I beg to move,
That this House has considered the future of the Green Investment Bank.
It is a pleasure to serve under your chairmanship, Mr Crausby. I thank the Backbench Business Committee for awarding the time for this debate. It is good to see that so many colleagues from across the House are present. I thank all the other Members who requested the debate for their support. They are drawn from the Labour party, the Liberal Democrats, the Scottish National party and the Green party—the ultimate rainbow coalition, which reflects the widespread interest in and concern for the Green Investment Bank.
The GIB was a major success story of the 2010 to 2015 Parliament. In 2010, the Government’s Green Investment Bank commission highlighted
“the urgent need for a new public financial institution to unlock the investment needed for Britain to deliver a timely transition to a low carbon economy.”
That investment is focused on the five objectives set out in section 1(1) of the Enterprise and Regulatory Reform Act 2013 and in the bank’s articles of association: the reduction of greenhouse gas emissions; the advancement of efficiency in the use of natural resources; the protection or enhancement of the natural environment; the protection or enhancement of biodiversity; and the promotion of environmental sustainability. Since the bank was established in November 2012, it has delivered on those principles. As of August this year, it had invested in 52 green infrastructure projects; I think that figure was updated to a larger number in the evidence given yesterday to the Environmental Audit Committee.
The GIB has also invested in seven funds in more than 240 locations around the UK, ranging from anaerobic digestion on Teesside to a £241 million stake in the Westermost Rough offshore wind farm and, indeed, new streetlights in Southend. The bank’s chief executive, Shaun Kingsbury, anticipated that by the end of this week it will have committed £2.3 billion of funding as part of wider projects worth a total of £9.8 billion. In other words, the next deal that the GIB does will take to more than £9 billion the total invested in the low-carbon transition that this country has not only said it will deliver but, in the Climate Change Act 2008, set out in law that it must.
Those numbers reflect the assurance, given by Mr Kingsbury to the Environmental Audit Committee in 2013, that the GIB would “crowd in” an additional £3 of private capital for every £1 invested by the bank. Unlocking that level of investment in the green economy is a serious and substantial achievement, topped off by
the GIB’s annual report showing that the company moved into profit in 2014-15, albeit marginally. Of course, it takes a long time for the types of projects it funds to come to fruition and for the cash-flow to flow. Nevertheless, the bank is successful—indeed, that very success has led to today’s debate.
In June, the Secretary of State for Business, Innovation and Skills, with whom I had a meeting last week, issued a written statement to the House that said that the Government
“have concluded that the best approach is to move GIB into private ownership subject to ensuring we achieve value for money…It has always been our intention that GIB should leverage the maximum amount of private capital into green sectors for the minimum amount of public money.”
I do not think anyone would disagree with that last intention. I understand the Government’s concern to ensure that the GIB can borrow from financial markets and so increase its impact. I should also emphasise that I certainly do not object to privatisation per se; I am a keen champion of the private sector and believe strongly that it can be a force for good in driving quality, efficiency and innovation.
The Green Investment Bank is, though, a special case, and its transfer into private ownership will be more complicated than most. There are important questions that need to be resolved about the move to private ownership and the form that the transfer will take. Those questions centre on the extent to which the market failure identified when the GIB was established has now been corrected and how the Government will ensure that a majority-privatised GIB continues to deliver its green purposes when its ownership and statutes have changed.
This week, the Government introduced amendments to the Enterprise Bill in the Lords that will repeal part 1 of the Enterprise and Regulatory Reform Act 2013, section 3 of which protects the GIB’s articles of association from being altered unless they continue to meet the green objectives mandated in section 1 of the Act, and provides that any change under section 3 must be approved by a resolution of each House of Parliament. The bank’s objectives are delicate. It was clearly felt that legislation had to be put in place at the outset to ensure that protection, even when the bank was owned by the Government. Without it, what assurances can the Minister provide that a future purchaser will continue to focus on providing not simply capital for green or greenish projects but specifically the funding for the kind of novel technologies that the GIB has helped to support to date?