I am grateful to the hon. Lady for that point. In so far as it was necessary to have a publicly controlled and funded green investment bank in the first place, what has changed so that such a bank can now be transferred to the private sector without ending up simply acting like and emulating all the other banks,
even if it has a greater degree of green expertise than most? How do we know that it will continue to play this unique role? That is the nub of what we want to hear from the Minister.
A good deal of the GIB’s success has come in the form of delivering what its CEO has called “financing firsts”. To use Mr Kingsbury’s own words:
“We have taken on complex projects that would otherwise not have gone ahead and we have been innovative, helping new technologies into the financial mainstream.”
The Westernmost Rough offshore wind farm I referred to earlier is a particularly good example of that. The GIB took a stake in the project in 2014. The project was unique, in that it was the first large-scale application of the new Siemens 6 MW turbines, which are significantly more efficient and better suited to the marine environment than previous turbines deployed to date. Of course, they had not been used in 2014, so there will have been natural caution about a move to a new technology.
The project will help to drive down the cost of offshore wind, which has already fallen by 11% in the past four years, and also has supply chain benefits—including, not least for me as the MP for Beverley and Holderness, the fact that Siemens will manufacture the turbines in Hull and East Riding. Over the coming years, we hope to see the supply chain develop around that initial investment. Indeed, there is hope that other manufacturers might see the supply chain and combination of specialties in Hull as something worth coming to and investing in.
The project simply would not have taken off if only private investors had been involved. When I spoke to Mr Kingsbury earlier in the week, he talked about the fact that DONG Energy, which was pushing the project, wanted to find a partner—it did not want to take on the responsibility and risk alone. It found a Japanese investor, but the partner company was looking for comfort. The comfort it sought came in the form of the Green Investment Bank’s expertise and particular positioning, which provided the reassurance needed for it to invest. The GIB got involved, negotiated—as Mr Kingsbury would say—high returns for high risk and used its expertise to help and give comfort to both the Japanese investor and DONG. The project then went ahead, with the positive ramifications being not only the lowering of the cost of wind energy but the delivery of investment in my local area and beyond.
Likewise, the GIB has joined Aviva Investors in financing NHS energy centres. A good example of that is the £18 million investment the bank made in the £36 million energy centre project for Cambridge University Hospitals NHS Foundation Trust. That project is emblematic of the market failure affecting the financing of non-domestic energy-efficiency projects. It required the installation of a combined heat and power unit, a biomass boiler, efficient dual-fuel boilers and heat recovery for medical incineration. The project will lead to a saving of £20 million on the hospital’s energy bill over the 25-year project period and an annual reduction of 25,000 tonnes of carbon dioxide.
I know the Secretary of State is confident that the eventual purchaser or purchasers will want to buy the GIB precisely because of its expertise in that kind of work. That is the nub of the Government’s argument. In a helpful briefing earlier this week, Mr Kingsbury
told me that he is adamant that the GIB is a marketable proposition precisely because the decision was taken not to use the bank simply to offer cheap Government borrowing to the renewables sector, but to develop specialist teams with deep-sector knowledge that are capable of managing sophisticated and challenging financial deals and negotiating high rates of return, as it did with Westermost Rough. Mr Kingsbury was clear that he believes that makes the bank a great business and an attractive proposition to potential purchasers.
Concerns persist, however, about the fact that in private ownership the GIB may yet come to resemble more conventional competitors, such as Bank of America or Macquarie. I do not want to criticise those institutions in any way, but they are driven by the shareholder value that the hon. Member for Brighton, Pavilion (Caroline Lucas) rightly mentioned, and they come to different decisions, take different approaches and have different team assemblies from those of the Green Investment Bank, which has a very specific brief.