Recommendations & Conclusions
23 items
2
Recommendation
Thirty-Fourth Report - The Creation of …
Accepted
The Treasury and the Bank have not yet put in place the conditions necessary for the Bank to be a successful and long-lasting institution. The government wants the Bank to be a “long-lasting institution”, providing financing for infrastructure projects well into the future. The £22 billion made available to the …
Government response. The government agrees and states that the Bank will provide the requested information to Parliament by the end of September 2023 and in March 2024, then information will be provided through the Annual Reports and Accounts process, and that the …
HM Treasury
3
Recommendation
Thirty-Fourth Report - The Creation of …
Accepted
We are not convinced the Bank has a strategic view of where it best needs to target its investments. The Bank’s 10 deals to date have mostly been relatively conventional investments, including seven loans. While the Bank’s early deals reflected a sensibly cautious approach, it is not yet capable of …
Government response. The government agrees and states that the Bank published its first strategic plan in June 2022, setting out the investment strategy and priority areas, and plans to publish a further update in summer 2023, which will be sent to the …
HM Treasury
4
Recommendation
Thirty-Fourth Report - The Creation of …
Accepted
The Bank’s advisory function remains in the early stages of development and uncertainty remains on how it will be funded and how smaller local authorities will benefit from its activities. The Treasury intends the Bank to provide advisory services to local authorities regarding infrastructure projects. This function is currently in …
Government response. The government will provide the requested information later in Spring 2023 after completion of the pilot projects in Bristol, Greater Manchester, and West Yorkshire Combined Authority. Recognising that the needs of different size local authorities will vary, the Bank has …
HM Treasury
5
Recommendation
Thirty-Fourth Report - The Creation of …
Accepted
Maximising the Bank’s impact will depend on close cooperation with government departments, but it has not yet worked out how this will operate in practice. The Treasury intends the Bank to play an important role in achieving key elements of this government’s wider agenda on net zero and levelling up, …
Government response. The government agrees and states a lead point of contact within the Bank has been assigned for key departments to understand government priorities and originate investment opportunities, supported by engagement with senior officials and examples of partnerships, and are now …
HM Treasury
6
Recommendation
Thirty-Fourth Report - The Creation of …
Accepted
The Bank has not fully set out how it will measure and report its performance, and how it will evaluate its activities to ensure that it can demonstrate additionality. Evaluation is crucial to ensuring the Bank delivers additionality and that the benefits justify the costs of creating it. The Treasury …
Government response. The Bank will work with the Treasury and UKGI to ensure that future metrics are clear and stretching to ensure the Bank continues to deliver against its strategic objectives, and across its remit. The Bank has already published guidance in …
HM Treasury
1
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
On the basis of a Report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury) and the UK Infrastructure Bank (the Bank) on the creation of the Bank.1
Government response. The government states that the decision to establish the UK Infrastructure Bank (the Bank) at pace was prioritised to ensure that the institution could begin to deliver on its objectives as soon as possible, supporting investment in infrastructure throughout the …
HM Treasury
7
Conclusion
Thirty-Fourth Report - The Creation of …
Accepted
The Treasury told us it took a “phased approach” to the Bank’s set-up with “checks and balances in place” to ensure it would be delivering value for money to the taxpayer.17 The Treasury seconded officials to key Bank posts, and initially had “very tight controls” over the Bank, including retaining …
Government response. The Treasury ensured clear governance procedures were in place before opening the UKIB for business, including an agreed Framework Document and appointment of interim Board, with permanent Chair in post, and maintained close oversight as UKIB started to grow its …
HM Treasury
8
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Treasury intends the Bank to be a “long-lasting institution” providing financing for infrastructure projects well into the future.21 This label echoes the Green Investment Bank’s status as an “enduring institution,” which was subsequently sold to the private sector five years after its creation. In our 2017 report The sale …
Government response. The Treasury and the Bank will report to Parliament six-monthly on the roll- out of the Bank, including updates on recruitment, deals made and progress towards the operation of their own internal systems, and the Treasury will update the Framework …
HM Treasury
9
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Treasury provided the Bank with £22 billion in capital to cover the first five years of operation; beyond then, it expects the Bank to be self-financing. We asked whether this was a realistic target. The Bank told us it expects to be profitable within five years, with its income …
Government response. The Treasury and the Bank will report to Parliament six-monthly on the roll- out of the Bank, including updates on recruitment, deals made and progress towards the operation of their own internal systems, and the Treasury will update the Framework …
HM Treasury
10
Conclusion
Thirty-Fourth Report - The Creation of …
Deferred
The Bank’s capacity to make complex and innovative deals is limited by the lack of suitably qualified staff members. The Bank has worked with Treasury to complete recruitment to key senior leadership positions that were not filled at launch. At the time we took evidence in early November 2022 the …
Government response. The Bank will provide the requested information to Parliament by the end of September 2023 and in March 2024 in addition to the information on the Bank’s operations which is already provided to Parliament through the Annual Reports and Accounts …
HM Treasury
11
Conclusion
Thirty-Fourth Report - The Creation of …
Deferred
The Bank told us that, as a result of having insufficient skills and expertise, it has only entered into relatively low risk, more straightforward investment deals, as those are the only deal types it is comfortable delivering with the available staff.28 It currently has a small banking team of 15 …
Government response. The Bank will provide the requested information to Parliament by the end of September 2023 and in March 2024 in addition to the information already provided through the Annual Reports and Accounts (ARA) process.
