A quick update to my previous post about the Green Investment Bank, where I wrote:
Largely unreported there has been a heavy debate over whether the Green Investment Bank will in effect simply by a pot for government grants or whether it will have the ability to operate much like a traditional bank. The more bank-like the Green Investment Bank can be, the more it will be able to do with its initial funding if, for example, it is able to issue bonds and underwrite loans. Helped by the backing of some Conservatives, such as Oliver Letwin, Chris Huhne seems to be winning the debate in government both about the degree to which the Bank is a bank and also the extent to which its initial funding is greater than £1 billion. It isn’t a done deal yet however.
That is most certainly still the case, with the debating lines having become much more HM Treasury vs the rest rather than Conservative vs Liberal Democrats. As The Guardian put it yesterday:
Chris Huhne, has become a “hero” to green campaigners, locked in a war of attrition with Treasury officials who wanted it to remain a fund, not a full bank. The liabilities of a GIB would have to go on the national balance sheet, they argued, and so the UK would lose its triple AAA rating. Huhne, a former bond analyst, wasn’t cowed.
But Clegg’s attempt to force a resolution was frustrated by the chancellor not turning up. Though the idea of a GIB is Osborne’s own from opposition, he hasn’t attended a single meeting. Osborne, colleagues say, is reticent to take on his officials after seeing Michael Gove duffed up for taking on his.
It is good to see Chris Huhne and others continue to argue their case so strongly (though it would be even better if the party was enlisting members and supporters to be helpful fellow campaigners rather than to be passive spectators to what is going on in Whitehall).
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3 Comments
One good reason to support the coalition is that Huhne has got the brief that he has, in opposition to the climate change deniers in the Tory party.
I hope he wins this battle. He is doing a great job, just a shame that Caroline Spelman is in charge of DEFRA and is more interesting in making cuts than protecting the environment.
The issue is that if the GIB is not able to operate like a bank ie issue bonds, tap into ISAs etc the money available (circa £1bn) will just not be enough. I saw a recent estimate of £40bn being necessary, I doubt the Treasury would be willing to find that level of funding!
The Aldersgate Group had a big meeting on GIB last November: it was really striking how much interest there was from the City and how potentially critical was GIB’s role in crystallising genuinely sustainable investment.
And it’s high time British people were empowered to buy bonds in their local sustainable infrastructure.