Yesterday I heard more about the Green Investment Bank. It will have £3 billion of taxpayers money to invest in green projects.
It is called a bank, but it does not plan to have any deposits. It will not raise money in the wholesale banking markets. Its initial plans are to invest the taxpayers money it receives in green projects with a view to making a profit on the investments. Many of the investments will take the form of loans to greeen projects and companies. It will be in effect a Green Investment Fund, not a bank.
Its idea of leverage is to be a co investor alongside private sector investors, who will help finance larger schemes. Without that it will not do a great deal with just £3bn of investment money in a £1500 bn economy. The fund has not ruled out borrowing some money later to augment its £3bn of taxpayer capital. It is clearly not envisaging anything like the leverage of a typical bank.
I would be interested in your views on whether this is a good way to spend £3bn of taxpayers money? If much of it is routed into green projects by loan finance the rate of return is not going to be that good. There are risks in concentrating investments in one sector. There could also be benefits if the fund managers build up an expertise and are the choice destination for interestign new schemes. Its early choice of schemes including a hospital project and a Council waste disposal project mean some of the revenues of the investments are secured on tax revenues, as well as the investment coming from taxpayers.
June 12, 2013
Without any real insight into what qualifies as a suitable “green investment” it sounds more like a poorly controlled propaganda machine to me.
(False allegation removed-ed)
June 12, 2013
How terribly easy it must be to sit on a committee and spend our money.
Secondly, if I start coming over all clever about saving the planet, it may look clever. Actually nothing puts people off faster. Holier than thou is a bad position for anyone let alone people who depend on our votes.
June 12, 2013
Nothing is more sincere than a pop star on a global tour lecturing little people on how they should conserve resources.
June 14, 2013
Electro-Kevin: “Nothing is more sincere than a pop star on …”
But the audience demographic tends to be at the least discerning end of the spectrum.
June 12, 2013
So where is the money heading? (names of possible well known beneficiaries removed as no evidence they will benefit-ed) It really must be great to have a bottomless pit of taxpayers cash to raid just to prop up some uneconomic sham of a company and pay yourself a big fat bonus. And it must be a con game because if the green business was a paying proposition it could get investment in it’s own merits and wouldn’t require stolen money to get it off the ground. It used to be said that Britain was not a corrupt country. I don’t know anybody that believes that any more.
June 12, 2013
Absolutely spot on. But hey, if LibDem MPs and hangers on can be persuaded only to waste £3bn of our money as Directors of said institutions after quitting office it might be a bargain.
June 12, 2013
Dear John.
The USA experience of green investment.
http://wattsupwiththat.com/2013/06/11/doe-green-energy-loans-11-45-million-per-job-and-a-rounding-errors-worth-of-averted-carbon-emissions/
Green investment is a good way of further impoverishing the Nation. It has little else going for it.
June 14, 2013
Sir,
If an investment makes financial sense and reduces energy needs, is it truly a Green investment? For instance, cleverly-designed LED street lighting can use a tiny fraction of the power of normal lighting, yet illuminate the streets much better; this lighting lasts longer and works better for less ongoing outlay.
On the other hand, carbon capture and storage plants are the flip side of the coin; nobody has yet made one work, and the suspicion is that this may well be impossible to do and still reap any significant power from such a unit, though it may be worth doing just for subsidies.
I therefore would question which flavour of investment would be favoured.
June 12, 2013
Clearly it is year another way of taking money off people (who generally use money well) in taxes and then wasting it on daft things as usual. If something makes sense it will not need soft loan and grants stolen from others (who would surely invest it rather better).
I read that the Greek state have closed the state TV and radio and lay off about 2,500 workers as part of a cost-cutting drive. creditors. Clearly we got some things to learn from the Greeks. All those people at the BBC released to do something useful other than drip Toynbee/Guardian think, pro EU, big state, quack greenery, enforced “equality” and a few old repeats over the nation.
June 12, 2013
This sounds more like an old fashioned “Tax & Spend” idea, at best it will be a way of getting direct subsidies to the green sector whilst pretending that it do no such thing. I expect all £3bn to be written off at some point in the future, or at least kicked far into the long grass.
Just to place this £3bn into context, and I don’t mean to take this blog way off topic (so please, others…), it is something like twice the amount that the DWP loose from fraudulent benefits claims.
June 12, 2013
I doubt we have a spare £3bn, and given their history, I doubt most green projects will prove to be economic, hence neither providing a decent return on investment nor a sustainable benefit in terms of jobs and growth. So I would prefer the government not to spend this money.
If you(we) must, I think it would be better (economically and environmentally) to invest more in rail, perhaps improving quality and capacity but more significantly lowering the cost of tickets. But then perhaps the present system doesn’t make that directly possible.
Otherwise, if you’re wanting jobs with the prospect of significant long term environmental and economic benefits, invest in the development of nuclear fusion. Develop the JET site at Culham. I’d imagine £3bn would make quite a difference there. It would provide a range of science and engineering jobs, and it would be quite inspiring for Britain to become a world leader in this field.
June 12, 2013
Nothing very green about half empty trains, especially high speed ones. Far greener to take a fuel efficient car that goes directly door to door and does not need billions of new track.
June 12, 2013
Lifelogic: Nothing particularly fuel efficient about a 3/4 empty car either!
June 12, 2013
Well at least cars go from A to B directly at the time you chose to and not A to B to C to D to E like a typical train trip with buses or taxi connections. Also it can pick up the shopping, children, wife, heavy luggage on route, change itinerary as short notice and does not need lots of expensive unionised staff and very expensive (and under used) train tracks.
Also you do not need to book in advance to get a sensible journey cost.
June 13, 2013
You’re right, cars are a lot more flexible, especially at the beginning and end of journeys (I’ve heard it called the first mile/last mile problem). They can also have comparable fuel efficiency per passenger over similar journey length with trains. The problem trains have is they’re pretty heavy per passenger. However, the problem cars face is congestion. Trains are much better at quickly transporting a large number of people over distance, and as such they gain environmental and economic advantages.
