Say goodbye to the EU and say goodbye to the benefits of the European Investment Bank

What has the European Union ever done for us, is one of those questions which most Liberal Democrats have no hesitation in answering – from cleaner beaches to reduced roaming charges for mobile phone users

However, one example that sadly receives little attention is the record of the European Investment Bank (EIB).

Now banking might seem rather dry, indeed rather boring for many people. However, when it comes to the EIB its benefits do need to be heard.

I was first alerted to how significant its lending was when I read the papers going to the Transport for London (TfL) Board last September. I discovered TfL had entered into a new £1 billion corporate loan with the EIB to support investment in a number of projects, including station upgrades, track renewals and cycle superhighways.

The more I looked into the issue the more I realised how significant EIB lending was.

In London alone it has funded over the years numerous projects including £1.5 billion for Crossrail tunnels and trains, not to mention funding for the East London Line, London Overground, Thameslink and new Eurostar trains.

Its lending is not just limited to transport projects, for example last year the EIB provided £102 million to improve 38 schools across Croydon, helping to provide thousands of extra spaces. Last month it announced £700 million in lending for the Tideway Tunnel to help clean up the Thames.

And in April this year University College London agreed a £280 million loan with EIB to develop its Bloomsbury and UCL East campuses.

And while I am most aware of the EIB’s work involving London it must be stressed that its work benefits every corner of the UK. For example it recently agreed to provide £525 million for construction of the Beatrice windfarm to be built 14 km off the Caithness coast. And just yesterday it announced £60 million of lending to enhance both Swansea University’s historic Singleton Park Campus and to expand research facilities at the new Bay Campus. Just two weeks ago it announced £280 million lending for North Ireland social housing. Back in April it provided £56 million to build seven new secondary schools in Bradford, Harrogate, Keighley, Bradford and Huddersfield. And in February it lent £100 million to Newcastle University for vital investment in new facilities.

If this wasn’t enough just yesterday the EIB also announced a ground breaking £100 million investment for UK small businesses.

Once you start looking at the long list of projects benefiting from EIB lending it is no surprise to discover that 2015 was a record year for the EIB’s engagement across the UK, providing £5.6 billion in total in lending. Last year the UK was the fourth largest recipient of lending from the EIB, with only Spain, Italy and France borrowing more.

But does the EIB really matter? Surely there are always organisations willing to lend?

Well it does matter and for two powerful reasons.

Firstly the lending from the EIB will largely dry up if we leave the EU.

And secondly the lending is cheap, providing often the lowest cost of borrowing available in the world.

Although the EIB is the world’s largest public lending organisation and does indeed lend outside the EU, it is a fact that 90% of its lending stays within the bloc. Indeed this is not surprising as the bank’s shareholders are the 28 members of the EU.

The fact that future lending will be hit if we leave the EU is not some Remain scaremongering. Indeed when specifically asked what would be the implications of Brexit, Boris Johnson, the then Mayor of London has said: “such an event would be likely to preclude further access to this source of finance and may reduce any non-contractual flexibility to negotiate restructuring of the existing loans.”

When questioned Boris Johnson has also admitted that the EIB provides a cheap form of lending, admitting for example that TfL’s recent loan of £1billion had borrowing costs £31 million lower than an equivalent loan from the Public Loans Board (which has historically been the cheapest form of lending for any public sector organisation).

On the rare occasions that the EIB is debated in public I have noticed that Brexiters immediately talk about how its funding could be returned to the UK. Sadly such a comment shows a huge misunderstanding by them as to how the EIB actually operates. The reality is that the EIB funds its operations by borrowing on the capital markets rather than drawing on the EU budget.

Of course no one is suggesting that schools can’t be built, new social housing provided, universities expanded and transport systems improved without funding from the EIB, but it is crystal clear that the EIB’s lending provides an invaluable role. And by providing often the cheapest form of finance available in the world it can ensure the difference between a project being viable or not.

The EIB might lack profile, but its significance certainly can’t be overlooked. It has helped change and improve the infrastructure in every part of the UK.

* Caroline Pidgeon is the Liberal Democrat London Assembly Member and chair of the London Assembly Transport Committee

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6 Comments

  • ‘What has the European Union ever done for us’

    Kept wages stagnant since 2003 with an endless supply of cheap labour ?

  • If wages are low then it is because the UK government has not set the minimum wage high enough and because of austerity policies also set by the Westminster government. If England votes for tories, the UK gets tory policies. It isn’t the fault of the EU if the UK gets the what England voted for.

  • Dr David Hill 21st Jun '16 - 10:47pm

    Well Mr. cameron, where is democracy in the EU and something that all MPs cherrish. For what about the voice of the 500 million EU citizens that is being overlooked when the EU is going to do what it wants and democracy is destroyed.This is what it appears that the EU project is about, overidding their 500 million people.

    REVEALED: EU To Bypass National Parliaments On Controversial TTIP Deal’ – http://www.breitbart.com/london/2016/06/21/eu-bypass-democracy-trade-deals/

    Just shows what the EU is all about, give me your money and we shall do whatever we wish. The people mean simply nothing.

  • James Murray 22nd Jun '16 - 5:57am

    Sir,
    There is something amazing about any sovereign state that issues its own currency, such as the UK,.
    Amazing it is that all such states feel that they can only raise funds to invest on itself by borrowing, as above for the EIB or from the financial capital markets.
    But we know that 3% of the UK’s money supply is ‘created’ by agreement between our Bank of England and the Treasury when notes and coins are minted.
    And notice that there is never any problem with this newly ‘created’ money – the fiscal roof does not fall in.
    Indeed we ‘created’ £375 billion worth of QE and there is not a smidgeon of inflation as The rampant deflation in the economy after the financial crisis soaked up the extra money with no problem of inflation – no problems caused by this creation of ‘fiat’ money.
    So it could be with raising funds for all the above projects.
    So it would be ‘Sovereign Money Creation’, SMC, where we would not need pay-back loans from the EIB.
    The Treasury just issues its own interest-free, perpetual, non-redeemable bonds to be ‘bought’ by the B of E in a similar fashion to its purchase of Gov’t Bonds from the banks in normal QE.

    Fellow LibDems, do see http://www.positivemoney.org for the easy explanation of this rarely used Treasury tool.
    It is the future and it really is fascinating.

    Jim Murray

  • Good to see Caroline raise this important issue.

    It is incredible that Boris Johnson tried to take credit for Crossrail when in reality the policies he advocate would have made financing of the project far more challenging.

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