The UK Green Investment Bank’s purpose is to accelerate the UK’s transition to a greener, stronger economy. It was created by the UK coalition Government in 2012, who provided the initial capital to invest. It was used to back green projects, on commercial terms, across the UK and to mobilise other private sector capital into the UK’s green economy, with the aim of funding the creation of new, modern, green infrastructure across the UK.
Now the UK government has decided to sell it off to a private consortium, led by the Australian bank, Macquarie, for £2.3 billion.
The privatisation has drawn strong criticism from environmental groups and opposition parties, who believe that the sale will set the UK back on reaching its climate targets agreed at COP21 in Paris. It may also lead to the loss of jobs in the renewables sector. Many believe it has been sold off too cheaply.
One contact wrote to her (Conservative) MP about this. His reply was:
“Thank you for contacting me about the Green Investment Bank (GIB).
The GIB has proven to be a pioneering venture into sustainable investment, and has now committed £2.6 billion of capital to 79 green infrastructure projects across the UK since its launch.
However, as the Independent Chair of the Bank, Lord Smith, has said, attracting new investors is vital if the GIB is to fund its ambitious plans to double the size of its business, expand into new parts of the green economy and deliver more environmental benefits. The Government has always been clear that the GIB was designed with a view to a possible transfer to the private sector. The company was designed to leverage the maximum amount of private capital into green sectors for the minimum amount of public money. Moving the company into private ownership is a natural development that further delivers this aim.
It is with this in mind that plans to explore the privatisation of the Bank were announced in 2013. Since then, the Government and GIB have continued to work together to facilitate the introduction of private capital into the bank, and a two stage auction process was formally launched in March 2016.
While the detail of the sale process is commercially confidential, I can assure you that the Government has no interest in selling to an asset stripper. Potential investors have been asked 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 has approved the creation of a special share, held by independent trustees, to protect GIB’s green purposes in future.”
It would appear that the sale has been backed by the GIB’s independent board. We need to keep a close watch on what happens to the GIB in the future and whether it loses it’s green credentials. I don’t feel too optimistic about this. It sounds like the government has been using its “growth, growth and more growth obsession” to damage a bright new initiative of the former coalition government. I suspect the LDs were most instrumental in getting it established in the first place.