Finance minister Alistair Darling has said there will be no pre-election giveaways in the budget, with polling day expected on May 6, but he wants more investment to encourage future sources of economic growth after an 18-month recession.
The green bank, designed to help finance projects such as railways, offshore wind power generation and eco-friendly waste management, will be half-funded from government asset sales with the remaining one billion pounds coming from the private sector.
“The high risk profile of these investments, which are in new and unproven technologies means an initial government investment is needed to draw in investors,” the source said.
“By providing an initial investment of government capital it will reduce the risk profile for investors and increase the incentive for the private sector to enter the market at the scale and pace needed.”
It is estimated that Britain needs well over 150 billion pounds to modernise its energy mix. It also has to meet climate change targets — cutting greenhouse gas emissions by a third and sourcing 15 percent of its energy from renewables by 2020.
The government could sell the rail franchise from London to the tunnel linking Britain to mainland Europe, the student loan book, a toll road crossing near London or betting company, the Tote, to finance the investment bank, the source said.
