The Treasury has launched a new Infrastructure Bank which it says will unlock more than £40 billion of investment in the UK.
Chancellor Rishi Sunak said that the new bank would funnel cash to projects that will support people across the UK.
“Opening its doors today, the UK Infrastructure Bank will accelerate our ambitions for tackling climate change and levelling up, while creating new opportunities across the UK as part of our plan for jobs,” he said.
“Through the bank, we are investing billions of pounds in world class infrastructure that will support people, businesses and communities in every corner of the UK.”
It is part of a commitment to spend £100 billion on capital expenditure – that is to say investment in new projects or extending the life of old ones.
The Infrastructure Bank will be able to buy £5 billion of equity in UK infrastructure projects. It will be able to lend £7 billion and guarantee loans of £10 billion as well.
There is currently no date by which this money needs to be spent.
It will initially start with loans, equity and guarantees to private businesses before starting to lend to local authorities later this summer.
In 2016, the public sector invested about £19 billion on infrastructure, with 40% of this coming from the coffers of local government.
Infrastructure bank chairman Chris Grigg said: “The new UK Infrastructure Bank is open for business. I am delighted to be leading this institution, which will be a catalyst for investment to support regional economic growth and net zero ambitions.
“I look forward to building strong partnerships with project sponsors, institutions and local leaders.”
Mr Grigg is set to meet with the chancellor at the bank’s office in Leeds on Thursday.
Tom Riordan, chief executive of Leeds City Council, said: “Since the brilliant news about Leeds being the home of the UK Infrastructure Bank, we’ve been busy working with Bank and Treasury colleagues to give them a warm welcome to the city.
“Today’s launch is a positive signal that the bank is moving at pace and there is a strong fit with plans for investment in clean energy, transport and housing in Leeds and the North.”
Greenpeace UK’s head of climate, Kate Blagojevic, said: “The money made available by the Chancellor for this Infrastructure Bank is a pittance compared to the total investment needed to truly green our entire economy and create hundreds of thousands of new jobs.
“If the Treasury expects the money to magically materialise from the private sector then Sunak must stop blocking the policies required to deliver this transformation. Withdrawing funds for tackling energy efficiency earlier this year is the perfect case in point.”
Federation of Small Businesses national chairman Mike Cherry said: “It’s encouraging to see the Chancellor being ambitious in his commitment to the UK’s new infrastructure bank, needed now more than ever as we seek to emerge from a severe recession.”