The money’s there if you want it, Boris
(Picture: PA)Chief executives and financiers hearing Boris Johnson flesh out his 10 point green spending plan last night found much to cheer.
At a private meeting for selected bigwigs, the PM fleshed out how he wanted to mobilise public and private sector cash to build more hydrogen power, windfarms and eco technology.
He challenged the City to triple the £12 billion of taxpayers’ money he’ll put in. So that’s £36 billion of new private cash.
That kind of talk is manna for City financiers looking for new projects to invest in, but the question from the likes of Legal & General, which hold the nation’s pension savings was: ‘why be so unambitious?’
A fast-growing, £440 billion pot of savers’ money is sitting in defined contribution (DC) pensions. The law states none can be spent on the infrastructure or private equity style assets Boris wants to grow.
Instead, it must be kept in shares and bonds, deemed easy to sell come a crisis.
The requirement is odd, given that pensions are, by their nature, decades-long investments.
It’s right to keep the overall mix of cautious, but a sliver of such a big pension cake would go a long way to bringing Boris’s green dreams true.
And, chances are, the returns would be a darn sight better than your average bond.
Allow, say, 5% for infrastructure and you free up an instant £22 billion.
By the end of the decade, as the DC pot grows, it would be £50 billion.
Tweak it up to 10% and you’ve got £100 billion.
A lot of windmills. Or green-tech investments. Or affordable housing.
Previous governments have considered such reforms not quite got them over the line.
As we seek a path out of the Covid economic mess, surely now is the time to do it.
