This week the Chancellor published the Budget for 2010 which received some pretty mixed reactions. In terms of the green measures, there were a range of announcements including support for the renewables industry, both small and large, some extra cash to help low carbon businesses and green manufacturers, plus some boosts to promote energy efficiency.

For me, the most interesting announcements were around a so-called ‘Green Investment Bank’.  Here at UK-GBC we were very encouraged to hear Government restate their commitment to creating a £2billion Green Investment Bank with a mandate to invest in low-carbon infrastructure.  Essentially Government is proposing that they will invest £1billion themselves which will be matched by the private sector; together the cash will be used to invest in major low-carbon infrastructure projects, particularly in the transport and large renewable energy sectors and should – crucially – be used to leverage further private sector money on a much larger scale. Leveraging capital for hugely complex low-carbon infrastructure is crucial for the renewable future of the UK but we believe the GIB has the potential to bring about a low carbon revolution for homeowners as well. 

So how does a massive new bank help eco-conscious homeowners?

Well we think the new bank could provide the ideal vehicle for implementing Pay As You Save finance to allow householders to make energy efficiency improvements to their homes.  Pay As You Save is an innovative scheme that UK-GBC has been busily promoting for some time – the idea is to spread the cost of low carbon home refurbishment over time, with the homeowner paying back the costs of the measures through savings to their energy bills.  The new bank could be an ideal vehicle to leverage private sector investment in the PAYS scheme, and provide a secure return on that investment. Read my last blog post here for more information about how PAYS works.

We know that Government is very committed to introducing a Pay As You Save style mechanism for financing low carbon refurbishment (both opposition parties have also made extremely encouraging noises that they will introduce something similar, should they come to power). Indeed within this week’s Budget there is also an announcement that ‘Government and the financial services industry will undertake detailed work through a joint Pay As You Save forum to develop such financing arrangements’, which all sounds very promising.

However we need government to be consistent and seize the potential of the GIB to make PAYS a reality for homeowners and the industry as quickly as possible.  We also need to see the GIB leverage much higher sums from the private sector – we must invest tens, if not hundreds of billions of pounds into our leaky home and building stock.  

There’s a useful summary of reactions from other organisations to the Green Investment Bank written by Greenwise Business news here if you want to read more.

Ellie Austin
Campaigns Officer
UK Green Building Council