out-of-date thinking. That is why we are proposing amendments today.

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[Andrew Griffith]

Perfect, Mr Davies. My hon. Friend the Member for North East Bedfordshire is not only a distinguished predecessor of mine, but is a doughty champion for the interests of the taxpayer, and we commend him for that.

We have set out in the framework that the bank must already generate a financial return as part of the company’s operating principles. As set out in the UK Infrastructure Bank’s strategic plan, that has been set at an admirable 2.5% to 4% by the end of 2025-26. The bank, as my hon. Friend said, has a triple bottom line, including a positive financial return as a requirement across its investments.

Putting that target into law—I cannot believe that my hon. Friend is an advocate of writing everything into statute; the statute is often large enough as it is without embellishing it with additional Christmas trees of prescription—could create legal problems for the bank and undermine its core purpose, given that there might from time to time be reasons outside of its control why it cannot meet the target in relation to every investment.

[Richard Fuller]

My hon. Friend is right: not everything should be written into statute, but there ought to be more clarity. Can he provide a couple of points of clarity so that I may withdraw my amendment? On the bank’s target of 2.5% to 4% return, is that a real rate of return, and above what cost of capital? And if the chief executive and the directors do not achieve that rate of return, what will be the consequences for them?

[Andrew Griffith]

I will write to my hon. Friend on the calculation of that return. The UK Infrastructure Bank is subject to the full panoply of disclosures, sanctions and accountability, not just to this place, as is appropriate, but under the Companies Act 2006 under which it is constituted. I do not believe, therefore, that there is a deficiency in that. For that reason, notwithstanding the very understandable spirit with which my hon. Friend advocates his amendment, I hope he will consider withdrawing it.

[The Chair]

Mr Fuller, do you want to withdraw the amendment?

[Richard Fuller]

Yes. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Abena Oppong-Asare]

I beg to move amendment 17, in clause 2, page 1, line 14, at end insert—

“(c) to reduce economic inequalities within and between regions of the United Kingdom, and

(d) to improve productivity, pay, jobs, and living standards.”

This amendment clarifies that the Bank’s objective to support regional and local economic growth includes reducing economic inequalities within and between regions and improving productivity, pay, jobs, and living standards.

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[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve on the Committee with you as Chair today, Mr Davies. As we know, clause 2 concerns the objectives and activities of the UK Infrastructure Bank. Subsection (5) seeks to define the infrastructure and makes reference to the

“structures underpinning the circular economy, and nature-based solutions”,

which reflects an amendment made in the Lords that Government amendment 1 seeks to remove. The Government’s opposition to this measure seems to run counter to subsection (3)(a), which defines tackling climate change as an objective of the bank. I note that the Government do not oppose this objective of the bank, but they do seem to reject its delivery. We naturally oppose the amendment, which highlights how the Government seem to be all talk but unwilling to follow through on solutions to the climate emergency.

The truth is that the Government and the newly appointed Prime Minister have a record of failure on investing in green infrastructure for our country and our economy. While we welcome the bank’s focus on tackling climate change, no matter how well it plays its part, the British people need a Government with an effective plan to make the investments in the jobs, homes and energy supplies of the future a reality.

[Richard Fuller]

The hon. Gentleman may point to conflict between taking out from subsection (5) the words

“structures underpinning the circular economy, and nature-based solutions”,

and the objective in subsection (3) about tackling climate change, but if he looks at subsection (5)(c), he will see that

“climate change (including the removal of greenhouse gases from the atmosphere)”

is retained. The amendment does not affect the Government’s commitments on climate change at all.

[James Murray]

I thank the hon. Gentleman for his intervention—it is a pleasure to speak with him once again following his brief tenure on the Government Front Bench. I am not quite sure from that intervention whether he supports our opposition to Government amendment 1. Perhaps we will see when we push it to a vote shortly.

Let me move on to Government amendment 2. It seeks to remove from the clause subsection (6), which was introduced by Labour in the Lords. Subsection (6) requires the bank to have regard to public interest when targeting investment that improves productivity, pay, jobs and living standards and reduces the economic disparities between the nations and regions of the United Kingdom. Sadly, it comes as no surprise to us that the Government wish to remove commitments to better pay and the reduction of economic disparities. My hon. Friend the Member for Erith and Thamesmead already set out clearly the importance of prioritising job creation and putting it in the Bill. We want all parts of the country to benefit from investment in green jobs for the future, along with improved rail and other transport services and other essential modern infrastructure, including broadband.

When it comes to supporting economic growth across the country—or levelling up, as the Government used to call it—words ring hollow unless people see change. That is why clause 2(6) is so important, as it seeks to ensure that the bank has regard to the first mission of the Government’s levelling-up White Paper when exercising its functions under the Bill. We oppose the amendment because we seek to hold the Government to account on their commitment to level up our country.

Question put, That the amendment be made.

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[The Chair]

I call Richard Fuller to move amendment 11.

[Richard Fuller]

I no longer wish to move amendment 11, because clause 2(6) has been removed.

[The Chair]

The amendment is not moved.

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[Andrew Griffith]

Clause 3 gives His Majesty’s Treasury the power to issue the bank with a strategic steer. We talked about that earlier as a mechanism by which the Government of the day can flexibly, and in an agile fashion, give the bank some direction. That steer will set out what, in the Government’s view, the bank should prioritise and focus its activities on. The strategic steer, and any revisions of it, will be required to be laid before Parliament.

The Chancellor issued the bank with its first strategic steer in March in order to inform the development of the bank’s inaugural strategic plan, which was published in June. That gave the opportunity to share an update on the Treasury’s interpretation of the bank’s strategic objectives and to clarify the definition of infrastructure that the bank should be working with. It highlighted the role that the bank can play in improving energy resilience, as well as setting out the outcome of the Treasury’s review of environmental objectives, confirming that there is significant scope in the bank’s existing objectives for it to invest in nature-based solutions.

We do not expect a steer to be issued more than once a Parliament, which will ensure that the bank has certainty in the long term to plan its investment strategy while keeping pace with Government priorities and ensuring policy alignment across infrastructure investment.

[Richard Fuller]

Can the Minister tell me whether the steer will include giving a bit more specificity to the UK Infrastructure Bank about where on the investment spectrum—emerging businesses, high-growth businesses, mature businesses—it should place the preponderance of its resources? Will the steer provide clarification from the Government to help the bank?

[Andrew Griffith]

The strategic steer is precisely an attempt to find the right balance between prescription—I understand that my hon. Friend does not seek that directly but wants to be able to command the bank to invest at particular points of the curve from time to time—and the bank’s being able to use its expertise and motivate its leadership by having a relatively broad set of parameters. We all understand that that is a careful balance, and we do not want to move it in either direction, but I agree with my hon. Friend that the strategic steer is a vehicle to achieve the purpose he seeks.

