Sunak’s new bank ‘no effect on growth’ says Labour
Rishi Sunak: hopes to generate green investment
Chancellor Rishi Sunak’s new ‘National Infrastructure Bank’ will have no effect on growth, according to data obtained by the Labour party from the Office for Budget Responsibility.
The OBR has said the Government’s intent for the National Infrastructure Bank (NIB) is to “boost private sector investment in UK infrastructure”.
Mr Sunak announced that it will be based in Leeds with the aim of driving at least £40 billion of green investment.
It will lend and invest around £1.5bn a year. The OBR says this would be equivalent to about a third of the financing that was provided by the European Investment Bank prior to the EU referendum.
It adds that “given the scale of its operations and the fact that it replaces only some EIB activity, we have not adjusted our economy forecast.”
Labour adds that the NIB is dwarfed by the national investment banks in France and Germany.
Germany’s Kreditanstalt für Wierderaufbau has total assets worth almost 15% of yearly GDP, while the UK’s will start at just 0.1% of GDP – 147 times smaller.
Labour says the £12bn funding allocated to the NIB over five years also falls far short of the £20bn recommended by the National Infrastructure Commission. It adds that the funding will “fail to plug the gap” left from the European Investment Bank, which invested on average around £5bn a year in UK infrastructure.
The establishment of the bank follows the Government’s decision to sell off the Edinburgh and London based Green Investment Bank in 2017.
Ed Miliband, Labour’s Shadow Business Secretary, said: “The [UK] Government’s smoke and mirrors cannot distract from the fact we have been left without the green investment we need. We needed climate leadership from government but we got climate failure.
“In the year of COP26 when we are wildly off track to meet our climate targets, we needed the Chancellor to put a green stimulus at the centre of the Budget.
“He totally failed to do so. A £1bn cut to the green homes grant, a refusal to help our manufacturers make the green transition and an investment Bank that lacks anything like the ambition we need.
“Far from transformative investment in infrastructure, the Government’s new bank won’t even plug the hole left by the European Investment Bank and will see us trailing way behind countries like Germany.”
The Scottish Government has set up its own National Investment Bank with a budget of £2bn over ten years.