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Investing for the future: Why we need a British Investment Bank

business and industry, economy, finance

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This report presents a detailed blueprint for what a British Investment Bank should look like in order to be fully effective in filling a gap in the UK banking system.

The idea of such a Bank has been around for a number of years, but only in the last five has it achieved any prominence in public debate. In September the business secretary, Vince Cable, announced tentative plans for a British Investment Bank.

IPPR's report examines the models provided for national investment banks by international case studies and sets out the main lessons that emerge.

It says that a British Investment Bank should have the following features:

  • Operation: The Bank should be 100 per cent state-owned but there must be a clear dividing line between the role of government and the activities of bankers in making lending decisions
  • Scope: A fully fledged British Investment Bank should be able to invest in infrastructure projects and to provide long-term financing for small and medium-sized businesses across the whole economy
  • Size: The government should inject an initial £40 billion of capital over four years into the Bank, and the Bank should be allowed to raise funds on capital markets up to a leverage ratio of 2.5:1 (that is, up to an initial £100 billion).
 
 

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Tony Dolphin, Senior Economist and Associate Director for Economic Policy

 

In the news

Fact check: inside Cable's bank
Channel 4 Fact Check - 25 Sep 2012

Tony Dolphin on Cable's investment bank (13mins55)
BBC Radio 4 World at One - 24 Sep 2012

Cable reveals plan for £1bn bank
Independent - 24 Sep 2012

Merge infrastructure and business bank
Huffington Post - 20 Sep 2012

State bank would need £40bn, says IPPR
Financial Times - 19 Sep 2012

Business bank will need £40bn
BBC News Online - 19 Sep 2012