We’ve had a rush of great guest posts this week and this one is no exception. I’d post it as an exclusive, because I think it is, but I’m sure Tom has made his views known elsewhere. He is after all Shadow Energy Minister in the UK Parliament and therefore has a keen interest in this development. Tom Greatrex is also Labour MP for Rutherglen and Hamilton West, being elected in 2010 for the first time with a thumping 21,002 majority.
The announcement yesterday that the UK government has decided to base the headquarters of the Green Investment Bank in Edinburgh is, of course, great news for the city. It was a policy envisaged under the outgoing Labour government, and continued by the coalition when they came into office. For that reason, it is not surprising that since the election in 2010, various MPs from all parties have been pressing the case for the bank to be located in their areas (with the exception of former Social Security Secretary Peter Lilley who said he did not want it anywhere near his constituency, a point he reiterated this week ).
The campaign championed in Parliament, particularly by Edinburgh MPs Mark Lazarowicz and Mike Crockart, with expert input from Scottish Financial Enterprise, has done what 31 other bids failed to do in convincing the government to site the headquarters in Edinburgh, with the project finance team in London. For both Edinburgh and the green economy, it was too good an opportunity to miss.
Edinburgh is an ideal base for the Green Investment Bank – a leading financial centre with world leading asset management and administrative skills, with a strong energy presence in the city. London can harness the huge investment potential of the City. Whilst there are some who never tire of advocating that these cities work in competition, this is a good example of what can be achieved by working in partnership.
The sharing of operations between Edinburgh and London reinforces the interdependence that exists throughout the UK economy, and the fact that our various cities offer so much that can be harnessed for the benefit of the whole country.
And while almost everything ends up being viewed through the prism of a possibly forthcoming referendum (especially on this blog site (oi! Ed)), before getting into the arguments about what would happen to the Green Investment Bank in a separate Scotland, it is worth reflecting on the scale of the ambition for the Bank.
While the initial funding, partly through UK asset sales, is projected to be £3 billion, that is a small proportion of the level of investment needed to help develop enhanced sources of renewable energy that, after years of research, are still nowhere near deployment. Yet the scale of even that start-up funding is dependent on the size of the UK.
The ambitions for the bank are much more significant – when it can be established as a bank, that is. Because despite having the name, and now the headquarters location, of a bank, the reality is that until 2016 it will be more of a fund than a bank. The ability of the Green Investment Bank to operate as a bank, and raise funds to invest, is still four years away. While the initial investment will be valuable, for many projects it is likely that they will need to continue to raise finance from other sources as well – the calls on the capital available to the Green Investment Bank will be considerable.
Part of the rationale for the Green Investment Bank is to be able to lend to projects unable to secure investment from other sources as they are viewed as too risky – but with an institution with expertise in green development, and the scale of a UK institution, that hurdle could be overcome.
That is why it is a case of two cheers, rather than three, for yesterday’s news. While it might seem churlish to question the UK government’s commitment just after they announce the chosen location of the bank’s headquarters, there remains a nagging doubt that the day when it is actually a bank may never quite come. Now that really would be a missed opportunity.