Business pleads for green investmentUnited Kingdom
Fiona Harvey, Environment Correspondent
Concerns that the government might abandon proposals for a “green investment bank” have prompted businesses to voice their backing for the measure, arguing it could have far-reaching effects in stimulating economic growth.
More than 20 companies have launched a fresh call for a bank that would invest £4bn to £6bn of public money over the next four years in projects to improve energy efficiency, cut greenhouse gas emissions and stimulate private sector investment in low-carbon goods and services.
The Treasury is tussling with the Department of Energy and Climate Change and the business department over whether public funds should be poured into a prospective green investment bank that would use them to leverage private sector investment in low-carbon development.
The idea had the backing of George Osborne as shadow chancellor. He set up a commission to draw a blueprint for the bank but Treasury mandarins have since cooled on the concept as the potential costs have become apparent.
Suggestions that the bank could be funded by the sale of public assets have been dismissed, and the billions of pounds of taxpayer funds that were envisaged could be reduced to a few million in the comprehensive spending review.
But the bank should be kept, argue companies including Jaguar Land Rover, Microsoft, BT, PepsiCo and British Airways, as well as several professional bodies and trade associations, including the City of London and the Institution of Civil Engineers. The group has written to officials who are meeting on Wednesday to discuss the bank.
Several financial institutions have also signed up, including Bank of America Merrill Lynch, Axa Investment Managers, F&C Investments and the British Private Equity and Venture Capital Association.
Peter Young, chairman of the Aldersgate Group, a business grouping that helped co-ordinate the companies, 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 green investment bank must be at the heart of the economic recovery, repowering the economy and creating valuable green jobs throughout the UK where they are most needed.”
Bob Wigley, the former European head of Merrill Lynch who was appointed by Mr Osborne to draw up plans for the bank, has laid out several possible sources of funding, including an amalgamation of current government green funds and ways for the bank to sell green ISAs.
These methods of funding, if combined with some sources from central government, could make the bank self-sustaining and allow it to invest in projects that are too complex or long term, or where the financial return is too dependent on public policy for private sector companies to be willing investors.
In this view, if such investments were partly underwritten by a green investment bank, many more private sector investors would come forward.
Ed Matthew, director of Transform UK, a campaigning group for business, said: “Low capitalisation will damage any chance of a low-carbon recovery.”
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