The UK’s first infrastructure bank will be launched in Leeds, with an initial £12bn to deploy into a “green industrial revolution”, the chancellor has announced.
Rishi Sunak used his Budget speech today to set out further details of the new institution, following an earlier announcement at the Spending Review in November that it would launch this spring.
Mr Sunak said that the lender, which is designed to invest into private and public projects, would have “an initial capitalisation of £12bn”, and was expected to support “at least £40bn of investment in infrastructure”.
“Our future economy needs investment in green industries across the United Kingdom so I can announce today the first ever UK Infrastructure Bank.
“Located in Leeds, the bank will invest across the UK in public and private projects, to finance the green industrial revolution,” Mr Sunak said.
Budget documents set out HM Treasury funding to the new entity of £7.5bn over the five years up to and including 2025/26. Social Housing has asked UK Treasury where the balance of investment will come from, and the extent to which the fund will be accessible for investment into housing projects by UK registered providers and banks.
The chancellor also confirmed that his department, HM Treasury, would form part of a new economic campus in Darlington along with the Department for Business, Energy & Industrial Strategy (BEIS), Department for International Trade (DIT), and Ministry of Housing Communities and Local Government (MHCLG).
The new hub was first announced in last year’s March Budget, with plans for around a fifth of all Treasury staff to relocate. Last month, plans for MHCLG to move to set up headquarters in Wolverhampton were announced. Other departments including BEIS were also preparing for the move north at the time, including recruiting for a director general for net zero buildings and industry.
Speaking in parliament today, Mr Sunak said: “Our future economy demands a different economic geography. If we are serious about wanting to level up, that starts with the institutions of economic power, and few institutions are more powerful than the one I am enormously privileged to lead, the Treasury.
“Along with the other critical economic departments including BEIS, DIT and MHCLG, we will establish a new economic campus in Darlington.”
Mr Sunak also confirmed today that a commitment to greening the economy would be reflected in plans to launch a sovereign green bond. Budget documents indicate that the “green gilt framework” for the issuance will be published in June which will detail the types of expenditures to be financed to “help meet the government’s green objectives”.
The documents add that “further issuance [will] follow later in 2021 as the UK looks to build out a ‘green curve’.
Elsewhere, Mr Sunak announced that he will set a new remit for the monetary policy of the Bank of England which will “reflect the importance of environmental sustainability and the transition to net zero”.
Social Housing has requested further details on the projects likely to benefit from the government’s allocation of the green bond proceeds, and what the Bank of England’s new monetary remit will entail.
Despite a slight ’green tinge’ to today’s budget, there was no reference to the 10-year, £3.8bn Social Housing Decarbonisation Fund promised in the Conservatives’ 2019 manifesto speech. A £50m pilot of the scheme was outlined at July’s post-pandemic ’Mini-Budget’ last year, but details of the full scheme are yet to materialise, and are not explicitly costed in today’s Budget documents.
Other budget announcements today include an extension to the £20-a-week Universal Credit uplift, and government guarantees for new five per cent deposit mortgage products.