Budget 2010: Government launches £2bn Green Investment Bank; staggers fuel duty rise

Wed 24 March 2010 View all news

The Chancellor of the Exchequer has announced that the Government will set up a Green Investment Bank with a mandate to invest in low carbon infrastructure. Also in the 2010 Budget was the introduction of a tax incentive to encourage the introduction of ultra-low carbon cars and a delay in the introduction of fuel duty increases. The Budget preceded an announcement by the Department for Transport of further details of how £30m committed in the PBR will be spent to encourage low carbon transport.

In an attempt to address what it describes as 'emerging equity finance gaps', the Government intends to create a Green Investment Bank, with a mandate to invest in low carbon infrastructure. The Government will start by investing up to £1 billion from the sale of infrastructure-related assets and will seek to match this with at least £1 billion of private sector investment. 

In a related development, the Chancellor also announced the launch of UK Finance for Growth to streamline the Government’s finance support for small businesses – including help for businesses seeking to commercialise low carbon technologies.

Budget 2010 announced a halving in company car tax for ultra-low carbon cars (under 75g CO2 per km) for five years from April 2010, to contribute to 'making the UK one of the best places in the world to design and build low-carbon vehicles'.

The rise in fuel duty will be staged 'to help consumers': duty will rise by 1p in April (less than the rate of inflation) and 1p in October. The full rise will be in place by the beginning of 2011, when inflation is expected to be two per cent.

The Government also announced a commitment to reduce its departments’ carbon emissions by at least 30 per cent.

Following the Budget, the DfT and BIS announced details of £30m funding for low carbon transport which had initially been committed in the Pre-Budget Report last year. (For more information, follow the associated link to LowCVP news story.)

Environmental groups and 'greentech' businesses generally welcomed the introduction of the Green Investment Bank but there were questions about whether the amount of finance involved was enough to make a significant difference.

For more details and information, please follow the associated links.


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