Isra-Mart srl:Cameron promises Green Investment Bank will be a bank

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Prime Minister David Cameron today made an intervention in the simmering row between the Treasury and the Department of Energy and Climate Change (DECC) over the future of the coalition's planned Green Investment Bank, insisting the institution would be a proper bank.

DECC and the Treasury are currently locked in increasingly tense negotiations about the structure of the bank, with the Treasury resisting recommendations from DECC that the institution be set up as a government-backed bank capable of raising private finance by issuing bonds.

Appearing before the House of Commons Liaison Committee for the first time, Cameron offered a short but revealing response to a question from Labour chair of the Environmental Audit Committee Joan Walley about whether the Green Investment Bank will be a bank and whether the prime minister will take a "personal interest" in the debate surrounding its formation. "Yes, and yes," he replied.

Offering arguably his most detailed assessment of the coalition's green policies since he was elected, Cameron also admitted that energy prices were likely to rise as a result of measures to decarbonise the economy.

He said electricity prices were on an "upward trajectory", but insisted they would have risen regardless of the government's low carbon agenda because of the urgent need to upgrade energy infrastructure and replace ageing nuclear and coal power plants.

He also said that debates were continuing within government about how best to deliver on the agreed goal of decarbonising the UK's energy supply and improving energy security while limiting price volatility.

He hinted that this was likely to be achieved through a more "planned approach" to the energy markets than the current model, but insisted that the debate about market reforms was still on-going.

The Prime Minister acknowledged that the government had not yet identified how to raise the money for three new carbon capture and storage demonstration plants, and also defended the decision to impose the second largest departmental budget cuts on Defra, insisting that spending on front line services such as flood defence would be largely maintained.

He also advised MPs that the government's progress against its claim to be the "greenest ever" could be measured against the coalition's structural reform plans. He acknowledged that they were not a particularly exciting read, but they would provide departmental commitments that the government could be measured against.