The Government set out their plans for the sale of the Green Investment Bank in the document “Green Investment Bank: Sale of Shares” laid before Parliament on 3 March 2016. The Government intend to move the GIB into the private sector, so that it can increase its access to private capital and increase its green impact free from the constraints of Government ownership. Potential bidders are interested in the GIB precisely because of its green specialism. We are asking potential investors to confirm their commitment to GIB’s green values and investment principles, and how they propose to protect them, as part of their bids for the company. In addition, the Government have approved the creation of a special share, held by independent trustees, to protect GIB’s green purposes in future.
As I am sure the House will appreciate, the sale is commercially sensitive, so I cannot comment on the identity of any bidders or the discussions taking place between the Government and potential bidders. All parties have been required to sign confidentiality agreements that place strict restrictions on the disclosure of information. The restrictions apply both to bidders and the Government.
I thank the Minister for his reply, but it gives very little reassurance, given that everybody knows who the preferred bidder is. The preferred bidder, Macquarie, has a very, very worrying and dubious track record. I am putting this question today with support from across the House.
This week, we heard that the Green Investment Bank stands on the brink not just of being flogged off but broken up, with its green purposes discarded. Founded in 2012, the GIB has been widely recognised as a true success story, kick-starting truly innovative low-carbon projects across the UK, yet the preferred bidder—Macquarie—not only has a dismal and terrible environmental record but an appalling track record of asset stripping. So why have the Government given preferred bidder status to this company? What assessment have the Government made of Macquarie’s record, given that in 2005 the board of the London stock exchange deemed Macquarie unfit to conduct a takeover?
Furthermore, research this week uncovered changes to the GIB’s corporate structure. Between 22 November and 1 December, 10 new companies were incorporated and registered to the GIB’s London offices. The changes suggest that Macquarie is planning to fundamentally hollow out the GIB. Why have the 10 new companies been set up? Will the Minister confirm whether the changes made at the end of last year were made at the behest of Macquarie? Why are the Government setting up a structure to invite in a property asset stripper? If the GIB has been restructured in such a way as to allow it to be stripped of its assets, how can the Government guarantee that the special share, supposedly introduced to protect the future of the GIB, will have the intended effect?
Is this not exactly the wrong time to be selling off the GIB, given that the Government have decided to embark on a new industrial strategy, which must, to be in accord with our own climate change commitments, have low-carbon projects at its core? Finally, will the Minister admit that this selling off could lead to the bank being fatally undermined as an enduring institution? Will he stop the killing off of the Green Investment Bank? Will he halt the sale process with immediate effect?
As I think the hon. Lady knows, she has asked a stream of questions to which I cannot give direct answers. She will also know, being an experienced Member, that I cannot comment publicly on the identity of bidders or the process under way, for the reasons I elaborated at the start. She draws a lot of conclusions from media speculation, on which it would be irresponsible for me to comment, but I will try to give her some reassurance, flowing back to the objectives behind the sale that I set out in my answer. It is precisely because we want the GIB to be able to do more, unfettered by the constraints of the state, that we are seeking to put it into the private sector.
The objectives that we set out in the sale could not have been clearer and have been discussed in the House, and they include clear objectives around securing value for money for the taxpayer, which must be our primary responsibility. We want to ensure that the GIB can be reclassified to the private sector, but we have also been clear that we want to move it into the private sector to enable the business to grow and continue as an institution that supports investment in the green economy. We are selling it as a going concern, and potential investors would have to buy into the company’s green business plan and project pipeline. These are the criteria that we have set and against which we are evaluating the proposals before us.
The GIB is a tremendous Conservative success story. It was devised by the Conservatives pre-2010, probably by my hon. Friend the Minister, and was introduced by a Conservative-led Government, and it has been a great catalyst for investment in the green economy—I am thinking, in particular, of the Galloper wind farm off the East Anglian coast. There is a concern, however, if the press stories regarding asset stripping and job losses are to be believed, that it will not be able to perform that role in the future. In that light, will he consider a pause in the process, so that we can ensure that the GIB continues to perform the great role it has played since 2012?
