Policy & Politics Blog

21 March 2011

Breathing life into the Green Investment Bank

The FT and the Guardian today both highlight the crucial role a Green Investment Bank can play in helping the UK's economic recovery.

A strong bank, able to issue bonds, can bring in billions of pounds of essential private sector investment to replace Britain's ageing energy infrastructure. We can have more economic success stories like the big port upgrade and wind turbine factory recently announced for Hull - creating jobs and growth, business and enterprise in regions across Britain.

The Bank is a no-brainer. Yet incredibly, with only 48 hours to go before the big Bank is unveiled at the Budget, the Treasury is still trying to choke the life out of it. One week after they helped stamp on the growing solar sector, they seem hell-bent on continuing their one-department crusade to tear-up David Cameron's "Greenest Government ever" pledge.

Chris Huhne, David Cameron and Vince Cable have all said it must be a Bank, with the power to borrow. But the Treasury is insisting that the Bank should not have any powers to borrow until 2015.

The excuse it gives is that the bank's borrowing would have to count as public sector spending and so this accounting "necessity" would mean the Bank hurts Britain's deficit reduction figures. This isn't the case, but whether it is or not the whole point of the Bank is to bring in multi-billions worth of investment into the UK - it's a critical part of UK's economic recovery strategy. It helps not hinders the UK's economy. The cynical interpretation is this is more to do with the Treasury's ideological opposition to any other institution having any control over borrowing.

With two days to go, Nick Clegg and David Cameron need to prise the Treasury's hands off the Green Bank's throat. Let the Bank breathe!

Posted by Simon Bullock | 21 Mar 2011 |