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.