Vampire strikes Green Bank

WHETHER one believes in climate change or not, it is hard to dispute the work of the Government-controlled Green Investment Bank (GIB).

Founded by the Coalition government in 2012, it has played a valuable role in using public funds to encourage the development of green choices in building and energy infrastructure.

It has done it by forming alliances with the private sector and helping to develop skills and technologies which could contribute to exports in the future.

In the Government’s anxiety to close the budget deficit, it is rightly seeking to privatise all that it can as rapidly as possible. It has disposed of almost all its stake in Lloyds Banking Group, reducing its holding to less than that of fund manager Blackrock.

So one can have no objections to the Government selling down its stake in the GIB. It is important for all those who believe in a cleaner energy future that the GIB, with projects stretching the length and breadth of the country, ends up in safe hands.

We don’t need a repeat of 2006 when Gordon Brown sold Westinghouse to the Japanese. It now has to court the very same firms, Hitachi and Toshiba, to help build a fleet of nuclear plants in the UK.

Keeping the lights on must be a long-term objective of the energy policy of all governments, whatever their political colour. What is causing concern is the decision to sell GIB lock, stock and barrel to the Aussie ‘vampire kangaroo’ Macquarie.

Whatever Macquarie decides to do with GIB, it cannot be trusted as a good owner of the nation’s vital infrastructure.

Its ownership of Thames Water has seen hundreds of millions of dividend payments shipped off to investors, minimal tax paid and disappointing investment in the network.

It is now revealed that Macquarie is already engaged in advanced planning to sell the assets of GIB as soon as it gains control.

To do so would make a mockery of the price at which it is being sold.

Macquarie will make an instant profit on the £2.7bn outfit, but also runs roughshod over the golden share which was meant to give the Government a continuing say.

In keeping with the spirit of the ‘golden share’ and the Government’s promise to cut emissions to an acceptable level by 2030, the Prime Minister Theresa May should halt the current plan. One possibility is that the Government merges the GIB with the British Business Bank to create an organisation similar to Germany’s KfW, which has been phenomenally successful in backing new technologies and keeping small- and medium-sized German enterprises in the country.

There is no reason why, after a merger, the Government could not float a minority stake in the new bank, either through a Lloyds-style placing in the market or an initial public offer, perhaps with some enhanced tax opportunities for investors.

GIB has demonstrated it can embrace technologies ranging from offshore windfarms to biomass, street lighting projects and anaerobic digestion and attract private funding.

When the Prime Minister had doubts about Hinkley she halted contracts midstream and ordered a new look.

She should do the same for the Green Investment Bank.

Vanguard triumph

JACK Bogle has very little of the name recognition of the famous investment gurus Warren Buffett and George Soros who cater for the more sophisticated investor.

But Bogle, who founded the Pennsylvania based Vanguard group in 1975, is the world’s most influential investor.

He recognised a truth about fund management. The high fees charged for active management are more likely than not to gobble up a large proportion of the gains achieved. Now at 87, a year senior to Buffett, he is sweeping all before him.

Figures from Morningstar show that in 2016 Vanguard attracted £230bn of money into its low cost funds and ETFs, outperforming the inflows of its ten closest competitors.

Both its passive and more active funds are doing well largely as a result of low cost fees. The domination of Bogle and Vanguard, for many years seen as a maverick, cannot be regarded as a healthy development for the more active managers charging higher fees and seeking to make big profits for their investors. Vanguard doesn’t have to worry so much about profitability since it is, in effect, owned by the clients who are rewarded with fee cuts as the money flows in.

The management fees of Vanguard’s traditional index funds have been cut to the quick and have now been reduced to just 0.16pc with 0.05pc becoming the going rate. Britain’s greedy fund managers with their fat-cat pay cheques need to look to their laurels.

Uphill struggle

MY horseracing-loving father brought me up to think that there was no such thing as a poor bookie. William Hill might want a corrective to that. It has warned that a run of favourites carrying off the spoils has left its profits for 2016 close to the bottom of its guidance some £20m short of where it hoped.

Shareholders better pray for a new chief executive, capable of making a deal, and an outsiders meet at Cheltenham this spring.