Increasing passenger density seems to be crucial for trains. Perhaps lower off-peak ticket prices would help that, but that’s not a government decision under the current system. Double decker carriages could also make a difference – which might be possible with the present infrastructure, although I get the idea it would be tricky. Otherwise electrifying the system would mean that they wouldn’t carry the weight of fuel, and power could be generated more efficiently at a power plant (if we did ever crack fusion that would become very cool). Presumably that would involve government.
Allister Heath pointed out an interesting prospect for cars, though (Telegraph 30APR2013) – the difference self-driving cars would make to the ability to avoid congestion by enabling large numbers of cars to travel rapidly yet safely with little physical separation. That would probably tip the balance back to the car, which would retain the advantages of flexibility and independence you mentioned.
June 12, 2013
So who are the experts who will decide if a green scheme is a good risk or not, and what criteria will they use. ?.
Pray tell me it will not simply be politicians who have no past business track record, or their mates in business who’s companies they have shares in.
June 12, 2013
I assume they will use the usual “criteria” to judge it. Such as is it a friend, relative, party donor or close contacts that will benefit and will it buy votes in any marginals. Perhaps I am too cynical but I so often find that I am not even cynical enough. Such as when we had “today is a good day to bury bad news” on 9/11!
Reply: The investment decisions are made by independent officials of the Green Investment Bank, not by politicians. The conduct you suggest would of course be against the rules and inappropriate anyway.
June 12, 2013
Indeed it would, but it clearly happens all the time. One only has to look at the endless daft legislation that is passed to see what lobbying, interested groups and consultancies are most probably behind them all, at both UK and EU levels.
Look at the absurd balance of risks in the current litigation system as an example.
June 12, 2013
Green tech is generally not ready to leave the lab. Green tech requires nano level technology to work. In other words green tech needs to mimick nature. For example take solar power or computer chips. Both can be improved by 10-100 times by using graphine (an atom thick layer).
In Trondheim Uni they managed to put circuits they usually write onto silicone onto graphine. But only US and Eastern companies are interested. Same with solar panels. Which are economically unviable – but will be with graphine.
So please invest in nano technologies – but incentivise UK companies to focus on nano technologies. The BIG technology change that is coming is understanding how material science works at tht atomic / quantum level. At Port Sunlight in the the UK they are looking at the quantum effects of cells in order to make face creams that will pass through the skin. For example.
The future is nano technology and quantum material science. There will be green spin offs but we need to focus on getting profitable products out before trying to apply this technology to green for green sake.
June 12, 2013
If you want to incentivise nano technology then allow companies to write off research AND development off against tax. You would need to apply for tax free status but I’m sure this would create jobs and higher tax revenues overall.
June 12, 2013
Javelin
.”…..Allow companies to write off ……”
Exactly, but why limit this to just green technology !
We need to encourage all types of business.
We have proven over decades that we are good at research and development, but we then have products made overseas because it is too expensive to mass produce in this Country.
Some of the reasons, expensive energy, high taxation and high overhead costs.
Thus we never get the full benefit or returns in financial or employment terms for the original investment made.
June 12, 2013
I’m no rocket scientist but I think reducing Corporation Tax by £3bn i.e x % would work better.
June 12, 2013
I can safely assume that rockets designed by you will be successful and neither will any tax plans. You think these often foreign owned companies do not get away with enough already in various tax reduction schemes? They have made billions over the years and are already sitting on piles of cash and still charging what they like in a captive market.
June 12, 2013
I’m surprised by your reference to the quantum effects of cells to get face creams to pass through the skin. Obviously quantum physics must have moved on a lot since I was taught the basics in the 1960’s.
June 12, 2013
I don t approve! Sounds like another hare brained scheme to me.
June 12, 2013
So much for trying to reduce the deficit. Borrowing money to give it to so-called “green” projects reminds me of the 1970s and the government thinking it could pick winners. The end result together with other poor economic management was an IMF bail out in 1976. The government should concentrate on reducing its spending and allowing taxpayers to keep more of their own money to spend as they decide, not the government.
June 12, 2013
More of our money to be wasted on the great global warming scam no doubt! I despair I really do!
June 12, 2013
No, this is a terrible idea. As we saw with the Help to Buy scheme, this Government’s answer to everything seems to be to spend more money while continuing to ignore our rapidly deteriorating finances.
It’s really starting to feel like the last lot never actually left office!
June 12, 2013
It is a disgusting use of taxpayers’ money.
– it gives a huge amount of power to a new, unelected group of people
– it will not make money on green projects without further governmental interference such as new regulations
– green projects will arrange their affairs around qualification for subsidy
– it will create a new class of people whose income is dependent on the state
June 12, 2013
Could some politicians be using this as a way to use taxpayers cash in order to line up some lucrative non-exec appointments to sustain themselves when they are ejected from office in 2015?
It sounds like a scammers dream.
BTW, how much profit has the Treasury made from the investment in the British banking sector?
Didn’t the government also lend £7 billion to Dublin at a “lucrative” rate of interest? How’s that one doing? Can we have an update?
June 12, 2013
“Could some politicians be using this as a way to use taxpayers cash in order to line up some lucrative non-exec appointments to sustain themselves when they are ejected from office in 2015?”
Surely not, how could you even think that?
etc ed
June 12, 2013
The government has no expertise in evaluating businesses and picking winners, but this is a great opportunity to funnel taxpayers’ money into well-connected companies.
June 12, 2013
Yes, I feel a documentary exposing the winners and losers perhaps just before the election. Hypothetically one could imagine a (person -ed) with influence on Green matters and similar business connections ending up being connected to bad investment decisions for the taxpayer.
Repkly MPs are not eligible to take second jobs in the Green Investment Bank
June 12, 2013
The chances of this fund finding the gap between projects the private sector would undertake without its help because they are sound and those that are bad – so the projects that it would be desirable to see undertaken but that the private sector will miss – is slight. Likely so slight as to be a waste.
The government might be better off spending the £3 billion on its own green projects, placing orders with green companies. At least then the taxpayer ought to be getting some direct and lasting benefit.
June 12, 2013
What about not spending the £3 billion at all?
