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The UK Infrastructure Bank has invested a fraction of the £22bn of taxpayers’ money made available to it since its launch, even as the Labour government has promised to give it an extra £7bn.
Since its founding in 2021, the UKIB has invested £4bn of the funds apportioned to it on private sector projects addressing climate change or driving economic growth.
Despite MPs criticising the bank last year for “reinventing the wheel” by funding projects already backed by private capital, the government in July pledged the UKIB an extra £7.3bn via a new National Wealth Fund.
Dieter Helm, professor of economics at the University of Oxford, said it was “hard to see how giving the infrastructure bank an extra £7bn would help it do better than it has in the past”.
Sir Keir Starmer’s new Labour administration has said it will use the NWF to spur about £20bn of private investment into decarbonising projects.
Rather than set up a separate NWF institution, Labour in July said it was giving the UKIB £7.3bn “so investments can start being made immediately”.
The money is intended to be used for debt and equity investments alongside the private sector, rather than funding projects outright.
The UKIB employs 245 permanent staff under chief executive John Flint, a former HSBC head. It has so far invested at a slightly slower rate than the £1.5bn a year initially expected, and has drawn criticism from MPs.
A report by the House of Commons public accounts committee report last year criticised the UKIB, questioning whether it had a “strategic view of where it best needs to target its investments”.
The PAC accused the lender of “lacking a strategic vision” and questioned what the bank was doing that the market wasn’t doing already.
UKIB has also been criticised for investing in third-party funds — in effect outsourcing investment decisions — such as a new infrastructure fund managed by Octopus Investments.
Lord Aamer Sarfraz, a former Conservative party treasurer and former chair of a cross-party group on sovereign wealth funds, said: “The UKIB has been given too much capital, too quickly, without having yet demonstrated the capacity to source, execute and manage investments at this scale.”
The £4bn deployed by the UKIB so far has been used for debt, equity and guarantees on 38 projects, including supporting the expansion of broadband in rural Cumbria and developing a lithium mine in Cornwall.
UKIB said the £4bn it had spent so far had drawn in £11bn in private capital. “We will never invest where we are not needed, nor will we crowd out private investment — we make no apologies for that,” it said.
The UKIB added: “We are working with our shareholder [the Treasury] to define how to best deploy the additional capital under the NWF, now that we have built our expertise and capabilities.”
The Treasury said: “The National Wealth Fund will play an important role in the government’s growth mission and by deploying this funding through the UKIB means investments can start immediately.”