The Government’s new ‘National Infrastructure Bank’ will
have no effect on growth, according to the OBR.
The OBR has said while the Government’s intent for the
National Infrastructure Bank is to “boost private sector
investment in UK infrastructure” that “given the scale of its
operations (at around 0.1 per cent of GDP a year) and the fact
that it replaces only some European Investment Bank activity, we
have not adjusted our economy forecast.”
The National Infrastructure Bank is also dwarfed by the
national investment banks in France and Germany.
Germany’s comparable national investment bank, Kreditanstalt für
Wierderaufbau, has total assets worth almost 15 per cent of
Germany’s yearly GDP, but the UK’s will start at just 0.1 per
cent of GDP – 147 times smaller.
The £12bn funding allocated to the National Infrastructure
Bank over five years also falls far short of the £20bn
recommended by the National Infrastructure Commission. And
crucially the funding will fail to plug the gap left from the
European Investment Bank, which invested on average around £5bn a
year in UK infrastructure.
The establishment of a National Infrastructure Bank follows
the Government's decision to sell off the Green Investment Bank
in 2017. Labour called in its Green Economic Recovery for a
National Investment Bank to support decarbonisation and the
recovery from Covid-19 over the medium and long-term, with a
clear climate mandate.
Labour also called for the Government to build up the bank’s
balance sheet to the level of other countries’, and seek to match
the ambitions of those nations which have proven the most adept
at catalysing long-term environmentally-friendly investment via
their National Investment Banks.
Labour has also called on the Government to ensure the new
Bank has a water-tight net zero mandate, and that it will not
fund high-emitting projects alongside low-carbon projects.
MP, Labour’s Shadow Business
Secretary, said:
“The Government’s smoke and mirrors cannot distract from
the fact we have been left without the green investment we need.
We needed climate leadership from government but we got climate
failure.
“In the year of COP26 when we are wildly off track to meet
our climate targets, we needed the Chancellor to put a green
stimulus at the centre of the Budget.
“He totally failed to do so. A £1bn cut to the green homes
grant, a refusal to help our manufacturers make the green
transition and an investment Bank that lacks anything like the
ambition we need.
“Far from transformative investment in infrastructure, the
Government’s new bank won’t even plug the hole left by the
European Investment Bank and will see us trailing way behind
countries like Germany.”
Ends
Notes to Editors
According to the
OBR (p158-9):
The Government forecasts that the UKIB will lend and
invest around £1½ billion a year (net of lending to
local authorities that would otherwise have taken place through
the Public Works Loans Board). This would be equivalent to around
a third of the financing that was provided by the EIB
prior to the EU referendum.
National investment banks exist in many countries. One of
the largest and longest established is Germany’s Kreditanstalt
für Wierderaufbau (KfW), which as of 2019 has total assets of
€506 billion (14.7 per cent of Germany’s GDP)."
The National Infrastructure Commission said
the Bank should start with an asset base of £20bn.
