I support the amendment proposed by the noble Lord, Lord Teverson. I would have put my name down on it if I had had the upfront certainty that I would be able to be here. The noble Lord has hit the nail on the head; the bank will not be allowed to borrow until the national debt is a declining proportion of national income. The Government’s debt reduction target is already three years off, so on current plans the earliest date at which the bank would be allowed to borrow would be not 2015 but 2018—and it may not be 2018 either. We are faced with the prospect of a bank that will not be allowed to borrow in any foreseeable future, and that borrowing restriction will undermine the bank’s ability to support the targets for reducing greenhouse emissions as stated in the Climate Change Act 2008.
We are setting up a public bank uniquely without the ability to borrow, and the noble Lord, Lord Teverson, is right in saying that that is not the model for KfW. According to the Deputy Prime Minister, it should be able to attract about £15 billion of co-investment. In other words, the bank would pay 20% of a project and the co-investors stake the remainder without the bank itself having to borrow. That would be a way round the borrowing restriction.
If the Green Investment Bank were allowed to borrow now at a conservative leverage, it would be able to leverage its £3 billion up to £18 billion. If the Deputy Prime Minister is right, that £18 billion would in turn be able to attract up to £90 billion in private sector co-investment, so these are the possibilities that would be opened up by easing that borrowing requirement. There is a huge difference between an investment of £18 billion over five years and an investment of £90 billion.
The problem this amendment is designed to address is that the debt may not fall for a long time, so the Green Investment Bank may not be allowed to borrow. It is not just a question of the problems of start-up, to which the noble Lord, Lord Teverson, rightly alluded; the problem is that the Government’s policy is not well designed to reduce the national debt. I have argued this point for a number of years because a policy of deficit reduction is not the same as a policy of debt reduction.
To conclude, the amendment would enable the Green Investment Bank to borrow by 2015, irrespective of what is happening to the national debt, and potentially earlier if there were a need to boost growth. This means starting the EU state approval process as soon as possible. For that reason I give my enthusiastic support to the approach of the noble Lord, Lord Teverson.