I suggest that would be of greater benefit to the tax payer.
June 12, 2013
The problem is, because many ‘green’ schemes are ultimately subsidised by the taxpayer, a big chunk of any returns on investment will actually be taxpayer money.
Effectively, taxpayer money will be used to leverage MORE taxpayer money.
June 12, 2013
The same could be said for all oil and gas revenues as well given all the subsidies and tax cuts these industries get.
June 12, 2013
The last time I filled up at the pumps I recall that the biggest chunk of the cost to me went straight into the pocket of the Chancellor of the Exchequer.
June 14, 2013
So all that oil revenue came from the motorist and not oil company taxes in that case.
June 12, 2013
They do not in general get any subsidies, they pay huge amounts of tax.
June 12, 2013
They get subsidies and special treatment far beyond any other industry despite permanently high oil prices and ever increasing profits see previous posts on this. You are the person who believes that cutting any employment rights and health and safety for cleaners will somehow improve their lot, so what does that tell us?
June 12, 2013
@Bazman: Care to actually cite some of these subsidies and special treatments? The only time I can think the oil industry has got such special treatment (not necessarily subsidies…) was in the early days of North Sea oil/gas exploration but since then the oil industry has been a net provider of revenue – especially from the North Sea, just to prove that governments do sometimes back “winners”.
June 13, 2013
@Jerry
Oil, gas, and coal received subsidies worth £3.63bn in 2010 from the UK.
They also recently receives £1 billion in tax breaks by Osborne to encourage them to continue drilling in the North Sea.
June 13, 2013
The cost of pollution in its many forms, ie health, diplomacy on their behalf, mainly tax breaks not allowed in any other industry and in a very profitable industry at that, often for drilling. Are they supposed to drill more as they are subsidised? More profits is what should drive them. Shale oil will not be profitable enough without tax breaks? To bad. An argument put against green energy all the time. The taxes raised are often sales taxes like VAT which have nothing to do with them.
The idea that they should not pay for the pollution they cause directly and indirectly and tax breaks are not subsidy is laughable.
June 14, 2013
@U5: You seem to be failing to understand that these “subsidies” are actually a hand back, just how many £bn in tax is received from oil/fuel sales each year?…
The oil industry is a net givers, the green (mostly wind farms) industry is a net taker, from the exchequer.
@Bazman: Irrelevant!
June 14, 2013
uanime5: “Oil, gas, and coal received subsidies worth £3.63bn in 2010 from the UK.”
More uanime5 misinformation. Goebbels would have had you for a sunbeam.
You deliberately confuse tax breaks given to industry – that is an incentive to behave in a way the government wishes it to behave – which is wrong, but that is another issue.
With…
Subsidies. Paying tax taken from one industry and giving it to another industry – the aim being to make an otherwise uneconomic activity, economic.
So, Coal, Oil & Gas, nuclear get tax breaks. Which you dishonestly call subsidies.
And Wind, Solar get subsidies – because otherwise these two sectors of the energy sector would be catastrophically uneconomic.
June 14, 2013
Tax breaks given to profitable industries with a constantly high priced resource is a subsidy. Why do they need these tax breaks if they are profitable. Why should their profits be added to with my taxes?
June 16, 2013
Bazman: “with a constantly high priced resource is a subsidy”
Really Baz, that is nonsense. The reason your litre of petrol or desiel costs so much is because it is taxed in excess of 100% of the cost to bring to market.
Who applies the tax? The Government.
Bazman: “Why do they need these tax breaks if they are profitable. ”
They don’t, the tax breaks are political initiatives.
June 12, 2013
That comment has been debunked so many times already. There are no subsidies in the UK – only cases where highest rate taxes are not applied, like diesel fuel for railways. Subsidies – payments to producers – are on the other hand the stock in trade without which most of the green industry simply wouldn’t exist at all.
Oil is subsidised in countries like India, where otherwise the poor would be largely unable to afford to heat their homes or cook. But that is welfare, not a subsidy to the industry.
June 13, 2013
The fact that you don’t know what a subsidy is doesn’t change the fact that oil and gas are heavily subsided. Both tax breaks and giving taxpayers money to the oil and gas industry are examples of subsidies.
June 14, 2013
@U5: If we are both sitting in the pub, you having just bought me a pint, if I then borrow a £5 note from you and offer to buy the next round of drinks who is actually buying the next round – of course you might get your £5 back, on the other hand I might also walk off into the dark street never to be seen again…
Basically the Government is lending the oil industry its own money back, taken by HMT in the shape of oil duty etc, knowing that it will get it’s money back with interest – that is hardly a “subsidy”.
June 14, 2013
Could apply to all taxation in your silly argument. They must pay for infrastructure and education to enable them to sell the oil to produce the products and services required. It is not their oil. It is a natural resource they are paid to exploit not plunder for their own benefit like in Russia where the country is basically run for the benefit of about a thousand people. A point lost on you.
June 15, 2013
@Bazman: “It is not their oil”
Nor is the wind… More strew men anyone!
Oh and oil (and gas) has not benefited a mere thousand people, it has benefited millions -though out the world- by giving them a way of heating their homes, cooking their food, being free to travel, true all could and has been done by coal but I suspect that you would be using the same silly arguments if coal was still dominant – assuming it wasn’t still a nationalised industry controlled by the whims of the union(s) barons.
June 15, 2013
Oil companies buy drilling rights from the government, so it is our oil.
June 12, 2013
@U5: Thanks for the laugh! As others have said, oil companies pay huge amounts of tax, as do those who use the oil products, in fact it could be said that the oil industry is subsidising the green industry.
June 13, 2013
If the oil industry pays huge amounts of tax why did they need to be given £1 billion worth of tax breaks by Osborne to continue drilling in the North Sea?
June 14, 2013
@U5: Because HMT has taken so much in tax and that drilling in the North Sea is bloody expensive! Duh…
June 14, 2013
uanime5: ” why did they need to be given £1 billion worth of tax breaks .. ”
Sometimes you are so naive it is almost sweet.
