The clue to the UK Infrastructure Bank’s geographical reach is in the name. We’re here to support the whole of the UK.
That’s why we’re proud that, in just two-and-a-half years since we began to build the Bank, we have already supported, and invested in, infrastructure that will help deliver net zero and regional and local economic growth across all four nations of the UK, via a combination of our local authority and private sector investment arms.
Our capital has already been committed to the far South West, where we’re bringing new skilled jobs to the lithium mining industry, and to the Scottish Highlands, via an investment that will help accelerate natural capital markets. We have invested in projects to improve local and regional connectivity, both physically, via our EV charging deal, and digitally (via a range of fibre broadband commitments).
In 2023/24 alone, we have provided expert advice on financing infrastructure projects to 14 local authorities across the UK, with at least another seven in the pipeline before financial year end. Local authority engagements to date have included advising Manchester, Glasgow and Leeds on green transport projects, and working with Belfast City Council on heat networks, as well as with Transport for Wales and the Welsh Government on zero emission buses.
One area that we hadn’t yet invested in is London. That changes with the announcement today of a £190 million loan to the Greater London Authority (GLA) which will cornerstone the Mayor of London’s Green Finance Fund (GFF) – our largest local authority lending transaction to date.
The GFF will support the decarbonisation of buildings, energy, and transport systems across London’s 32 local authorities, some of which are amongst the most deprived areas in the country, and it has the potential to increase economic growth and opportunity.
As the nation’s largest city by far, the route to net zero leads directly through London. There is no way we can decarbonise on the scale required if we don’t tackle emissions in the Capital. Latest data shows that in in 2020, London’s CO2e emissions stood at 28.1 million tonnes.
Importantly, a significant proportion of the recipients of the GFF are expected to be local authorities. This will give us a model we can replicate with others across the UK. In fact, we're already speaking to other authorities elsewhere in the country who would like to follow the Greater London Authority (GLA) in setting up funds to support net zero delivery and we hope more will follow suit.
Deploying our capital via a fund enables us to support projects under our minimum lending size of £5m for local authorities by effectively aggregating our lending. This is important in an area such as retrofit, which is key to delivering net zero, but where there is a lack of projects at scale.
Noting that this is our first London transaction, it may come as no surprise that we haven’t invested entirely uniformly across all regions of the UK. That is in part a reflection of the fact that, as a new bank, we have done a relatively limited number of transactions. We have responded to investment opportunities in the market rather than dedicating ourselves to a particular geographical pattern of investment.
It also reflects the fact that, while driving regional and local economic growth is one of our two key objectives, we consider a range of factors in deciding whether to deploy our capital, whether that be the opportunity to provide liquidity to a capital constrained market; helping establish or develop a sector, thereby paving the way for future transactions; or increasing investment potential through our presence in a deal or market.
As required by our shareholder, all our investments must be focused on economic infrastructure and deliver a financial return and, for our private investments, mobilise, rather than crowd out, private capital.
Importantly, the impact and long-term benefits of many of our investments will be felt UK-wide, not just in the location where the individual deal is situated. For instance, our investments in the Neu Connect interconnector, in solar, and in grid-scale battery investments help decarbonise the grid for all of us.
So, with our headquarters in Leeds, and our recent move to establish banking and investment leads located in Scotland, Wales and Northern Ireland, our commitment to finding transactions where our capital is needed in all corners of the UK is ingrained.
And, while having a telling impact on net zero targets, this latest deal in London, and many of our other public and private investments and local authority advisory engagements to date, will also help unlock the critical infrastructure our communities need, creating growth, opportunity and prosperity nationwide. If we do that, we really will be living up to the ‘UK’ in our name.
If you have a project that you would like to talk to us about, get in touch.
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