BBC BLOGS - Douglas Fraser's Ledger

Archives for May 2011

On the move

Douglas Fraser | 12:55 UK time, Wednesday, 25 May 2011

With a mighty thud, the Ledger has been slammed shut.

Thanks for reading it. But it's not finished - far from it.

As with other BBC journalist blogs, it is flitting to a new home, and appearing in a new format.

I'm assured it will be easier for you to use, with enhanced e-bells and i-whistles to cover a wider range of BBC Scotland's business coverage.

You can follow me here.

Do Bankers Deserve Bonuses? Discuss

Douglas Fraser | 18:04 UK time, Monday, 16 May 2011

Let's talk about getting very rich, with news of investment bonanzas and company executives on vast earnings - before I set you a challenge fit for a 13-year-old schoolgirl.

First, this might seem a tad insensitive at a time when many of us are facing falling real earnings. The trade union backed High Pay Commission today published a report saying FTSE100 chief executives are earning 145 times more than the median full-time wage of £25,800.

But this is great news if you're a shareholder in two of Aberdeen's oil services giants, and not so bad if you're at the top of Scottish financial companies Standard Life and Alliance Trust.

First, let's turn to RBG, based in Aberdeen and specialising in inspecting and maintaining oil platforms and rigs.

Its corporate roots go back to 1975 when Rigblast started out. It's been announced today that RBG is being bought by Stork, a Dutch company already in that field and backed by Candover investments. The value and structuring of the deal isn't being disclosed.

It was reported to be worth about £200m last year, and it's been expanding fast. Being in the business of extending the lifespan of ageing oil and gas assets, power stations and chemical plants, and getting into the business of decommissioning at the end of life, it's very well placed to grow.

So if that reported figure is true, it's particularly good news - worth about £80m - for its chairman John Ray, majority shareholder of Ashley Group, the Aberdeen company with a 50% stake in RBG.

£31m failure

It's good news for RBG and its 4,900 employees - 3,000 of them in Scotland - if it's being taken over for its strengths rather than targeted for its weaknesses. But it means yet another major corporate headquarters is leaving Scotland.

And it's a much bigger payday for Sir Ian Wood and his family, 22% owners of Wood Group, with confirmation of the £1bn-plus shareholder return - based on a buy-back shares - now that its well support division to GE has been finalised.

There was a failure to agree terms for Wood Group and GE to work together on other projects, but the breakdown in those talks last week delivered another £31m from GE. Some failure!

Very nice for the Rays and the Woods, but there's a bit more discomfort for those earning slightly less colossal sums at Alliance Trust and Standard Life.

Alliance Trusted

This Friday in Dundee, Katherine Garrett-Cox, chief executive of Alliance Trust, faces a challenge to company strategy from activist hedge fund investor Laxey Partners.

It has been pushing the investment company to buy back shares as a means of reducing the discount at which it's been trading - which means pushing up the share price closer to the valuation of its portfolio. To some extent, it's already being successful, with buybacks under way.

Laxey has made it rather personal, raising questions about Ms Garrett-Cox's earnings, which have done rather better than the company. Last year, she secured 69% of her potential bonus, raising her total earnings by a third to £843,000.

Perhaps that was one reason why her promise last month to "come out fighting" against Laxey led to a strangely silent period. Alliance Trust seems to have figured out that Laxey was going to lose its resolution at the Dundee AGM, and has chosen to take a low-key approach to winning the hearts and minds of investor shareholders.

What marks this company out is the wide base of retail investors who have a say. Ultra-conservative Dundonian publisher and investor DC Thomson owns nearly 6% of Alliance Trust, Legal & General has 4%, while there are 44,000 retail investors each wielding a vote, many of them Scots who have stuck with the Dundee investment trust down the generations.

It's not an easy place for activist investors to stir things up, but it does raise questions - which aren't currently being answered - about the progress of the Garrett-Cox turnaround project at Alliance Trust. Maybe she'll have more to say after the AGM.

Raising the Pay Standard

As for Standard Life, it's changed its remuneration for senior executives, and the Association of British Insurers has issued an alert to its member organisations that they might not like the implications of shifting to 90% of the bonus being based on share performance. A similar warning had already come from PIRC, which advises pension fund managers on shareholder issues.

It's all the more embarrassing as Standard Life is itself among the more activist institutional investors when it comes to questioning others' pay packages.

At its AGM in Edinburgh tomorrow, it may face some of the same questions that it puts to others, particularly on the top two men at the pensions and life assurance giant.

