26 November 2020: The Spending Review highlighted the crucial role private infrastructure investment must play in the COVID-19 economic recovery, with the confirmation of plans for a National Infrastructure Bank.

Headquartered “somewhere in the north of England”, the infrastructure bank will work with the private sector to finance new investment projects across the UK. It will in part replace funds previously obtained from the European Investment Bank, of which the UK will no longer be a member following the end of the Brexit transition period. 

Funds will be more targeted and better aligned with the UK government’s objectives around levelling up and reaching its net-zero targets. £600bn, half of which will be privately financed, will flow to capital projects over the next five years.

Further details relating to the infrastructure bank will be revealed in the 2021 Spring Budget, from which point it will operate in an interim form until it can be put on a statutory footing.

In the National Infrastructure Review, Boris Johnson said: “About half of all infrastructure spending is private, especially in energy, water and telecoms. We will reduce policy uncertainty that holds back investment”.

Co-investors such as insurers and pension funds will be awaiting the promised “long-term policy certainty” to consider how best to use the bank. Potential changes following the Solvency II Review and those being considered by the Department of Work and Pensions will need to be understood to ensure the risks and incentives around infrastructure investment are appropriate. 

The infrastructure bank will offer guarantees through the existing UK Guarantees scheme, debt, equity, and hybrid products. It will be crucial to understand what meets the criteria for a “key project”, and for metro mayors and local authorities to make use of the bank in the five-year time frame.