Terry Murden: Charles Hammond needs deals after power plant U–turn

Good news for those protesting against the bio-mass plant. Picture: Neil Hanna
Good news for those protesting against the bio-mass plant. Picture: Neil Hanna
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THE decision to drop the plan for a 200-megawatt biomass plant in Leith will no doubt be celebrated among those in the community who feared that it might blight the area.

Whether or not it would have been the dastardly polluter that residents claimed, they were not convinced by repeated assurances to the contrary from Forth Energy, its promoter.

Now that Forth has withdrawn its application, the arguments, and campaign against it, will stop, or at least be suspended. There is an evens chance, according to Forth Ports boss Charles Hammond, that another application will be submitted if it still considered a requirement and that it would almost certainly be for a smaller plant.

Forth Energy – a joint venture between Forth Ports and SSE – says the decision to abandon the project was not so much because of the local opposition but because of more pressing commercial demands.

It is clear to see how the prospect of £100 million of investment in the renewables industry, both public and private money, would be a persuasive argument. The plan now is to advance talks with a number of parties in the hope that expressions of interest and confidentiality agreements can be converted into firm commitments.

In truth there has been some cooling of interest in the biomass project for some time, not least since Forth was acquired by Arcus Infrastructure Funds in a £746m deal last June.

Arcus, which was already a major shareholder, indicated that it wanted a shift in strategy for the Leith ports area from stagnant retail and residential towards industrial development. In particular, the interest of renewables companies in siting workshops and other engineering projects on prime dockside land made it a logical step and has changed the power requirements for the area.

Debate over the best way to spend £50bn

ECONOMISTS are divided on whether the injection of a further £50 billion into the economy by the Bank of England will be the last or merely the start of a new round that may amount to ten times that sum.

It has put a quarter of Britain’s gilt market in the control of the Bank which is now set on a course of action with no guarantee of achieving its aims.

The Bank appears to have gambled on inflation being in decline.

So what are the supposed benefits? The Bank buys gilts with this newly-created money and the sellers deposit that money in banks who lend it to business. Demand forces gilt yields to fall, making interest rates lower across the economy. So borrowing becomes cheaper and that stimulates economic activity.

The trouble is that a lot of the new money goes overseas or into shoring up bank balance sheets and that by keeping interest rates low it is damaging for savers and those buying annuities.

Businesses themselves are not convinced that they’ll see the benefit which is why some analysts believe it would be better for the Bank to make the money more directly available.

Will there be more QE? That will depend on two simple issues: firstly, whether the latest funding makes any difference. Secondly, a recovery in the economy will weaken the case for further injections.

There have been tentative signs that Britain will avoid a double dip recession, but the balance of opinion suggests the climb back to growth will be weak and slow and that more QE will be needed to give the economy a push.

Raising a glass to one of our top exporters

THESE are good times for the Scotch whisky sector and for Britain’s export figures which are bolstered by sales of whisky.

It’s a message repeated by Diageo, the spirits group, which has acknowledged the contribution Scotch made to its half-year figures, particularly in emerging markets.

The industry’s attention is now more closely focused on the Latin American countries – Brazil and Mexico – which offer enormous potential for growth.

They also throw up the same sort of problems that beset the industry in India where it continues to battle against high tariffs and counterfeiters.