Written evidence submitted by Unite the
union
This response is submitted by Unite the union. Unite
is the UK's largest trade union with over 1.5 million members
across the private and public sectors. The union's members work
in a range of industries including manufacturing, financial services,
print, energy, construction, transport, local government, education,
health and not for profit sectors.
EXECUTIVE SUMMARY
Unite believes government support for investment
in low carbon manufacturing is crucial.
Unite is very concerned about proposals to achieve
the necessary investment from the public sector will result in
other government funded organisations being reduced or disbanded
altogether.
Unite would like to see a singular analysis of how
the workforce for the green investment bank (GIB) is to be created
- it is not acceptable for government to assume that workers made
redundant in the Carbon Trust will make up the core workforce
in the GIB.
Unite has serious concerns about the proposal for
the GIB to be set up as a public private partnership (PPP).
Unite believes the ability to provide the amount
of public investment needed to stimulate growth in the industry
must be matched with the appropriate level of investment from
industry itself.
It is vital that government takes the initiative
to ensure that confidence in the UK as a place for green investment
is not compromised.
Unite believes one of the most important aspects
of the GIB is where value will be added - where jobs will be created,
how environmental benefits will be achieved and how much investment
will be required to achieve high levels of technological innovation
and R&D.
One of the key barriers to investment is that investors
cannot see a sure fire return on their investment under the present
regulatory framework.
Unite believes the proposal not to include small
and medium sized enterprises (SMEs) in this investment process
is a serious failure to appreciate the important role which SMEs
play in the manufacturing production supply chain.
1. INTRODUCTION
1.1 Unite welcomes the opportunity to respond
to this inquiry. There are clear contradictory elements in what
seems to be a worthwhile but nebulous proposal for the implementation
of a Green Investment Bank (GIB). However, there is obviously
a massive challenge ahead for government regarding meeting the
low carbon manufacturing challenge. With an estimated £550
billion of investment required by 2020 to facilitate the investment
needed to kick start the UK low carbon emissions programme there
clearly needs to be a focus by government on how to achieve this
level of investment.
1.2 Unite is clear about the need for investment
but is not clear about how this will be achieved successfully
in relation to how jobs will be created or retained, how skills
and knowledge will be improved with training to meet the new technologies
required for low carbon manufacturing and how government is going
to achieve all of this while implementing the biggest cuts to
public finances since the second world war.
2. INVESTMENT
STRATEGY
2.1 In a report produced for government, by former
investment banker Bob Wigley, proposals state that the proposed
bank would need three forms of funding to sustain its ongoing
operations. This would include consolidating £185 million
a year currently spent on low carbon initiatives through government
backed organisations. This proposal would mean dissolving the
Carbon Trust and directing £100 million of its funding to
the bank. £55 million a year would be taken from the Energy
Technologies Institute (ETI) and the Technology Strategy Board
would lose the £30 million it currently uses for low carbon
strategy programmes.
2.2 Unite is very concerned that government proposals
to achieve the necessary investment from the public sector results
in other government funded organisations being reduced or disbanded
altogether. There are suggestions in the Wigley report[6]
that the workers made redundant in the Carbon Trust and other
organisations will make up the core workforce in the GIB.[7]
Unite has serious reservations about this automatic transfer of
staff and whether government has undertaken the necessary skills
audit to ensure that the skills of staff in the Carbon Trust whose
role is the promotion of carbon neutral manufacturing processes
are transferable to those required to work for an investment bank.
Unite would also question whether such personnel would necessary
want to work for an investment bank.
2.3 There needs to be a singular analysis of
what type of workforce is required to manage the bank and how
that workforce will be achieved. It is not good enough for government
to say that redundant workers will be found new jobs at the GIB
when it is clearly not a feasible option.
2.4 Unite acknowledges that all of the organisations
mentioned have been undertaking some very worthwhile and successful
work in assisting UK companies to achieve their low carbon goals.
It is not clear whether this work will be undertaken by any other
organisation but seems to be a "rob Peter to pay Paul"
scenario - not the best way for government to show its commitment
to the low carbon agenda.
2.5 The report has also said that raising public
investment income in this way would be coupled with public funding
strategies, such as financing for ongoing activities which would
include green bonds, green ISAs, a GIB debt fund and a levy on
domestic energy bills. Unite is bitterly opposed to any raising
of investment funds by effectively levying a tax on domestic energy
consumption. At present the UK utility users are seen to be a
"cash cow" in a way that has not happened in other European
Union (EU) countries which have gone through the same process.
2.6 It is also proposed that there could be initial
bank capitalisation and funding via the use of a bank levy or
bank bonus tax or the proceeds from the sale of government owned
assets such as the channel tunnel and the student loans portfolio.
