Infra Bank in Focus

Digital Infrastructure in Focus

11 November 2022

By John Flint, Chief Executive Officer

Digital infrastructure underpins everything citizens, consumers and businesses do. It is key to boosting growth in regions across the UK and is a key enabler of the transition to net zero. Fast, reliable digital networks improve productivity – supporting people in work and education, as well as driving innovation and encouraging social connectivity.

Digital is one of the Bank’s priority sectors, alongside, Clean Energy, Waste, Water, and Transport. The Government has a target for at least 85% of UK premises to have access to gigabit capable broadband by 2025 and a further target of 99% of UK premises having access to gigabit capable broadband by 2030.

The Government targets, and the policy framework that support them, has driven a rapid expansion in the market for full fibre (or fibre-to-the-premises - FTTP). This increased competition has therefore increased the number of companies looking to raise finance. Our assessment of the market has shown a financing capacity gap, particularly for projects rolling out into locations around the UK that are digitally under-served.

As we assessed the opportunities to invest, we looked closely at whether these deals meet the tests of our triple bottom line – whether they deliver against our twin objectives of net zero and local and regional economic growth, make a positive financial return, and whether our involvement is additional to what the market can provide.

To date, UKIB has approved four digital deals, but we have also declined many more. There are a number of reasons why we chose not to participate in some of the opportunities we have seen. In some, our market assessment has shown that, whilst we may be wanted as an investor we are not needed. We only select projects that at the outset meet our triple bottom line or where we have been able to work with the project sponsor to raise the ambitions of the project such that it passes that threshold. Our investments will accelerate the rollout of fibre to circa 8 million homes in England, Northern Ireland, Scotland, and Wales.

Our Impact analysis has led us to focus our resources on two key areas of opportunity.

Firstly whilst broadband is going to become almost ubiquitous, we know that there are areas that will be harder to reach, especially in the next few years. This means that people and places could lose out on their productivity potential. UKIB loan facilities are targeted towards areas of low connectivity or locations with low productivity but which have the skills within the local workforce to realise the benefits from improved digital infrastructure. Our investment is specifically aimed at accelerating roll out in these areas. Secondly, we have invested in projects that bridge the urban-rural divide.

It is hard to imagine that the UK can make meaningful progress towards either its Net Zero, or local and regional growth ambitions without comprehensive and high-quality digital coverage. I am pleased that the UK Infrastructure Bank is able to play a part in making this happen.