Several UK pension and insurance firms have backed plans for a public-private blended finance model to help navigate investment risk and drive "billions" of private finance into "green and good" infrastructure.

The funding model, which was announced as part of the Association of British Insurers' (ABI) Investment Delivery Forum’s 10-point action plan for investment, aims to facilitate private investment in the UK’s critical infrastructure, particularly a national EV-charging network.

Developed in partnership with the Green Finance Institute (GFI) and engagement from HM Treasury’s blended finance team, the model is designed to produce many multiples of private investment for every pound of public investment.

In the model, public support, potentially from the government’s new National Wealth Fund, would be used to mitigate the initial risk in new infrastructure that private investors are unable to take, due to regulatory rules.

Once these risks have passed, public financial support would no longer be required, which is expected to result in a self-sustaining financing programme that is ideal for institutions to invest in over years or decades.

Using the case of a national EV charging network as an example, the forum estimated that less than £1bn of public investment spread over 15 years would support up to £20bn of private investment, driving economic growth.

It also suggested that the funding model could be used to speed up the planning process and the current problem of EV networks being absent from remote locations, both of which are holding back a reliable national charging infrastructure.

The forum, which includes some of the UK’s largest pension firms and insurers, has also confirmed that it plans to take this model to government, following the announcement of the National Wealth Fund Bill in the King’s Speech.

Commenting on the model, Investment Delivery Forum chair, Baroness Nicky Morgan, said: “Members of the forum stand ready to act to accelerate the nation’s investment into green and good infrastructure. This will deliver growth, 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.”

In addition to the new model, the 10-point action plan on investment highlighted the level of appetite for nuclear investment among several forum members, as well as longer-term aims including floating offshore wind investment.

Given this interest, the forum said that it will continue investigating newer technologies for investment suitability, such as carbon capture and small nuclear reactors.

The forum is also set to broaden its regional engagement plans, which focused on Manchester and the North West in 2023/4, expanding to cover West Yorkshire, Liverpool, Wales and Scotland in 2024/25.

Alongside this, the forum will begin tracking and reporting on investments made under the new Solvency UK regulatory regime, which will be live from January 1 2025, detailing both the total investment but also the types of projects being invested in.

Further regulatory engagement will also continue, including the investigation of options for enhancing the Prudential Regulation Authority (PRA) approval processes through the use of an investment accelerator or project sandbox.

Commenting, Economic Secretary to the Treasury, Tulip Siddiq, said: “I welcome the final report of the Investment Delivery Forum, which sets out a clear plan to deliver on the £100bn 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.”

GFI chief executive officer, Rhian Mari-Thomas, added: “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.”

This article was first published on our sister website, Pensions Age.

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