Tories to look at green ISAs plan

Mr Osborne said the scheme would give a "strong incentive"

The Conservatives are to look at introducing "green" ISAs, offering extended tax breaks for people who invest in eco-friendly companies.

Shadow chancellor George Osborne said Green Individual Savings Accounts would encourage "can-do environmentalism".

A working group will look at raising the tax-free savings allowance on ISAs from £7,000 to up to £10,000.

Meanwhile, Tory leader David Cameron has called for greater independence for the Bank of England.

Kitemark

Mr Osborne's working group is expected to come up with detailed proposals on green ISAs by the end of the year.

It is suggested that an independent body could be set up to judge whether the companies invested in were environmentally friendly enough, with a "green kitemark" awarded to those which pass the test.

Decisions that are crucial to the running of the British economy are still being made by politicians behind closed doors David Cameron, Conservatives

Those which would qualify, because of their existing carbon emissions commitments would include Marks and Spencer, Sky and Glaxo Smithkline.

Speaking at Imperial College London, Mr Osborne said: "Seventeen million people have ISAs.

"This is a way for people to engage positively in the fight against climate change and it provides a strong incentive for companies to play their part too, without the heavy hand of government regulation."

Under current rules regarding ISAs - made up of cash or shares or both - one person can invest up to a maximum of £7,000 in any tax year, completely free of tax.

The Tory plans would increase the limit to between £8,000 and £10,000.

Environment spokesman Greg Barker told the BBC that "when we know exactly how much it does cost, we'll be able to take a decision then as to how we're going to pay for that".

Meanwhile, in a speech to the British Chambers of Commerce, Mr Cameron said the issue of Bank of England independence was not "done and dusted".

He added: "Decisions that are crucial to the running of the British economy are still being made by politicians behind closed doors.

"The chancellor retains the right to re-appoint the governor of the Bank of England. I believe it's time to have a single, non-renewable fixed term for the governor to insulate him or her from political pressure."

Mr Cameron added that the needed to be a "system of open applications" for membership of the Bank's Monetary Policy Committee, which sets UK interest rates.