[Richard Fuller]

I do not mean to dwell too much on this issue, and I certainly do not want to irritate the Minister through my questioning, but I want to make the point that the skillsets required for the bank to be effective as an emerging-stage investor are different from those required for it to be an investor in a mature business or a high-growth business. My concern is that the bank will try to spread itself too thinly, particularly in the early stages.

[Andrew Griffith]

My hon. Friend makes a very wise and informed point. The UK Infrastructure Bank is not the only intervention that the Government make; the British Business Bank has a broad portfolio of ways to support the sector. I hope that between the two of them, with the strategic steer perhaps being used as a vehicle to align them, every outcome that my hon. Friend seeks can be properly covered. Again, he makes a strong point about confidence and capability, and about how we resource against different types of investment.

The bank is required under the clause to update its strategic plan to ensure that it reflects the changes when a strategic steer is issued, once per Parliament. That will ensure that the will of Parliament is satisfied within a reasonable timeframe. Given that the bank is ultimately owned by the Government and the taxpayer, it is right that we retain a power to issue the bank with a strategic steer to set out its priorities, which is why I support the clause.

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[Abena Oppong-Asare]

As the Minister highlighted, clause 5 concerns financial assistance to the bank and clause 6 concerns the bank’s annual accounts and reports. The Minister has already provided a detailed summary, so I am not going to repeat what he has said. As he mentioned, clause 5 allows for the Treasury to provide financial assistance to the bank for the purpose of helping the bank deliver its objectives. Clause 6 requires the bank’s directors to comply with section 441 of the Companies Act 2006, delivering the Treasury a copy of its accounts and reports each financial year. As the Minister has outlined already, such clauses are commonly used. These are clearly technical and administrative requirements, and we will not object to them.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Clause 7

Directors: appointment and tenure

[Richard Fuller]

I beg to move amendment 12, clause 7, page 3, line 20, leave out “fourteen” and insert “eight”.

[The Chair]

With this it will be convenient to discuss amendment 13, clause 7, page 3, line 20, at end insert

“of which at least four must be non-executive directors”.

[Richard Fuller]

I am getting clear instructions from the Whip to be as brief as possible, so—[Interruption.] Not quite that brief. I draw hon. Members’ attention to clause 7(a). Clause 7 concerns the directors and 7(a) is about the number of directors; it says the bank is to have at least five and no more than 14 directors. It was that number 14 that caught my eye: it seems an extraordinarily large number of people to have on a board, and I do not believe that it is in accordance with corporate best practice.

Furthermore, there is no provision for the balance between executive and non-executive directors. It is a clear aspect of corporate governance that there should be a plurality and, often, a majority of non-executive directors. I want to probe the Government about why the number is 14, and why there is not more specificity about non-executive directors.

To back up my argument, I should say that the Minister will be aware that in the United States the average number of directors for the largest American corporations is between eight and 11, not 14. In its review of the FTSE 100 companies, Spencer Stuart said that the average board size is 10, and that 77% of boards are solely non-executive directors. The Minister will also be aware that the British Business Bank has nine directors, of whom four are non-executives and one is additional—he is a senior independent director. These are important points. There is a risk that the board could be full of people there to please—[Interruption.] He just told me to shush up.

[David Linden]

rose—

--- Later in debate ---

[Richard Fuller]

No, I am not going to take an intervention. He just told me to sit down, but he can sit down while I finish making my speech.

[Valerie Vaz]

Cronies!

[Richard Fuller]

The right hon. Lady is right about the potential here; I think I heard her use the word “cronies”. That is the concern—that with so many places the board will end up being stuffed full of people who have their own interests to play and that good governance will, as a consequence, be a victim of that large board membership.

--- Later in debate ---

[The Chair]

Richard Fuller, have you got the comfort you seek?

[Richard Fuller]

Well, Mr Davies, I am sorely tempted to push this to a vote, notwithstanding the comments from my hon. Friend the Minister. I understand his point and would ask that in his direction he would issues around governance. I am disappointed that Labour is not prepared to support my amendment. Therefore, rather than my valiant quest end in ignominious defeat, I beg to ask to withdraw the amendment.

Amendment, by leave, withdrawn.

[Andrew Griffith)]

I beg to move amendment 5, clause 7, page 3, line 23, at end insert—

“(ba) the Board is to appoint one or more directors to be responsible for ensuring that the Board considers the interests of the appropriate national authorities when making decisions;”

This amendment would require the Bank’s Board to include one or more directors with responsibility for ensuring that the Board considers the interests of the appropriate national authorities when making decisions.

The amendment sets out the requirement for UKIB’s board to appoint one or more directors to be responsible for ensuring that the interests of the devolved Administrations are considered in the board’s decision making. The work of the bank is UK-wide and it has already supported projects in each of the devolved Administrations. Given that Scotland, Wales and Northern Ireland have strong interests in infrastructure investment in their respective nations, we, the Government, are keen to ensure that UKIB considers their views throughout its strategy and decision-making, including board discussions.

--- Later in debate ---

[James Murray]

I beg to move amendment 20, clause 7, page 3, line 23, at end insert—

“(ba) at any time, the Bank is to have at least one non-executive director who is a representative of workers.”

This amendment ensures there is a workers’ representative on the board of the Bank.

As I mentioned earlier, Labour is concerned about the absence of a workers’ representative on the board of the bank, especially as much of the board consists of political appointees at the behest of the Chancellor.

We are committed to a strong partnership between industry, workers and the state. Having a workers’ representative on the board of the bank is important for good governance. The UK’s corporate governance code states that a company should have 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, however, that if the board has not chosen one or more of those methods, it should explain what alternative arrangements are in place and why. In the absence of such an explanation, we have tabled amendment 20, which was originally moved in the Lords. We recognise arguments made in the Lords about how the Government’s framework document, to be published after Royal Assent, provides safeguards and protective measures, however that document is not legally binding. Sufficient questions have also already been raised about the activity of the bank to require explicit assurances in the Bill.

[Richard Fuller]

Could the hon. Gentleman clarify to whom the clause refers when it talks about workers? Is he referring to workers of the infrastructure bank, and is he calling for a board representative of them, because most of those people will be bankers? I am not so sure that Labour has always felt that the bankers are the most in need of representation in financial institutions. Or is he referring to workers of the investee company? If so, how would that be facilitated?

[James Murray]

I thank the hon. Gentleman for his remarks.

