Bank's green intentions not adequately protected in sell-off
14 Mar 2018 12:27 PM
The Public Accounts Committee report finds the Green Investment Bank failed to live up to original ambitions and there is no guarantee it ever will.
No guarantee Bank will ever live up to original ambitions
The Green Investment Bank failed to live up to original ambitions and now there is no guarantee that it ever will because its green intentions are not sufficiently protected.
Since it was created in 2012, the UK Green Investment Bank plc (GIB) has been successful in attracting private investment into some sectors of the green economy, such as offshore wind projects. However, the Department for Business, Energy & Industrial Strategy does not know whether GIB achieved its intended objectives of encouraging investment in the green economy and creating an institution that lasts.
Government chose to sell GIB before fully assessing its impact. In making decisions about GIB’s future, the Department prioritised reducing public debt and how much money could be gained from the sale over the continued delivery of GIB’s green objective.
Protection measures not sufficient to ensure enduring existence
In August 2017, the government sold GIB to Macquarie for £1.6 billion. The Department’s process for selling GIB took far longer than planned. The Department’s approach was reactive and it had to make a number of compromises to complete the sale.
The measures the Department put in place to protect GIB’s Green Purposes are not sufficient to ensure that GIB is an enduring institution. It is unclear whether Green Investment Group (GIG; the rebranded GIB under Macquarie ownership) will continue to support the government’s energy policy, or continue to have an impact on the UK’s climate change goals.
We believe that it was a misjudgement that the Department has so little assurance over GIG’s future investment in the UK and in emerging technologies, which will be crucial to ensuring that the UK’s green commitments are met.
Deputy Chair's Comments
Comment from Sir Geoffrey Clifton-Brown MP, Committee Deputy Chair:
"Government set up the Green Investment Bank to grow investment in the green economy and thus help the UK meet its climate change obligations.
The manner in which it was sold off is therefore deeply regrettable. Government did not carry out a full assessment of the Bank’s impact before deciding to sell, nor did it secure adequate assurance over the Bank’s future role.
This was a UK initiative but the rebranded Green Investment Group is not bound to invest in the UK’s energy policy at all, nor to invest in the kind of technologies that support its climate objectives.
The protracted sale process put Government on the back foot; had it been shrewder, it could have secured a better return for taxpayers.
It was a mistake to repeal legislation protecting GIB’s green investment obligations without securing firmer commitments from potential buyers.
Macquarie told us such commitments did not affect the price it was prepared to pay, indicating the Government could and should have strengthened these commitments contractually.
We expect the Government to keep us updated on the GIG’s future activities in the UK but there are broader lessons here—not least for how Government evaluates public assets and, when relevant, prepares them for sale."
Further information