Green investment bank will invest in renewables

AMONG the more eye-catching proposals in the Budget was the plan for a £2bn state-backed investment bank to develop infrastructure and renewable energy projects.

Chancellor Alistair Darling confirmed the widely-trailed idea, which will be half-funded by the sale of the government’s interest in the Channel tunnel and in half with private cash.

The bank will particularly focus on wind power generation, with at least £60m set aside every year for developing facilities to transport the huge turbines needed for offshore farms.

Campaign groups such as Greenpeace welcomed the move, but KPMG said more thought needed to go into ways to forge long-term public and private cooperation.

KPMG infrastructure boss Nick Chism said: “The fund only covers a fraction of the estimated £400bn the UK needs in infrastructure investment over the next 10 years.”

Separately, Darling said the messy array of funding schemes for small businesses would be grouped together under a new body called UK Finance for Growth (UKFG). With £4bn of firepower, UKFG will operate like private equity house 3i when it was set up after the Second World War to help feed start-up enterprises.

Business secretary Lord Mandelson said the fund, which will finance firms looking for between £2m and £10m in growth capital, was about helping the wealth creators who were “the real heroes of the recession”.

As many as 1m Britons without access to a bank account will be registered with a lender in the next few years, the chancellor said.

He added that more competition in retail banking would help and the FSA would “speed up” banking licence requests.