David Nish, in his first year as chief executive, earned £720,000 basic salary. With his bonus, the 2010 package reaches £1.97m. The previous year, his predecessor, Sir Sandy Crombie, was on £1.76m

The head of Standard Life Investments, Keith Skeoch, has a salary of £369,000, and his bonus is a whole lot bigger, taking him up to £1.87m.

Who will have to take the flak on that? Possibly Crawford Gillies, chairman of Standard Life's remuneration committee - and when he's not doing that, he's chairing development agency Scottish Enterprise.

Bank bonuses for a 13-year-old

Another AGM in Scotland this week that's facing a rocky reception from shareholders is that of Lloyds Banking Group. Its corporate rules state that AGMs have to be held in Scotland, for historic reasons to do with the Trustee Savings Bank that are almost certainly exasperating Lloyds' new chief executive Antonio Horta-Osorio.

What's exasperating his shareholders - which, remember, includes all of us in the British public - is his "golden hello" or "hola dorada" of more than £13m.

And that brings to mind a challenge I've been set by a 13-year-girl from Edinburgh. She's doing a school project titled: "Do Bankers Deserve Bonuses?"

She read The Ledger from some weeks back and wrote to me with disarming bluntness: "I found it quite hard to understand. I was just wondering if you could help explain it for me in more simple terms".

I've been pondering this, and it's a challenge I've decided... to hand over to you.

So in no more than the length of a text message - that's 160 characters - the question is not whether they deserve big bonuses. That's far too easy.

The challenge is to explain, for the benefit of a 13-year old Edinburgh girl, why bankers get such big bonuses

You can add your entries to the Ledger below, or email me:

UPDATE: 17/05/2011

Twelve percent against the may not seem much of a revolt, but it's a significant warning shot to Standard Life bosses.

That was the share of the shareholder vote rejecting the remuneration committee's report at today's AGM - saying 'no' to those big bonuses and changes to executive pay.

While 32% of shareholder votes were in play, a further 4% refused to give the board its backing.

Spicy finances and hot topics

Douglas Fraser | 19:26 UK time, Wednesday, 11 May 2011

Newly-elected MSPs probably think they've heard what their priorities should be from listening to voters on the nation's doorsteps.

But as they arrived at their offices over recent days, they've been presented with a rather different distillation of the challenges ahead.

This is in a 60-page briefing from the officials, analysts and statisticians in the Scottish Parliament Information Centre (SPICe), ranging across justice reform, same-sex marriage, climate change and personal debt.

Most of the briefing keeps coming back to government spending.

The Scotsman has this morning highlighted the big numbers.

This includes a bill of more than £3bn for freezing the council tax over nine years, assuming the SNP fulfils its promise to keep council tax in the cool box.

That's a cumulative number, and it's big. But it's not all that meaningful, at least until you consider that Holyrood's budgets over that time will add up to more than £250bn.

What it reminds us is that the council tax freeze comes at a cost, because the amount being spent on compensating councils for the freeze, rising to more than £600m in 2015-16 (and councils say that still won't be enough), is money that obviously can't be spent on other priorities.

Heading south

Other numbers should be familiar, at least to those who followed the BBC's election campaign coverage.

The budget from last year to 2015 is falling by more than 12% in real terms, and capital spending is heading down very much faster.

The cost of open-ended commitments to free services is highlighted.

The cost of health and social care for older people is rising steadily, but the cost of free bus travel for older people is increasing fastest of all - up from £180m this year to £286m by 2014-15.

There's that gap in university funding - somewhere between £93m (the SNP's preferred manifesto assumption) and £286m (university principals like to cite the bigger figures).

It's pointed out to MSPs by SPICe that, while they've been out campaigning, that gap has moved to the upper end of that very wide margin.

That's because many English universities are pushing to charge the maximum level of fees, and the more they charge, the bigger the gap the Scottish government will have to fill.

In addition, the SNP's manifesto assumptions included the gap could be partly filled with £22m of 'service charges' to students from other EU nations.

Officials at the parliament politely point out that charge may not be legally possible.

Squeezed out

So far, so familiar. But then there's some interesting discussion about the direction of travel for the Christie Commission - the group considering options for the future delivery of public services, headed by former trade union leader Campbell Christie, and due to report by the end of June.

On public service reform, one of the more senior Holyrood officials, Stephen Herbert, is pretty blunt about cutting back on 'back offices'.

