The UK Infrastructure Bank has invested £22 billion from taxpayers since its inception, while the Labour government has pledged it a further £7 billion.
UKIB will have invested £4 billion since its inception in 2021 into private sector projects that boost economic growth or tackle climate change.
Despite MPs last year criticising the bank for “reinventing the wheel” by funding projects backed by private capital, in July the government pledged an extra £7.3 billion to UKIB from a new National Wealth Fund.
Dieter Helm, a professor of economics at the University of Oxford, said: “It’s hard to see how giving the infrastructure bank an extra £7 billion would help it perform better than it has in the past”.
Sir Keir Starmer’s Labour government has announced it will use the NWF to drive around £20 billion of private investment into decarbonising projects.
In July Labour said it was creating a separate NWF institution “to enable investment to begin immediately” rather than giving £7.3 billion to UKIB.
The money should be used for private sector investment, equity investment and debt, rather than to directly fund projects.
UKIB has 245 permanent staff under chief executive John Flint (a former HSBC chief). MPs have criticised it for investing at a rate slightly slower than expected so far, at £1.5 billion a year.
UKIB was hit by a report by the House of Commons public accounts committee last year which questioned whether it had a “strategic view of where it should target its investments.”
The PAC accused the lender of a “lack of strategic vision” and questioned whether the bank was following market rules.
UKIB has also come under fire for investing in third-party funds, i.e. having investment decisions made externally, such as a new infrastructure fund run by Octopus Investments.
Lord Aamer Sarfraz, former chairman of a cross-party group on sovereign wealth funds and former treasurer of the Conservative Party, said: “UKIB has been given too much capital, too quickly, without demonstrating its ability to source, execute and manage investments at this scale.”
The four billion pounds of loans, equity and guarantees provided by UKIB so far have been funded across 38 projects, including the development of a lithium mine in Cornwall and supporting the expansion of broadband in rural Cumbria.
UKIB said it has spent £4 billion so far, raising £11 billion in private investment. “We will never invest in areas where we are not needed, nor will we stifle private investment – we make no apologies for that.”
UKIB said: “We are working closely with our shareholder [the Treasury] to determine how best to use the additional capital under the NWF, now that we have developed our expertise and capabilities.”
“The National Wealth Fund will play a vital role in the Government’s growth mission and deploying this funding through UKIB means investment can begin immediately,” the Treasury said.