Here we are again. Only a few more shopping days to go before Christmas and, as usual, I still can’t make up my mind as to what presents I want or, indeed, what I’m going to buy for everyone else.
But at least I know what my priorities will be when it comes to spending – and, of course, family comes first.
Sadly, though, that once great institution, HM Treasury, seems to have real difficulty in determining what its spending priorities should be – and what its role is.
As we all know, the banks have done well in attracting the Treasury’s support and have benefited to the tune of many tens of billions of pounds.
Strangely, though – and despite the Government’s publicity machine working overtime on promoting its climate-change policies and constantly advising us of its glowing credentials when it comes to saving the planet – the Treasury seems strangely reticent when it comes to putting its hand in its pocket and providing renewable energy technology R&D funds for Scotland.
Scottish Renewables has asked Chancellor Alistair Darling to release up to £174million from the Scottish Fossil Fuel Levy fund to be spent in Scotland.
Not unexpectedly, he has told them to go jump in a loch because he says the Scottish Government has already received revenue from the levy in the form of so called Barnett Consequentials.
These occur when a decision is taken in Westminster to change expenditure in a particular area and are designed to make sure Scotland benefits in the same way. In effect, what the Treasury is saying is that we’ve had additional funding already because of the Fossil Fuel Levy Fund spend in England and Wales. So the Treasury will now only release this £174million if there is a cut in the block or main grant to Scotland, and meantime, it will remain sitting in some Treasury bank account and, like my saving accounts, is probably earning hardly any interest. Stupid or what?
Now, it has always been my opinion that the Treasury is a major obstacle to any real UK progress, and this episode seems to me to be just another demonstration that it’s an obstinate and narrow-minded institution that’s long overdue for a complete overhaul.
Self-evidently, it is not fit for purpose because it is standing in the way of technological developments that are essential if we are to re-balance the economy as all politicians now seem to be promising.
In fact, I have really found it entirely bizarre that Darling’s department has more real influence over this Government’s admittedly almost non-existent industrial policy than any other.
It makes the setting of priorities extremely difficult and, as we all know, the Treasury’s attitude to North Sea oil& gas taxation is one that could jeopardise the future of the entire sector.
But then the Treasury has taken this same attitude with almost every other industrial sector. It has an approach that I consider malevolent and overbearing and which has done huge amounts of damage, particularly when it comes to manufacturing.
Nowadays, of course, the Treasury is pretending that it is really on our side. It’s castigating the banks for not lending enough and being particularly hostile towards those once acceptable practices of paying City whiz kids huge salaries and bonuses.
Consideration is now being given to not outlawing the practice of paying bonuses, but changing how they’re paid, and when. Now this monster of a department is saying it wants to know how many people in the City are paid a million quid or more a year.
Frankly, I really don’t care a monkey’s as to how much City types are earning or how big their bonuses are. What concerns me considerably more is how little the collective financial-services sector is putting into risk-equity capital that can flow into start-ups and early-stage companies.
Our priority in Energy is to encourage the development of a growing renewable/clean technology/energy sector, not forgetting North Sea oil&gas, but other sectors suffer from the same issue.
So if the Treasury was really on our side, it would be using these proposals for curbing the excesses of the recent past as a lever for initiating a change in behaviour when it comes to funding new companies.
It could, for example, just say to all these companies, including the banks, that if they start making a certain percentage of their profits available to venture funds then they can do what the heck they like in terms of bonus payments and salaries.
I would go further than that and say that if these institutions start doing this properly and it does truly start the long process of rebalancing and growing the economy, then they probably deserve those bonuses anyway.
In fact, I find it very interesting that Richard Lambert, CBI director- general, said recently: “We may be at the start of a new era for businesses in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years.”
The CBI has also produced a report entitled The Shape of Business – The Next 10 Years which is well worth reading.
It’s a document the Treasury should also read in the context of its obstinacy over releasing that £175million worth of Fossil Fuel Levy funds, but the point is that, within this report, this sort of change of approach would fit well.
Moreover, Darling’s department does seem to be having real difficulty in aligning the Government’s aspirations to be a leader in cutting carbon emissions with its industrial aims. In fact, I have a feeling it cares far less about developing a clean energy technology sector that can export products to the world than it does about strutting around on the world stage pontificating about the threat from climate change. This, of course, makes it look it extremely foolish.
There is, of course, the Government’s other flagship policy of carbon trading – or is it now cap and trade? I’ve lost track of where we are on that, probably because I’ve developed this tendency to doze off whenever it’s mentioned.
Whatever it’s called now, it isn’t working, and I’m really pleased about that.
As far as I’m concerned, carbon trading is the energy equivalent to those stupid financial engineering mechanisms that got the banks into trouble.
They achieve nothing except for those that are doing the trading. The time for this sort of nonsense is over and the Treasury needs to pull its horns back in and keep out of the whole energy discussion – unless, of course, it’s asked to provide an opinion on something financial.
The world has changed. Richard Lambert is right. There’s a new era starting, and it’s an era where financial engineering will become the tool of real engineering and not the other way round. Or, rather – it better had.
Have a very merry Christmas.
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