If a company is in business to make money. And the government turns up and says. ‘Your industry is paying a shed load of tax, so if you do something that we ( the government ) want you to do, we will let you off a little bit of the tax you would otherwise pay’. That is a tax break not a subsidy.
By the way, the oil company doesn’t have to take advantage of the tax break, but since it is essentially money it is no longer liable to pay in tax.
It would be foolish not to do so – so long as the cost of complying with the requirements of the tax break do not exceed the savings in tax as a result. In which case it would be foolish to take advantage of the tax break.
June 14, 2013
Drilling is expensive? Many are subsidies that aren’t even available to every company in the industry. and are we to pay for all business costs incurred in making money in all business? Manufacturing does not receive as many tax breaks and the oil industry is a direct beneficiary of manufacturing. The refining process does involve high-tech manufacturing, but there is never any danger that either drilling or refining is going to migrate overseas. Pity everyone cannot claim their mortgage as a business expense in taxes huh? Apologist nonsense.
June 13, 2013
That simple is it Jerr?. They pay some taxes and that make it all OK. The gas industry was complaining that the taxes made the wells not worth drilling. Sack em’ and fins someone else. It’s out gas. Not in this case though for the fantasists.
June 14, 2013
@Bazman: I bet you would not be saying the same if such reserves were still in the hands of BNOC…
June 14, 2013
What is BNOC?
June 12, 2013
A dozy idea. If the green projects were likely to give a good return then they would have no problem attracting investors – short or long term. That they need for their project cash a government fund, which as it’s unaccountable to the providers of the underlying money will not care as much about the returns, says all we need to know.
June 12, 2013
If I had control of the money I would not invest it in such schemes. I would not spend it at all, but declare it as a small contribution towards reducing the deficit.
The reality is that this is a politicians vanity project and a sop to the Greens. As such it will result in a loss to the long suffering taxpayer. Such schemes that do attract investment will probably require yet more taxpayer subsidies to show a (phoney) return.
June 12, 2013
This has all the fingerprints of the soppy Lib Dems and Cameron’s “we’re going to be the greenest government”.
June 12, 2013
If it quacks like a Quango, it probably is a Quango. Or it could be one of them new GOCOs (Government Owned Contractor Operated) like the MoD is going to have.
(Thinks!: Is Network Rail (NR) a Quango or a GOCO. The woman who runs the Office of Rail Regulation has just said on the radio, NR has got its budget wrong and is not using the right technology to cut costs. Why doesn’t she run the railway then and cut out the supposed private sector middle man?) Anyway, as you say JR £3 b is peanuts; £30 b, then you’d be talking. Green investment would be nice when we are rich again, we need a much bigger bang for our buck right now. The Q4-12 ONS Profitability Bulletin says our net rate of return is down at 4.9% on manufacturing; 15.9% on services and 31.1% on UK Continental Shelf. Drill Baby Drill as Ms Palin would say.
The UK has a bank that could do the job under instruction from the Treasury; RBS. Crikey, we own most of it already; a Gilts for equity swap could get the rest and we would have a proper state owned retail bank. (Better make it an English bank, to be on the safe side, nod-nod-wink-wink. Sell off all the other banks when they are in the money.)
KfW, the German government-owned bank, topped the Global Finance Safest Banks list. Caisse des Depots et Consignations (CDC), the French public sector bank, was second and Dutch powerhouse Bank Nederlandse Gemeenten came in third. German and Dutch banks dominated the top ten. Our best, HSBC was 16th. (HT: MailOnline)
Red; Blue; Yellow or Green Investment Bank, we have got all the kit to do the job already, just needs an MP with a brain to kick it in the right direction.
June 12, 2013
I promise I didn’t know Hester was going to announce his exit from RBS today. Osbo’ has said he won’t nationalise RBS any further, he is making a tactical mistake, but that is to be expected of a mainstream Austerian who wants to be a member of that exclusive club; the 0.1%.
June 12, 2013
Yet another desperate attempt to spend money on upgrading the infrastracture to accomodate the consequential costs of there being millions of new Britons without having to declare it as government expenditure: PFI with taxpayers’ and spivs’ money camouflaged as another SavethePlanet scheme.
June 12, 2013
Money like that could go into boosting our universities and research and development in energy efficiencies rather than on projects. Wind technology in particular seems to be too inefficient to trust just yet.
Imagine how far the Olympics money could have g0ne in this regard, putting our own scientists to the fore whilst saving the planet rather than blowing it on fireworks and Leftist propaganda.
June 12, 2013
Badly worded – cut the first para and it makes more sense (or less stupidity)
June 12, 2013
@EK: Quite frankly, it makes more sense if the second paragraph is deleted – a political rant to nowhere!…
June 12, 2013
But how do you stop money going into universities from giving professors a higher salary and even better pension provision – without any real stress or need to deliver anything in their whole, lovely, academic lives.
June 12, 2013
If their universities deliver the technology then we must not begrudge them.
The difficult bit would be keeping the rights to that technology here.
June 12, 2013
We keep being told of the need for austerity. But nearly every day we hear of the government “investing” money is some scheme like this; a million here, a couple of million there, it seems endless.
It would be far better if the government stopped spending money on anything new unless it was a “life and death” matter. That’s what the private individual does when they are hard up; money is only spent on things that are absolutely essential. By spending money like this, the government encourages the belief that things aren’t as bad as they are and as a result the various government departments continue to spend on more crack-brained schemes.
June 12, 2013
@EP: Indeed, if the government must spend money then spend it on something that will put the unemployed back to work doing something that the nation really needs, that way QE actually goes were it is needed -via people having spending money again- and even if not the nation has improved infrastructure (such as repaired highways or improved flood defences), even just a few more homes for people to live in.
Call it Keynesian economics if you like, many will, it has worked before and unlike the immediate post war period we know when and why to bring such stimulus measures to a halt and allow the free market forces to take-over again. I have no idea if austerity should have worked but one thing is clear, it is not working, the medicine is killing the cancer by killing the patient! 🙁
June 12, 2013
The Green bank should be barred from making any investment in any project which requires subsidy in any shape or form for its profitability.