As I set out, the UK corporate governance code already has clear guidelines about the involvement of workforce in governance of boards. However, we have not had explicit assurances from the Government. We have tabled the amendment to push the Government on that. We need assurances that investments and loans made by the bank will be guided by the economic needs of the entire country. Investments made into tax havens pose a real risk to achieving that goal. Marcus Johns from the think-tank IPPR North has said that the use of tax havens

“hollows out our economy, keeps wages low, holds communities back, and enables money to be syphoned away into a globalised system of extraction”.

He argued that the bank

“must look seriously to prevent the use of tax havens and avoidance among the firms it supports.”

As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), said, a Labour Government would support

“British industry, supply chains & support industrial strategy”,

and ensure that trade unions

“have access to workplaces”

and that all

“businesses & bodies receiving public money from the UK Infrastructure Bank…have a plan to create good jobs with decent conditions”.

We believe that only with a workers’ representative on the board will the bank have that critical perspective on job creation and succeed in being governed with the entirety of the UK’s economic prosperity in mind.

UK Infrastructure Bank Bill [ Lords ] (Second sitting)

Richard Fuller Excerpts

Committee stage
Tuesday 22nd November 2022 Public Bill Committees

[Richard Fuller (North East Bedfordshire) (Con)]

I beg to move amendment 14, in clause 9, page 4, line 14, at end insert—

“, and

(c) the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”

It is a particular pleasure to serve under your chairmanship, Mr Bone. Had you been with us this morning you would have witnessed a series of debates between the Minister, me and, on occasion, Opposition Members about the importance of the bank, with references to its ability to attract private capital from outside and to the importance of its achieving a financial return for its shareholders, who, I remind right hon. and hon. Members, are the taxpayers, through the choosing of the Government.

Amendment 14 relates to reviews of the bank’s effectiveness and impact. In previous discussions the Minister said—on balance, I think quite rightly—that there was sufficient power in the Government’s ability to provide a framework of strategic priorities and plans and, if necessary, to put directions in place for those objectives not to be included in the Bill. He said there was enough flexibility for the Government to provide a response by other means, which I accept.

In clause 9, however, we are trying to look at the bank’s effectiveness and impact. We are reviewing not just the bank’s homework but the directions provided by the Treasury and His Majesty’s Government over that period. That is underlined by subsection (1), which makes reference to “an independent person”. My amendment would amplify subsection (1)(b) by adding a specific provision on

“the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”

To reiterate some points that are relevant to the review —the hon. Member for Erith and Thamesmead has agreed with at least one of them, and perhaps more—there are concerns that the bank might spread itself too thinly with regard to where and how it might seek investments, all the way from early-stage investing, through growth capital, to mature investing. It is therefore important that the review by the independent person takes into consideration the efficiency of capital allocated between those various tasks or parts of the investing spectrum.

It is important that we understand the investment structures that are in place. What I have in mind—and I am interested to hear the Minister’s observations—is the fact that the bank is trying to attract external capital to achieve some of our climate change and levelling-up goals. For climate change goals, the backstop provider of the gap in any funding if the private sector does not provide, if we wish to achieve our policy objective, is the UK taxpayer. Right now, in the main Chamber Members are discussing the autumn statement. Members on both sides of the Committee are aware that we are pledging increases in taxation, expenditure and borrowing, notwithstanding additional pressures that achieving net zero will place on taxpayers. It is therefore crucial, if the bank is to play an effective role, that we are vigilant in understanding the burden left at the end of its efforts on the taxpayer, and we should seek to minimise it. My amendment seeks to put pressure on the independent person to look at that objective. Those are the main priorities of my amendment and I look forward to hearing the Minister’s response.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure, Mr Bone, to serve under your chairship. It is an honour to follow the hon. Member for North East Bedfordshire. As he has highlighted, we have come to a substantial and key clause.

As the hon. Gentleman briefly stated, the clause sets out requirements for reviews of the bank’s effectiveness and impact. In particular, it states:

“The Chancellor must appoint an independent person to carry out reviews of…the effectiveness of the Bank in delivering its objectives, and…its impact in relation to climate change and regional and local economic growth (including the extent to which its investments in particular projects or types of projects have encouraged additional investment in those projects or types of project by the private sector).”

The independent person must share those reports with the Treasury, which must then publish the reports and lay a copy before Parliament. I welcome that there will be performance reviews of the bank. Given the importance of its objectives, it is right that its ability to meet its aims is evaluated. We will get to the frequency of the reports later. I am sure I do not need to reveal to Committee members that we think the current proposed frequencies are inadequate.

Amendment 14, tabled by the hon. Member for North East Bedfordshire, would add a third element to the reports: the independent person would have to consider the effectiveness and scale of private and other third-party capital attracted to investments by the bank. We have already discussed the concept of additionality—the idea that the bank should be adding value and crowding in private sector investment. Clause 9(1)(b) already makes reference to additional investment, so I am confident that that is already covered by the Bill.

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for North East Bedfordshire for his diligence in endeavouring to ensure that the Bill properly protects taxpayers’ interests and properly mobilises the private sector investment that the country depends on. I also thank him for trying his hardest to keep Ministers and this institution to account. I would never seek to do anything to discourage him.

However, in this case, I would like to join hands with the hon. Member for Erith and Thamesmead and, regrettably, confirm that it is my view that clause 9(1)(b), which already talks about the degree to which investments in particular projects or types of projects have encouraged additional investment in those projects or types of projects by the private sector, will go a long way to accomplishing what my hon. Friend wants. I am happy to write to him on what I consider to be the effectiveness of the clause and explore whether there is some value to be added in changing it, but it is my position, as it is that of the hon. Member for Erith and Thamesmead, that clause 9(1)(b) already does that.

My hon. Friend the Member for North East Bedfordshire should be reassured that the Government are setting up this institution with great foresight as to how we keep it accountable. The mere fact that we are legislating at its inception for an independent review to be carried out is a very progressive thing. We are trying to ensure that all our arm’s length bodies are as effective as possible. Speaking personally, I think it would be an innovation for every other arm’s length body to have to have independent reviews at frequent intervals.

I hope that my hon. Friend will agree that the wording of the Bill is already sufficiently broad to cover what he is seeking and accept my assurances to explore whether it should be changed, and that he will not press his amendment to a vote.

[Richard Fuller]

I appreciate the comments by the Opposition spokesperson and, of course, my hon. Friend the Minister. My concern about subsection (1)(b) is that the focus on the extent to which investments have attracted additional private sector investment is subordinate to the effectiveness, in terms of the impact on climate change and regional and local growth. That essentially means that if there is a project that is very strong on achieving climate change goals, the bank will be perfectly happy to pursue that, even at an extended cost to the taxpayer. I hope I have not got the Minister wrong.

