Whe David Cameron declared that the Coalition was going to be "the greenest government ever" and upset the Green Great and Good - http://www.jonathonporritt.com/Campaigns/greenest-government-ever - I just put this down to a "Dave the Vague" moment (of which there have been many!). However, the prime minister has turned out to be a more "eel-like customer", to use a recent Boris Johnson description of Tony Blair, than I initially envisaged. The big difference, of course, is that the nation's coffers are far more depleted than in the heady days of "New Labour" and, so thankfully, opportunities for foreign misadventures have been restricted, but that is about the only good news.
My guess is that when Mr Cameron referred to "the greenest government ever" he really meant that the Coalition would engage in the greatest "evergreening"* of any modern British administration. Now the term "evergreen" is used with a number of different meanings so I will clarify its usage in this post by referring to a Financial Times article of 25 March 2011 - http://www.ft.com/cms/s/0/59864380-570f-11e0-9035-00144feab49a.html#axzz31CkN4Zo5 - entitled ""Evergreening" will still leave UK banks in the red". Written by Marryn Somerset Webb, of Money Week and SuperScrimpers fame, the article uses "evergreen" according to the FT Lexicon - http://lexicon.ft.com/Term?term=evergreen-loan - to mean a "short-term loan that is continuously renewed by the lender." The FT's Gillian Tett also uses the expression with the same meaning in an article of 30 December 2010 - http://www.ft.com/cms/s/0/c23e885e-1422-11e0-a21b-00144feabdc0.html#axzz31CkN4Zo5 - on the subject: "Commercial property loans pose new threat".
To return to the Somerset Webb article, she comments: "One
of the odd things that happens after a credit crisis is bad loan
“evergreening”. Banks need to reduce their loan books to get their
capital adequacy ratios back in order. But they can’t get rid of their
low-quality loans (they need to keep rolling them over so no defaults
turn up). As a result, they end up reducing their good loans instead.
This looks slightly counter intuitive from the outside (bank in trouble
reallocates its business away from good-quality assets towards
lower-quality assets) but it makes sense for the bank: it buys it time
to run down the bad loans slowly and earn its way out of trouble."
Unfortunately, the scale of the financial crisis and the level of state involvement in the banking sector, as well as the wider structure of the UK economy (which certainly has not re-balanced since 2010!) has meant that the Coalition has also followed this strategy. In short, lots of bad historic loans, including those obtained by public sector and other organisations under the so-called Private Finance Initiative (PFI) - see my earlier post below - have been, or are in the process of being, evergreened. This is not good news, as noted in 2012 by the TaxPayers' Alliance - https://www.taxpayersalliance.com/bettergovernment/2012/07/pfi-deals-costing-300-billion.html - who refer to a Guardian newspaper article of 5 July: http://www.theguardian.com/politics/2012/jul/05/pfi-cost-300bn
The big difference between state and bank "evergreening", of course, is that the mechanism is not restricted to short-term loans. In the case of the UK government, "long-term evergreening" is the name of the game. However, whilst this may help shore up the nation's finances until after the next General Election, the strategy, as Marryn Somerset Webb notes, has the downside of diverting resources from good projects. This accounts for the lack of positive investment, in for instance the green economy, which many identify with the Coalition, and leaves me wondering whether evergreening will not just leave the country in the red, but also colour the nation's vote in 2015.
* "Evergreening" is also used to describe controversial practices associated with the pharmaceuticals industry: http://en.wikipedia.org/wiki/Evergreening
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