PUBLIC AFFAIRS AND MEDIA RELATIONS BLOG - Veena Hudson

Is a Green Investment Bank the solution?

The establishment of a UK Green Investment Bank (GIB) has been a project of the environmental lobby for some years now. Recently, however, combining as it does the zeitgeists of financial reform and greening the UK, the idea has been fast-tracked to the top of all three major parties' agendas.

The Conservatives have it as the centrepiece of their proposals, and UK chancellor Alistair Darling this weekend committed to a similar scheme ahead of the Budget.
 
According to estimates, an investment of some £230bn in new infrastructure will be needed by 2025 to ensure the UK's energy security and emissions targets are met - yet green groups fear that existing banks will be reticent to engage with the relatively low-yielding renewables sector. An entirely new GIB would, say Green Alliance, 'disburse capital on a commercial basis, but exclusively to companies and projects designed to accelerate the transition towards a low carbon economy' - for example, clean energy, grid improvements and public transport. They suggest using taxpayer shares in nationalised banks, revenue raised by auctioning carbon permits, or fossil fuel taxes to capitalise the bank; the chancellor plans to sell government assets, including the Tote and the High Speed One rail link.
 
But would it work in practice? Green banking is not a new concept; the Co-op has promised since 1992 not to finance 'any business whose core activity contributes to global climate change, via the extraction or production of fossil fuels'. Worldwide investment in clean energy tripled to $70.9bn in the three years to 2006 - yet just months later, major banks were collapsing left, right and centre. The worth of a new GIB will be measured not only by the sustainability of the projects in which it invests, but also the sustainability of the sector in which it operates.
 
There is also the question of whether the UK workforce is equipped for the low-carbon transition. While public spending on science has doubled over the past 10 years, the R&D spending of British firms still lags behind their French and German rivals. It has been estimated that the wind energy industry will require 10 times more jobs over the next decade - some 50,000 by 2020 - but, as one commentator put it, not many people 'come straight out of school with the knowledge of how to calculate load factors on a 100-metre tall wind turbine operating in a force five gale'. The next government will need to work urgently with business to plug the technology skills gap, if the GIB is to have anything to fund.
 
Yet despite the scale of the carbon challenge ahead, there is, as someone once said, no alternative. A GIB could both stimulate the investment and training required to meet it, and provide a model of good governance for UK financial services.

EHealth offers solutions, but progress is slow and fragmented

In March, EU health ministers signed a declaration that recognises the strategic value of eHealth and committed to greater collaboration across Europe. But what is eHealth and what does it mean for the future?

EHealth, the highest growing market in the health sector, is the term for the electronic processes and communication that support the healthcare practice. It refers to a variety of tools, from Electronic Health Records (which facilitate the communication of patient data between the various healthcare professionals) and Telemedicine (a variety of physical and psychological measurements that remove the need to travel to a specialist) to Healthcare Information Systems (software solutions for tasks such as appointment scheduling, patient data management and work schedule management).
 
The introduction of advanced electronic Health - or eHealth technologies in large hospitals - can improve efficiency, reduce financial costs, and deliver a significant return on investments. This is backed up by the findings of a recent research entitled Collaboration and Communication Technology at the Heart of Hospital Transformation, published by ACCA in collaboration with the European Commission.
 
The study, which includes financial analysis illustrated with concrete facts and figures, shows that since the deployment of the new technology, patients in the featured hospital now spend significantly less time waiting for treatment, while doctors have increased their available time for direct patient care time by around 40 minutes per day, leading to improved patient and staff satisfaction.
 
It is estimated that spending on eHealth worldwide stands at only around 2% of healthcare expenditure, yet it has the potential to reduce inefficiencies inherent in the healthcare environment by as much as 25-40%. While the EU continues to move towards a 'European eHealth era' and the European Commission has brought forward a number of initiatives, progress to date has been fragmented, and there are a number of areas where there needs to be more progress. These include:

• Data protection and patient confidentiality are key issues in terms of eHealth and they play a vital role in the trust that patients have in the healthcare system. In encouraging greater collaboration, the EU must also ensure that privacy is paramount and that systems are constantly updated.
• The European Commission has called for a change in the "mentality" that leads to thousands of small scale pilots being run in eHealth.
• The EU could support research into common data standards which, if adopted by individual healthcare information systems manufacturers, will facilitate the sharing of medical information both between and within individual countries.
•  Healthcare information systems may need to be certified and a certifying authority may therefore need to be established to do this in order to ensure that all member states recognise the systems.
• The EU should facilitate the sharing of best practice in the use of eHealth between member states.
• The real challenge is the financial commitment from member states through a coordinated approach to invest in ICT in the health environment.

