UK lost more than €5bn in EU financing after Brexit referendum, peers say

The UK lost more than €5bn (£4.5bn) in infrastructure funding in a year as lending from the EU collapsed following the Brexit vote, a powerful Lords committee has said.

Peers warned that major infrastructure projects would be hurt further if the government fails to “plug the funding gap” when Britain loses access to the European Investment Bank (EIB) after Brexit, as ministers have relied on the EIB to fund major projects such as Crossrail and Manchester’s tram extension.

Brexit has already had a “material effect” on the UK’s relationship with the EIB, which lent €7bn to 54 projects in 2016, compared to €1.8bn to 12 projects in 2017 and €932m to 10 projects last year, according to a new report by the Lords EU Financial Affairs Sub-Committee.

It comes as Theresa May’s attempts to break the Brexit impasse by renegotiating her deal were met with fierce resistance in Brussels, as senior leaders lined up to insist it cannot be reopened.

Peers accused ministers of being vague over future relations with the EIB, which has contributed more than €118bn to UK projects in the last 45 years, ranging from the London Overground to roads in Scotland, as well as major water and sewerage systems.

In the last decade alone, the EIB has pumped €50bn into the British economy, and in 2015 accounted for a third of total funding of UK infrastructure projects.

The committee argued that Britain should give “swift and serious consideration” to creating a state-backed infrastructure bank to replace funding the country will lose.

Baroness Falkner of Margravine, who chairs the committee, said: “For the last 45 years the UK has relied on the European Investment Bank to invest in all manner of vital infrastructure projects such as Crossrail, London’s ‘Super Sewer’, the expansion of Manchester’s tram network and Scotland’s Beatrice offshore windfarm.

“The UK’s infrastructure, and the industries that depend on infrastructure spending, will be hurt if the government does not quickly find a way of plugging the funding gap that will be created if access to the EIB is lost after Brexit.

“We’re calling on the government to give serious and swift consideration to the creation of a UK infrastructure bank.” 

The Liberal Democrat peer also urged Ms May to “come clean” about why the government is not claiming Britain’s share of €7.6bn from the EIB as part of its Brexit plans.

Under the terms of Ms May’s Brexit deal, the UK will receive the €3.5bn of capital it has paid into the EIB but it will not receive any share of the bank’s profits, which the committee says could amount to €7.6bn.

Responding to the report, a Treasury spokesperson said: “As we leave the EU, we will get every penny of the more than £3bn we put into the European Investment Bank back to invest in UK infrastructure. We also have assurance that existing UK projects will face no disruption from our exit.

“This is just one of part of a much larger settlement that we have negotiated with the EU, which honours our commitments and is a good deal for taxpayers.

“We are investing record amounts in Britain’s infrastructure, with funding for roads, railways, schools and hospitals reaching levels not sustained for forty years.”

Ms May was recently criticised for choosing to launch her long-term plan for the NHS from a hospital that was built with £50bn of EU financing.

Liverpool’s Alder Hey Children’s Hospital received £56m from the EIB for reconstruction work in 2013, according to research by the Best for Britain campaign.

The Independent has launched its #FinalSay campaign to demand that voters are given a voice on the final Brexit deal.

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