UK mulls national infra bank launch

The National Infrastructure Commission has appointed consultants to look at such a vehicle to replace EIB funding post-Brexit.

The UK’s National Infrastructure Commission is analysing the prospect of launching a national infrastructure bank after Brexit.

The NIC has appointed consultants to look at the viability of a potential organisation, Anesu Bwawa, policy advisor at the NIC, told the UK Infrastructure Policy & Investment Summit this week.

The consultants will be looking at countries both with and without similar national institutions and assessing how these environments impact the financing and development of major infrastructure projects, she said.

The vehicle is envisioned to replace funding from the European Investment Bank following the completion of Brexit. While EIB funding for UK infrastructure reached record levels of £5.5 billion ($7.7 billion; €6.3 billion) in both 2015 and 2016, this dipped to below €2 billion last year and has since stalled, according to the EIB’s website.

The concept of a UK infrastructure bank was mooted in the NIC’s Congestion, Capacity, Carbon: Priorities for national infrastructure report released in October, although concrete action had yet to be taken.

“A UK Infrastructure Bank would want to avoid restricting opportunities for private investors or crossing the line from helping markets function to backing unviable projects or technologies,” the report stated. “Very clear guidelines would be needed to avoid ‘crowding-out’ or financing poor projects.”

The idea was met with a degree of scepticism at this week’s summit by Darryl Murphy, head of infrastructure debt at Aviva Investors. Murphy said a national bank would struggle to replicate the EIB and warned of another institution just adding liquidity rather than risk.

Adrian Jones, director of infrastructure debt at Allianz Global Investors, added that the success of such an institution would depend on whether it existed to offer cheaper-than-market debt, like the EIB, or was a market filler such as the Green Investment Bank before its privatisation.