National investment bank
What the manifesto says: Labour wants to establish a bank devoted to lending £250bn over 10 years to large-scale investment projects that the private sector cannot fund and make a profit. Regional development banks will be created and a law would be tabled preventing branch closures “where there is a clear local need”. Backing for research and development would also be one of its aims with a target of reaching 3% of GDP – higher than the OECD’s 2.4% average.
Analysis: Many eminent economists, including former Bank of England policymaker Adam Posen, have supported the idea of an investment bank. Initially, funds would come from the public purse. But the bank, which would be underwritten by the state, could keep these funds in reserve and only lend the private funds that will pour in from pension funds and other institutions looking for an ultra-safe home for their cash. With the Treasury cutting back on borrowing, it is the perfect time for an investment fund backed by the state to boost major infrastructure spending