I agree with my hon. Friend’s opening comments about saluting what has been a great success story of the coalition—let us maintain the season of good will—but Conservative-led Government. It was the right thing to set up; it was we who did it; and it has been a great success, having mobilised £8 billion of private capital into a critical area of infrastructure, according to the last figures. I can, however, assure him—he is far too experienced to be drawn or influenced too much by media speculation—that we are not being naive in this process. We have set clear criteria for the sale. We have run a genuinely competitive process, and we are now evaluating the proposals before us, through the lens of the criteria we have set, which include value for money and reclassification. We are selling a going concern, and what we want to hear about are forward plans for a dynamic, ongoing concern seeking to mobilise more private capital into the green economy. He knows as well as anyone in the House that we need to mobilise a lot of private sector capital to get the clean energy we need.
I hope the Minister would agree that the GIB is a great British success story—he has already said as much—but let us put the record straight: it is also a Labour success story, having first appeared in our 2010 manifesto, and I am glad that the coalition Government took it up. If it is a success story, however, why are they selling it off? Is it simply a case of “public good, private bad”? That is what we think on the Opposition Benches, but Conservatives think it is “private good, public bad”. I am telling the House, quite simply, that from the assessment of Macquarie and what we have seen of it, we see that it has a history of asset stripping, so how exactly will the Minister protect this valuable public institution from having its assets sold off? That is a very fair question.
We know that the Government had planned to hold a share in the bank, which would have helped to maintain its green purposes, but new evidence has shown that Macquarie has already set up new companies that will control the GIB’s major assets. Will the Minister elaborate on the purpose of those companies and what oversight the Government will have of them once the sale goes through? The Prime Minister told us that the industrial strategy would be at the heart of her Government, yet the Government are now selling off an institution that has succeeded, from scratch and against the odds, in attracting capital for our green infrastructure on commercial lines. The Minister has already been outmanoeuvred by Macquarie bank and, frankly, we do not have much confidence that it will not happen again. Will the Government agree to stop the sale of the Green Investment Bank today until such time as its green purpose and core assets can be genuinely protected? If the Minister will not, does he accept that the GIB’s fate rests on his shoulders?
I will pass over the bizarre claim that the GIB is a Labour success story by virtue of its simply being mentioned in a 2010 manifesto, with nothing done for 13 years in government prior to that. This meant that in 2010, we started with far too low levels of clean energy in this country—a situation transformed by the coalition Government.
Again, I caution Members against making assumptions on the basis of speculation in the media, and I am not going to comment on that or identify any bidders.
The hon. Gentleman reflects the different view across the House about the benefits and values of the private sector. He should be aware, holding the position that he does, that we need to mobilise a huge amount of private capital. It is private capital, not public capital, that is going to make the difference when it comes to the big shift in infrastructure. What he misses is the critical role that the state has played in setting up the GIB to correct a market failure.
The fact that we have run a competitive process and that private sector bidders have come up and said, “We want to buy this as a going concern because of its green specialism,” indicates that the market failure has, to a large extent, been corrected. The fact that this institution has mobilised billions of pounds of private capital into this critically important area of infrastructure is a success story. Our whole instinct now is that because we want it to do more, it will do more and be an even more successful institution in the private sector as a going concern.
The Government have always been clear that the GIB was designed with a view to a possible transfer to the private sector, so will the Minister assure the House that the purpose of the GIB is, and will remain, green investment? I know that the Minister is dedicated to environmental issues, so will he also assure us that we will stick to our laudable manifesto pledge of leaving the environment in a better situation than we found it?
I thank my hon. Friend for her positive observation, and I pay tribute to her record and her absolute integrity and authenticity on protection of the environment and climate change, which are well respected across the House. I can give her this assurance. We have put before Parliament the whole procedure for protecting the green purpose of the GIB through the special share arrangements. It will be held by an independent company and it will have the power to approve or reject any proposed changes to the GIB’s green purposes. This is going to be set in company law. The five trustees were announced on 31 October 2016, selected through a genuinely independent process. If my hon. Friend looks at the names, she will see that they are independent and extremely credible. That is the mechanism that we have set out. I return to the point about the objectives of the sale. We want this to go into the private sector, so that it can do more of what it is doing—unfettered by the inevitable restrictions that the state has to put on it at this stage.
I thank you for granting this urgent question, Mr Speaker, and I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for putting it. We support it wholeheartedly. The Minister has repeatedly said that he wants to see more money raised through this, but it will not happen if the assets are stripped from the company and taken abroad. Also, this is happening at precisely the worst possible time. There are reports that we will see a 90% fall in renewables investment. That must be addressed, and the GIB should be the vehicle for doing that.