Two reasons; something has to be done to clean up the unholy links between Government and Green energy businesses, and no one can argue that investing in developments with the potential to lower energy prices will benefit everyone.
June 12, 2013
If its our money that’s being invested perhaps they should have to pitch to us on a Dragon’s Den type program where we vote for the investment choice.
June 12, 2013
@a-tracy: “they should have to pitch to us on a Dragon’s Den type programme”
Oh prey not, policy made by the lowest possible common denominator, not a good idea! But hay-ho, why not go the whole hog and have the management picked by a Big Brother style programme, or the marketing pitch made in a X-Factor style programme…
June 14, 2013
None of that technical razzle-dazzle, but a marketing breakthrough!
June 12, 2013
Back in the real world banks are looking for any breach of contract in order to call in loans and terminate facilities .
That is right , banks are getting out of the lending business .
The intention of stricter capital requirements for banks is to ensure good businesses cannot get finance so that the financial services sector can pick up their assets in a fire sale or shares at rock bottom prices through proprietary trading . They are predatory and this is the “squeeze” phase of the Great Financial Con-trick .
Having banks controlling access to capital is bad but what is the alternative ?
All this green investment bank will do is channel money to quangos .
June 12, 2013
The banks are indeed trying to get out of loans where ever they can the government owned ones especially. Does Osborne not know this in which case he is incompetent or is he in on it?
June 12, 2013
Lifelogic , I don’t think it is a matter of incompetent or complicity .
George Osborne is just too young for a job which gets in the way of enjoying himself with trips to the football and sinking beers with his mates .
The job doesn’t seem to interest him . He may well be unaware that companies which need finance can’t get it .
My main point is that denying companies finance (by requiring banks to be overcapitalised) is a deliberate ploy to enable shadow banks to get out of fiat currency by converting it into real assets by means of foreclosure on assets put up as security and forcing fire sales .
All just before the currencies become toast .
That pretty much completes the cycle of transferring the wealth from the masses to themselves and enslaving the masses in perpetual debt for generations .
Reply Mr Osborne is well aware of the need for more business finance, and repeated his wish for RBS to oend more in his recent interviews.I don’t think he wants to spend more timer drinking beer with his mates.
June 13, 2013
Clearly it would be cocktails and champagne with the in-crowd.
June 12, 2013
How many more outrages can government, any government, visit upon us?
They are unfit to look after our health, our care in old age, our childrens education and now they wish to go into the investment banking business.
I really do dispair for this is no more than a bunch of over inflated political egos pretending to themselves that they are capable entrepreneurs when none of them have any sort of track record to justiry the contention.
This will be more tax payers money down the drain and the thought that they might actually be able to borrow more with recourse to the taxpayer, makes the whole scheme very worrying no matter what the value of their investments might turn out to be.
June 12, 2013
It’s picking green winners by HM Government, with the salaries of the bureaucrats needed to run the scheme kept off balance sheet. Why? Why are administration costs never considered in decision making? Civil Servants are not God given. And the scheme will need a Director (etc ed)
June 12, 2013
Why is the damage done by first taking the money of others (usually far better able to invest it well) never considered. It is clearly a net damage to the economy.
June 14, 2013
It’s needed for infrastructure and companies either cannot or will not pay for this and neither will they pay taxes to fund it, so we have to in order to subsidise their profits and low wages allowing them to invest in more low paid jobs to pay low taxes. To fund infrastructure and low wages to allow more companies to invest and so on…A bit like the lack of training by many companies solved by the East Europeans who filled the as the employers tried to get rocket scientists on the cheap, but in reality put costs before quality. I saw it. They thought they would be the ‘magic bullet’ their own words. This is what you are dealing with.
June 12, 2013
Can this be serious I ask myself? If it is, it is obviously a bone thrown to the hapless 1% 7th place Liberals. Isn’t there any kind of legal definition of a Bank any more? Given that you call it a Fund I assume (but hardly have any idea) that this is a one off payment of our taxes in to this thing for politicians to spray around. In other words God preserve us from it being an annual £3 billion because who can believe it won’t run at a loss immediately and the £3 billion will soon run out. Says a lot that £3 billion can be treated so cavalierly even in these straitened times. It is just a conduit facilitating increased burning of our money.
June 12, 2013
Is this basically a Lib Dem scheme?
If the projects that draw investment are profitable can we be sure that this profit is ‘pure’ i.e. that is not profit by virtue of the fact that the companies receiving investment are being subsidised. One can imagine that companies might receive taxpayers’ money twice: once through subsidy and once through the Green Bank.
June 12, 2013
JR
I’m at a loss to understand why you wish to belong to the provisional wing of the Labour Party ( Camerons Tories ).
What is the point of voting at all if all we get is the same spendthrift nonsense from all of the major parties.
If only there was someone in British politics with some principled conviction ( as opposed to criminal convictions, plenty of those) who was willing to put their head above the parapet and break the mould
June 12, 2013
libertarian–Absolutely Amen!
June 12, 2013
@libertarian “someone in British politics with some principled conviction ( as opposed to criminal convictions, plenty of those) who was willing to put their head above the parapet and break the mould”
You’re not allowed to mention their name here. It’s in breach of some electoral rules on spending apparently. I don’t know exactly which rule it is, but Mr Redwood said it is so.
June 12, 2013
On the one hand, surely this is just the sort of thing a government should be doing. We all want warm homes to live in and businesses need energy. So ‘Energy’ is one of the few areas where we really do need to work collectively etc. I.e. We need government to be involved.
I don’t buy the idea that government should not be involved. There are many clever people involved in trying to develop new, sustainable, green energy projects. But ideas take money to develop.
I knew a bloke years ago who had 100k to invest. He invested 10k each into 10 start ups. 7 of them went broke within a year or two. 2 of them did okay and he made a little bit of money. One of them did really well and was bought out a few years later by a bigger player – and his 10k turned into 1.4 million.
We have to accept that a lot of this 3 billion will not show a return. But if some of it does – the returns and rewards might be massive. As Mr. Redwood said £3 billion is not a lot of money in a £1500 billion economy. That said – I would prefer to see the money taken from the Overseas Aid budget with the proviso that if some breakthrough (particularly in solar) is made, it is shared with the countries in the world who, despite lots of sunshine, are very poor.
