- The Observer,
- Sunday November 2 2008
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The fight against climate change will get an unexpected boost today from oil-rich Gulf states which will pledge to invest some of their petrodollar profits in British green energy projects.
The surging oil price over the past year has left parts of the Middle East awash with cash as the rest of the world is squeezed by the credit crunch, making Arab royals some of the few active investors worldwide. The Gulf states have enjoyed a $1.4 trillion windfall from higher oil prices since 2003.
Ed Miliband, the Climate Change Secretary, arrived in Saudi Arabia yesterday with Gordon Brown at the start of a tour of the region. He said some of that cash would now 'help our firms reap the rewards from going low carbon and providing green energy to thousands of families' under a so-called 'green Gulf deal' to be announced today.
Brown, who is accompanied by a high-level trade delegation seeking Gulf investment, including the CEOs of BP and Shell, was due to hold talks yesterday with the Saudi government on plans to boost the International Monetary Fund's capacity to help distressed economies during the current crisis. Britain wants the Gulf states to release more funds to the IMF, with Saudi Arabia likely to play a key role in talks later this month in Washington.
As the government attempted to deal with the financial crisis in the UK, it emerged yesterday that Jim Murphy, the Scottish Secretary, has discussed a rival bid for the troubled HBOS bank, which could provide an alternative to the planned merger with Lloyds TSB. Ministers have been challenged over whether the new 'superbank' is still the right option following the bail-out of British banks.
Murphy, who has met Jim Spowart, founder of Intelligent Finance, which is part of HBOS, said yesterday that if there was 'a second serious bid then [the Treasury] would be happy to talk to them.' Spowart, who has previously accused ministers of trying to railroad the merger through, said he had been told by merchant bankers that an unnamed financial services organisation was interested and thought he should 'alert the government' to the possibility.
The potential bid risks causing confusion hours after Peter Mandelson announced on Friday that he would rubber-stamp the merger with Lloyds despite a report from the Office of Fair Trading warning that bank customers could get a worse deal as a result. The OFT concluded the merger would remove an aggressive competitor from the market and increased risks that banks across the sector would offer less competitive deals on personal bank accounts: 'The value for money of personal current account propositions is expected to worsen, not only for the merged entity but for the industry as a whole.'
The merger also risked 'substantial lessening of competition' for mortgages, with the new merged bank controlling 20-30 per cent of the market. In Scotland, it also predicted a lessening of competition and therefore potentially worse deals for small and medium-sized businesses seeking loans and services such as overdrafts.
However, Mandelson, the new Business Secretary, ruled the merger was in the public interest because it would protect the stability of the financial system.
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