He points out it's not so easy to see what constitutes a back office as distinct from a front-line service.

And that spending on the administration of services is quite a low share of the total, so savings may be limited.

And he points out that if you want more efficiency from aggregating procurement contracts for public services, that can mean smaller companies, typically with higher unit costs, can get squeezed out by larger national firms.

The Federation of Small Businesses is already expressing its alarm at this, and SPICe says: "The aggregation of contracts or service delivery mechanisms at a national or regional level can result in a significant negative impact upon local economies, particularly rural economies, whilst the savings which can arise from such measures may not begin to accrue until the medium term".

This is backed by evidence from the Society of Local Authority Chief Executives (SOLACE), which has sent a submission to the Christie Commission that skewers the assumption that merging authorities (police forces, for instance) will have the desired effect:

"There is no evidence supporting the view that simplistic exercises in redrawing boundaries - organisational or geographical - will achieve the necessary cost savings, meet demand or improve outcomes to the public. Experience is that structural reforms are costly, time-consuming and fail to deliver anticipated benefits".

Capital priorities

Two other aspects of the SPICe briefing caught my eye.

One is the clear steer, citing official and academic watchdogs, that the new Holyrood administration needs to prioritise its capital programme.

The chances of delivering all the desired projects when last listed, back in pre-crunch 2008, "are now slim".

The briefing points MSPs and ministers towards the criteria used by the Irish and UK governments to prioritise, including those with the highest return on investment - oddly enough, something that's been far from obvious in St Andrew's House thinking.

And here's the other thing: economic growth.

One of the targets set by the last SNP administration was to get Scottish growth performance up to the level of the UK.

But what MSPs are being told is that that had already been achieved by the time the SNP first took office: "Between 1998 and 2007, the growth in GDP per capita in Scotland and the UK were identical at 2.3%".

The other growth target was to get Scottish growth figures up to the same level as similar, small European nations by 2017.

That was before the financial crisis and economic crunch, and before calamity in Ireland and Iceland made that target rather easier to achieve, and those countries became rather less appealling role models.

So what growth targets will SNP ministers choose next?

The new business minister's in-tray

Douglas Fraser | 11:14 UK time, Sunday, 8 May 2011

Wanted: a new business minister. Whatever else Alex Salmond does with his ministerial team, he'll have to find a replacement for Jim Mather, who stepped down from frontline politics ahead of the landslide.

For all his breadth of choice, the re-elected First Minister would be hard-pressed to find someone with as much energy and enthusiasm for the task. Business leaders may be slightly less bamboozled by mind-maps and laden with reading lists than they were by Mr Mather, but they knew he was on their wavelength.

Looking at the list of endorsements from Scottish business figures that the SNP built up over the campaign, business seems to have liked what it saw in the last SNP administration, particularly its competence and its open door to corporate Scotland.

But then, what it saw was a Scottish government that was unable to push through its minimum pricing of alcohol, or its £30m supertax on supermarkets, and which was unable to call a referendum on independence. Being constrained in minority and with few taxation powers, it was unable to do much to alienate the business lobby.


That's all changed. If the SNP had a majority over the past year, it would have introduced the minimum pricing that the drinks industry fought ferociously to block. The proposal is coming back to Holyrood, so will that fight start again? Or will the drinks industry do as the opposition parties will surely have to do, and give way to the power of a democratic mandate?

If John Swinney had a majority last winter, he would also have imposed that extra tax on large retailers to balance his budget. He, or his successor as finance secretary, is facing yet more tight budgets, for sure.

So will the supermarkets be back in his sights? They won't be able to rely on opposition parties in the Parliament or in committees to block such a move this time.

Liz Cameron, of the Scottish Chambers of Commerce, has an interesting observation when she says: "Minority government delivered a great deal of welcome consensus over the last four years, and the Scottish government now faces a real challenge to deliver a Scottish consensus from a majority position".

Export priority

There are other proposals in the SNP manifesto for the new business minister and colleagues to implement. It points to tourism becoming more integrated with the international outreach work of inward investment agency Scottish Development International (SDI).

Exports are to be one of the priorities, with a target for increased exports to be set. When the manifesto says "we believe Scottish businesses can deliver a 50% increase in exports over the next six years", it's not clear if that is the target itself, or something less binding - merely a belief.

Small-scale manifesto commitments range across an expansion of social banking, support for near-market research and development for smaller companies, and a strategy on something called agri-renewables.

