An influential all-party group of MPs have raised questions about the independence and added value of the first investment deals of the UK Infrastructure Bank (UKIB).

The Public Accounts Committee (PAC) has said the UK Infrastructure Bank was created “in haste” which meant it operated with “weak financial governance and very close to the treasury for its first year”. 

The committee has raised questions over the independence and added value of first investment deals; staffing and governance challenges; and said it has received little assurance the UKIB will not be sold off like the Green Investment Bank.

The committee’s concerns include the UKIB operating without an effective audit and risk committee and outside the UK’s Corporate Governance code.

UKIB has deployed £1bn of its initial £22bn capital in 10 deals so far, but the committee has questioned claims that these will fill gaps in private sector investment markets. 

So far, UKIB has provided financing to deliver broadband and build solar farms, a move the committee argues are “relatively common projects”. The committee has said in its report that “there is no clear strategic approach to balancing the risk of investment in new markets with the risk to taxpayer money”.

The UKIB was set up in response to the scale of the investment challenge facing the UK particularly from the government’s net zero and levelling up commitments.

The PAC report also said that UKIB is “well behind on recruitment plans” and is only piloting an intended infrastructure projects advisory service for local authorities, which the committee says must be developed to avoid past mistakes where the government has made loans to local authorities on property and other capital projects that put the authorities’ overall finances at risk. 

Dame Meg Hillier MP, chair of the Public Accounts Committee, said: “The UKIB was set up in haste to shore up the government’s stalled promises on net zero and levelling up, as we lost £5bn a year of European infrastructure funding to Brexit.  

“It’s really not clear what the UKIB is doing that the market wasn’t already, or would be doing with better functioning tax incentives – as just one example.

“The treasury didn’t need to reinvent this particular wheel, with all the attendant risk to benefit, value and taxpayers’ money. The predecessor Green Investment Bank was also sold to the public as an ‘enduring institution’ and then sold off to the Australian private sector five years later. It’s now turning bumper profits. 

“We need more assurance from government that lessons learned are being implemented and the catalogue of policy and spending errors we’ve seen will not be repeated.”

The findings of the report have been welcomed by the Association for Consultancy and Engineering (ACE).

Guto Davies, head of policy at ACE, said: “We welcome the recommendations made by the committee into the establishment of the UK Infrastructure Bank, notably on sharing of performance metrics, encouraging a collaborative cross-departmental approach and more detail on how its advisory function will work in practice. 

“The establishment of the bank is a great opportunity for communities across the UK, and we need to ensure that it is set up to be as impactful as possible as quickly as possible.

“The committee recommends that a full suite of performance metrics is developed covering productivity and performance. We believe that there is an opportunity here to also include metrics around regional skills development and social value which will create a broader base on which to measure impact.

“Furthermore, the moves to encourage cross-departmental engagement are welcome and could help the establishment of more co-ordinated placemaking approach throughout the UK. 

“The Bank’s advisory function also has a role to play here, and we need to ensure that this approach is mirrored in its engagement with local authorities of all sizes, reducing the need for competition, tendering and ring-fencing when allocating investment to projects across the country.”

The Institution of Civil Engineers believes that many recommendations identified by the PAC would be answered by making the National Infrastructure Strategy a statutory requirement, ensuring the bank has a long-term set of defined priorities that are based on national need.

Chris Richards, director of policy at ICE, said: “Getting the UK Infrastructure Bank up and running quickly was always going to be a challenge, and PAC has identified some gaps that need to be filled, like the need to set KPIs. 

“The ICE believes that these KPIs should be linked to the National Infrastructure Strategy, which provides a roadmap for our long-term approach to infrastructure.

“That’s why we are calling for Parliament to include a National Infrastructure Strategy as a statutory requirement in the UK Infrastructure Bank Bill. 

“Making the National Infrastructure Strategy a legal requirement will ensure that the bank has a long-term set of priorities, based on clear national needs that are in line with net zero and levelling up goals.”