Months of speculation over whether the Green Investment Bank will be a proper bank or a fund was ended today when it was revealed in the Budget that the Government will set up the world’s first public green bank with total funding of £3 billion.
Transform UK, the business and civil society alliance that founded the campaign for a Green Investment Bank, spoke to a Senior Minister in Number 10 who confirmed that the Green Investment Bank would be set up in legislation, borrowing powers would be enshrined within its constitution and a shadow Board swiftly set up.
However, in a serious blow to the potential for the Green Investment Bank to drive forward green growth, the Treasury has succeeded in delaying the application of these borrowing powers until at least 2015 and subject to the Government meeting its debt targets.
The power to borrow is what gives the Green Investment Bank its potential to leverage the huge resources held by institutional investors into the low carbon economy. In the UK alone they have assets of £4 Trillion. Seven leading investment companies recently stated in a letter to the Prime Minister that they would be keen to buy Government backed Green Bonds issued by the Green Investment Bank.
The Government announced today that the capitalization of the Green Investment Bank with a total of £3 billion could leverage in £15 billion into the low carbon economy. But with the power to borrow £10 billion they could have leveraged in another £50 billion to spark a clean tech jobs boom.
Ingrid Holmes, a low carbon finance expert from the climate change think tank E3G and one of the UK’s leading policy experts on the Green Investment Bank said:
"Confirmation of the world’s first public green bank is a mile stone. But a delay in borrowing means a delay in green growth. It’s a bit like buying a powerful car but being forced to drive it around with the hand brake on. If the Government is really serious about delivering growth then they must take the handbrake off and let the Green Investment Bank borrow from the word go.”
Ed Matthew, Director of Transform UK said:
"Allowing the Green Investment Bank to borrow is the key to generating growth and re-booting the UK economy. By delaying this power until the economy has recovered is like a doctor waiting for a seriously ill patient to recover before giving him life saving medicine. Commitment to a set up a proper public green bank is to be strongly welcomed but this decision on borrowing drives a dirty, high carbon truck through the heart of their growth strategy. Green growth is the key to economic recovery.”
For more information please contact:
Ed Matthew, Director, Transform UK, Tel: 07827 157906
Ingrid Holmes, Programme Leader – Low Carbon Finance, E3G, Tel: 07825 829592