The UK is at risk of falling behind in the global race to achieve a net zero economy without strategic public investment in green manufacturing technologies, according to a new report by the IPPR think tank.
In the US the Biden administration has just marked the first anniversary of its Inflation Reduction Act, aimed at boosting domestic investment in clean energy technologies and infrastructure and creating green jobs. The EU has meanwhile responded with its own Green Deal Industrial Plan.
IPPR says without urgent government action, the UK will remain on the starting blocks of the race to capture the green industries of tomorrow. A new, green industrial strategy is needed, with the government setting a clear direction for investment that will deliver prosperity, levelling up, reduced emissions and restoration of nature.
The report, Growing green: A proposal for a National Investment Fund calls for a new UK-wide public body to help finance investment in net-zero industries. The proposed National Investment Fund (NIF) would provide finance for investment projects in green manufacturing. In doing so, it would encourage (or “crowd-in”) private companies to make strategic investments that they would not otherwise make.
The NIF would provide equity finance to firms, supplying funding in return for becoming a part-owner of the business and sharing in its success and future profits – analogous to the type of investment offered on the BBC’s Dragon’s Den.
Initial funding to the NIF itself would be provided by the Treasury, but it would be further supported by tax revenues from North Sea gas and oil, or by levies which IPPR is urging be imposed on share dividends and ‘buybacks’ – effectively diverting excess profits and “economic rents” from fossil fuel activities into productive investments in a future green economy.
Simone Gasperin, IPPR Associate Fellow, 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. 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.”
George Dibb, Head of the IPPR Centre for Economic Justice said:
“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?
“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.”