There are plans to help sole traders take on their first employees, and to introduce four new enterprise zones. Some may be 'low carbon' enterprise zones. I'd guess that Moray might be one, in response to the closure of at least one air force base.

But then, with so many constituencies won, it's less clear if or how the new administration looks after such SNP heartland seats - will the pork barrel now be rolled out in more marginal, newly-won seats?

With ambitious target on renewables, there's a lot planned. It's not just about encouraging big companies to invest big money on wind and marine power, and facing down local opposition to planning applications. The new government also has to get on with adapting infrastructure for electric cars and the move to district heating.

Risky business

And those commitments are only dealing with the powers the Scottish Parliament already has. What about the powers its new SNP majority wants?

Top of the list are the changes Alex Salmond wants to see to the Scotland Bill, currently going through Westminster. Among them are more power to borrow and control of corporation tax in Scotland.

Those business figures who endorsed the re-election of Alex Salmond seemed to assume that devolved corporation tax would be lowered. Can they be sure, given what happened with the proposed supermarket tax?

What's for certain, says CBI Scotland, are the business costs of creating separate tax accounts, and it's not convinced those costs are outweighed by the benefits to business.

And now that an independence referendum is very likely within the next five years, where will Alex Salmond's business endorsers stand on that? Several of them are clearly against.

More immediately, what will inward investors make of the uncertainty that now hangs over the future management of the Scottish economy, particularly if it hangs there for most of the five-year parliament.

There's no evidence that four years of SNP administration has in any way harmed inward investment. On the contrary, there have been significant successes, notably in the renewable energy sector. And the abolition of England's regional development agencies can be an opportunity for SDI to press its advantage with foreign companies.

But with independence now in play as never before, that represents uncertainty about future tax rates, change to regulation, and even a switch of currency to the euro.

Change adds risk. And business attaches a price to risk.

Weir running with the Frack Pack

Douglas Fraser | 09:37 UK time, Thursday, 5 May 2011

Other chief executives might dream of having Keith Cochrane's biggest worry - ensuring he can handle a bulging order book.

That's the view from the headquarters of Weir Group in Glasgow, as he sets out a rudely healthy set of first quarter results, fuelling a 6% uplift in profit expectations for the year.

Of the three divisions - supplying engineering equipment and valves for the mining, oil and gas and power utility industries - it's the hydrocarbons that are taking off explosively.

It may not be on the scale of the Glencore float, but it says much about the same booming raw materials and commodities markets.

Two years ago, the oil and gas division was doing $200m (£120m) of business. It's already risen to $400m (£240m), and it's heading towards $700m (£420m). Following record figures in 2010, the latest numbers show orders in that division up a staggering 129% on last year's first quarter.

Getting the supply chain right and maintaining quality, while taking on another 500 staff and investing $40m (£24m) on expanding its Fort Worth base is a big management challenge. It's probably tougher for a company with such a widespread global footprint, in 70 countries, with 26 manufacturing sites and 100 service centres.

Horizontal drilling

The Clydeside company has market leadership in the kit required to "frack" shale rock for gas, and increasingly for oil. In America's drive for new sources of domestically-produced energy, fracking, or hydraulic fracturing of rock, is where it's at.

And it's moving fast. The technology now relies on horizontal fracking. That means drilling a well into a rock seam 10,000 or so feet underground, then drilling the borehole horizontally along it.

Blasting it with water, sand and chemicals forces gas and oil out of the rock formation. Weir Group's pumps then get it to the surface.

The idea's not new, but it's been expanding rapidly in the past few years, revolutionising the gas market in the USA. It's had a global impact in depressing prices for gas worldwide, while decoupling it from its link to crude oil prices.

Now, the focus is on oil reserves, and not only in the Texas basin but with huge potential in the Dakotas. With the technology being rapidly adapted to double the level of pressure being exerted, the potential reserves are growing.

But with that pressure - up to 15,000 psi - comes a lot of wear on the equipment, which is where Weir Group has been cashing in on selling spare parts and after sales from its 26 services centres across North America. Through the downturn, the industry cut back on capital expenditure, but now, it's taking off again.

Ground water

One other factor that might flag up some concern is that environmentalists believe fracking is not only energy intensive, but it could be damaging to ground water. Under the Bush administration, it was barely regulated, but with the US media pursuing concerns about health impacts, there's now a review by the US Environment Protection Agency, which is due to report next year.

Keith Cochrane sounds relaxed about the possible threat to this boom industry. However damaging to the environment, the logic of delivering a domestic supply of oil land gas to meet America's energy security desires is hard to argue with in Washington.

