Written evidence submitted by the Creativity
Partnership
EXECUTIVE SUMMARY
The concept of a Green Investment Bank is welcome
if it helps create and channel new sources of finance to "green"
the UK.
It is vitally important that by consolidating the
activities of other funding bodies it does not accidentally divert
what little investment finance there is away from innovation and
into infrastructure. Funding for "green innovation"
is as important as funding for "green infrastructure".
THE SUBMITTER
I am Anne Miller, Director of The Creativity Partnership
www.tcp-uk.co.uk where I provide training, workshops and consultancy
to help organisations get value from creativity (often this relates
to issues such as low carbon, clean tech and sustainability).
Clients range from major corporations to SMEs and individual entrepreneurs.
I am also a co-founder of TTPGroup, now one of Europe's
leading independent technology innovation organisations www.ttpgroup.com
; founder and coordinator of the Green Enterprise Community www.green-enterprise.org,
a community of over 80 early stage "green" entrepreneurs;
one of the UK's most successful female inventors with 39 patents,
many of them commercialised; and author of the acclaimed book,
How to got your ideas adopted (and change the world) www.anne.miller.info
This gives me real expertise and insight into the
issues facing the UK's innovators, and the barriers facing them
as they try to develop the ideas and enterprises that will lead
the UK to a prosperous and low carbon future.
THE FACTS
The UK has real strength in creativity and innovation:
we punch way above our weight in terms of the amount, diversity
and significance of UK inventiveness (from the Beatles to the
Body Scanner). This is recognised internationally.
Our weakness is in the exploitation of that inventiveness:
lack of finance for innovation often means that innovations have
to go overseas to be exploited, and hence UK plc only gets a small
proportion of the value that our innovators create.
In today's climate, what finance is available for
small business is poorly suited to entrepreneurial activity. A
bank loan to support liquidity secured on assets is of little
use to an innovative small business that really needs capital
that can be subject to risk.[1]
Historically, where sources of finance existed that
genuinely understood the innovation process, the results were
transformational. For example the well known Cambridge Phenomenon
took off in 1978 when Matthew Bullock of the Cambridge branch
of Barclays Bank persuaded the bank to let him adopt a positive
policy towards "high tech" businesses in the locality.
This started a process that converted one of the poorest regions
in the UK into one of the richest. Whereas 30 years ago there
were about 100 people employed in high tech firms in the Cambridge
region, today there are over 40,000 people employed in knowledge
based business and over 1,500 high tech companies.[2]
Although currently the investment climate is tough
for innovators, two small but useful schemes are the SBRI programme,
run by the Technology Strategy Board[3]
and grants provided through the Carbon Trust's Entrepreneurs Fast
Track scheme.[4]
We hear concerning rumours[5]
that as part of the spending review, the Carbon Trust and even
the Technology Strategy Board may cease. Alternatively we hear
that the "green" funds they administer may be rolled
into The Green Investment Bank (GIB), but that the GIB will itself
focus on financing major capital infrastructure projects. As the
Utility sector is one of the least innovative sectors in
the UK economy (and SME's tend to be the most innovative), this
change would leave the UK's innovators and green entrepreneurs
stranded.
RECOMMENDATIONS
I strongly support the general principle of a Green
Investment Bank, but urge the committee to ensure that it devotes
a substantial proportion of its funding to supporting entrepreneurs
and innovative SMEs in the Green Sector. It is vitally important
that the creation of the GIB doesn't divert existing funding away
from innovation into infrastructure.
If the Carbon Trust and TSB are to be closed,
this could be done at its simplest by "relocating" the
SBRI programme and the Entrepreneurs Fast Track scheme within
the GIB.
Preferably however, the creation of the GIB would
result in an increase in the availability of informed finance
for green entrepreneurs and innovative SMEs. If 5% of the GIB's
lending were allocated for "green innovation" by SMEs
it would be transformational.
This would also be good for the GIB's finances because,
as Venture Capitalists know, a well managed portfolio of investments
in genuinely innovative SMEs delivers a far greater return than
the equivalent sum invested in supporting the activities of a
major corporation.
This "green innovation" investment programme
should be designed and run by investment managers that understand
the needs of innovators and have the experience to develop an
exciting and profitable portfolio.
Unlike major corporations, green entrepreneurs and
innovative SMEs have limited resources, so are unable to undertake
the lobbying activities that are no doubt going on behind the
scenes to influence the investment priorities of the Green Investment
Bank. We therefore need the Environmental Audit Committee to take
care to ensure that the creation of the GIB doesn't accidentally
handicap the UK's ability to compete in the green innovation race
that's to come.
13 October 2010
1 New Economic Foundation "Where did the money
go: building a banking system fit for purpose" p44. Back
2 http://siteresources.worldbank.org/EXTECAREGTOPKNOECO/Resources/PS_IV_W_Herriot_Replicating_the_Cambridge_Phenomenon.pdf
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3 htp://www.innovateuk.org/deliveringinnovation/smallbusinessresearchinitiative/whatissbri.ashx
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4 http://www.carbontrust.co.uk/emerging-technologies/fast-track/pages/default.aspx
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5
http://www.telegraph.co.uk/finance/newsbysector/energy/7863253/The-Green-Investment-Bank-is-going-down-the-wrong-path.html
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