EHealth is bringing about a change in working practices to ensure better value, more efficient service provision with fewer errors, and better communication between healthcare professionals and patients. 
 
A sustained increase in the level of ICT investments now requires the co-operation of all stakeholders in following a realistic strategy for the deployment of e-health technologies.

UK general election 2010: Europe

In days gone by, the electorate knew what each of the main parties stood for. The differences have become more nuanced now, but one area where they do still remain is Europe.

Although one of the main advocates of the UK's entry into the then European Communities was Conservative Prime Minister Edward Heath, the Conservative Party has over the past three decades become more and more 'eurosceptic'. However, there are notable exceptions, and this has led to an ideological divide within the party.

The Conservatives say that they back the EU but want a halt to further political integration and a return of key law-making powers to nation states. They also pledge to secure three specific guarantees:

• a full opt-out from the Charter of Fundamental Rights
  
• greater protection against EU 'encroachment' into the UK's Criminal Justice System
• restoration of national control over social and employment legislation.

One of their key pledges in the run-up to the election is that they would create a new, Brussels-facing treasury minister, who would ensure that the interests of the UK's financial services are fully represented.

The Conservatives in Europe used to be part of the European People's Party in the European Parliament, and allies therefore of other centre-right parties, including those of Nicholas Sarkozy and Angela Merkel. Now they have pulled out, the consequence has been to put the Tories in bed with fringe right-wingers and other unsavoury types.

The Labour Party uncontroversially stresses the importance of British membership of the EU when it comes to big transnational issues such as climate change and security. It also wants to prioritise further reform of the Common Agricultural Policy to ensure farming becomes more competitive, sustainable and innovative, and it wants to work with EU partners to achieve a global trade deal to cut tariffs and liberalise world trade.

One key area where the parties differ is that Labour would proactively promote further enlargement of the EU, including support for the accession of Turkey and Croatia. This is very controversial, especially in the light of the financial crisis, which has seen weaker members of the EU having to be bailed out.

Traditionally the most pro-European of the big three parties, the Liberal Democrat's leader Nick Clegg has urged Britain to play its full part in the EU, which he says has a vital role on big issues such as climate change and security. But it is clear that the party sees its pro-Europeanism as something to play down during a general election campaign. When they do mention it, the expressions 'critical friend' and 'the EU is not without its faults' follow swiftly after any expression of support.

Whenever pollsters enquire about which issues matter most to people, health, education and the economy generally rank above Europe. It remains to be seen how much of an issue it will be in the upcoming general election.

Women and accountancy: still a way to go

In 1919, Mary Harris Smith (1847-1934) became the first woman chartered accountant in the world at the age of 72. Although she had studied from the age of 16, worked as an accountant and established her own practice in 1888, her applications to join the Society of Accountants and Auditors were repeatedly turned down. However, after much campaigning, and once the Sex Discrimination (Removal) Act was passed, she finally won her battle.
 
In 2010, women make up an increasing proportion of new entrants to the accountancy profession. Almost 50% of the accountancy trainee intake is female and over half of ACCA members and students are women. So have all the problems been solved?

In 2009, ACCA in Singapore conducted the Women in Accounting and Finance Survey 2009 jointly with Robert Half to ascertain whether the proverbial 'glass ceiling' is finally cracking.

One of the most worrying statistics to come out of the survey was that 45% of those asked do not think they will reach a senior management position, such as a directorship, within finance and accounting. This is a feeling that is reflected around the world.

This view exists partly because the upper echelons of the profession are often still dominated by men - in the UK and the US, two of the most advanced countries, only 20% of senior jobs are held by women. It also relates to work-life balance issues. Evidence shows that female accountants have similar careers to those of men until they have a child, after which their career is typified by a break in employment and part-time work. This is also often the point at which disparities in pay begin. Others still may leave to go into a smaller practice where they can work on a more flexible basis.
 
This is something that should be addressed as a priority. Evidence proves that companies need gender-balanced senior management teams to participate in the global market strategically and wisely. For example, many studies confirm that men and women bring different and complementary sensibilities and leadership styles to the table.

Taking just two examples, Columbia University's 2008 report Girl Power: Female Participation in Top Management and Firm Performance provides data suggesting that firms that promote women to senior management positions have superior economic performance due to the different skills women bring to the table. And a 2005 study from the Center for Financial Research at the University of Cologne entitled Sex Matters: Gender and Mutual Funds documented differences between male and female fund managers: women managers tended to take less extreme risk and to adopt more measured investment styles (that perform well over time).

