Fears over plans for green bank

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Indy Politics

Campaigners calling for a Green Investment Bank to kick-start low carbon growth today said they feared the Treasury will not let the bank borrow money until 2015.

It is hoped the promised bank will leverage billions of pounds in private finance to fund clean energy and low-carbon projects.

But the setting up of the Government-backed institution has been dogged by disagreement within Whitehall about whether or not it should be a bank able to raise its own capital, amid concerns its borrowing could undermine efforts to cut the deficit.

Ahead of this week's Budget, Ed Matthew, director of campaign group Transform UK, said he expected the Treasury to announce that the bank would be able to borrow - but not until 2015.

He said the bank was due to be up and running by September 2012, and urged the Government to set a cap on borrowing when it is first operational rather than imposing a delay on its ability to raise capital.

"The power to borrow is what gives the Green Investment Bank the ability to leverage in the private investment required to spark low carbon growth and de-carbonise our energy system.

"If they clip the wings of the Green Bank so it can't fly, where is the growth going to come from? Are they going to magic it out of thin air?

"It seems extraordinary that in terms of delivering a 'Budget for Growth' the Government can't even do something everyone wants.

"We are in a clean-tech race with the rest of the world and the Treasury seems determined to lose," he warned.

Earlier this month, the Environmental Audit Committee (EAC) called for the institution to be a "real bank" and not just another fund for distributing Government money.

MPs said the bank must be able to raise private finance to plug the multibillion-pound gap in investment needed to drive the shift towards green technology such as renewable energy.

Green Party MP Caroline Lucas today said: "There are rumours that the Treasury are moving to crush the Green Investment Bank ahead of the Budget on Wednesday, by stating that it will not be allowed to borrow until 2015.

"Although the Treasury may agree in principle that the Green Investment Bank can borrow eventually, to stop it borrowing for four years means it will be merely a fund for that time.

"To clip the Green Investment Bank's wings at exactly the time it needs to fly would be daft. It would put growth and low carbon budgets in serious jeopardy."

Greenpeace executive director, John Sauven, said: "The Government's flagship plan for a Green Investment Bank was the glue that would hold together the coalition's entire green programme.

"Ministers' decision to announce what is now nothing more than an ill-equipped quango throws into doubt Britain's chances of building a low carbon economy and means we will now lose jobs and industries to places like China, Germany and Silicon Valley in California."

He said the Prime Minister David Cameron must urgently intervene to keep his pledge to MPs that the institution would be a real bank and not just a fund.

A Department for Business, Innovation and Skills spokesman said: "The Government has allocated significant resources to the Green Investment Bank over this parliament, despite a historically tough spending environment.

"Our aim is for it to operate at a scale sufficient to catalyse private sector investment and contribute to filling the considerable gap in green investment needed. We will do this while being transparent about the implications of any borrowing for the Government's fiscal constraints."