Osborne’s green bank moment
The Green Investment Bank “must be able to start making investments within twelve months”. This is the stark conclusion from the Environmental Audit Committee’s new report. Despite ongoing tensions between Treasury and DECC, Chancellor George Osborne will ignore this report in his March Budget at his peril.
The Green Investment Bank isn’t a mere add on to policy, a bit of green window dressing, or a sound bite. Without the new bank, the committee warns that we face a funding gap for green infrastructure running into hundreds of billions of pounds.
For the TUC, there’s an equal and matching argument: the GIB is vital for economic growth and jobs, at a time when nearly a million young people are out of work.
Perhaps the most interesting aspect of the committee’s report is the rounded assessment of its function in the setting of current government policy, not just that windy aspiration to be the greenest government ever, but the delivery of key parts of the Coalition’s green economy roadmap.
So we learn that the bank should be a fully fledged operation, capable of issuing Green ISAs, to the value of £2billion a year, as a way of linking individual savers to the low carbon transition, “with tangible things that help people, society and the planet.” Green ISAs are a pre-election commitment that the Chancellor was rumoured just a few days ago to be sidelining.
It has a vital role in supporting the Green Deal. There are three financial commitments that still need resolving, which the bank could advise on: sufficient low cost finance for households; aggregating individual loans to packages that large investors would be interested in; and setting long-term loan arrangements. The Green Deal doesn’t start until the end of 2012. Even then, with half a billion cut from the present Warm Front Budget, it will take some considerable time for the Green Deal to get up to that kind of speed insulating our leaky homes. A further good reason for the GIB to play a part in the market-based new home insulation programme that the Coalition believes will replace Labour’s public led programme. Time will tell.
Finally, the committee suggests a role for the GIB in advising government on the low carbon economy programme, green infrastructure investment, and joining up the interests of government departments. It could provide a stable policy role, so monitoring and supporting progress of real investments as the electricity market reforms and CO2 pricing mechanisms develop would make sense.
In its evidence to the committee, the TUC suggested that the Forum for a Just Transition should play an advisory role to this bank. The committee is reversing this role, saying the bank should advise government, in a monitoring role. Fine. The relevant body now for the bank to speak to is the Green Economy Council, which has taken over where the forum left off in some ways. So, decisions for the Chancellor, then, on 23 March: to announce that the bank will be fully operational by the end of this year; and that it will work with and advise the Green Economy Council as part of the government’s plans for a return to growth and green jobs.