[Andrew Griffith]

To clarify, I do not read it as being subordinate; it is merely clarificatory that that is within scope. I thought it might be useful to put that on the record.

[Richard Fuller]

That is very helpful. With that assurance from the Minister, I am happy to withdraw my amendment.

Amendment, by leave, withdrawn.

[Abena Oppong-Asare]

I beg to move amendment 23, in clause 9, page 4, line 14, at end insert—

“(c) the geographic spread of the businesses and bodies the Bank invests in, and

(d) the ownership of the businesses and bodies the Bank invests in.”.

This amendment requires reviews of the Bank’s effectiveness and impact to consider the location and ownership of the businesses and bodies it invests in.

It might be helpful if I give the background to the amendment. Labour wants to strengthen British industry, supply chains and our industrial strategy. That is why we have proposed amendment 23, which would require reviews of the bank to consider the geographic spread of the businesses and bodies that the bank invests in, and their ownership.

I was concerned to read research by Open Democracy that found that the bank has so far pledged nearly all its cash to firms with offshore owners, including some linked to tax havens and repressive regimes. That was an independent report, not carried out by my party, but by Open Democracy. We want the benefits of the UK Infrastructure Bank to be seen here in the UK, with home-grown renewables such as offshore wind, solar, nuclear, hydrogen and tidal power. We want to work with businesses to crowd in private funding and work with unions to ensure high-quality jobs. I am sure the whole Committee can agree on that.

We know that this could be a national enterprise. We have a world-leading offshore wind industry in Scotland and on the east coast, hydrogen in the north-west and Teesside, nuclear power in the south-east, and solar power in the south and midlands. That can only be realised if investment stays here in the UK. A lack of domestic champions has compromised our security and stalled progress.

[Richard Fuller]

Are the Opposition concerned that investments and co-investments in projects in the UK will come through funds that may be held in offshore trusts, or is the concern that the bank will be investing in projects offshore through offshore investment trusts?

[Abena Oppong-Asare]

The hon. Member asks an important question. I am sure that we agree that it is important to look at the geographical element of investments. This is not just a concern of Labour’s; the report I mentioned is by Open Democracy. Brilliant projects are taking place; I do not want to take anything away from them, but I want us to ensure that we are supporting businesses in the UK. That is really important. We all know from talking to our constituents that great investment could be used. That needs to be acknowledged, and that is why we tabled the amendment, which would ensure that reviews of the bank consider the geographic spread of the businesses that the bank invests in and their ownership.

--- Later in debate ---

Division 7

Ayes: 6

Noes: 10

[Richard Fuller]

I beg to move amendment 15, in clause 9, page 4, line 21, leave out from “Treasury” to end of line 22 and insert

“12 months and the second report within 24 months of the day on which this Act comes into force”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 21, in clause 9, page 4, line 21, leave out “7” and insert “4”.

This amendment requires an initial report of the Bank’s effectiveness to take place within 4 years after the Act comes into force, rather than the current 7.

Amendment 16, in clause 9, page 4, line 24, leave out “7” and insert “2”.

Amendment 22, in clause 9, page 4, line 24, leave out “7” and insert “5”.

This amendment requires reviews of the Bank’s effectiveness to take place every five years after the initial review, rather than the current 7.

[Richard Fuller]

One last time, Mr Bone.

This group, including my amendments 15 and 16, relates to the timing and frequency of reports that will be provided. My amendments focus on the start of the UK Infrastructure Bank’s existence. Essentially, my question is: does the Minister feel that there will be enough transparency and exposure around the bank as it sets up its guiding principles, begins its work, puts its board together and starts to put some flesh on the bones of its investment profile?

My concern is that we will be waiting a bit too long if we wait for seven years to have any influence at all on the way in which the bank is being structured and is moving. Will it be going in the right direction? Essentially, we will not know until the next decade, and that will be well on our way to the time at which Parliament has set the objective of achieving net zero.

Amendment 15 suggests that we should have a report within the first 12 months, and a second report after 24 months. Those two reports would provide independent understanding about what the board and the bank leadership itself are doing at such crucial stages. Amendment 16 tries to do something similar in clause 9(5). The Government propose that subsequent reports must be made every seven years, while my suggestion is that they should be every two years.

I am probably willing to concede to the Government that, after the first couple of years, my proposal would probably involve a bit too much oversight over the board. The board must be allowed to do its job, so someone looking over its shoulders every two years is probably a bit too much. I am therefore minded not to press that point, but I will be interested to hear the Government’s thinking, particularly on the first two reports.

[Abena Oppong-Asare]

I thank the hon. Member for North East Bedfordshire for his comments. I will speak briefly to amendments 21 and 22.

I share the hon. Member’s concerns, because the initial review of the bank will be published within seven years of the Bill coming into force, and subsequent reviews will be published at intervals of no more than seven years. Those timeframes are shocking, particularly given that the Government’s original intention was for the initial report to be published in 10 years’ time.

I point out to the Minister that the levelling up missions are due to be met by 2030 and the net zero target by 2050, so a review in seven years’ time would miss the first of those targets. I would be interested to hear from the Minister how, without that review, those targets will be met.

Amendment 21 would provide that the initial review would be published within four years of the Bill coming into force, while amendment 22 would see subsequent reviews published every five years. That would enable the bank to grow, improve and ensure that it is meeting its objectives. I noted that the hon. Member for North East Bedfordshire may not press his amendments, so hopefully he finds ours to be more appropriate.

--- Later in debate ---

[Andrew Griffith]

We are moving slightly away from the amendments, but I will write to all hon. Members with an update. The annual report is due to be published imminently; the hon. Member was not here this morning when I confirmed that I have signed off what I needed to do. I expect the report to be laid in the House of Commons Library in the coming days. Some 10 deals have been made so far but, because this is a subject of interest, we will ensure that everybody is aware of the deals and that we lay the annual report before the House as quickly as possible.

[Richard Fuller]

Will the Minister give way?

[Andrew Griffith]

If it is a choice, I will do it one final time. We will then move to the vote.

[Richard Fuller]

The Minister referred to coming back another time about clause 9(5). As my hon. Friend the Member for South Ribble said, when we are reviewing investments, a seven-year period, and perhaps longer, might be a reasonable period for consideration. As the hon. Member for Glasgow East said, there is logic to having a review every five years during a Parliament. To my mind, subsection (4) refers to the more essential period. Essentially, it says that we will not have our first report for seven years. My thought is that we need one more frequently than that. Will the Minister clarify whether he intends to come back to the Committee on not just subsection (5), as he said he would, but subsection (4)?

