UK Infrastructure Bank Bill [Lords]

Stewart Hosie Excerpts

2nd reading
Tuesday 1st November 2022 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

On what has just been said, the issues relating to the power of direction in clause 4 and the steer that can be given on the strategic priorities by the Treasury deserve to be explored in a little more detail. When I see words like

“the Government will not normally”

and I think about what the Government do not normally do in relation to Scotland, I think the hon. Member for North East Bedfordshire (Richard Fuller) is right to be slightly anxious.

However, I give the UK Infrastructure Bank and the Bill a broad welcome. Taking the Bill at face value, there is nothing to criticise in its objectives of helping to tackle climate change and supporting the efforts to meet the UK Government’s 2050 targets. Nor is there anything to criticise in the objective to support regional and local economic growth. What I would point out, however, is that—the Minister alluded to this—the delivery of support to facilitate local and regional growth is provided in Scotland by the Scottish Government, local government and other agencies, and that the green targets in Scotland, for example the earlier net zero target, are also set independently in Scotland. It is therefore important that the UKIB supports the devolved Governments’ objectives and does not, even inadvertently, end up working against them. That is important, because Scotland has its 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.

There is—I am sure the Minister is aware of this—clearly an overlap between the strategic objectives of the UK Infrastructure Bank and the Scottish National Investment Bank, particularly in the context of tackling climate change and supporting regional economic growth. The UKIB’s aims include:

“to help tackle climate change”

and

“to support regional and local economic growth”.

The Scottish National Investment Bank’s aims include:

“investing in inclusive and sustainable economic growth”

and

“investing to promote environmental wellbeing”.

To ensure that both banks meet their goals and deliver the maximum impact for the people of Scotland, and in line with the objectives being 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 of the bank’s aims, there should be an administrative mechanism, such as a memorandum of understanding, between the UK Infrastructure Bank and the Scottish National Investment Bank to ensure that policy alignment is maintained. I fear that, unless we have such a mechanism, UKIB’s aims might be undermined and there will ultimately be a risk that it will not deliver fully on its objectives.

It is also vital that the creation of UKIB is not seen as an excuse to reduce further the Scottish or any other departmental or devolved Administration budget. We have already had a £1.7 billion real-terms cut since last December. However, I welcome the Bill and its strategic objectives, including tackling climate change, but it is vital that the Scottish Government’s more ambitious climate targets are reflected either in the Bill or in the way in which the bank operates.

My next point is on the bank’s activities, which are clearly described in clause 2 as

“providing financial assistance to projects wholly or mainly relating to infrastructure”

and

“providing loans to relevant public authorities”—

and so on. That is broadly welcome, as is the description of infrastructure underpinning the “circular economy”—not least because the Scottish Government are introducing a circular economy Bill to advance a zero-waste and circular economy by increasing reuse and recycling rates and improving waste and recycling services. It is important that the investment bank can therefore fund existing bodies such as non-governmental organisations, think tanks and other agencies that are already specialists in their fields. Let us take, for example, the Scottish Institute for Remanufacturing at the University of Strathclyde, which enables industry to become part of the circular economy. To date, the Scottish Institute for Remanufacturing has committed substantial sums to support Scottish remanufacturing to become part of the circular economy.

I also particularly welcome the express inclusion of railways, including rolling stock, in the description of infrastructure. However—this is a very narrow point—I was at a loss as to why there was no specific reference to electrified rail or carbon-neutral rolling stock. That may be implicit in the Bill’s intentions, but it would nevertheless have been helpful to see it.

On strategic priorities and plans, the Bill states:

“The Treasury must prepare a statement of strategic priorities…The Treasury must comply with subsection (1)…The Treasury may revise or replace the statement…The Treasury must lay a copy…before Parliament…The Bank must…act in accordance with strategic plans which reflect the Treasury’s statement”.

I can well understand why the Treasury would be intimately involved in the creation and the nuts and bolts of setting up a bank, but I am at a bit of a loss as to why devolved Administrations, other agencies, the Department for Business, Energy and Industrial Strategy, the Department for Environment, Food and Rural Affairs and even those responsible for levelling up have no specified role in setting out the bank’s strategic priorities.

My final point is that, sadly, as has been mentioned, we have been here before with the Green investment bank. The Minister said twice in his opening remarks that he wanted the bank to be long-lasting and to endure, and I agree entirely. However, the way in which the Bill is drafted fails to provide the certainty that many of us would like about its future. The Treasury has too much power over the investment bank’s functions and there are few safeguards to ensure that the bank is not sold off to a private company. It is vital that the Bill contains more of an assurance that UKIB will not meet the same fate as the green investment bank: it was privatised and is now owned by the Macquarie Group. The Green Investment Group, as it is now known, carries out extremely valuable work, but it is vital that the new investment bank is not set up at public expense and public risk only to be sold off later. I am sure that right hon. and hon. Members will recall that when it became clear that the old green investment bank was to be privatised, the decision was described as reckless. This is what was said at the time:

“The Green Investment Bank is not just the government’s most lauded innovation in the war against climate change. It has kept investment in the real economy going at a time when bank lending had fallen to an all-time low. It has played a critical role in supporting the UK economic recovery.”

I would like the UK Investment Bank to be long-lasting and to endure. The last thing we would like to see is the public purse and public risk being used to establish an institution that is then privatised, no doubt with some Minister hoping for preference later and a seat on the board. That is not what our party considers the circular economy.