Vince Cable: Banking on green shoots of recovery
The Business Secretary tells Margareta Pagano about the launch of the world's first dedicated green bank and his commitment to the Union
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Tuesday 27 November 2012
"This is a big advance, the first investment bank in the world dedicated to greening the economy," declares Vince Cable, the business secretary. "It's a great achievement and an example of how the Government is working together with the private sector to get big, long-term projects off the ground in a way that leaving it to the pure, free market can't do."
But when the Coalition announced it was going to set up a new Green Investment Bank, he says, there were a lot of people who were sceptical about what it was doing. The business secretary doesn't need to say what he thinks about those sceptics now; his smile says it for him.
Today Mr Cable gets to smile some more when he visits Edinburgh to launch the bank and its £3bn of start-up equity at the Heriot-Watt university conference centre. It's a bit of a Lib Dem outing as with him at the launch will be Ed Davey, energy secretary, and the Scottish secretary, Michael Moore; a clear message that the Government is committed to Scotland's role in renewable energy developments and a more subtle one about the importance of the Union.
Speaking in his offices near the Houses of Parliament ahead of his visit to Edinburgh, Mr Cable says that getting the GIB off the ground is absolutely central to the Government's long-term industrial strategy to get the economy moving again: estimates suggest £200bn is needed to invest in the energy sector over the next decade.
But it's equally vital to helping rebuild the much-needed confidence of the private sector. "As we've said before, our industrial strategy is focusing on working with advanced manufacturing in sectors like aerospace and life sciences but also through enabling industry such as developing green energy."
Giving a vote of confidence in Scotland's growing renewable energy industry is why Mr Cable chose Edinburgh as the new headquarters for UK GIB, a bank which employs 15 people but which is expected to grow to about 60 staff, and possibly as many as 100.
"Having the headquarters in Scotland was a big decision for us as we wanted to show the country that we are serious about our commitment to the Union. We are also keen to show how important the renewable energy industry, from the work in the Orkneys on tidal wave energy to the new catapult centre in Glasgow, is to the UK's overall energy policy," he says. To demonstrate his point, Mr Cable and his Lib Dem ministers will be visiting the Whitlock Energy Collaboration Centre in Rosyth, one of Scotland's newest education and research centres focusing on the renewable energy sector, before the official launch in Edinburgh.
Hosting GIB's lift-off will be the new chairman, Lord Smith of Kelvin, and its chief executive, Shaun Kingsbury, the former private-equity energy investor who used to advise 3i and will be outlining his plans for the bank to an audience of finance and environmental stakeholders.
The GIB starts with £3bn of equity from the Government and has been given the powers to gear up by between three and five times with investment from the private sector, adds Mr Cable. "That means over the next two and a half years the bank can gear up to £18bn of new investments. Its borrowing powers will be looked at again after this parliament.
"What's so important about the GIB is that it will be making investments in some of the most critical areas, ranging from industrial waste to renewable energy for the long-term projects which the banks don't want to lend to. It's also significant because it will show the private sector that the government is serious and, hopefully, lead to a step-up from the private sector." He adds: "This commitment for the long term is crucial, something that has been missing in previous governments."
All energy projects which are already proven and commercially viable will be considered, he says. "But all requests for investment will be vigorously challenged and subject to double bottom-line tests. We are interested in looking at all sorts of environmentally related projects, from waste to possibly even nuclear".
UK GIB has pledged about £180m for specialist fund managers. Two new investments will be announced today: one for £8m in the £16m Greenlight project for an anaerobic digestion plant in Teesside and another £5m for building materials group Kingspan in north Wales.
These new investments are tiny, yet symbolic. If they can kick-start the private sector to start spending again, the GIB will have got off to a good start. But Mr Cable, flush with his green success, is not stopping here: expect more news soon on the £1bn "business bank" as well as moves on alternative financing such as crowd funding.
Vince Cable welcomed the appointment of Mark Carney as the Governor of the Bank of England, claiming the Canadian "ticked all the right boxes".
He says: "After all the accolades it will be interesting to hear what he says to the Treasury Select Committee on the Vickers reforms on banking and the Government's strong monetary policy."
Mr Cable hopes that Paul Tucker, the deputy governor, will not leave the bank: "I hope we keep him. He was not tainted by the Libor scandal and would be a loss."
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