[Andrew Griffith]

With respect, these are quite different points. I do not intend to come back on subsection (4). There are many reviews. We should not confuse the additional process of bringing in an outside party and conducting an independent review. That is quite different from the normal regular accountability of publishing an annual report, disclosure, complying with the combined code, having good governance practices, the oversight of the Treasury Committee and any of the other ongoing reviews that the Government spawn all the time. This is a separate statutory independent review. It is an unusual but positive feature, and I do not propose to reopen the point, because that is the Government’s position. We thought about it, and it will take time for this entity to be operating at scale, when it is actually capable of providing a useful determination for the review.

[Richard Fuller]

I am looking expectantly across the room, but as I do not see any encouragement from Opposition Members, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 21, in clause 9, page 4, line 21, leave out “7” and insert “4”.—(Abena Oppong-Asare.)

This amendment requires an initial report of the Bank’s effectiveness to take place within 4 years after the Act comes into force, rather than the current 7.

Question put, That the amendment be made.

UK Infrastructure Bank Bill [Lords]

Richard Fuller Excerpts

Report stage
Wednesday 1st February 2023 Commons Chamber

[Richard Foord]

I rise to speak to new clause 1 and amendments 3 and 4.

I welcome the UK Infrastructure Bank Bill. We previously had a Green Investment Bank, founded by the Liberal Democrats in government. It was short-sighted for the Government to sell it off, especially as it made £144 million in profit for its Australian owners last year. Nevertheless, the Liberal Democrats are glad to see steps finally being taken to put the replacement UK Infrastructure Bank on a statutory footing.

Liberal Democrat new clause 1, in the name of my hon. Friend the Member for Richmond Park (Sarah Olney), seeks to ensure that this new UK Infrastructure Bank will remain in operation until the Government’s net zero and environmental commitments have been met.

I hope to see this new bank change investment in green infrastructure for the better, and this brings me to the two amendments—amendments 3 and 4—tabled in my name and those of Liberal Democrat colleagues. They seek to ensure that water companies set out costed, time-limited plans to deal with discharges before they can get funding through the bank. This is important because communities across the UK are currently being impacted by the actions of some negligent and wayward water companies. For years, we have seen these firms failing to invest in our vital infrastructure, but instead prioritising shareholder payouts and bumper bonuses for chief executive officers. It is shocking that this practice has been allowed to continue, and that the Government have resisted several attempts by the Liberal Democrats to clamp down on these sewage spills.

South West Water, which covers my patch in Devon, was awarded a one-star rating by the Environment Agency after having been found to have discharged sewage into rivers and lakes and on to our beaches over 42,000 times. This represents more than 350,000 hours of dumping, including at our prestigious blue flag beaches. Three of the 10 most affected beaches are in Devon. And what was the reaction at South West Water? It gave the chief executive a bonus of more than £1 million.

[Richard Fuller (North East Bedfordshire) (Con)]

We on the Government Benches are aware of some of the comments—if I may say so, the somewhat misleading comments—in Liberal Democrat propaganda about this issue. The hon. Gentleman is obviously familiar with the situation at South West Water. Could he tell me what the cost is to South West Water of eliminating sewage overflow, and what are the implications for water bills for residents in the south-west, because that is what the literature from his party has been saying needs to be done?

[Richard Foord]

The amendment that we are considering is about loans from the UK Infrastructure Bank. Whatever figure is required, the bank should not be permitted to release funds for the purpose of improving our sewerage system until there are plans by water companies for the system’s complete restoration.

--- Later in debate ---

I urge colleagues from all parties to back the amendments and show that we are serious about ending the sewage scandal once and for all.

[Richard Fuller]

I shall go through the amendments thoroughly and therefore I shall not detain the House long.

New clause 1 on the future of the UK Infrastructure Bank would have the effect of not permitting a sale of the bank until the duty set out in the Climate Change Act 2008 and the targets of the net zero commitment by 2050 had been met. That puts significant strictures on the maintenance of one bank and its objectives. I think the hon. Member for Tiverton and Honiton (Richard Foord) probably acknowledges that. He wants us to reflect on the sale of the green bank that was set up under the coalition Government. He talked about the profits that it made last year—about £180 million, perhaps a little less. However, I hope that he recognises a couple of things.

First, when the sale was made, the taxpayer benefited to the tune of £2.3 billion. That included a surplus of £186 million on taxpayer-invested funds and a commitment from the successful acquirer, Macquarie bank, to invest a further £3 billion. In the round, I do not think that was a bad transaction to make, because it enabled the attraction of more third-party capital—private capital—to try to achieve some of the objectives of that green bank under its new owners, and indeed that has taken place. Part of the balance with this Infrastructure Bank is: how are we going to evaluate its abilities and success in attracting third-party capital? If the hon. Member for Tiverton and Honiton reflects, he will see that his broad point in new clause 1 is a fair one, but I hope that he will not press it to a vote, because there are strong arguments on the other side and I would not support the points that he would be trying to make.

Again, I can understand some of the import of Labour’s new clause 2 and amendment 5. Labour is saying, “Here is an opportunity, with a major institution, with which we are going to look at and try to expand the infrastructure of the country, to make sure it has a full focus on the round of public interest in the things it is doing in our name.” That is a good intention but, as the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) knows—we have talked about this in Committee—there are trade-offs to be made within those sets of objectives. As we add objectives to our institutions, those trade-offs make it more obscure to parliamentarians and to the public what the intention of the bank will be.

The objectives that the Government have set out in the Bill are already clear. They have the benefit of clarity, as we know what they are. They also cover a wide range of sectors and intentions, but with the underlying core objective of helping us to meet our green net zero and climate change objectives.

So if the Opposition wish us to support their amendments, where do they see the trade-offs being made between achieving those objectives and having the duties to reduce economic inequalities between regions, to improve productivity, pay, jobs and living standards, and to support supply chain resilience? Very few of us would disagree with some of those objectives—indeed, the Government are making great strides on some of them with their levelling-up initiatives—but we have to accept that as we give directions to some of these institutions with a broad range of objectives, we are, as democrats, losing some control over how public money can be directed; we are giving more discretion to the chief executives of those organisations to do as they see fit and not perhaps to do as we were laying down in statute. I encourage the Opposition to think again, and to consider that perhaps having the clarity and precision of objectives set out in the Bill is precisely what will enable this and future Parliaments to exercise control over the Infrastructure Bank.

The hon. Member for Tiverton and Honiton, who is speaking for all the Liberal Democrats today, as he has graced us with his presence in a number of the debates, talked a little about the water companies again. I hope that he will have been listening today and will be reflecting back to his party’s leadership that some of the publicity the Liberal Democrats have put out has been substantially misleading about the intentions and actions of this Government. Obviously, parties make political statements all the time, this way and that. However, particularly as he has now followed up with his proposal for how water company discharge can be managed, I hope he will see that it is a serious issue and therefore we should treat it seriously.