With US growth rates slowing up to about 7% per annum, the next big prospect for fracking and shale gas is in China, with the potential to unlock reserves as big as North America. Weir Group recently formed a joint venture there, and has made its first sale.

He's equally relaxed about problems in the nuclear industry, where Weir Group does only about 2% of its business, supplying safety valves.

Following the Fukushima disaster in Japan, the industry's taking a pause to review safety. But at Weir Group, they don't anticipate that lasting much more than a year, before new projects get under way again. This is a three-year supply cycle, so while orders may be down on 2010, it may not make much difference to Weir Group operations.

Reality Check on the NHS: This Won't Hurt?

Douglas Fraser | 20:57 UK time, Tuesday, 3 May 2011

A third of Holyrood's budget goes on health, so where's the election debate about the future of the health service?

The pledges being made are towards the margins: Lib Dems want more efficient medicine procurement and capped pay, and there would be a small increase in income if Tories re-introduce prescription charges for some.

The biggest difference between Labour and the Scottish National Party on health is between Labour's promise to speed up the maximum wait to see a cancer specialist, while the SNP says the priority is to get Scots with cancer to their GPs at a much earlier stage in the disease's progression.

What they all agree on is protection of the NHS budget against cuts being imposed elsewhere. That makes perfect political sense, as the NHS is hugely popular, and cutting it would be hugely difficult.

It makes a bit less financial sense.

Ring-fencing one part of Holyrood's budget gives an incentive not to make efficiency measures that might be possible or desirable. It allows those within the service to expect continuation of the rapid rise in pay that several groups have seen over recent years.

But look at it another way. While the cash going into NHS Scotland keeps rising, the rise in real terms spending power has come to an abrupt stop.

Spending pressures have not.

Spending power

With the current financial year barely a month old, I'm reliably told that health boards reckon they face an overspend of around £100m because of ring-fenced money within their budgets and cash that's already allocated.

That may be modest, judging by an interview given by the chief executive of Greater Glasgow and Clyde health board.

Robert Calderwood told The Herald earlier this year that he's getting a 1% increase in spending power this year, but it's quickly wiped out by commitments already in the pipeline, amounting to between £45m and £51m.

Part of that is in the drugs bill going up, by between 6% and 9%. Unlike other sectors, the more you invest in health technology, the more your costs go up, and the more people's expectations rise of having access to it.

Audit Scotland recently reported the VAT bill is adding £23m to NHS Scotland costs, plus an increase in employers national insurance contribution.

It said there are "major challenges to find significant savings", even if the budget is protected from the cuts being felt elsewhere.

Older people

The pressure it highlights strongly is the demographic pressure on services.

That comes particularly from the growing number of older people, who use health services more, and the particularly rapid rise in the very old. Scots aged over 85 are due to rise in number by 144% by 2031.

Audit Scotland cites Scottish government analysis showing that the bill for health and social care for those aged 65 and over is around £4,800 this year, and will be up by about 15% by the end of the next parliament, in 2016.

By 2031, it is on track to rise by 62%. Simply keeping pace with general inflation isn't much of an answer to that kind of cost pressure.

Since Professor David Kerr's report into the future shape of NHS services in Scotland, his recommendation of centralising some services to improve their quality has been dumped in favour of protecting local hospital services. That's now common ground for the major parties.

So if hospitals are protected, what about jobs?

Compulsory redundancies

The political desire to avoid compulsory redundancies is described by one very senior health manager (they tend not to talk both candidly and publicly) as "completely unrealistic".

So if both hospitals and jobs are protected, then watch out for pressure being brought onto the relatively soft and less politically sensitive options of public health or mental health.

Or there could be a significance to the moves for health and social care to be merged. There are variations on that theme on offer in party manifestos.

In England, one way the government is handling the protection of NHS spending while others suffer is to give it more to do, such as taking on the healthcare elements of immigration and detention.

That might also be what comes out of a merger with social care, forcing the NHS to take more of the squeeze while making it look like a sensible piece of efficient management.

Inside the NHS, and away from the political consensus on protecting the total NHS budget, there's a lot of questions being asked about how sustainable the current model and expectations can be without big and difficult changes and reforms being required.

That's where Campbell Christie's commission on the future of public services, recently set up by the SNP administration, may provide some answers - when it's safer to debate these things, after the election.

Reality Check: How many wind turbines?

