Enterprise and Regulatory Reform Bill

Debate between Baroness Worthington and Lord Brooke of Sutton Mandeville

Monday 3rd December 2012 Grand Committee

[Baroness Worthington]

My Lords, this amendment is designed to try to elicit a few more comments from the Government on where this investment will be targeted—perhaps on the spectrum of entirely safe commercially proven technologies towards the more innovative end of the spectrum. It is prompted by a report about the launch of the bank from the CEO, Shaun Kingsbury, who, I suspect, in an effort to try to begin the process of creating a track record for being a sensible investor, said that only safe and proven technologies would be invested in.

We are not critical of that as it makes sense, but in much of the literature about the setting up of the bank there is a discussion of the desirability of investing in late-stage innovation. We think that is important because it is about ensuring that this bank is doing something that is not currently done in the market: it is addressing a market failure. The balance between investing in already proven technologies and more innovative solutions is crucial to the bank’s identity and to its success. Obviously it should not operate in the realms of risky investment and venture capital investment but it ought to operate in a space that has perhaps been overlooked by traditional investors. In that way, it would be adding value to the existing market.

We have tabled an amendment which is designed to try to tease out this area of the bank’s operations to make the policy much clearer so that there is more transparency. It is worth saying a few words about where late-stage innovation might occur. It is clear that the Government are seeking to create a crowding-in effect rather than a crowding out effect. That is an interesting phrase and one that we should definitely seek to achieve. We do not want to be competing with existing private investments, but beating a path down which other investors can follow. That crowding in is linked with the concept of what is a late-stage innovation. The current list of technologies that the bank will be investing in is broad. There will be room for innovation among those categories that have already been selected, but there are other technologies that are perhaps not on the list, which is slightly regrettable. I mention wave and tidal technologies because that is an area where the UK could have a great potential to lead globally. We have exactly the right geography for these very important technologies, which are not yet commercially viable. We know that the policy is coming and we look forward to contracts for different mechanisms that might bring these technologies on. It would seem a shame to preclude those sorts of technologies from the list that the bank is looking at.

The amendment is asking for further clarity about where the bank will position itself compared with tried and tested technologies and more innovative aspects, which might play more to the UK’s strengths. We would welcome the Minister saying a few words about the bank’s attitude to that. Perhaps he could also talk about wave and tidal technologies as I think those are hugely important for the UK. I beg to move.

[Lord Brooke of Sutton Mandeville]

I assume that the noble Baroness’s proposal is born of previous literature. Could she tell the Grand Committee what proportion has been given to innovative technologies as against existing ones? We are an inventive nation. In other words, what kind of percentage does she envisage will emerge out of this plan?

[Baroness Worthington]

I do not have a number in mind. This is a newly created facility, which we have to explore. As there has not been a previous example of a bank like this being created in the UK, there is no precedent on which to draw. Perhaps we could look overseas. We have had examples cited from Germany; there are similar banks in Portugal, Spain and Holland; and the Australians are in the process of setting up their own investment vehicle. I do not have an answer, but I am sure that, with some study, the department could provide us with some guidelines or some examples from overseas.