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Welcome to the National Infrastructure Bank

One of the most eye-catching announcements in Rishi Sunak’s recent Budget was the creation of the National Infrastructure Bank, which – as part of the Government’s commitment to economic ‘levelling-up’ across the UK – will be based in Leeds.

What is the new bank? Why is it being introduced? And what impact might it have on both the regional and national economies?

The Bank is part of the Government’s stated aim to reach ‘net zero’ by 2050, part of what the Chancellor described as a “green industrial revolution.”

Launched with £12bn of capital, the Bank is aiming to attract a further £40bn of private investment into green projects. According to UK Government documents, “the Bank will provide leadership in the development of new technologies.” The Bank will also be able to issue £10bn worth of guarantees, as well as having the ability to “draw capital from the Treasury and borrow from private markets.”

Initially it looks as though much of the Bank’s lending will be to local authorities. It appears that one of the key aims of the Bank – as with the Budget’s freeports initiative – will be to regenerate areas that have previously suffered from a lack of investment. The Government’s initial briefing notes talk of ‘high value and strategic projects of at least £5m.’ The National Infrastructure Bank won’t be lending you and me money to put solar panels on our roof…

These are clearly early days – at the moment the Bank is little more than another headline. But it has been broadly welcomed: this was certainly true in Leeds, with the council seeing the Bank as confirmation of the city as the biggest financial hub outside London – and another feather in the region’s cap following Channel 4’s recent move to Leeds.

There have, inevitably, been one or two dissenting voices. Mark Robinson, chief executive of procurement authority Scape said, “There is a pressing need for [the Bank] to move at speed to create the best conditions for local economic growth and sustainable inward investment.”

In other words, if the economy is going to bounce back from the pandemic, then the Chancellor’s ‘green industrial revolution’ – and the Bank behind it – needs to get to work, quickly and effectively.

In theory, it should be able to do this. According to figures produced by the Office for Budget Responsibility, the Bank will initially provide less than half the funding previously provided by the European Investment Bank (EIB). The Government’s intention is that the Bank will provide ‘more targeted’ support than the EIB and, with the UK no longer bound by European rules and the Government keen to press ahead with the ‘green industrial revolution,’ we may see the National Infrastructure Bank expand rapidly.