Amendment 4 seeks to provide that the support the bank can give can happen only after the water companies have produced a “costed, time limited plan”. I think the water companies would say, “We have already done that.” They have a plan, but not one that can be implemented just like that, in the flash of an eye—I mix my metaphors there. I am not sure that the amendment will have the intention that the hon. Member for Tiverton and Honiton wishes it to have, given what the water companies are already doing and what the Government are already doing with the monitoring and the objectives being set to reduce sewage discharge.

I will step over what the SNP spokesperson, the right hon. Member for Dundee East (Stewart Hosie), put forward, because I am sure he will be able to elucidate that point clearly—I believe we have heard it here a number of times, although we are never bored by the repetition. Finally, I thank the Minister for listening to the points that were made in Committee and coming forward with the Government’s amendment.

Finally, I thank the Minister for listening to the points that were made in Committee and coming forward with the Government’s amendment. I can see that the Opposition have not put down a further amendment on that matter, which is a sign that he has got that judgment call right.

[Stewart Hosie (Dundee East) (SNP)]

I will speak to amendment 2 in my name, but before I address that fully, I will say a little about the other Opposition amendments and new clauses.

New clause 1 seeks to stop the bank being sold prior to net zero targets being met, which is sensible in principle, given the fate of the old green investment bank, as I described on Second Reading. New clause 2 seeks a report on the geographical spread of investments, which, again, is sensible given the Government’s recent track record on allocating money from the levelling-up fund. It still strikes me as rather absurd that the Prime Minister’s wealthy Richmond constituency should have been allocated £90 million, while the entire city of Glasgow received nothing in the second round of funding. I think we would all want to ensure that the UK Infrastructure Bank was far more equitable in its disbursements.

Amendment 5 seeks to reduce inequality and improve productivity. Amendments 3 and 4 seek to ensure that investment in water supply quality is permitted, but with conditions on the private companies receiving it. Each of these amendments and new clauses have merit, and we will be happy to support any if they are pressed to a Division.

Government amendment 1 seeks to reduce the gap between reporting from a maximum of seven to a maximum of five years. That is progress of a sort, but five years is still too long. I would be looking for a commitment from the Dispatch Box that the Government anticipate the review and reporting frequency to be within the proposed five-year maximum.

Let me briefly reprise what I said about my own amendment on Second Reading, when I gave the UK Infrastructure Bank and the Bill a broad welcome. Taking it at face value, there was nothing to criticise in its objectives of helping to tackle climate change and supporting the efforts to meet the UK Government’s 2050 target. Nor was there anything to criticise in the objective to support regional or local economic growth.

What I pointed out, though, is that—the Minister on Second Reading alluded to this in his speech—the delivery of support to facilitate local and regional growth in Scotland is provided by the Scottish Government, local government and other agencies, and that the green targets in Scotland, such as the earlier net zero target, are also set independently. It is therefore important that the UK Infrastructure Bank actually supports the devolved Governments’ objectives and does not, even inadvertently, end up working against them. That remains important because we have our own infrastructure investment plan, our own global capital investment plan and our own national strategy for economic transformation that provides the framework for the Scottish Government’s policy priorities.

In giving the Bill a broad welcome, I also made the point that while there is clearly an overlap between the strategic objectives of the UK Infrastructure Bank and the Scottish National Investment Bank—the wording of the aims of both the UKIB and the Scottish National Investment Bank are broadly similar—it is vital to ensure that both banks meet their goals and deliver the maximum impact for the people of Scotland. In line with the objectives set in the Bill, it is essential that the two banks are able to work together to identify and support appropriate infrastructure projects in Scotland. It is also vital that Scottish interests are appropriately represented and that there is an awareness of the Scottish economic context and the Scottish Government’s policy goals.

To ensure that there is alignment between both banks’ aims, I have argued that there should be an administrative mechanism, such as a memorandum of understanding, between the UKIB and the Scottish National Investment Bank to ensure that policy alignment is maintained. I fear that unless we have a firm mechanism, the UKIB’s aims might also be undermined, and there will ultimately be a risk that it will not deliver fully on its objectives. However, the Bill merely suggests in line 9 of clause 2(7) that the Treasury must only

“consult the appropriate national authority before making provision in regulations…that would be within the legislative competence of”

one of the devolved Administrations.

--- Later in debate ---

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

A lost decade of broken Tory promises has left much of the UK with second-rate infrastructure, which is why we support the establishment and the strengthening of the UK Infrastructure Bank and will not be opposing the Bill. The bank is much needed. It will invest in projects that support our net zero targets and contribute to local and regional economic growth. However, we will go further than the Government and harness the full potential of the bank to provide good jobs and opportunities across the country. I will speak to our amendments a little later.

I wish to start by saying how much I welcome the Government’s U-turn in relation to their amendment 1. I see Ministers on the Front Bench who were with us when the Bill was debated in Committee. I am sure that they notice how similar their amendment is to the one that Labour tabled at that stage. Indeed, it is identical to our amendment—an amendment that they voted against. As Labour has repeatedly emphasised, reviews of the bank’s performance will be essential to ensuring that it meets its objectives to invest in the industries of the future. It was shocking that the Government wanted an initial review in 10 years with subsequent reviews every five years. The bank needs momentum and drive behind it, and I am glad to see that the Government have now realised the error of their thinking and committed to reviews of the bank every five years.

[Richard Fuller]

I commend the hon. Lady for holding the Government to account on this particular issue of the review period. This is where we are setting the bank free to go on its mission. As she and I agree—I think we agree—the initial few years are really very important. I notice that the Minister has restricted to five years subsequent assessments, as both the hon. Lady and I thought would be wise, but there is still that initial seven years. She did not table an amendment on that, so I wondered what the Opposition’s thinking was on that initial period?

[Abena Oppong-Asare]

I am grateful to the hon. Gentleman for his comments. He might remember that we tabled amendments in Committee and again on Report on that issue, but because the Government announced a U-turn, we decided to withdraw our amendment.

Yesterday’s dreadful IMF forecast makes it very clear that Britain has so much potential but that the Conservative Government are holding us back. The UK is the only G7 country forecast to see negative economic growth. Let us look at the Government’s record on infrastructure: a green homes scheme closed just six months after its introduction, with a £1 billion cut from its budget; an energy system that sees fossil fuel companies making record profits while hard-working people’s bills soar; and just a fortnight ago, a crucial gigafactory, Britishvolt, went into administration, leaving the future of the British electric vehicle market in jeopardy. According to the Government, the purpose of the UK Infrastructure Bank is to provide access to money, particularly where there is an undersupply of private financing. Britishvolt, a UK battery start-up, was expected to support new jobs and green technology with a factory in Blyth. Now it is being sold by administrators, with the Government seemingly abandoning their promises of levelling up and supporting a green economy.