My only caveat is that the track record of governments with regard to efficiency and honesty makes one want to weep. A lot of this money will be wasted – as opposed to not providing a return – and some of it will be hijacked.
When you read stories about someone’s father in law getting massive subsidies for having wind turbines on their land – it does make you rather uneasy about the whole process of having your money taken off you and used by other people.
June 12, 2013
Is this another directive oozing out of the EU to further undermine the UK?
June 12, 2013
I wouldn’t entirely dismiss the idea of the government using taxpayers’ money to help get new technology off the ground. But the role of the venture capitalist is a risky one; he has to be prepared to see many of his investments go belly up, and hope that there are enough big successes to more than compensate for that; the problem of course is that in this case those investing are not using their own money, and could invest less carefully.
So how about some genuinely long term incentive scheme, to fully align the interests of the investment managers with those of the taxpayers?
June 12, 2013
I wouldn’t entirely dismiss the idea of the government using taxpayers’ money to help get new technology off the ground.
Why not? Can you think of many positive examples?
June 12, 2013
Well there was Inmos, based on Jim Callahan’s idea that we had to have a silicon foundry to keep up.
Then there was the Lisbon Agenda designed to turn the EU into a hi-tech powerhouse.
What you have to do is to create the conditions where these things arise and lay off. Almost impossible for the modern breed of politician who has to pretend to be able to control everything but actually controls nothing much and none if it well.
June 13, 2013
Yes, I can. Admittedly they’re not recent examples, but radar was a product of the state owned Post Office, the first programmable computer was built at Bletchley Park, and the whole of the UK nuclear programme, both military and civil, was funded by taxpayers, the production of penicillin started in a state funded university, and so on. And that was just in this country, of course other countries were also using taxpayers’ money for similar purposes.
June 13, 2013
Denis Cooper:A really feeble attempt.
It simply means that out of a myriad of so called investments costing taxpayers billions of pounds, the government get it right occasionaly.
Actually from the examples you give it would seem they might get it right more often if they spun a coin and consistently called heads
June 14, 2013
See above:
“But the role of the venture capitalist is a risky one; he has to be prepared to see many of his investments go belly up, and hope that there are enough big successes to more than compensate for that”
Radar, programmable computers, nuclear weapons and power stations – not big enough for you?
June 14, 2013
Would the National Grid exist without government intervention? In your dreams.
June 12, 2013
If it creates more jobs then it’s a good thing. Especially when compared to the amount spent on the Work Programme and how few people it has gotten into work.
Perhaps this investment fund should focus on green power generation given that the UK will need more power plants when the coal power plants go off-line in 2015.
June 12, 2013
uanime5, you just don’t get it, do you?
Just like Mr Keynes you think any job, including digging holes in roads and then filling them in, is worth it.
Try for once to think of who is to pay for these non-jobs and why should the taxpayer not pay rather less in unemployment benefit. How fair is it for some to have highly paid non-jobs and for others to receive unemployment money.
Seems to me you are more of a Socialist than a socialist.
June 12, 2013
Most on here are in favour of communism for the rich in the hope they will get a few crumbs fro the trickle down effect and are in a state of perpetuate surprise they do not. It is fair to say that they all believe the black propaganda that Labour spending on welfare despite never being more than 11%, created the financial crisis not the banks.
June 12, 2013
@U5: If you want a tax payer funded job creation scheme there are better examples to chose from, ones that have either guaranteed long term benefits, proven returns or both, for example socail housing that can be used to bring down the cost of housing benefit to the government or recouping the building costs by commercail rentals or sales. Gambling on, mostly unproven, “Green” technology is very risky and ripe for a write-off within a decade or so.
@waramess (in reply to U5): Perhaps they should have thought about that before embarking on QE, at least paying people to dig a hole and fill it back in again put money directly into the economy, and thus is a direct stimulus.
June 13, 2013
The problem with social housing is that it only benefits those in the construction sector. So it won’t help other sectors such as manufacturing or anyone who doesn’t work in construction.
It also won’t reduce the costs of housing benefit if the houses are sold to whoever will pay the most money or no one wants to live in the social houses.
June 14, 2013
@U5: So these construction workers will not spend their money on a new car, white goods, brown goods, service industries such as restaurants or holidays etc?! As for your second paragraph, indeed, but I did say that would be a choice that would have to be made – given the political will there is no reason why new ‘council house’ estates could not be built and kept in the socail rental sector, they could be kept that way for 30 years and then sold off, perhaps converting tenants previously paid rent into a down payment/mortgage.
June 14, 2013
They would have to be rented out and would work. Thatchers sell off was controversial for sure, but who remembers the ‘council estates’ “Nowt to do with me mate It’s the council” Mentality. Still there. What will be the brake on that and the Tory mentality of sink estates?
June 12, 2013
So uanime5
“If it creates more jobs then it’s a good thing. Especially when compared to the amount spent on the Work Programme and how few people it has gotten into work.”
Therefore you would also agree that as long as it was totally reinvested in creating new jobs ALL Corporation Tax should be scrapped?
June 13, 2013
The loss of tax revenue from scrapping corporation tax is unlikely to be recovered due to higher employment levels thus there’s no reason to scrap it. Especially when the largest companies pay little to no corporation tax, so they won’t create any jobs.
June 12, 2013
As many say just part of the AGW Scam
I cant think of any Green Projects that will yield any profit if assessed at accounting prices that remove the effect of tax and subsidy
In practice most Green projects involve putative reduction in carbon emission without supporting evidence
Good for politicians investing in carbon related projects like Al Gore
Im not sure who these are in UK– Lord Stern? Yeo? etc
June 12, 2013
I don’t like the idea of risking tax payers money . “Green” projects – were they viable , would have no problem in attracting private investment capital ; with little background to research , I doubt this route would succeed . Using tax payers money to reduce the cost of fuel would be effective and have short and long term benefits to the economy . As someone has commented , it is a “hair-brained” proposal .
