Lords’ Committee issues urgent call for a UK infrastructure bank to replace the EIB
The government should urgently consider establishing a UK infrastructure bank ahead of leaving the European Union, according to a new report from a sub-group of the House of Lords EU Committee.
In the report, Brexit: the European Investment Bank (EIB), published on Thursday, the EU Financial Affairs Sub-Committee pointed out that since joining the EU in 1973, the UK's infrastructure has been the beneficiary of more than €118 billion of lending from the EIB and will lose access to the EIB after Brexit. It urged the government to consult on establishing a UK infrastructure bank, under the banner of its infrastructure finance review and, depending on the outcome of this review, for the bank to be part of the government’s National Infrastructure Strategy.
Baroness Falkner of Margravine, chair of the EU Financial Affairs Sub-Committee, said: "For the last 45 years the UK has relied on the EIB to invest in all manner of vital infrastructure projects such as Crossrail, London’s super sewer, the expansion of Manchester’s tram network and Scotland’s Beatrice offshore windfarm. The UK’s infrastructure, and the industries that depend on infrastructure spending, will be hurt if the government does not quickly find a way of plugging the funding gap that will be created if access to the EIB is lost after Brexit.
"We're calling on the government to give serious and swift consideration to the creation of a UK infrastructure bank. It also needs to come clean about why it has not claimed any share of the EIB's profits, which for the UK could amount to €7.6 billion.”
The Committee elaborated: “The government failed to provide a satisfactory explanation of its negotiation position on the return of the UK’s capital. As a profitable business, there seems to be a plausible case that the UK should receive some share of that profit. A 16.1% share of the EIB's retained earnings would be €7.6bn, almost 20%of the UK’s financial settlement of £35–39bn.”
The report also pointed out there has already been a marked decline in funding from the EIB since the Brexit referendum and triggering of Article 50. “The decline in EIB (87%) and EIF (91%) funding since the referendum and the triggering of Article 50 is striking,” said the Committee. “Despite this, and the fact that the UK will lose access to the EIB after Brexit, the government has said little about any future relationship with the EIB or possible domestic alternatives.”