What assurances can the Minister provide that capital from existing assets will be reinvested in green projects in the UK? How will the golden share work when it comes to subsidiaries and, in particular, to having a say over asset sales? What reassurances can he give us that the headquarters in Edinburgh will continue? How will the Government ensure that the shortfall in investment in renewables will be met? Finally, in the light of the forthcoming industrial strategy and emissions reduction plan, will the Minister pause this sale, so that Parliament can properly look at these and see what role the GIB can play in that process?
The hon. Gentleman quite rightly talks about the need for investment in renewables, but it would be nice if he could give more recognition of the extraordinary progress this country has made in respect of the profound transition to clean energy and the fact that we have generated more electricity from renewable energy than from coal this year, which is a pivotal moment in our history. Investment continues to flow, and the GIB has played and I am sure will continue to play a very important role as a catalyst for all that.
I understand that the hon. Gentleman seeks reassurances and share his sentiments, but this is part of our process of evaluating the proposals before us against the criteria transparently set out and agreed through the House. It is through that lens that we now evaluate the proposals, which obviously includes attitudes to the workforce and sensitivities around jobs in Scotland. This is all part of the criteria and is, as I say, the lens through which we look at the proposals. Beyond that, I cannot say much because of confidentiality, and I hope the hon. Gentleman will respect that.
For the Opposition business spokesman to make the sweeping generalisation that “private is bad” is, I find, an appalling indictment, which provides evidence of why millions of private sector workers cannot rely on the Opposition. When the Minister looks at the golden share, will he consider whether some guarantees could be provided for future investment and in relation to the existing portfolio, perhaps for the first couple of years during the transfer to any bidder?
I thank my hon. Friend for that constructive observation. He is quite right in his first point—“public good, private bad” could not have been clearer from the Opposition Front Bench. That will have been noted in the business community and across the country, reinforcing the question mark that the country’s business community has about the Labour party’s attitudes towards it.
On the green share and the maintenance of assets, I have set out the mechanisms; I think they are robust, and Parliament agreed that they were. As for so-called asset stripping and the freedom to sell assets, let us not get ourselves into a position in which we view holding assets for ever as a good in itself. I do not think we would want that for the GIB under its current structure. The management of the organisation has to be free to manage a portfolio. As a Government, we have to be practical about the limitations we would place on a private sector bid. I come back to the point that we have been very clear about the criteria we are setting for this sale, and we are looking at proposals by taking a holistic view of those criteria, which include the need for reassurance about the forward plans for the organisation and the level of ambition for mobilising private sector capital into this critical area of clean infrastructure.
In the interests of consensus, we can agree that there was cross-party support for the Green Investment Bank right from the get-go. I would say to the Minister that there is also cross-party concern about this sale—and I could mention Lord Barker, who was a Minister in the last Parliament, Vince Cable and of course people on the Labour side. Is not the key question for the Minister and the Secretary of State this one? They promised a new approach to industrial strategy with a new Department, by contrast with their predecessors who did not even use the phrase “industrial strategy”. The question to the Minister is: what has changed since they took over? If there is a moment to prove commitment to the new industrial strategy, it is this one in respect of their plans for the GIB.
The right hon. Gentleman may be right about the cross-party agreement on the need for a GIB; the difference is that we did it, and he did not. His party had plenty of opportunity to do it. He talks about the need for a continued commitment to investment in renewables, and I think we have shown that. In fact, one of the most decisive steps this Department has taken in the short time we have been in power is the announcement of the new contract for difference auctions, which will be the next stage of support for the more mature renewable tech choice. There is no issue about this Government’s commitment to the low-carbon economy and the green infrastructure that needs to underpin it. The Secretary of State could not have been clearer about that. Where I think there is a divergence of view is that the Labour party seems to think that state ownership is a good in itself, whereas in this situation we feel we have moved on from that. When it comes to this very important organisation, which has done a great job, we want to liberate it so that it can do more in future. It is partly through that lens that we are looking at the proposals before us.
Does my hon. Friend agree that the test—the proof of the pudding—lies not in how many existing assets of a given kind are owned, but in whether there will be a greater or smaller amount of investment in renewable and other green energy projects in the future? Does he agree that this privatisation will prove to have been a success if investment in new projects increases as a result?