Just this week, the British electric van start-up “Arrival” announced that it is cutting 800 jobs, as it moves for extra funding and green subsidies in the US. Hon. Members will not be surprised to hear that Labour has no faith in the Government harnessing the potential of the UK Infrastructure Bank to invest in the high-skilled jobs of the future. A Labour Government will use our green prosperity fund to invest in wind, solar and nuclear energy; insulate 19 million homes; grow our economy; and get Britain winning the race to net zero. We have tabled new clause 2 and amendment 5 to ensure that the UK Infrastructure Bank can play its role in this mission. New clause 2 would require the bank to publish an annual report setting out the geographical spread and the ownership of businesses and bodies that it invests in. It would also require the bank to publish a good jobs plan for every project it invests in, to ensure that the project will improve productivity, pay, jobs and living standards.

[Abena Oppong-Asare]

My hon. Friend makes strong points about what the Government should be doing, and I hope the Minister takes them on board. We have all seen the allegations of favouritism that have beset the Government’s levelling-up funding, with nothing in the Bill to guarantee that the bank will distribute its funds to the areas that need them the most. Our new clause would ensure scrutiny and transparency over bank investments. Given the Prime Minister’s now famous boast—I quote it in case Members have forgotten—about reversing Treasury formulas that

“shoved all the funding into deprived…areas”,

I hope the Minister can see why we think transparency is necessary. His party, after all, is the party responsible for the loss of £6.7 billion to fraud and mismanagement.

I hope, too, that the Minister is paying attention right now and agrees that we want the UK Infrastructure Bank to create high-skilled, well-paid jobs. With a good jobs plan for every project that it invests in, we can ensure value for taxpayers’ money. That approach has been taken with previous significant infrastructure projects in the UK. For example, the Olympic Delivery Authority worked with trade unions and others to ensure that the project delivered good quality local jobs, and a similar approach was taken with High Speed 2. If the Government are as committed to their levelling-up agenda as they claim to be, I am sure that they will vote for our new clause today.

Amendment 5 would strengthen the bank’s objectives. It would make it clear that the bank’s target of boosting regional and local economic growth includes reducing economic inequalities within and between regions in the UK. Despite the Government’s assurances to the contrary, the Bill contains only a watered-down commitment that could result in the bank’s resources being poorly targeted and ineffective.

We want a further objective for the bank to contribute to the UK’s supply chain resilience and industrial strategy. I have mentioned the collapse of Britishvolt and the warnings of green investment moving abroad. Those are serious concerns. The importance of supply chain resilience has become particularly clear in the wake of the pandemic and as concerns over energy security have come to the fore with the war in Ukraine. We want the benefits of the UK Infrastructure Bank to be seen here in the UK, with home-grown renewables such as offshore wind, solar, nuclear, hydrogen and tidal power.

[Richard Fuller]

The hon. Lady is being generous in giving way, and I am grateful to her. I want to probe her thoughts a little further on amendment 5. The Bill, as I have said, has the benefit of being quite precise in its current objectives. As parliamentarians, we know that when we take something from statute and leave it to regulators, the House’s ability to hold them to account in the public interest is somewhat weakened. Does she accept that additional objectives would give an Executive a lot more discretion to say, “I didn’t achieve that because I was focusing on this objective”? We have created some primary objectives about climate change and so on. Adding others would leave us somehow disempowered, because those Executives could move and shake around where they said their priorities were. As I said earlier, I am concerned about the balance between laudable objectives and ensuring that, when we have put the Bill into statute, we parliamentarians retain the ability to control what is actually happening on the ground in one, two, three, four and five years from now.

--- Later in debate ---

[Andrew Griffith]

I hope the hon. Lady would never dream of trying to score cheap political points, as distinct from our good-natured and collaborative discussions in Committee. Rather than setting a new timeframe there and then, we looked at precedent in a quest for the optimal timeframe. I undertook to come back on Report and share a proposal with the House, precisely as I am doing today. Having listened and having made that determination, I can feel the warm radiation of support from the Opposition. I hope to see that good will extending to supporting the rest of the Bill without further amendment.

[Richard Fuller]

As it gets warm and huggy between the two Front Benchers, I would like to remind the Minister that I also tabled an amendment in Committee. I hope that he is feeling warm and huggy towards Government Back Benchers as well. He seems huggy, though I am not sure it is politically correct to say that any more. I want to emphasise that the Minister has been listening, which is why he has come back with the amendment. That is the right thing for him to do.

The serious part of my point is how the institutional culture of the bank is set. The Minister will know from his own experience that the first few years are very important. He says that the first review period will be seven years, and I understand that, but can he share with the House some of his thinking about how that responsibility will be balanced? I think Members on both sides of the House are concerned that we set the institutions and regulators out there a task, but then we do not have the time, the information or the control to hold them to the original principles that we have set. Does the Minister broadly agree with that? Is he comfortable with the way the legislation will now be framed?

[Andrew Griffith]

Let me assure my hon. Friend and the whole House that this institution will not lack the proper scrutiny. In that initial set-up period it will be reviewed by both the Cabinet Office and His Majesty’s Treasury. It will not lack scrutiny. It has an obligation to report annually. On some of the amendments we have discussed today, I have already procured a commitment from the bank to put more information into the public domain about its investments and their location, which Opposition Members have rightly pressed us for.

Although the bank is yet to reach its full complement of staffing and run rate of operations, it has already benefited from a serious review by the Public Accounts Committee of this House. I think it would be worth trying to correct some misapprehensions, but I do not for one moment take away the importance of regular scrutiny. We are talking about public money, and it is of the utmost importance that we engender trust as well as good value for public money.

That Public Accounts Committee report is a good and important piece of work. I absolutely commend the work of the Committee, which does a sterling job to protect the interests of taxpayers. We should always remember our duty of care when we are spending other people’s money. It is a good piece of work, and I am grateful for it. We will respond to it in the usual way through the Treasury minute process to get that on the record.

However, I want to address one or two of the points raised. The report raised concerns about governance, but this is an institution that has benefited from strong financial governance from the get-go. All deals done to date have been reviewed by the full UK Infrastructure Bank board before being approved. Because of that, early deals were also approved by HM Treasury Ministers to ensure that we protected taxpayers’ money.

I am proud, as we all should be, of the bank’s work as it continues to engage with the market and across Government, building on its first 18 months in which it has done 10 deals worth more than £1 billion of additive, incremental investment across all parts of the United Kingdom.

