The government must introduce a new public fund to encourage investment in green technologies and catch up in the race to secure a net zero economy, new analysis from the Institute for Public Policy Research (IPPR) has argued.
The report highlights how the US has recently marked the first anniversary of its inflation reduction act which is aimed at bolstering domestic investment in clean energy technology and infrastructure, while the EU has also launched its own green deal industrial plan.
Without swift government action, IPPR believes the UK will remain behind other world powers in the bid to capture the green industries of tomorrow.
To combat this, the think tank proposes the establishment of a new public body to help the net zero sector – the new national investment fund (NIF) would provide financial support to green manufacturing projects, thus promoting private investment.
The NIF would provide equity finance to organisations; in essence, supplying funding in return for a stake in the company and thus a share of the profits – this is compared by IPPR to the approach seen on the BBC’s Dragon’s Den.
The Treasury would foot the initial bill for the NIF, with further support from tax revenues from north sea gas and oil, as well as potential levies which IPPR is urging to be imposed on share dividends and ‘buybacks’.
Co-author of the report, Simone Gasperin, who is an associate fellow at IPPR, said: “The National Investment Fund is a policy proposal for our time. The UK needs to finance and coordinate strategic industrial policy projects that will deliver a net zero transition through economic prosperity and inclusion.”
He continued: “The cost of inaction on people’s livelihoods will be too high, while there are huge opportunities to be captured by the government co-investing with private companies.”
In the report, IPPR would want the NIF to:
- Invest via equity finance in organisations wanting to expand green manufacturing activities
- Support companies integral to the future of the UK economy and, rather than look for an immediate return of investment, grow the economy in its most deprived regions
- Work in tandem with similar funding initiatives such as the British Business Bank, the UK Infrastructure Bank and research grants from UK Research and Innovation to encourage private investment
- Urge the firms in which it owns a stake to reinvest profits in the economy or staff members, rather than paying excessive dividends
- Operate under formal transparency and accountability rules, including conducting annual reports to the government on its value for money
The report’s other co-author, George Dibb, head of the IPPR centre for economic justice, added: “For the UK to hit net-zero our households and businesses will need to buy new green products – from electric cars to heat pumps.
“We have a choice: do we want to make those products in the UK with all the jobs and prosperity that come with green manufacturing, or do we want to import them from abroad?”
He concluded: “The USA and EU are making major investments to secure the manufacturing and technologies of tomorrow, and its time the UK stepped up. Our proposal for a National Investment Fund is a practical way for the UK government to crowd-in private sector investment by strategically supporting companies and taking a share in their future success.”
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