MP Alan Whitehead describes the limitations of the Green Investment Bank.
Well, as a result of the Budget we are to have a Green Investment Bank (GIB) – sort of. It will be called a bank, and it will have up to £3 billion pounds at its disposal from its inception in 2012/13. But as in all budgets, it is wise to read the small print, and doing so highlights a rather different picture.
The Environmental Audit Select Committee recently published a report on the GIB, which underlined the imperative that it should, from the beginning, be a real “bank” – that is, it should have the ability to raise funds, to borrow, and to issue bonds: and in so doing, to be able to “lever” the funds that can really make the difference in green and low-carbon investment.
This is particularly important in areas where, for a variety of reasons, the need is great but traditional funding is scarce.
This model has already been an enormous success elsewhere in Europe – the KFW bank in Germany, for example. It is this picture that those who want the GIB to succeed would have been looking at the small print to confirm, but it was absent.
The GIB will be a bank in name only until at least 2015.
That is the earliest point at which the government says the GIB may be able to acquire borrowing powers, and even then, the small print states, only “once the target for debt to be falling as a percentage of GDP has been met”. In other words, the bank will have no borrowing power until the Treasury declares it should.
This is all very disappointing for those who really thought that at last we could have a key instrument to help underpin the investment we plainly need to ease the transition to a low-carbon economy.
There will be some limited investment, granted, but even a billion or so goes only a little way to underpin the scale of that task.
That’s what we’ve got available now, but it is way short of what is required. Let’s be clear that, for the next few years at least, we’ll be working with a green investment fund and not a bank.
