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The government has committed to setting up a 'green' investment bank. Yet the sums the government is committing are tiny: £3 billion, or about a fifth of 1 per cent of GDP, which can hardly have a huge effect on the economy. Gerald Holtham argues for swift action to establish the bank, and an ambitious change of scope in its operations.

Holtham argues that the bank should be able to borrow additional funds earlier than the mooted 2015/16 date, and that such borrowing needn't count against the government's austerity drive. Rather than as loan capital, he says, the government's initial £3 billion allocation should be committed as reserves to guarantee a much larger loan, perhaps to underpin a balance sheet worth some £100 billion: disbursed over five years or so, this much larger amount could raise investment in the UK by more than 1 percentage point of GDP per year.

The green investment bank: Do it now, make it big

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