June 12, 2013
A complete waste of money!
June 12, 2013
Sounds to me like a way to get money into dodgy projects a normal bank wouldn’t touch with a bio-bargepole, and makes so little sense that it has to be of European origin.
June 12, 2013
It is an absurd and foolish idea, and it is incredible that there are Conservative MPs – who remember the rescue of the UK by Margaret Thatcher from this kind of 1970s socialist corporatism – who are prepared to put their names to it. Here’s how I suggest a Conservative should think about this idea:-
– If the money is invested in the equity of economically viable projects, the Green Investment Bank is pointless as funds will be available from the capital markets. We do not pay taxes to take a punt in risky investments, we decide to do that or not ourselves;
– If the money is invested in the equity of projects which would not otherwise be able to raise capital – ie their economic viability is doubtful – it is very likely to result in the loss of taxpayers’ money (as has happened in the US with many of Obama’s green ‘investments’);
– If the money is invested in making loans to ‘green’ projects, it is highly likely that this will mean subsidy by taxpayers – providing loans where the market won’t do so, or at lower rates. As you point out, the returns are likely to be poor;
– Wherever the money is invested in the capital structure of such projects it will act as a distortion, creating a false sector and artificial businesses, which would not exist but for the state subsidy. Govt does not have market-driven investment return criteria. Politicians and civil servants don’t lose their jobs, as fund managers do, if they lose our money, and don’t have any incentive to perform such a fund management service well. As always when the state usurps the role of the markets, genuine businesses and sectors suffer. They are crowded out due to the effect of the subsidy. Have we not enough evidence for this in the UK and Europe in recent decades?!
June 12, 2013
Spot on
June 12, 2013
This is definitely worth doing, but it will stand or fall by its terms of reference or mandate setting the direction and limits, by the quality of the management team chosen to lead it, by the trade and other protections provided by the government, and by all of us being aware of the ups, downs, and surprises of research and development elements of new developments. The ‘green’ label needs changing – that’s almost a pejorative nowadays.
Subject to these points, this is definitely worth doing because the scope and scale of many new developments need – sometimes depend on – a mix of public and private involvement, the public portion kick-starting or getting things off the ground. In our perilous state we need more of these arrangements, not fewer.
June 12, 2013
More Mod Party crap. You should be ashamed!
June 12, 2013
A Quango by another name. Jobs and qudos for the boys.
June 12, 2013
I will look forward to the transparency in organisations and directors’ and shareholders’ names of the companies funded by my company’s Corp. Tax.
June 12, 2013
There is never any end to the bright ideas that politicians come up with for spending Other People’s Money, always dressed up as the Next Really Good Thing that will save the planet, get the economy moving, etc. etc. Of course, it does not really matter, because the economy is doing so well that there is plenty of surplus tax revenue so we can afford to waste a bit on the off chance that it might work out. Er, no, hang on a minute …..
June 12, 2013
Another scheme to take money off people and spend it on things that wouldn’t succeed on their merits – subsidise them. Recent developments suggest such things are rife with friendly deals.
It’s dishonest to call this a bank, much less an investment bank. Does it have a banking license? Will it be taking deposits? Will it be asking for security on its loans? Why is there a need for it when conventional banks can already invest in green schemes if they wish?
A dreadful idea in all respects.
June 12, 2013
Like all Government spending and borrowing just where is the legitimacy from the electorate to do such?
£3 Billions of OUR money taken/borrowed without our consent and targeted to be spent on for the most part vain/unworkable/unprofitable vanity projects that would never survive in a commercial world without the heavy tax payer funded subsidies, so that ministers and their toadies can feel good about themselves in the tax payer subsidised bar and restaurant!
And it will never change until we take back control of OUR money via ‘referism’ where a local and national executive(governance) has to submit a properly audited budget detailing what it is proposing to raise and spend for the following 12 months that has to be put to a vote in a local/national legislative assembly followed by local referenda where relevant.
June 13, 2013
Just because you don’t like green projects doesn’t make them “vain/unworkable/unprofitable vanity projects”.
June 12, 2013
Frankly, it seems to me like another way to waste £3 bn on crackpot schemes, such as carbon capture and storage. And, no doubt, equally bizarre schemes riding on the backs of wind turbines and solar cells.
June 12, 2013
It’s £3bn down the drain!
June 12, 2013
Quick reply:
A complete waste of money, it’s more characteristic of New Labour.
June 12, 2013
Heathism obviously is the ruling mindset…..
zorro
June 12, 2013
Dreadful idea; of course.
I’m not even going to elaborate; the reasons are obvious.
June 12, 2013
The fact thast they won’t be able to leverage is a good thing as they will cause less damage…….I would be more worried if they could leverage like a private bank as I would be wary of their rationale behind investment decisions. We should be thankful for whatever small mercies.
zorro
June 12, 2013
Still, it’s just another three billion to be wasted by the Conservatives….and whilst you sit idly by as a member, you are entirely complicit in this Mr Redwood..
June 12, 2013
There are private sector unit trust funds etc. that do ethical/green type investments.
Exactly why the government wants to compete in this area I have no idea. Is this market distortion allowed under competition rules?
If the government wants to be green it should stop cutting down trees every few year for pulp for yet another airport report that will be shelved.
June 12, 2013
I think £3m spent teaching MPs and civil servants the basics of proper discounted cashflow evaluation of energy projects with all the green subsidies excluded would be a far better investment. They might then understand the enormity of their actions in voting through the Expensive Rationed Energy Bill last week.
June 12, 2013
As a course prerequisite they should have to attend basic arithmetic lessons and Mr Gove could make sure they have taken it in by getting them to sit a an updated version of the old 11-plus .
June 12, 2013
I should have added journalists to the list – including those in the broadcast media.
June 12, 2013
Several strands to this – Firstly the taxpayer already has big positions in big banks, (£45bn in RBS alone) why do we need another one? For £3bn of additional lending, this entails a whole new overhead base.
Then there’s the skill base – best leave lending decisions to the experts in the big banks, although the Green banks may be employing people with the appropriate skills.