Encouraging women into senior management positions is a crucial part of the global drive to improve equality between men and women. Chartered accountancy is a diverse and rewarding career. We need to change these often negative perceptions of the accounting profession to ensure that there is a fair representation of women at all levels.

ACCA has made a number of recommendations to address these issues in its paper Equality: Women in Financial Services - we would be interested in your views.

UK general election 2010: pensions

Obscured by coverage of banks and bonuses over recent months, the UK's pension woes predate the financial crisis by some years - and arguably exceed it in scale. 

Today, there are just under four working people for each UK pensioner; by 2050, the Office for National Statistics (ONS) projects there could be only two. Five years on from the Turner Report, political parties must spell out to voters how they will defuse this timebomb.
 
The government has already set the ball rolling; from April this year until 2020, women's state pension age will increase gradually to 65. The age for both sexes will then rise by two years each decade, reaching 68 by 2046. The Tories claim £13bn extra could be saved each year if these plans were brought forward 10 years - though leader David Cameron has said this is subject to review.
 
Reflecting concerns that an 'arbitrary' age of retirement is enforced by employers as a tool to shed staff, the Lib Dems have pledged to scrap it altogether. The Equality and Human Rights Commission and equalities minister Harriet Harman also champion its abolition as a catalyst for more flexible working arrangements. 
 
But what will we get for our long years of toil? From April, a single pensioner will receive £97.65 from the state: a 2.5% rise for which the chancellor opted to amend the law to avoid a repeat of the outcry caused 10 years ago, when the weekly rate rose by just 75p. Both his opponents cite a further increase unaffordable at present. 
 
All three parties would restore the link between the state pension and earnings: Labour and the Tories by 2015 at the latest, and the Lib Dems immediately. Lib Dems leader Nick Clegg recently acknowledged, however, that lack of funds have put a temporary hold on his plans to roll out a residence-based 'citizen's pension'.  
 
Occupational pensions will also be subject to change. There is cross-party consensus that the new system of automatic enrolment, due to be phased in from October 2012, is required - although the Lib Dems warn some employees could be worse off if firms reduce existing contributions to the minimum amount. 

Alistair Darling's planned cuts in higher-rate tax relief on pension contributions are endorsed by his Lib Dem counterparts, and though the Tories disagree, they have ruled out a quick reversal. A cap on public sector pensions is a feature of all three parties' agendas - and one of the most controversial.

Pension reform will prove protracted and complex, whoever is calling the shots. That we face working longer is certain; quite how long, and for how much, remains to be seen. 

China and the US: no love lost?

The Dalai Llama's visit to the White House last month was the culmination of a testing few months for Sino-US relations: one that promised rapprochement, but yielded little.
 
Much has changed since this time last year. Hot off the campaign trail where he had promised 'fresh thinking' to work through their differences, Obama seemed to extend his hand to Chinese premier Wen Jiabao. Commentators wrote of a 'G-2 approach' that could 'steer global governance' and 'solve the world's ills'. In September, the president declined to visit the Dalai Llama, for fear of offending Beijing.  
 
Then Jiabao refused to endorse sanctions proposed by Obama to stymie Iran's nuclear programme; trade between the two is booming. In Copenhagen, despite Obama's footwork in the foregoing weeks, the final deal was 'gutted' by a Chinese delegation asserting its right to fuel-heavy growth. The US took most of the flak. This, teamed with the Google-China debacle, secretary of state Hillary Clinton's speech on internet freedom, the announcement of arms sales to Taiwan, and the unveiling of the Quadrennial Defense Report, which specifically highlights the need to defend against China, seems to show a new hardening of the US's views on China.
 
But Obama's real issues are closer to home. The majority of China's $2bn foreign currency reserves are held in US dollars, and it holds the most part of the US's $12.4 trillion debt.  Beijing stands accused of protectionism and of undervaluing the yuan, giving its imports unfair advantage in a struggling domestic market. The trade deficit grows; China won't budge, and denies that it is undervaluing its currency. Meanwhile, the increasing number of jobless Americans puts more and more pressure on the president to act.
 
Beijing's sale of some $34bn US bonds, announced this week, could be interpreted two ways: as vengeance for recent months' irritation, or an attempt to reduce the risk on its reserves.  The latter, perhaps, is more worrying for Obama. 'After all,' writes one commentator, 'if the world's richest investor suddenly turns bearish on you, this could be a sign that you are in trouble.' 
 
Yet China must sell as the US must borrow; no market but America is of requisite scale. The yuan is pegged to the dollar, and any large sell-off would kick off steep decline. If predictions of market meltdown play out, Beijing will be on the back foot. 
 
Broken marriage analogies come thick and fast, but the love's never been there to lose. The two are instead mutual hostages, and neither knows how to get out.