I am delighted to respond to that question from my right hon. Friend, who was, in many respects, the guardian angel of the coalition Government, and who was intricately involved in the deliberations that led to the establishment of the Green Investment Bank. He is absolutely right, and he has made a fundamental point. We should not necessarily judge the bank on the basis of what it is at the moment; this is about what it can become, about levels of future investment and about commitment to the green purpose of the organisation. I do not think that the Government could have been clearer about the priority that we attach to those considerations. This is about the future.
May I give the Minister another opportunity to answer the question that I asked him in the Select Committee yesterday? How can he reconcile insisting on preserving the green purposes of the bank and preventing asset stripping from a new buyer with satisfying the classifications of the Office for National Statistics in respect of public sector control and balance-sheet requirements post disposal?
I have great respect for the Chairman of the Business, Energy and Industrial Strategy Committee, and we had a useful exchange about this issue yesterday, but he is again making assumptions about asset stripping. He is aware of the structure that we have established, having doubtless been involved in the parliamentary debate about it. There is a great deal of concern on both sides of the House about protecting the integrity of the green purpose of the GIB, which is why we have gone through the process—which I think is robust—of setting up what is effectively a green share, along with the mechanism for its governance. That system was, I think, agreed to by Parliament and was introduced formally with the protection of corporate law.
I return, however, to the human motive of those who want to buy this organisation, which is to enable it to grow and do more. It is the authenticity, sincerity and integrity of those proposals that we are now evaluating.
I am sure the Minister shares my slight amusement at the Opposition’s argument that we can believe everything we read in the press about the Green Investment Bank, given that they spent all yesterday afternoon arguing that we cannot believe everything we read in the press. Does he agree that the Green Investment Bank was set up to deal with a market failure, that the fact that private investors are now keen to come in demonstrates the purpose it has served and, in particular, that without the restrictions imposed by EU state aid it can deliver more investment, not less?
My hon. Friend has made—much more eloquently than I have so far succeeded in doing—exactly the fundamental point that we are trying to convey. The test of an organisation that was set up to correct a market failure is whether that failure has indeed been corrected. We believe that it has, and our view is supported by the large amounts of private sector investment that are flowing into green infrastructure in the United Kingdom and around the world. What we must do now is ensure that the GIB is free and unfettered by the state, so that it can do more.
The Environmental Audit Committee’s report on the sale of the bank stated that Ministers had rushed to privatise it without consultation or proper consideration of the alternatives, and that either it should continue to exist as a low-carbon investor or its sale should not proceed. Taxpayers do not want a repeat of the Royal Mail debacle, when a public asset was sold off at £1.4 billion below its true value, and they do not want this landmark British institution to be sold off to an asset stripper.
Is it not extraordinary that the bank’s assets were restructured in November? Can the Minister tell us whether that was done at the request of the UK Shareholder Executive, to facilitate its sale to the preferred bidder?
I do not believe that that was the case at all, although I understand the points that the hon. Lady has made. Like any other Government, we have a responsibility to deliver value for money to taxpayers, and we are very conscious of the need for this deal, if it materialises, to present itself well to the public whom we serve and represent. That is why, as one would expect, value for money is at the top of our list of criteria. We are embarking on a very good process, and we are setting ourselves very high standards for the presentation of the deal.
I remind the Minister that during the passage of the Bill that became the Enterprise Act 2016, the Government rejected a Labour amendment that would have guaranteed the green purpose of the bank. Will he give an assurance today? After privatisation, will the bank be free to invest in fracking projects?
Let me respond to the hon. Gentleman’s substantive point about the protection of the green purpose. If he doubts the integrity of the mechanism that we have established, that is fine, but I think Parliament has recognised that it is a robust mechanism, whereby the green purpose is set in the articles of association and any change must to be given effect by an affirmative resolution of the trustees. It is worth our noting the integrity of those people: James Curran MBE, Trevor Hutchings, Tushita Ranchan, Robin Lord Teverson—a very public sceptic of this process—and Peter Young. That is a very good group of people, selected by a rigorously independent process to safeguard the integrity of the green purpose, which is a priority for the Government.
We were told that we were to have the greenest Government ever, but the failed green deal collapsed, investment in renewable sources has been slashed, and we have slipped in the world rankings for investment in the low-carbon economy. If the Minister is not persuaded by the moral and environmental reasons why supporting the green economy is vital, will he consider, as a matter of urgency, the financial and economic reasons why it is crucial for us to invest in it, and will he then reverse his decision on the Green Investment Bank?
