It could be hard to feel optimistic about infrastructure in the UK right now. We have crumbling schools, a road network marked by potholes and a water system that risks England’s rivers and beaches becoming a sewage-filled international embarrassment – not to mention the largely abandoned multi-billion-pound megaproject HS2. None of them inspires confidence. And with neither of the possible next governments looking committed to increasing capital spending – quite the opposite, in fact – it would be easy to despair.
But there are people on a mission to improve things. One such person is Lorna Pimlott, managing director of the UK Infrastructure Bank’s local authority function, who in a three-decade career has developed and delivered many major infrastructure projects. She now works with local government, a sector that is desperate to deliver but lacks the resources and increasingly – after more than a decade of restrictive funding and shrinking teams –the expertise to do so as effectively as it wants.
“Infrastructure can connect people and give individuals the opportunity to make the most of their talents without leaving their local area,” Pimlott tells PF. “Unfortunately, in the UK, opportunity is not always spread equally across the country. Often, sophisticated and long-term infrastructure investment is required beyond what the market can deliver. What authorities therefore need is a critical friend to help them understand and navigate the commercial challenges and financing barriers they face in delivering ambitious infrastructure projects. This is where UKIB is stepping in.”
The UK Infrastructure Bank was launched in 2021 – after the country left the European Investment Bank – to provide £22bn of infrastructure finance. It was tasked by the Treasury (the bank’s only shareholder) with partnering with the private sector and local government to drive forward projects that deliver on the UK’s net-zero ambition and the need to develop regional economies. Pimlott, as head of the local authority advisory service, plays a particularly interesting role within that – helping, alongside a dedicated team of infrastructure experts, the country’s subnational governments with advice relating to finance, commercialisation and strategy. The bank also offers lending at gilts+40bps – lower than the Public Works Loan Board in most cases.
Transformation
“Here at UKIB, I am part of an organisation at the forefront of solving complex infrastructure problems to support the UK’s transition to net zero and drive local and regional economic growth,” says Pimlott. “Practically, that means supporting local authorities with funding requirements, but part of the bank’s long-term mission is to be part of the transformation of the UK’s industrial heartlands into thriving green economies for the long-term.”
The bank opened its advisory service with three pilot schemes in September 2022, and is gradually building up to its full offer. Pimlott, at the head of the process, has found it thrilling. “The sheer scale of any infrastructure project, no matter which sector it’s in, makes it an exciting challenge,” she says. “And, of course, there is always a human element – it’s a privilege to drive forward changes and improvements to infrastructure to enrich experiences for the people and communities that use it.”
Part of the problem is the funding landscape. The Treasury, Pimlott says, recognises the “real challenges” local government faces. Apart from some huge authorities, many don’t have a great deal of expertise, nor the budget for consultants. “It’s no secret that a lot of local authorities have absolutely no budget to be able to meet their ambitions for net zero or regional growth. A lot of them have really good ambitions for net zero, but they are never going to see those projects get out of the blocks because of resources. The bank can help bring in external stakeholders and package projects as investible.”
But it is not just about the quantity of money available. Pimlott took aim at the system of competitive funding pots, now broadly recognised (including by the Department for Levelling Up, Housing & Communities) as frustrating and inefficient. “Many of the local authorities coming to us have spent lots of resources applying for grant schemes and getting nothing,” she said.
“We can help bring the government a bit of realism from the coal face. What might work in Whitehall might not work everywhere. Projects require a level of certainty beyond the reliance on short-term grant funding. Providing this certainty is essential to the market, especially the supply chain needed to deliver the projects. As large-scale projects can take many years to develop and deliver, such as complex mass transit projects, government policy is critical to underpin areas requiring significant future interventions and investment, particularly in areas such as retrofit, heat networks, transport and regeneration.”
Replicable models
UKIB, Pimlott says, can help with a project “from inception to completion”. “Especially when we go to smaller authorities, there’s often no plan – but that’s not because they don’t think they need one. Even if they developed a plan, it would just sit there. It’s different in every case, but they are working to the same timeline on net zero and local economic development as the largest authorities. We’re setting up replicable models, sharing all the learning we gather along the way, in particular from those larger local authorities.”
“It’s a privilege to drive forward changes and improvements to infrastructure to enrich experiences for the people and communities that use it”
In the not-quite-a-year since Pimlott joined UKIB, she has found out just how entwined the bank’s two missions are. “What’s become clear through the transactions and advisory projects we’ve completed so far is the close and positive relationship between accelerating progress towards net zero and driving local growth,” she says. “We need local authorities’ involvement across the UK if we are to successfully achieve net zero. We track the impact of every deal we close. If we’re supporting local authorities as they create new local green industries, for example, we’re also looking at how many jobs we’re creating or supporting and how it’s developing invaluable new green skills locally.”
Enduring legacy
So regional growth can drive green development, just as green development drives regional growth – or, as it is less and less frequently being referred to, levelling up. From its first articulation in Boris Johnson’s Conservative Party manifesto in 2019 (although in truth it felt like a rebrand of Theresa May’s ‘left behind’ agenda), it is hard to see ‘levelling up’ as having had anywhere near the impact befitting an apparently flagship policy. Genuinely reducing inequality between the UK’s many places will require more than a few billion pounds of grants for local projects. Doubtless, communities will benefit from a large number of the winning schemes from various funds, but perhaps the policy’s enduring legacy will be the UK Infrastructure Bank.
Regional inequality
Mind the gap
Regional inequality in infrastructure spending is holding back large parts of the country. Don’t tell the people who used to rely on Hammersmith Bridge (which has been closed to vehicles since 2019, with funding for its full reopening unclear), but London gets much more investment than elsewhere.
From 2010 to 2021, London saw more investment in new work infrastructure (£42.4bn) than any other region of Great Britain, according to Office for National Statistics figures. The next highest were Scotland (£31.2bn), the South East (£26.3bn) and the North West (£25.5bn). The lowest were Wales and the North East (both £9.9bn).
Specifically on transport, the IPPR North think-tank found in 2019 that spending per person had grown by 2.5 times more in London than in the North in the previous decade. Had spending in the North kept up, it would have seen £66bn more invested during that period.
The National Infrastructure Commission told the government that investment in mass transit is urgently needed in and around Birmingham, Bristol, Leeds and Manchester if those cities’ economies are to make the most of their rising populations and grow anywhere close to their potential in the next few decades. Its once-per-parliament National Infrastructure Assessment, published in October last year (just after the decision was made to abandon large parts of HS2), called for the government to devolve transport budgets to local authorities. “These are better placed to determine what their priorities are for transport investment, as they better understand local issues and opportunities.”
If this – or any – government is really going to ‘level up’ left-behind parts of the country, it’s going to take more than a few grants to do so. Regional economic growth is one of the UK Infrastructure Bank’s key missions.
