Last week I wrote about why the Government should be trying to tackle crony capitalism. That way, they can show that they aren't in it for the rich. More importantly they can defend the vital quality of a free market: that you succeed by efficiently producing goods and services that other people value, not by winning political favour at the expense of others. Too many bailouts and subsidies have left that basic principle in a sorry state.
Unfortunately, the special interests have their hooks in deep. Yesterday Nick Clegg stood up at Climate Change Capital and announced two things about the Green Investment Bank, which the Government are putting £3 billion of our money into.
First, that it would be independent of ministers and set up under legislation. The idea is that insulates the bank from ministerial interference. In practice, I suspect it means two things. That a Government with more sense can't easily get the money sunk into the GIB back if it decides there are better uses for the capital. And, crucially, that it won't be subject to accountability through mechanisms like the Freedom of Information Act.
Second, that it would start investing a lot of money very quickly. Apparently through its own funds and assisting other investors it will bring about £15 billion of investment over the next four years. With generous subsidies for offshore wind and other green investments dangling juicy profits, why is that necessary?
The problem is that investing in offshore wind farms is very risky for a whole range of reasons. One of the biggest risks is that the huge subsidies those investments are premised upon might be taken away. Either directly, as the Spanish have done, or indirectly through new taxes as the Czechs and Germans have. As Citigroup research has put it: "Events in Spain and Germany over [last] summer have substantially increased investor perception of political risk in the Utility sector in our view." People don't invest in frightening things like that, so the plan is to transfer the risk to the poor old taxpayer, who is going to have to bear the cost of the subsidies and be saddled with the risk if they don't turn out well.
That transfer isn't in taxpayers' interests. What they need is a reformed climate change policy that isn't based on unilateral targets and the political class obsession with renewable energy. It is in the interests of Nick Clegg's hosts, "an "investment manager and advisor specialising in the opportunities created by the low carbon economy".
Climate Change Capital are a good example of the business opportunities in positioning yourself at the heart of a fashionable agenda and lobbying furiously. They are Britain's equivalent of Enron, who in an internal memo praised the Kyoto protocol they had fought hard to win US support for, saying it was "good for Enron stock!"
They set up their own "think tank", provided specialist support for the generalist Bob Wigley who the Conservatives tasked with investigating the Green Bank idea in opposition and hired a staffer from Policy Exchange. If this went through, and chanelled £15 billion of investment into their sector, then there is good reason to think that they would be able to cream off fat profits managing it or advising on how all that money should be directed.
I could be wrong. Maybe there's nothing in it for them and all their involvement in the issue is the selfless action of a company that believes in action to curb greenhouse gas emissions. But if the Green Investment Bank isn't subject to FOI then – on long experience from the MPs' expenses scandal to the Carbon Trust – you would be naive to expect anything but festering misuse of taxpayers' money. The Government need to clarify immediately that the new bank will be subject to FOI or it is safe to assume the worst.
Climate Change Capital are based in 3 More London Riverside. It is an impressive building, pictured to the right, in a prime location overlooking City Hall and the Thames. When I was last there, the other organisation in residence was the Equality and Human Rights Commission, a quango ripe for abolition. When a politically connected climate change investment management company and a quango that is almost the definition of mission creep are occupying such luxurious digs, it says that political priorities are where the money is. The zero sum game of politics, not productive entrepreneurship, is winning out in Britain.