The hon. Lady is flogging rather an old horse, and, if I may say so, that is completely misplaced. Significant investment is being made in clean energy in this country and around the world. Indeed, with the Hinkley deal, the Government made one of the biggest commitments in the world to low-carbon energy. There is no question about our commitment to the transition to a low-carbon economy and a clean energy structure, and we are well along the track. I would add that we inherited an arrangement whereby we were operating on far too low a base in terms of renewable energy. It was a coalition Government led by Conservatives who changed that.
The Minister refused to name the bidders for the Green Investment Bank, but went on to tell us that private companies were saying that they wanted to buy the bank because of its success. Will the Minister tell us which private companies were saying that, or did he make up the quotation?
The right hon. Gentleman is extremely experienced, and I am not sure what part of a confidentiality agreement he does not understand. As I have said, the Government’s criteria could not be clearer: we are selling a going concern, and we are not interested in proposals that do not respect that.
When are the Government going to learn the lessons of the past when it comes to selling off public assets? I was here when Mrs Thatcher decided to sell off not only electricity but gas, and then, finally, water. She said we were going to be a British share-owning democracy: that was the phrase. If we look at the list now, we find that some of those companies are owned in Germany and some are owned in France—and Macquarie, in Australia, bought the Birmingham toll road in a flash under a Tory Government.
Today we are being given another lecture on how the Minister will preserve the identity of the Green Investment Bank. History tells us that that is not possible. The bank will go to those who are bidding for it, and they will not be just in Britain. We are in the process of leaving the EU, and the chances are that somebody in the EU will be buying up British assets—although maybe not this one. Why don’t you learn the lessons?
Of course, one of the lessons of privatisation can be seen in the record levels of investment that have flowed into those organisations since they were privatised. I respect the hon. Gentleman’s experience, and I respect his sincerity and integrity, but I think he is totally wrong. All I will say is that I have a strong instinct that he would like British Telecom still to be a public company. I will leave it at that.
The Minister is being very dismissive about speculation in the press. However, in the Financial Times the former Business Secretary, Vince Cable, has expressed concern about asset stripping, which he thinks was Macquarie’s objective, and Ed Davey, the former Energy and Climate Change Secretary, has said he considers it unlikely that the golden share would give Ministers enough clout to influence the bank’s investment strategy. Does the Minister not think that those two people—who, after all, were very much involved in the setting up of the bank—should be taken seriously and that we should act on their concerns?
Let me assure the hon. Lady that I take seriously all the concerns expressed by politicians past and present. It is important that through this urgent question the concerns that people have go from this House to potential bidders. I absolutely respect that and the individuals she mentions, but she says I am dismissing media speculation. I am not; I am just not commenting on it, because Ministers should not.
I thank the hon. Member for Bristol East (Kerry McCarthy) for reminding the House of the involvement of Liberal Democrats in initiating the Green Investment Bank. Can the Minister address the point raised by Sir Vince Cable in a letter to the Secretary of State that he remains unconvinced that the golden share will prevent the asset stripping of the company and therefore the original intentions of the green bank at its inception will be under threat?
There was a whole set of arrangements under which the special share solution was reached. It was debated through Parliament and settled through that process. My personal view is that it is a robust mechanism in itself, given its legal underpinning and the integrity and independence of the people selected to be the trustees and guardians of the process. I also come back to the fundamental point about the motivation of people who might want to buy this organisation, and the lens, criteria and disciplines we will have in evaluating their proposals and deciding whether or not to go ahead.
I, along with many colleagues, fought for the headquarters of the GIB to come to Edinburgh, where it now has more than 50 staff. Can the Minister tell us how many of those 50 staff will remain in Edinburgh after privatisation?
Many people have mentioned Vince Cable, but the legacy of Vince Cable as Business Secretary is the botched privatisation of Royal Mail, and that is why people have concerns about the GIB. The reason why we have concerns about the sale of assets is that by its nature the GIB invests in projects that the market will not touch, and therefore when those projects come on-stream they are much more profitable than normal projects, and if a preferred bidder then sells them off, they will sell them at great profit at the taxpayer’s expense.
