Major insurers and pension providers have unveiled a 10-point plan for driving more investment into “critical” infrastructure such as an electric vehicle charging network.
The proposals centre on a new “blended finance” model, combining private and public sector funding to initiate investment in new and existing projects.
Members of the Association of British Insurers’ Investment Delivery Forum announced the action plan on Monday (22 July), coinciding with the government’s launch of its Pensions Review.
The companies are targeting investment in a national electric vehicle charging network as part of increased allocations to “critical infrastructure”, as well as nuclear energy and offshore wind assets.
The group includes Aviva, Rothesay Life, Royal London, Just Group, M&G, Phoenix and Lloyds Banking Group. They have partnered with the Green Finance Institute and the Treasury to develop the blended finance model, which they said would “produce many 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 Green Finance Institute in building out these innovative solutions to fund essential infrastructure and lower emissions.”
Public sector funding, potentially from the planned National Wealth Fund, could be used to take on initial funding risks that private sector investors often shy away from, the group said.
“Once these risks have passed, public financial support would no longer be required, resulting in a self-sustaining financing programme that is ideal for institutions to invest in over years or decades,” the group said in a statement.
It claimed that a £1bn public investment in electric vehicle charging facilities could support up to £20bn of private sector allocations, while also speeding up planning permissions and addressing accessibility issues in remote areas.
Forum members have agreed to direct up to £100bn into “productive assets” following reforms to the UK’s insurance regulations, known as Solvency UK. This framework governs how insurers can invest and is based on the European Union’s Solvency II rules.
Baroness Nicky Morgan, chair of the Investment Delivery Forum, said the proposals would “deliver growth, jobs and help us meet our net zero targets”.
“The work done by the Forum on new funding models, such as the electric vehicle 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,” she added.
