The cut of your GIB
In the long arc to recovery, a new Green Investment Bank is the keystone. Without a Green Investment Bank (GIB) as a driver for new (green) jobs, only one-fifth of the capital needed to renew the UK’s energy and transport systems will be available from the markets. In its topsy-turvy approach to economic stewardship, the Government has published a White Paper on Welfare that Works before its strategy on growth and jobs. This matters to the five unemployed people currently chasing every vacancy, and now facing a simpler but harsher welfare system.
According to TransformUK, without a GIB, the Goverment is unlikely to realise the £200bn of infrastructure investment it needs to meet the UK’s carbon targets by 2020 – let alone generate the 2.5 million jobs it aspires to create in the next five years.
The number of vacancies has been falling for the last three months. The toughening of welfare reforms is not balanced against credible policy for economic renewal.
Jobseekers face “regular checks to ensure recipients are meeting their conditionality requirements…. in setting conditionality, advisers will ensure that the requirements they place on a recipient are reasonable for that person … In line with this personalised approach, we will continue to give advisers the flexibility to target stronger conditionality on some jobseekers where they think this is necessary to help move them into work.”
Both the Comprehensive Spending Review and the Treasury’s National Infrastructure Plan 2010 speak easily of a Green Investment Bank. But the CSR provided for just £1bn as a one-off payment in 2013, adding other small scale proceeds from unspecified asset sales.
Meanwhile, the Treasury in truth has its own strong conditionality on a Green Investment Bank: that it shouldn’t add to the level of public debt. Indeed, apparently it shouldn’t be a bank at all, but a green fund. The UK is almost alone in Europe in not having a development bank to support economic growth. The TUC has argued for the Bank to be created as an independent entity, with £2bn of capitalisation every year to 2020, a total of £20bn, reducing risk for private investors and leveraging 10 to 20 times this amount in new investment. We also urge the Government to consider the massive boost to GDP that the Bank would generate.
Following the very significant cuts announced in October’s CSR, political focus is now turning to growth. 2.5m private sector jobs must be created over the next 5 years to support the growth on which the Coalition Government’s budgetary forecasts are based. But, as Adam has pointed out, after the recession of 1991/92, 2 million jobs were created over a period of nine and a half years with average annual GDP growth at 3.2%. Creation of 2.5 million jobs took eleven years with growth of 3.1%. No Green Investment Bank, no credible economic renewal policy.