I recognise the importance of the GIB to Edinburgh and have agreed to meet with the Members of Parliament for that area to discuss this process. It was entirely the right decision to locate part of the organisation there, and jobs are a part of what we want to hear from bidders; we want to hear about commitment to staff and the ongoing organisation.
As the hon. Gentleman has mentioned staff, let me place on record—I hope this is shared by Members across the House—the Government’s admiration and respect for the senior management team and all staff at the GIB, led by Lord Smith and Shaun Kingsbury, not just for what they have achieved in a relatively short period, but for the professionalism with which they have conducted themselves during this process.
The GIB has made substantial investments in Wales, most recently at Parc Adfer on Deeside in partnership with five local authorities. That model works pretty well. What guarantees can the Minister give that the new owners will continue to invest in that sort of way, and invest in the regions and nations of the UK rather than abroad, or possibly even in the golden south-east?
I return again to the main point about the questions we ask of bidders and the criteria we set. We want to achieve value for money; we are selling an ongoing concern, and we are determined to protect the integrity of the green purpose of the organisation, so we want to hear plans for the mobilisation of future investment and future capital. If models are working, I am sure that any bidders that are professional organisations that view the GIB as a business will have regard to them. That is what we want to hear from bidders, and we are at the point in the process where we are evaluating that. I am afraid I cannot say a great deal more beyond that.
The GIB will be required under this process to continue to respect the green purpose of the organisation, as set out in the articles of association. The degree to which investment proposals fit those criteria is a judgment to be made by management and the trustees that we have set up to be independent guardians of this process.
When Vince Cable was legislating for the GIB, we got assurances that it would operate throughout the UK and support projects in Northern Ireland, and, importantly, would not be precluded from supporting cross-border projects. In fairness, one of its first investments was in Northern Ireland, and indeed in my constituency. However, many of us are concerned that the quality of its investments, reach and support will be lost in this sell-off. The Minister talks about integrity but that is not something people associate readily with the preferred bidder.
I am not going to comment on either the identity, character or values of any bidder at this stage, but I join the hon. Gentleman in recognising the good work done and the approach taken by the GIB in making sure its investments are spread across the country. I come back to the point that the motivation for our wanting the GIB to be in the private sector is to enable the business to grow and continue as an institution supporting investment in the UK green economy—the reference to the UK there is important.
I have been listening to the Minister rewrite the history of this Government’s appalling record in this area since 2010, but the GIB is the one success story, and it did have cross-party support. It does a magnificent job in supporting risky businesses that the rest of the market will not invest in. Without breaking any confidentialities around the ongoing negotiations, what guarantees can he give to this House that such risky investments will continue and that green investment will be in as good a state as now, or even better, in five years?
I am forced to repeat myself again. We have set up, in a process agreed through Parliament, a mechanism for protecting the integrity of the green purpose of the organisation. Beyond that, because we are serious about selling the bank as a going concern and want to see positive proposals for growth and future investment, we are evaluating proposals from bidders through that lens. We are, and will continue to be, influenced in that process by the attitudes of the senior management team and what they feel about the proposals.
Last year, Macquarie—to cite a company at random—made its largest ever profit, and it did so, as the markets will tell the Minister, by selling off Moto, Britain’s largest motorway service company, taking the cash out of the company and giving it to shareholders. Will the Minister tell us what in the current safeguards will prevent the future buyer, whoever they may be, from doing what Macquarie has always done: selling assets, taking the money out of the company and using it to pay its shareholders?
Again, I must repeat myself. The hon. Gentleman has chosen a company at random, but I am not going to talk about any companies. What I have tried to labour is the seriousness of purpose behind this process and the safeguards we have set up, which are protected in law and also by the criteria we have set in evaluating any bids. An important part of that is the forward intention and the intention to mobilise private capital in future.
Given Brexit and the uncertainty around it, is it not risky to sell the GIB at this time? How does the Minister envisage the Government ensuring that money will be available for the new innovative technologies that will be very important for areas such as mine in Hull and the Humber?
With respect to the hon. Lady, I am not entirely sure why Brexit is relevant to this process or to the decisions underpinning it. I agree 110% with her fundamental point about the need to invest in energy innovation, which is why our Department has a £500 million spending review portfolio dedicated to energy innovation that sits in a wider system of budgetary support for energy efficiency. The point she makes is entirely the right one: if we are to achieve what we want to achieve in decarbonisation and the transition to abundant sources of affordable low-carbon energy, we have to continue to innovate. The Government have a role in that, which is why budgetary support is available for it.
