European Investment Bank to back Thames Tideway Tunnel with £700m loan, sparking EU row
The European Investment Bank (EIB) has agreed to provide a £700m loan for London's "super sewer", the largest ever loan for water investment worldwide, sparking a new row in the EU debate.
The 35-year-loan is directed toward the biggest infrastructure project ever undertaken by the UK water industry, and is aimed at tackling overflows of untreated sewage into the river through the centre of London.
“The new loan for Tideway represents the EIB’s largest-ever water loan and the most significant support for UK infrastructure since Crossrail. This demonstrates the EIB’s strong commitment as the largest source of financing for long-term investment in UK water infrastructure since before privatisation,” said Jonathan Taylor, EIB Vice president.
Britain Stronger in Europe touted the decision as an example of the merits of EU membership. James McGrory, its chief campaign spokesperson, said: “This is yet another example of the EU funding that creates jobs for Londoners and keeps our great capital city running smoothly.
“90 per cent of EIB funding is restricted to EU member states, meaning that projects such as the Thames Tideway could become impossible if we leave."
But Matthew Elliott, chief executive of Vote Leave said: "We hand £350m Brussels every week. EU projects are paid for by British taxpayers, not some magical money tree in Brussels. The UK has a significant exposure to the EIB loan portfolio, yet if we Vote Leave we could decide ourselves which projects it is best to offer lending to. It is safer to take back control and spend our money on our priorities."
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However, Dan Lewis, senior advisor on infrastructure policy at the Institute of Directors said politicising the decision does not make much sense, stressing that the £700m provided is a loan, not a grant.
“Getting the EIB loan isn’t a bad start, and it might be slightly cheaper than the government paying for it directly, but it is only part of the funding needed. There is debt out there for large, regulated assets like this, so this loan was never going to be make or break,” he said.
The announcement comes as Prime Minister David Cameron warned last weekend of a cut to EIB – which is 16 per cent owned by the UK government – funding if the UK votes to leave the EU.
He said: "Vital projects across every region of the UK have been financed by the EIB. These make a huge difference locally, nationally, and sometimes globally."
Of the investment, environment minister Rory Stewart said it is an "example of investment in the UK’s water sector, supported by financing from institutions such as the European Investment Bank: good value for customers, creating jobs and making the long term infrastructure decisions necessary to protect this great city and our natural environment in the century ahead".
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Last month Vote Leave also hit out at the EIB's decision to lend £1bn to the UK to build social housing, which led the investment bank to deny it was seeing to influence the outcome of the vote.
London's modern day sewerage network was founded in 1858, and the interceptor sewers built then still form the backbone of the network today. They are coming under increasing strain as the population has exploded.
The Thames Tideway Tunnel will be 25km long, with the main tunnel’s outer diameter measuring 7.2 metres.