Last point, why direct it to green projects only? Many green projects already receive “Price” subsidy from the taxpayer. Present green technology can’t economically compete with fossil fuels. The net result is that we’re exporting some UK jobs overseas.
Economic, low carbon, alternative energy sources will probably come from new technology at the cutting edge of physics, such as superconductors at room temperature or cold nuclear fission. If the government wants to aim for low carbon, (possibly very cheap) energy then best subsidise such developments.
June 12, 2013
With the massive amount of subsidy anything “green” already gets economic realism would suggest that they should easily be able to raise all the investors they could want without “loans” from this “bank”/pork barrel fund.
Unless, of course, “green” ventures make so little actual economic sense that they need not merely subsidy & subsidy on subsidy but a bit more subsidy on top. In which case what have the Sunlight from Cucumbers industry, that Swift wrote of, done not to deserve equal support.
June 12, 2013
I am all for the Government looking to help secure business developments with help from the taxpayer say to clean up a run down area and to supply the amenities. We have had greats of a large Chinese investment at Royal Albert Docks and there is another proposed development of a branded centre being developed.
The narrow remit of this bank “Green” means we could be funding a high risk low return project when others with lower risk and higher return – jobs etc would go wanting. I wonder if its “Green” in order to get agreement from the EU for a state aid enterprise?
(allegation concerning Livingstone left out ed)
What is Green? Its like what is an Ethical Investment? People have different ideas. I think in 2 or 3 years it will feature in a documentary about dubious investments being made.
The risk could be great to the tax payer. The equivalent in the private sector maybe a Venture Capatalist Trust but where they wouldn’t narrow their options and where they go for high return for the risk taken. This GIB seems to be high if not higher risk and low return.
I would rather we kept the money and when there are opportunities that arise like the Chinese investment at the RA Docks in London that if in order to secure that we need to pay for the power supply connections and road modifications etc that we spend it on those.
June 12, 2013
Before it gets moderated I’m sure when the former Mayor set up the LDA it was with all the best of intentions for worthy causes with proper accounting.
June 12, 2013
Sorry to change subject.
This relates to your post on what the Government might do about house prices.
Real earnings have fallen back to 2003 levels and this is at least in part due to the market being flooded with cheap labour. This has caused a shortage of housing too.
Falling wages, rising house prices. How so ?
I posit that we have a population problem and not a housing one.
Government initiatives to stimulate the housing market will do nothing but perpetuate the problem as low skilled youth from weaker EU economies come here – quite understandably – to compete for building jobs, low skilled jobs and our resources. Most of it Government (taxpayer) subsidised.
Then there is the issue of how many minimum wage imported workers it takes to house one imported prisoner who has been convicted of a crime here – 35 by my reckoning and that excludes the costs of investigation, insurance and damage to public confidence.
Under these circumstances this can only remain a high tax, high welfare economy – unless we are to see REAl poverty among our people.
Once again, I’m sorry for the diversion but I think this the single most damaging issue facing the Tory party in 2015 and so thought I’d better mention it.
June 12, 2013
In anticipation of this not being published (I would not object if it were not published – some six hours later, understanding that you’re busy)
But… WHAT IS THE POINT IN YOU ???
June 12, 2013
I wonder if our kind host and the other 649 of his colleagues would be willing to ‘invest’ all their monies and put their homes (and where applicable, second homes) as collateral for such a ‘bank’ (sic) ? If not then, why do you think it OK to use our money for such a scheme.
If this so called bank makes a profit (unlikely) do I get a share of the proceeds, or does the government take it – effectively taxing me twice ?
Do the people who will be allowed to run this bank be allowed to set their own pay and bonuses, whether they make a profit or not ?
This 3 billion. Is it a one of payment or is this every year?
And lastly. 3 billion pounds divided by 60 million people, equals £50 per man, woman and child. For a typical British family, one adult two children, that’s £150 per household.
In these times of financial need, can we really afford to create another tax payer funded gravy train ?
June 12, 2013
Forget the bank. Directly invest £3B into Joule fuels. BBC Horizon programme thinks this is the future. Audi are already partners. Get ethanol fuel from sunlight and waste CO2 and some very clever bio-engineering.
June 12, 2013
Bl**dy silly idea worthy of the previous government that got us into this mess.
Have this recurring nightmare that Gordon Brown’s ghost still haunts No. 10. How about £3bn tax cuts on business? Or have one flat TAX RATE for personal/business taxes to stop tax arbitrage? The Russians manage to do this.
Investing in start-ups is also very risky. etc
June 13, 2013
In principle, the idea of the government lending to business appalls me. At a time of cash shortage and when successive governments have ducked energy infrastructure investment, this beggars belief.
The style of the coalition is unfortunately close to the Blair Brown government, launching expensive, eye catching initiatives to no or little good, aimed at winning PR capital. This also fuels the ineradicable idea that government has to be seen to be doing something. I fear this will be picking winners from the donkey enclosure. Still, doubtless some good jobs for some surplus to requirement civil servants, past-it bankers and celeb green activists! etc
June 14, 2013
John, if green-ness was any kind of an investment, then you wouldn’t need a fund, because people would invest in green things because they were a great investment. As it stands, green initiatives are a great investment only because they offer the opportunity to separate vast amounts of taxpayers money from the government. The government doesn’t care because for no effort at all, they can say they are doing the “right thing”. Search for ‘Solyndra’ and you will see how much damage this whole idea has done to the ‘teflon’ president Obama.
June 15, 2013
It does not matter how much or how little is given to these so called “Green Investment” ideas it is just another way of those in Parliament desperately trying to keep their jobs. The whole energy policies are just a scam by any other name. We have been signed up to “legally binding obligations” why? Has the seas risen or summers ended? When this policyof trying to save the world is shown up for what it really is, will the electorate thank those politicians who have blindly followed their leader. Green Banks, subsidies, sea and carbon levels history will show how gullible and apathetic the people of this once great nation have become. Is it any wonder the real world leading countries have not signed up for this scam? They really do see it for what it is. The price we pay for having professional politicians in control instead of people with real world experience. What a sad country we have become.