HM Treasury
12
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The costs associated with setting-up the Bank as a separate institution, such as procuring new IT systems, make it a more costly option than alternatives such as extending the remit of existing bodies.31 The Bank told us it is working towards a “triple bottom line”, consisting of its two policy …
Government response. The Treasury will update the Framework Document and Strategic Steer to ensure that they reflect the new statutory footing for the Bank, and the Treasury and the Bank will continue to work closely together over the coming years to ensure …
HM Treasury
13
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank told us it is currently developing several Key Performance Indicators (KPIs) to measure its success. For its two policy objectives, these include carbon emissions abated, jobs created and productivity. The Bank told us it expects to abate 2 million tonnes of CO2 and create or support 3,900 jobs …
Government response. The Bank will work with the Treasury and UKGI to ensure that future metrics are clear and stretching to ensure the Bank continues to deliver against its strategic objectives, and expects to publish a further document setting out its Impact …
HM Treasury
14
Conclusion
Thirty-Fourth Report - The Creation of …
Not Addressed
The Bank recognises there could be tensions between its two policy objectives.37 For example, there is a risk that a project could promote local growth but be harmful to the environment. The Bank told us that for any investment that is primarily focused on regional and economic growth, its needs …
Government response. The government repeats the committee's conclusion.
HM Treasury
15
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank has developed arrangements for reporting performance and emerging issues to its shareholder (the Treasury), through the shareholder representative (UKGI). However, the Committee has seen other examples in government where similar arrangements apply and where things have gone wrong long before Parliament has received any warning.39 In addition, neither …
Government response. The Treasury's Shareholder Representative on the UKIB Board is UKGI who are managed independently but are wholly owned by HM Treasury, and the Treasury are responsible for oversight of UKGI and reporting on their performance to Parliament.
HM Treasury
16
Conclusion
Thirty-Fourth Report - The Creation of …
Accepted
The Bank was set up to address market failures and fill gaps in financing for infrastructure investment.41 The Bank told us that it can do this by taking risk that the market is just not willing to take, for example in “first-of-a-kind” technology. It also told us that it can …
Government response. The Bank has published its first strategic plan in June 2022, which sets out the Bank’s investment strategy. The Bank has already made 12 deals worth £1.16 billion across a range of priority sectors and have further deals in the …
HM Treasury
17
Conclusion
Thirty-Fourth Report - The Creation of …
Accepted
The Bank’s 10 deals to date have mostly been in relatively conventional investments.45 This total consists of seven loans and three equity investments made through funds rather than directly. The Treasury told us that the Bank was deliberately designed to start with “those less controversial things, less equity driven” as …
Government response. The Bank has published its first strategic plan in June 2022, which sets out the Bank’s investment strategy. The Bank has already made 12 deals worth £1.16 billion across a range of priority sectors and have further deals in the …
HM Treasury
18
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank’s 10 deals to date have focused on clean energy (five) and digital (four) projects.49 These deals have generally been in areas of technology and risk where projects are relatively common, for example broadband and solar power farms.50 The Treasury told us that the Bank “needs to take a …
Government response. A lead point of contact within the Bank has been assigned for departments that are most critical to delivering our mission, each of whom has regular engagement with their department to understand the government’s strategic priorities and help originate and …
HM Treasury
19
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank’s functions include providing an expert advisory service to help local authorities and other project sponsors to develop and finance infrastructure projects.53 The Bank told us that establishing this service is not straightforward, compared to its local authority lending function which is already operational. The Bank has three advisory …
Government response. The government and the Bank welcome the Committee’s recommendation and will provide information later in Spring 2023 after completion of the pilot projects. The Bank will share insights from pilots and engagement with local authorities and is already engaged with …
HM Treasury
20
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank told us that in developing the pilots, it wanted to try to understand and define problems that it thinks will be most common across the local authority landscape, such as financing heat networks, zero-emission buses and social housing retrofit projects. The Bank will then find the most capable …
Government response. The government and the Bank welcome the Committee’s recommendation and will provide information later in Spring 2023 after completion of the pilot projects. The Bank will share insights from pilots and engagement with local authorities and is already engaged with …
HM Treasury
21
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The Bank has not reached a decision on how it will fund its advisory function. Decisions on funding will be important given the Bank’s expectation that demand will be significant, and that it will not have the resource to cover all requests effectively.57 The Bank told us it has considered …
Government response. The Bank will share the key insights developed through the pilots and its engagement with a range of local authorities to date in Spring 2023, and is already engaged with a range of local authorities for its next wave of …
HM Treasury
22
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
The activities and policy objectives of the Bank overlap with departments across government. For example, the Department for Levelling Up, Housing and Communities (DLUHC) has policy responsibilities in relation to local government and to regional and local economic growth.59 The Treasury expects the Bank to set out how it intends …
Government response. A lead point of contact within the Bank has been assigned for departments that are most critical to delivering our mission, each of whom has regular engagement with their department to understand the government’s strategic priorities and help originate and …
HM Treasury
23
Conclusion
Thirty-Fourth Report - The Creation of …
Acknowledged
We asked whether the Bank had mechanisms in place to manage pressures from competing government departments looking for the Bank to invest in their policy areas. The Bank told us that it is operationally independent to make its own decisions, with an Accounting Officer and a Board as part of …
Government response. A lead point of contact within the Bank has been assigned for departments that are most critical to delivering our mission, each of whom has regular engagement with their department to understand the government’s strategic priorities and help originate and …
HM Treasury