Mandelson weighs in behind National Investment Bank

Alex Hern reports on the support Lord Mandelson has given to the idea of a national investment bank, as called for by a new IPPR pamphlet

 

Lord Mandelson has put his support behind a new report (pdf) from the Institute for Public Policy Research (IPPR) which calls, amongst other things, for the coalition’s nascent green investment bank to be turned into a national investment bank, and put to work improving Britain’s infrastructure.

Writing in the foreward to the pamphlet, Lord Mandleson said:

“This report argues that in the increasingly multipolar world in which we live, it is arguable that no single world view will emerge to define the way we manage globalisation. But, while the end of a world in which the west dictated the terms of globalisation is not necessarily a tragedy, a world without a shared set of principles for managing globalisation would be.

“This report is not naïve about the prospects for global governance, but it argues for new rules accepted by developing and developed countries alike, because ‘no rules’ is not a sustainable option.

“All of the recommendations in this report are directed towards that set of principles.

On the topic of a national investment bank, the report concludes:

“The vision and scope of the nascent Green Investment Bank needs to be more ambitious.

“First, it should become a National Investment Bank with green characteristics, rather than an institution purely focused on green investments.

“The energy and transport sectors are two critical areas where Britain already has some comparative advantages, but it makes little sense to restrict such an important branch of industrial policy to these sectors in isolation.

“Second, this bank should be able to utilise the historically low yields on government borrowing with immediate effect. The chart below shows the interest rate on 10-year government bonds. Any investments with a rate of return greater than the current yield of around 2 per cent will generate a positive net impact on the government’s balance sheet.

“Investing in marketable services of this kind would turn the government’s private finance initiative on its head by allowing the public sector to borrow and then sell or lease back the service to the private sector, rather than the other way around.”

Interest-rates-on-10-year-government-bonds
Introducing the idea on Left Foot Forward earlier this month, Will Straw wrote:

“Despite these low borrowing costs, it has rarely been harder to get credit in the private sector. The time is clearly right for a British Investment Bank set up on a strictly commercial basis and run by an independent board tasked with generating a long-term return across a diverse range of sectors.

“Any investments with a rate of return greater than the current yield will generate a positive net impact for the government’s balance sheet.

“Indeed, investing in marketable services like transport infrastructure, sources of renewable energy, or housing would turn the Private Finance Initiative policy on its head by allowing the public sector to borrow and then sell or lease back the service to the private sector, rather than the other way around.

With support from Lord Mandelson and Will Straw, is a national investment bank an idea whose time has come? We can but hope.

See also:

The economy is crying out for more investment; we need a British Investment BankWill Straw, January 14th 2012

George Osborne is the downgraded chancellor of a deflationary governmentWilliam Bain MP, December 8th 2011

The coalition could end up borrowing more than LabourCormac Hollingsworth, July 27th 2011

Wolf savages government’s approach to growthWill Straw, February 11th 2011

A middle way for economic recoveryGerald Holtham, September 16th 2010

23 Responses to “Mandelson weighs in behind National Investment Bank”

  1. Patron Press - #P2

    #UK : Mandelson weighs in behind National Investment Bank //t.co/c5ZXp2ck

  2. Anonymous

    Mandelson is worth millions.

    He can invest his wealth with others like Blair in an investment bank.

    Somehow I expect they won’t put their money on the line.

    They just want to put other people’s money on the line for their own profits.


    Indeed, investing in marketable services like transport infrastructure, sources of renewable energy, or housing would turn the Private Finance Initiative policy on its head by allowing the public sector to borrow and then sell or lease back the service to the private sector, rather than the other way around.

    Just like with the bank bailout. Socialise the losses. Force the state to loan to your favourite cronys.

    More free money British Leyland? Certainly. Don’t worry about any losses. We’ve got lots of mugs lined up to take the hit.

    After all, it was Labour’s line on the bank bail out at the time. It will make the public sector wealthy when we sell them. Think of all the profits.

    Idiots.

  3. Anonymous

    Any investments with a rate of return greater than the current yield will generate a positive net impact for the government’s balance sheet.

    ===========

    So what’s the impact for HS2?

    36 billion – 5% interest (Who is going to lend below inflation unless forced to), over 30 years.

    Interest a day, close to 6 million.

    Passengers – 100K a day.

    Yep, that’s an extra 60 quid on a ticket for a 15 minute saving.

    It’s a negative return.

  4. Pulp Ark

    Mandelson weighs in behind National Investment Bank //t.co/nrYLh9TD #Sustainable_Economy #economy #globalisation #muslim #tcot #sioa

  5. Rikbut

    Mandelson weighs in behind National Investment Bank: //t.co/je5FIqmR reports @AlexHern @IPPR #Globalisation

  6. Political Planet

    Mandelson weighs in behind National Investment Bank: Alex Hern reports on the support Lord Mandelson has given t… //t.co/irt2Sz6a

  7. Hens4Freedom

    RT @leftfootfwd: Mandelson weighs in behind National Investment Bank: //t.co/R2qjWUMP reports @AlexHern @IPPR #Globalisation #NewsClub

  8. leftlinks

    Left Foot Forward – Mandelson weighs in behind National Investment Bank //t.co/oLZPpvtQ

  9. BevR

    Mandelson weighs in behind National Investment Bank: //t.co/je5FIqmR reports @AlexHern @IPPR #Globalisation

  10. BevR

    RT @leftfootfwd: Mandelson weighs in //t.co/EVCdjViH #spartacusreport

  11. Christian Wilcox

    We could use RBS like @carolinelucas suggested: //t.co/qbdSe0rk. We desperately need to get credit to SME's. #Croydon #Labour #bbcqt

  12. Croydon feed

    We could use RBS like @carolinelucas suggested: //t.co/CBjAqzFt. We desperately need to get credit to SME's… //t.co/TKg407vh

  13. Look Left – The hate-filled Right hone in on their next target: Disabled people | Left Foot Forward

    […] Left Foot Forward reported today, the report concludes: “The vision and scope of the nascent Green Investment Bank needs to […]

  14. awake!

    shadow banking will replace a lot of the function of traditional banks who are too busy working out where the losses from their investment banking units are coming from.
    The very last thing neede now is a govt run/sponsored investment bank because as we’ve recently experienced, ahem, letting numpties loose with others money never works…

  15. Anonymous

    That’s why Mandy has come out into the sunlight a banking job maybe going.

  16. Newsbot9

    Sure. So, no investment. Your hatred for this country continues. Your excuses continue.

  17. Anonymous

    Nah you’re just worried that you won’t get your gold plated pension.

    Too much debt.

  18. SimonB

    A national investment bank seems like a good idea, similar bodies have worked quite well in some US states. I’d be concerned about the Green Investment Bank, weak as it is, being diverted to this new version though. There needs to be a specific stimulus to green projects and a bank is a start, though more is needed.

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