Initial capitalisation must be a minimum of £4-6 billion over the next four years
Bank could re-power the economy and create jobs
A powerful group of big businesses, NGOs and cross-party MPs today urged the government to deliver a bold vision for the Government’s Green Investment Bank (GIB).
The creation of a GIB is a key pledge of the Coalition Government but there are concerns that government spending reductions could starve the GIB of the capital it requires to spark low carbon economic growth and a green jobs boom.
The “Green Investment Bank Position Statement”, published today (available to download above), states that this critical institution can help tackle the significant financing barriers to deliver investment in the UK’s energy infrastructure and can stimulate growth and jobs, especially in the regions. It calls on the Government to set up a “strong, powerful and effective” bank without delay.
Public and Private funding
The statement argues that the GIB needs to be capitalised by at least £4-6 billion over the next four years which can be a combination of public and private funding. Over time this could leverage over a hundred billion pounds more in investment from the private sector. This is the minimum required to ensure the GIB fulfils its potential to help make the UK a world leader in the supply and deployment of low carbon technologies.
The statement is signed by a diverse range of organisations, including BT, F&C Investments, HgCapital, Bank of America Merrill Lynch, Jaguar Land Rover, PepsiCo, AXA Investment Managers, Climate Change Capital, Microsoft, City of London, The Co-operative, WWF, Friends of the Earth, Greenpeace, The Institution of Civil Engineers and The British Private Equity & Venture Capital Association.
Peter Young, Chairman of the Aldersgate Group, one of the co-organisers of the statement, said: “The Spending Review cannot just be about budget cuts. We also need to restore growth and build a more resilient economy for the future. To achieve this, the GIB must be at the heart of the economic recovery, re-powering the economy and creating valuable green jobs throughout the UK where they are most needed.”
“Funding an ambitious green bank does not have to be at the expense of the budget deficit. For example, the previous government planned to raise £1 billion from sales of assets such as the Channel tunnel rail link. The bank could also raise capital from current government policies such as a carbon floor price or EU ETS. By using these mechanisms, our minimum target of £4-6 billion for capitalisation is readily achievable without impacting on the budget deficit.”
Ed Matthew, Director of Transform UK, the alliance campaigning to accelerate investment into low carbon energy, said:
"The GIB has the potential to leverage billions of private investment into the low carbon economy. Low capitalisation will damage any chance of a low carbon recovery. And when it comes to stimulating an industrial resurgence for the UK the truth is that we know they have no Plan B.”