Fears mount over Green Investment Bank sale as MPs warn of asset-stripping
MPs have today (11 January) raised concerns over the proposed sale of the Green Investment Bank (GIB) to private investors in a letter which urges Business, Energy and Industrial Strategy (BEIS) Secretary Greg Clark to consider the bank's long-term role in the green economy.
The state-owned institution is expected to be sold for around £2bn to Australian bank Macquarie. Reports earlier this week suggested that the preferred bidder has already lined up a series of potential buyers for the GIB’s most valuable assets, which include wind farms and biomass plants.
In light of these developments, the Environmental Audit Committee (EAC) has written to Clark to seek assurances that the new owner will protect the bank’s green principles and will not pursue fragmentation of assets post-privatisation. Without mechanisms in place to ensure that the GIB can continue as a low-carbon investor, MPs insist that the sale should not proceed.
EAC Chair Mary Creagh MP said: “Ministers have rushed to privatise the it without consultation or proper consideration of the alternatives. Taxpayers do not want to see a repeat of the Royal Mail debacle where public assets were sold at bargain basement prices, and they do not want to see a landmark British institution sold off to an asset-stripper.”
The process of privatising the bank began in March by the then-Business Secretary Sajid Javid. He revealed a "golden share" would be created which would enable the holder – a company formed specially by the Government - to reject any changes to the banks’ green ethos.
In today’s letter, the EAC praises the Government for the appointment of special shareholders. However, concerns remain that ministers will not be able prevent Macquarie from selling off parts of the bank’s portfolio once the deal is complete. The preferred bidder has previously received criticism for its “asset stripping” reputation and management of other large infrastructure firms including Thames Water.
Green Party Co-Leader Caroline Lucas today accused Macquarie of having a “dismal” environmental record, while on Monday former Energy Minister Greg Barker said control over the bank should be retained by ministers at BEIS who have the “right vision” and “understand its value”.
Neither Macquarie nor the GIB have been willing to comment on the sale due to commercial confidentiality, although earlier this week Macquarie released a statement insisting it has “a substantial and longstanding commitment to the renewable energy and clean technology sectors”.
Since its creation in November 2012, the GIB has invested £2.7bn on more than 80 green infrastructure projects around the UK. The bank recently provided £7m to an energy efficiency project for a global chemical manufacturer, which could reduce greenhouse gas (GHG) emissions by an estimated 28,000 tonnes per annum.
In March, the GIB announced plans to upgrade a district heating scheme in the north of Scotland, and also raised £355m in the second tranche of investment for its Offshore Wind Fund, bringing the total value to more than £818m.