The Association of British Insurers (ABI), the voice of the UK’s insurance and long-term savings industry, has unveiled a new public-private blended finance model to mitigate investment risk and potentially drive billions of private finance into ‘green and good’ infrastructure.
The ABI ‘Investment Delivery Forum’ has unveiled a 10-point action plan for investment, which includes the design of a new funding model to facilitate private investment in the UK’s critical infrastructure. The model, which specifically focuses on a national EV-charging network, also demonstrates support for nuclear energy and plans for offshore wind investment.
Developed in partnership with the Green Finance Institute (GFI) and engagement from His Majesty’s Treasury’s blended finance team, the model hopes to produce multiples of private investment for every pound of public investment.
Rhian Mari-Thomas, chief executive officer of the Green Finance Institute, said: “Partnership is essential if we are going to meet our net zero targets in the UK. Not just a partnership of public and private capital investment, but also a partnership of ideas – as demonstrated by the Forum and the GFI in building out these innovative solutions to fund essential infrastructure and lower emissions.”
The model outlines plans to use public support (such as the government’s newly announced National Wealth Fund) to mitigate the initial risk in new infrastructure that private investors are unable to take, due to regulatory rules.
ABI explained that once these risks have passed, public financial support would no longer be required, leading to a self-sustaining financing programme that is ideal for institutions to invest in over years or decades.
Hannah Gurga, director general of the Association of British Insurers, commented: “The Investment Delivery Forum has laid firm foundations for the industry to act on the opportunity that reforming the regulatory framework brings, with £100billion set to be channelled into green and good infrastructure over the next 10 years.”
Accelerating the nation’s investment in green and good infrastructure
Members of ABI’s Investment Delivery Forum plan to take this model to government, following the announcement of the National Wealth Fund Bill in the King’s Speech.
Tulip Siddiq, Economic Secretary to the Treasury, said: “I welcome the final report of the Investment Delivery Forum, which sets out a clear plan to deliver on the £100billion pledge insurers have made to invest in critical UK infrastructure. I look forward to working with the sector in my new role as City Minister as we take action to drive sustained economic growth in the UK so we can make every part of our country better off.”
The Investment Delivery Forum, set up in 2023, comprises some of the UK’s largest pension firms and insurers. Its latest report highlights the progress made over the last year, in which time it prepared the ground for increased investment by insurers as the UK reformed its Solvency II regime, which is set to unlock £100billion for productive assets over the next 10 years.
Its 10-point action plan on investment also details an appetite for nuclear investment among several members, as well as longer-term aims including floating offshore wind investment. The Forum has said that it will continue investigating newer technologies for investment suitability, such as carbon capture and small nuclear reactors.
Baroness Nicky Morgan, chair of the Investment Delivery Forum, also said: “Members of the Forum stand ready to act to accelerate the nation’s investment into green and good infrastructure. This will deliver growth, and jobs, and help us meet our net zero targets.
“The work done by the Forum on new funding models, such as the EV charge point programme, are essential to facilitate the flow of private capital into the green infrastructure transition and a number of members see nuclear as an attractive investment.”