Douglas Fraser | 16:56 UK time, Monday, 2 May 2011

To some it's cloud cuckoo land. To others, it's a big business opportunity.

The SNP target of achieving 100% of Scotland's electricity needs from renewable sources by 2020 has been met with disbelief from its principle opponents. It's also been warmly welcomed by many in the energy industry.

Two words of warning: Labour is targeting 80% of electricity from renewable energy by 2020, and it hasn't said the point between 80 and 100% at which a realistic target becomes unrealistic, and why.

Also, it's wise to treat endorsements with some scepticism.

The renewable energy industry is delighted when politicians set ambitious targets. It knows promises later have to be backed up with the regulatory, planning and pricing regimes that ensure they're kept.

Electric vehicles

So how realistic is it to aim for 100% of electricity from renewable sources?

Well, one of the more influential reports into Scotland's renewable potential came from an environment consultancy called Garrad Hassan.

This was commissioned by Scottish Renewables trade body and published last autumn.

Others have produced much less favourable reports on wind power, commissioned by those who are less favourable.

But Garrad Hassan seems to be the one that's making the running with pro-renewable politicians.

It set out different scenarios for Scotland's energy mix, including some assumptions it believes to be quite conservative.

Two of them don't seem at all conservative, in that they think the shift of home heating to electricity and to electric-powered vehicles won't make a significant increase in demand.

Their scenarios boil down to two variables making four outcomes.

One variable is the extent of renewable power generation, and the other is the extent of demand reduction.

Giving a fair wind to investment in new renewable capacity, and adding in a significant cut in energy use, the reckoning is that 123% of Scotland's energy needs could be renewably sourced, with the excess being exported.

If you're a bit less ambitious about reduction of demand for power, Garrad Hassan says its higher level of investment could deliver 106% of Scotland's needs by 2020.

With limited cuts in energy demand and a lower development of renewable capacity, it's reckoned 81% could be achieved.

Spoiled views

And what would that mean in onshore turbines?

This is where the later stages of the Scottish Parliament election campaign have hit turbulence from those who don't like their views spoiled.

SNP leader Alex Salmond was asked how many turbines will be needed during the BBC leaders' debate in Perth.

His answer: the onshore target would be 7 gigawatts, or 7,00 megawatts, which happens to be a mere 500 megawatts behind Garrad Hassan's assumptions.

Scottish demand sits at around 6GW, but onshore wind only produces around a third of its capacity, depending how hard the wind blows, so lots more capacity would be needed.

The consultants also say their 106% figure could be reached by allying that onshore wind expansion with 13% more hydro, up to 1,700MW, offshore wind would have to grow from very little to 5,000MW by 2020.

Biomass and energy from waste would have a capacity of a further 680MW, and reach a far higher share of that capacity.

Tidal and wave power, yet to be commercially proven, are given modest ambitions of around 300MW each by 2020.

If you're not sure how that translates into onshore turbines, then consider this: According to Scottish Renewables' figures dated 18 April, there were 1,367 turbines in 117 onshore wind projects in Scotland, with a capacity of 2.4MW.

Another gigawatt, or a thousand megawatts, of capacity should be delivered from the 450 turbines under construction.

The planning process currently has 2,200 more turbines being considered, with a further 1,600 possible turbine sites being scoped for possible planning applications in future.

Total potential capacity if all that were to be developed - around 13 gigawatts, or more than double Scotland's needs.

But they don't all get approval. Garrad Hassan reckons it can assume that 26% applications do so.

For the clearest picture, it's best to go back to the installed capacity. That way, we're looking at nearly tripling the number of onshore wind turbines to reach that 100% target.

Rising power bills

Of course, none of this explains where the investment capital is to come from.

There's a telling assertion in one of the weekend newspapers that the UK government's £2bn per year tax raid on oil and gas production in British waters - the third such sudden increase in 10 years - is putting a chill on renewable investment as well.

Investment in renewable energy is based on the market signals and cross-subsidies from other forms of generation that the UK government and its regulator put in place.

Martin Falkner, energy banker at consultancy Gleacher Shacklock, told the Sunday Times: "The risk for companies is that this scale of investment will lead to rising profits just as consumers are experiencing large increases in their utility bills.

"While low-carbon investments may represent a good return for the consumer in the long run, will a future government honour the rules put in place today? The recent rise (in oil and gas tax) is a reminder that expected returns can prove illusory".

So targets can be reached - but only if there's a willingness to build a lot more turbines, on a lot more hillsides, and a willingness to fund them.

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