THE GOVERNMENT’s flagship Green Investment Bank (GIB) should see its role widened to allow it to invest in Britain’s under-funded infrastructure, a report to be published this week will say.
The Association for Consultancy and Engineering (Ace) will call on the UK coalition to turn the newly launched bank into a nationalised infrastructure investment vehicle to help stimulate the economy. It says it would be a “strong option” for delivering much-needed capital funding, particularly in Britain’s overstretched roads and rail networks.
The GIB, which officially opened for business at its Edinburgh headquarters last month, can lend £3 billion of taxpayers’ money over the next three years. But plans to allow it to borrow after 2015 rely on reducing public borrowing.
Investor confidence in backing the bank may have suffered a setback last week when Chancellor George Osborne announced a 12-month extension to cutting public borrowing. Osborne has said the bank can only extend its own borrowing when the UK balances its books, now expected in 2016/17.
Ace is pushing for the government to allow GIB’s borrowing powers to start in 2014-15 as part of a widening of its remit.
It argues that a State Investment Bank could be in place by 2017, which would allow it to take a formal role in delivering the National Infrastructure Plan by 2020.
Dr Nelson Ogunshakin, chief executive of Ace, said: “Given the time involved in establishing a new State Investment Bank, and the confidence that would need to be built up and the time it would take to capitalise, broadening the scope of the Green Investment Bank offers a strong option delivering a larger vehicle for investment quickly.”
He added: “While the government is keen to reassert its commitment to its deficit reduction, the rules for the Green Investment Bank’s borrowing powers may hurt investor confidence and make it difficult for industry to plan for investment.
“By linking the new bank’s borrowing powers to a target that government may not be able to hit, industry is unable to plan with any certainty for those borrowing powers to come into force.
“Government should change the rule and fix the date on which the Green Investment Bank can start to borrow so as to provide certainty for industry as it plans to deliver growth through infrastructure investment.”
A spokesman for the GIB said that the bank was “focused on our important role to help support the low-carbon economy”. He added: “We expect this will keep us busy for the foreseeable future.”
Regarding the risks posed by the delay in getting borrowing powers, the spokesman added: “We are reasonably relaxed about our borrowing arrangements, and continue to focus on sound investments that deliver a good return and help us achieve our sustainability metrics.
“We have sufficient funding in place today, and are confident that as we demonstrate that we can invest this capital effectively, and build a high-quality team with the right expertise, we will earn the right to raise further capital.
“If we require further capital to meet demand, this will be a clear sign that we are achieving our goals”