[Richard Fuller]

My hon. Friend has just used the magic word “additive”. Would he care to explain further, in the context of these new clauses and amendments, that the issue of additive capital is a crucial part of the bank’s responsibility? This is not just about protecting taxpayers’ money, but about attracting third-party private capital. One of the points about the proposal to spread the objectives is that it becomes harder to attract that capital when the mission of the institution is more diffuse. The more focus it has, and the more focus my hon. Friend has, the more likely we are to achieve the objective of additive capital that he has outlined so clearly.

[Andrew Griffith]

My hon. Friend is, once again, absolutely right. The principle of being additive is baked into the core charters and constitutions, as well as the steer that my colleagues and I will give.

New clause 1 would insert a provision to prevent the sale of the bank. I understand the concern that has been expressed by Members in the past, but I can reassure them that the bank is intended to be a long-lasting institution. I have detected a strong degree of consensus about the importance of this, both in Committee and here in the Chamber, just as our commitment to net zero is long-lasting and a subject of consensus. We intend the bank to be permanent; it is an essential part of the Government’s infrastructure strategy. Moreover, the new clause is simply not necessary. In the event that any future Government considered a sale of the bank—and that is not my expectation—it would require primary legislation at the time. The new clause cannot bind the House on a future occasion, and in any event it is not necessary, so I ask for it not to be pressed to a vote.

The hon. Member for Erith and Thamesmead has tabled a new clause and an amendment. New clause 2 would require the bank to publish an annual report addressing the geographical spread and ownership of bodies in which the bank invests. That is, of course, its core purpose, and I therefore do not think we need the new clause. We debated this proposal in Committee and, for the reasons that we set out then, we do not propose to accept it now.

The new clause is simply unnecessary, because the bank will already be reporting on its investments: it will publish a summary of them in its annual report and accounts. It captures data in all its deal assessments, and will be happy to make them publicly available. I have received a letter from the bank confirming that it will make publicly available the names of developers and/or sponsors of the projects it supports. It will also provide the geographical location of these projects. I feel pressed by colleagues on this matter. I have procured more information, as the hon. Lady has requested and, again, I ask for this new clause not to be pressed to a vote.

As for jobs, it is actions, not lines of statute, that count. We do not need to deliver an amendment to deliver good jobs; just ask the employees involved in the NextEnergy, Gigaclear and Fibrus investments which the bank has already supported. Every job is a good job. The bank is committed to pursuing the highest environmental, social, resilience and governance policy standards, and we do not feel that there is any added value in simply adding extra lines of statute or red tape for the sake of it, as the hon. Lady proposes. It is actions, not words, on which we are focused.

Amendment 5 asks for the bank’s objective to include reducing regional inequality and improving pay, productivity and living standards, as well as supporting supply chain resilience. However, those are already implicit in the bank’s current objective. That is the very purpose of setting up a UK infrastructure bank—the clue is in the name—and we now have a track record to show what the bank is doing to support regional and local growth.

[Richard Fuller]

Will my hon. Friend give way?

[Andrew Griffith]

I will give way one final time, but my hon. Friend will have to make it count.

[Richard Fuller]

I am not so sure about that, but I know that my hon. Friend has a lot of reading to get through. As he obviously knows, part of what is inherent in the net zero objectives is the fact that there will be an increase in supply chain resilience.

[Andrew Griffith]

My hon. Friend did indeed make his intervention count, because that is a very pertinent point. Of course, the whole purpose of the bank is infrastructure and capability building, and the commitment to regions is at its heart. Regional and local growth are among its core objectives. The more diverse infrastructure we have in all parts of this great United Kingdom, the more we are naturally adding resilience and achieving our objective. Indeed, the strategic steer set by the then Chancellor in March last year makes it clear that the bank must focus on geographic inequalities by reference to the levelling-up White Paper, which includes a comprehensive set of levelling-up objectives and measures and supports the Government’s strategic approach to levelling up. We would rather do that on a portfolio basis than investment by investment, as proposed by the hon. Member for Erith and Thamesmead.

Amendments 3 and 4, tabled by the hon. Member for Tiverton and Honiton (Richard Foord), focus on the important issue of water quality. This is an area where the Government do not need any lessons. We are taking the lead in this matter, and are taking the action that the hon. Gentleman’s party and its leader failed to take in coalition. Sometimes one detects the fervour of a convert, or even the working-out of some past guilt about their failure to take action on water.

UK Infrastructure Bank Bill [Lords]

Richard Fuller Excerpts

Consideration of Lords message
Wednesday 22nd March 2023 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I just have a small point. The SNP supports this Bill and the intention to create the UK Infrastructure Bank, with its objective to help tackle climate change. However, it is worth putting on record very briefly that both the original Government amendment 3 and amendment 3B in lieu from the other place—while the latter does keep “nature-based solutions” in the wording of the Bill—seek to remove

“structures underpinning the circular economy”

from the infrastructure that the Bill is designed to support in its objectives of tackling climate change and meeting the target for 2050.

I am sure people interested in such matters will look rather askance at that. How on earth can we have a UK Infrastructure Bank Bill, with highly laudable objectives to tackle climate change and meet the Government’s own targets, only then to have both the Government and the other place actively remove investment in infra-structure to support the circular economy—which, for goodness sake, must be part of the solution—from the Bill? We are not going to oppose the amendment, because the Lords amendment is marginally better than the original Government amendment, but it is worth putting on record that the removal of the words

“structures underpinning the circular economy”

from the Bill strikes me as somewhat perverse.

[Richard Fuller (North East Bedfordshire) (Con)]

I find myself in the unusual and extremely uncomfortable position of agreeing with what the SNP spokesperson has just said. It is a condition that I hope will be quickly removed so that I can assert my usual sound Conservative principles.

There is an important point here, which I know the Minister is aware of, and which is not specific to this Bill. It seems a little odd, if we are looking at the next 10 or 20 years of our investment in infrastructure under the terms of the new Infrastructure Bank, to omit explicitly one of the foundational aspects of infrastructure from the Bill. I know my hon. Friend the Minister will have already reviewed that and he will say, I think correctly, that there is nothing in this Bill to stop support for investment in the circular economy infrastructure. However, I think it is important to have voices at this stage of the debate who can say that clearly, so that those who will now take forward the Infrastructure Bank know that, even if it is not in the Bill, the importance of creating the foundation of the circular economy is explicitly one of the things we anticipate and hope that the bank will do.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

On behalf of the Opposition, I would like to say that we support this amendment. As other speakers have said, it improves on the text of the Bill, so we are happy to support it.