The Green Investment Bank employs 55 people at its head office in my constituency. When it was set up in 2012, the then Business Secretary, Vince Cable, said:
“Edinburgh has a lot going for it, both in terms of it asset management and finance sectors…also its proximity to green energy activity”.
He also said that choosing Edinburgh supported what he described as the “wider narrative” of binding Scotland into the UK in the run-up to the independence referendum. Will the Minister meet me to discuss how such promises can now be delivered to those 55 employees who work in the head office in my constituency?
My question relates to the bidding process. What is the Minister’s view of the Macquarie bank, the potential bidder also known as the “cuff-linked buccaneers”? What is his opinion of the bank’s recent activity as the owner of Thames Water when it shipped off hundreds of millions in dividend payments to investors, paid minimal taxes and made disappointing investment in the network?
Does the Minister agree that, if green investments are as profitable, sound and attractive as their supporters have claimed in the House today, there should be no concern about the introduction of private finance for such projects? Indeed, given the pressure on the public purse at the moment, is he not surprised that the House is not welcoming another source of funding for these activities?
The hon. Gentleman makes an important point about the increased attractiveness of investment in renewable energy and low-carbon infrastructure. Governments in the UK and around the world have helped to facilitate that investment over the years and have seen dramatic falls in the cost of those technologies and the cost of the capital attached to them, making them a more investable proposition. This helps to reinforce our argument that this is the right time to liberate the GIB from state control to enable it to play a bigger part in the market.
The Aldersgate Group has highlighted the fact that the strength of the Green Investment Bank is that it has supported innovative projects throughout the UK that help us not only to tackle climate change but to drive down costs in the NHS and local government through energy efficiency. Will the Government heed the warning of the former Conservative Energy Minister, Lord Barker, that the bank is heading for break-up? Will they halt the sale to ensure that the bank remains a single public institution that is one step ahead of the market in the green projects that it backs?
Lord Barker is a good friend of mine for whom I have great respect. I would like to reassure him and, I hope, the House that the Government are not being naive. We are very clear about the criteria we have set, and we are in the process of a robust and rigorous evaluation of the proposals against those criteria.
The Minister has been very clear that the creation of a special share in the governance arrangements will protect the integrity of the bank’s green purpose and future investments, but may I press him for a little more detail on precisely how that special share would prevent successful bidders—Macquarie or others—from offloading current projects?
I want to make two points on that. First, the special share is being set up to protect the integrity of the green purpose, which is set out in the articles of association. It is there for all to read. Any proposed changes would need to be approved by the trustees, who have been selected independently. That is the mechanism involved. Secondly, I made the point earlier that I do not think it is sensible for investment institutions to hold on to assets forever. Part of their role is to manage a portfolio, and if they get attractive offers to divest assets we expect them to look at those offers seriously. We are interested in the plans for future investment, and in what this organisation could become under private ownership. That is what we are evaluating.
The Minister was right to say that there was cross-party support for the Green Investment Bank. There was, however, no such cross-party support—or support in Scotland—for the removal of support for carbon capture and wind energy. The fact that his party’s policies have been so disastrous in Scotland might explain why it does not do so well with the electorate there. Will he absolutely commit to all the projects that the Green Investment Bank has invested in—totalling hundreds of millions of pounds in Scotland—and assure us that, regardless of who the buyer is, they will continue?
I dispute the hon. Lady’s analysis. This country has made enormous progress in the shift to clean energy, and Scotland has been a big part of that. I point her to the recent commitment to the next round of contract for difference auctions and to the fact that last year I think we generated 25% of our energy from renewable sources. If she looks at the starting point of 2010, I think her argument falls away. On her point about continued investment in Scotland, I repeat what I have already said to colleagues.
When taken alongside the cuts to renewable energy and the abolition of the Department of Energy and Climate Change last year, does not the sell-off of the Green Investment Bank show that the Government are no longer committed to being a world leader on climate change and sustainability?
No. I am afraid that that is total nonsense. If the hon. Lady wants proof points on that, I can tell her that one of the first actions of this Department, within days of the new Government being formed, was to put into law the fifth carbon budget. I am sure that she knows the detail of that, so she will know how ambitious it is. That was not the action of a Government who are shirking their responsibilities in relation to Britain’s role in mitigating climate change.