As far as Unite is concerned this is all too tenuous and too late.
The strategy for raising investment funds to start the GIB must
be made clear and must not compromise people's jobs or organisations
that are already making a positive contribution to the low carbon
growth economy. It must also not treat the UK public as a bottomless
public purse. Unite would prefer to see a levy on the oil companies
to contribute to the funding of the GIB.
3. PUBLIC PRIVATE
PARTNERSHIP.
3.1 The proposal that the bank should be a public
private partnership (PPP) is very worrying. As far as Unite is
concerned any proposals around PPP immediately ring alarm bells.
This concern is not born out of ideological antipathy but out
of experience in a number of sectors where PPPs are prevalent
and where the process seems to end up being public investment
for private profit and has not proved to provide value for money.
3.2 There is a huge amount of money to be made
in the green technologies and services market. Conservative estimates
say the global market is worth more than $3 trillion per annum
and the UK has only a 5% share of this market with Germany and
France both having at least twice that of the UK. However, Unite
believes the ability to provide the amount of public investment
needed to stimulate growth in the industry must be matched with
the appropriate investment from industry itself.
3.3 It is vital that government takes the initiative
to ensure that confidence in the UK as a place for green investment
is not compromised. The tangential nature of the GIB, with the
former government proposing the bank as a way of stimulating investment
into capital projects and the present government clearly seeing
it as a way of cutting public sector spending means there is no
clear focus and strategy. This must be addressed and a strategic
framework produced which outlines to everyone concerned how the
GIB will work and what its objectives will be.
3.4 Unite also believes it is the "added
value" of the GIB that government should be looking at. Where
will the jobs be created? How will the environmental benefits
be achieved? And how much investment is going to be needed to
achieve high levels of low carbon technological innovation and
R&D? What impact will the GIB have on the skills agenda, will
there need to be new apprentice and graduate programmes to ensure
there are enough highly skilled workers to undertake the jobs
in the low carbon economy? All of this must be considered to ensure
the bank is fit for purpose and achieves its objectives.
4. SMALL AND
MEDIUM SIZED
ENTERPRISES
4.1 One of the key barriers to investment is
that investors cannot see a sure fire return on their investment
under the current regulatory framework. The fact that the Wigley
report has stated that SMEs will not be included in the investment
regime and the GIB will only focus on large energy related capital
projects tells Unite all it needs to know about investors looking
for a return on their investment, rather than at the "added
value" for the UK economy.
4.2 SMEs make up 80% of UK manufacturing and
innovation comes predominantly through SMEs as they are in a position
to respond quickly and efficiently to the big tier 1 companies
in the manufacturing sector which require innovative products
and services to enable them to meet demand from their customers.
4.3 Unite believes that for the proposal not
to include SMEs in this investment process is a serious failure
to appreciate the important role which SMEs play in the production
supply chain. Unite has, in previous submissions to government
referred many times to the problems that SMEs have with accessing
investment capital. The recession has proved to be a crisis point
for SMEs in the UK and the financial situation has not improved
very much since late 2009. It does not matter how much the banks
are told to help SMEs, they do not respond. In the face of this
Unite is very concerned that when the big capital energy projects
start to be built the supply chain will not be there to support
the tier 1 companies concerned because of this lack of investment.
UNITE RECOMMENDATIONS
Unite is in favour of government support for investment
in low carbon manufacturing products and systems.
Government must provide a cohesive and strategic
investment strategy whereby the private sector can see a long
term pipeline of work regarding infrastructure development for
the renewable energy sector.
In a global economy the UK is in competition with
many other nation states regarding the production of low carbon
products and services, government must provide the right economic
framework to encourage inward investment in the industry.
Government must acknowledge how important the manufacturing
sector is in the decision making process around investment and
the creation of the GIB.
Unite would prefer to see a levy on the high profits
of energy companies rather than a tax on energy users to fund
the GIB.
The proposed closure of the Carbon Trust and the
re-direction of funding from the ETI and the Technology Strategy
Board must be reviewed and an analysis of how this vital work
will continue.
Unite believes that PPPs are not good value for money
and are a waste of tax payers money, as such there needs to be
a re-think of the investment structure of the GIB.
Government must explain how the GIB will produce
the "value added" for the UK manufacturing sector.
The UK economy must be re-balanced, the only way
to do this is for government to invest in the manufacturing sector.
Unite believes it is of vital importance that an
investment strategy for SMEs is included in the objectives of
the GIB.
Unite believes that the proposed levy on banks or
a bank bonus tax should be used to part fund the GIB.
13 October 2010
6 Unlocking investment to deliver Britain's low carbon
future - Report by the Green Investment Bank Commission. Back
7
Ibid, executive summary, page XV. Back
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