George Osborne’s Spending Review, just announced in Parliament with the full document available online here, makes provision for a new Green Investment Bank (GIB). This is a vital piece of policy to take forward the low-carbon transition. But the announcements look to be too little, too late.
The Government has pledged just £1bn of direct public funds for the GIB – despite a previously anticipated figure of £2bn – and falling far short of the £4-6bn that analysts and campaigners had been calling for.
The Spending Review states that the GIB “will catalyse further private sector investment… so that the impact on the finance gap for low carbon investment is many times the scale of the public contribution.” But a recent report by Ernst & Young recommended the GIB receive minimum public funding of £4-6bn, or else fail to leverage necessary quantities of private sector money.
The Spending Review pledges that “additional significant proceeds from asset sales” will help supplement the £1bn figure, but gives no indication on what these asset sales might be, or the amount of money they will free up.
Also worrying is the timescale under discussion. The Spending Review document fixes a date of 2013-14 for the Green Investment Bank to receive its £1bn capital injection. Why so late? The design and testing work on the precise structure of the GIB is meant to be completed by Spring 2011, presumably in time for primary legislation to be introduced in the Finance Bill expected for April 2011. Anticipating a year to establish the GIB in law seems fair enough; but why then wait an extra year to grant it any funds?
Delaying such funding risks deterring private sector investment, and gives another year of slippage in which the UK can lose first mover advantage in capturing renewable and low-carbon markets. In sum: too little money, delivered too late.