Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Acknowledged
The costs associated with setting-up the Bank as a separate institution, such as procuring new...
Conclusion
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 objectives—helping to tackle climate change and aiding regional growth; alongside two financial objectives—generating a financial return and “crowding-in” additional private investment.32 The Treasury set the Bank a target to earn an annual return on equity between 2.5% and 4% by 2025–26. It also told us that it has set the Bank a target to attract additional private finance of £18 billion.33 The Bank told us that “to be additional every time we invest”, that “additionality is a judgement” and that there are many ways the Bank can be additional. The Bank explained that it can be additional by filling financing gaps or taking risks, including policy risk, that the private sector is unwilling to accept. The Treasury told us that “but it is not there just to get as much money out the door as it can. It is there to do the things that are truly additional.” The Bank told us that it “can look to be additional to all those market moments by working with the government departments, understanding the private market appetite and then figuring out what we think our intervention is”, but that it has “not got there yet”.34
Government Response Summary
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 that as the Bank becomes more established, the targets and objectives of the Bank reflect its operations and capacity.
Government Response
Acknowledged
HM Government
Acknowledged
2.3 The Treasury has set out its expectations of the Bank through the Framework Document and the Strategic Steer which cover the principles underpinning the relationship between the two institutions, and sets out clearly the government’s expectations around the Bank’s priorities. These documents are publicly available to ensure transparency. Following the passage of the UK Infrastructure Bank Bill through Parliament, the Treasury will update the Framework Document and Strategic Steer to ensure that they reflect the new statutory footing for the Bank. 2.4 The Treasury and the Bank will continue to work closely together over the coming years to ensure that as the Bank becomes more established, the targets and objectives of the Bank reflect its operations and capacity. To aid with this, as set out in the policy design document, the government intends to carry out a Strategic Review of the Bank “in which the Bank’s progress and financial performance will be reviewed by government, including considering market demand and pipeline, with a view to ensuring it has sufficient resource”. This is in addition to an independent review of UKIB’s effectiveness and impact which is included within the UKIB Bill.