Skip to main content

Government accepts EAC recommendation for National Infrastructure Bank to be permanent with possible future focus on nature recovery

22 June 2021

The Government has confirmed that the National Infrastructure Bank will be a public institution on a permanent basis and has committed to reviewing the case for broadening the Bank’s mandate to include improving the UK’s natural capital, before bringing forward legislation to put the Bank on a statutory footing.

This pledge comes in its response to the Environmental Audit Committee’s report, ‘Growing back better: putting nature and net zero at the heart of the economic recovery’ which is published today.  

The EAC put forward a number of recommendations stressing that the economic recovery from covid-19 is addressed in tandem with forwarding environmental priorities on climate change and nature recovery. 

Transport infrastructure and nature recovery  

The Committee’s report recommended that the nature recovery network that the Government has promised must not be an afterthought established after new roads and other infrastructure are built. The Government response acknowledges the considerable carbon impact of cars on the road and points to existing projects to enhance public transport. However, the response fails to engage with the report’s arguments around road building or nature recovery networks.  

Homes and energy efficiency 

The Committee recommended that the Government introduce embodied carbon targets for the construction of new homes. The Committee is disappointed that the Government did not respond to this recommendation.   

Shortly after the EAC’s report was published, the Government decided to close the Green Homes Grant voucher scheme. The EAC welcomes its commitment to honour all applications while the scheme was open and urges the Government to consider a replacement scheme in this year’s Spending Review. 


The EAC called for carbon border adjustments to be considered to address carbon leakage and welcomes the Government’s recognition that this must be looked at. However, in its response, the Government explains that any trade policy must comply with the UK’s Free Trade Agreement obligations and World Trade Organization (WTO) rules and it argues that it is currently unclear how a Carbon Border Adjustment Mechanism can comply. We believe this needs addressing through the WTO and other relevant international fora as a matter of urgency in the run up to COP26.

Investment in nature 

The Government failed to address recommendations around nature recovery networks and a National Nature Service.   

The Government’s response to the EAC’s report was received ahead of publishing its response to the Dasgupta Review. In responding to Dasgupta, the Government has undertaken to table an amendment to the Environment Bill that new Nationally Significant Infrastructure Projects in England, such as future transport and energy projects, will need to provide a net gain in biodiversity and habitats for wildlife. 

We welcome this move, and will address the Government’s response to the Dasgupta Review in the forthcoming EAC report, Biodiversity and Ecosystems. 

VAT reductions 

The Government rejected the EAC’s recommendation to reduce VAT to boost green sectors – including energy efficiency upgrades and ultra-low emission vehicles – citing the cost to the Exchequer. 

Green finance 

The EAC welcomed the Government’s accepting the Committee’s recommendation to expand the Bank of England’s remit to ensure that its bond purchasing is consistent with a net zero emissions trajectory. The Committee also welcomes confirmation  that climate-related financial disclosures will be made mandatory for UK premium-listed firms – implementing a recommendation originally made by the Committee.  

The EAC looks forward to seeing the Sovereign Green Gilt framework document which is due to be published shortly.  

Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: 

“The Government is seeking as recent host of the G7 and later this year host of COP26, to demonstrate global leadership in greening the economic recovery from covid-19. This response today to our inquiry misses the opportunity to address several quick wins. VAT reductions to spur consumers to make green improvements to their homes could have provided a welcome boost, as would putting more investment in championing nature recovery. 

Our Committee does however welcome the Government’s pledge to review the case including nature recovery projects in the National Infrastructure Bank’s remit. Our nation’s natural capital deserves investment too. 

As we all know, the vaccine success offers a route out of the pandemic, but we are not yet out of the woods. There will be countless further opportunities to combine economic recovery measures with our environmental goals and I hope that as we approach COP26 and get back to normal, all options will be open.”  

Environmental Audit Committee member Jerome Mayhew MP, said:

“Carbon Border Adjustment Mechanisms have risen up the political agenda and are widely seen as an inevitable development to allow leading countries to raise the price of carbon in their internal markets. Similar challenges will apply to the Carbon Border Adjustment Mechanism currently under consideration by the EU.”

Further information

Image: Alan O'Dowd