Isra-Mart srl:Business leaders demand Osborne delivers green budget

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A coalition including some of the UK's largest businesses has today called on chancellor George Osborne to deliver a new green growth strategy as part of his upcoming budget, including increased green taxes and clear details on how the proposed Green Investment Bank (GIB) will operate.

The Aldersgate Group - which features some of the biggest names in UK business – including BT, Microsoft, the National Grid, the Co-operative and Merrill Lynch, as well as the TUC, Friends of the Earth and WWF – warned that the UK was falling behind international competitors in its efforts to build a green economy, and as a result risked losing out on new investment and jobs.

A report from the group, to be released next week, argues that new green economic plans from countries such as China, India and South Korea meant the UK was falling behind in the development of new green products and services.

It warns that the government must develop a "green growth strategy" that includes "a strong policy framework to address market failure across the economy, combined with a concerted push to support those sectors that have competitive advantages".

It also calls upon Osborne to deliver this strategy in next month's budget, noting that UN research, to be released later today, has demonstrated that green investment does not harm economies and produces higher rates of GDP growth over a six-year period.

"The chancellor has promised a 'budget for growth' but we believe this must be a 'budget for green growth'," said Peter Young, chairman of the Aldersgate Group. "The UK needs an explicit strategy to take advantage of the global shift to a green economy; driving jobs and exports. Cuts alone will not deliver a competitive economy."

Business leaders in the Aldersgate Group signaled they would like to see Osborne raise green taxes as part of the budget, despite calls from some industrial groups for him to cut fuel duty.

"The UK needs a simpler, more ambitious policy framework, so that businesses take the lead in the low-carbon market," said Richard Evans, president of PepsiCo UK and Ireland. "This must include a robust carbon price and incentives to spur innovation. To be a growing and green economy, we need to tax what we burn and not what we earn - the forthcoming budget can start this shift."

Speaking to BusinessGreen, Aldersgate Group executive director Andrew Raingold said that while the budget was unlikely to feature significant increases in green taxes, there were indications that Osborne could detail how the government plans to make good on its coalition agreement pledge to increase the proportion of green taxes over the course of the parliament.

Meanwhile, TUC general secretary Brendan Barber called on Osborne to end the long-running confusion over the future of the GIB, which, according to reports, Treasury officials are keen to scale back so that it operates as a simple fund rather than a full-blown bank.

"To drive jobs and green growth, we would urge the government to commit Budget 2011 to the creation of a Green Investment Bank, operational within a year and well capitalised," said Barber. "The GIB is vital to drive the £110bn of new investment required for green energy infrastructure and jobs by 2020."