Barry Gardiner
Main Page: Barry Gardiner (Labour - Brent North)Enterprise Bill [Lords]
Barry Gardiner Excerpts
Barry Gardiner (Brent North) (Lab)
I wholly support my hon. Friend’s remarks. What impact does he think it might have on the prospects for full privatisation of the Green Investment Bank were the official Opposition to indicate that they were minded to purchase back the bank into the public sector?
Kevin Brennan
My hon. Friend will understand that I am not going to speculate on that, given that it is not current party policy or under discussion. What I will say is that the Government have a duty, if they go ahead with a privatisation that we do not support, to be absolutely sure they get value for money for the taxpayer, as well as to give an absolute guarantee that they will protect the bank’s green purpose.
I have praised the Government for the introduction of the Green Investment Bank, but why would they do anything to place its central green mission in grave doubt? I remind the House that the bank was first proposed under the previous Labour Government. It was first mentioned as a proposal for development by the former Chancellor of the Exchequer, Alistair Darling, in one of his Budgets. It was developed in the Cabinet Office and the Department for Business, Innovation and Skills when I was a Minister in those Departments. It was introduced under the coalition Government, and it has made a good start. It has been able to participate in the financing of projects that would otherwise not have taken place and that make a real contribution to meeting our commitments under the Climate Change Act 2008.
I think we all agree, throughout the House, that the creation of the bank is a good news story. I do not see any dissent from that proposition from anyone in the Chamber. We have therefore come to a strange pass when even something we all agree is a good thing—good borrowing for sustainable purposes—is classified as bad for no other reason than that it appears on the Government’s books.
During the difficult years following the banking crash, in which we were sometimes in recession, a significant part of the UK economy’s growth came from the green economy. By some estimates, it accounts for 1 million jobs in the low-carbon sector and is worth more than £100 billion. It is disappointing that the Government are in danger, if they are not careful, of undermining one of the key drivers of that sector. If we could tap into our country’s wind, wave and tidal power, we could create thousands more high-quality, sustainable jobs for our economy as well as doing the right thing for the environment.
When the Government announced their privatisation plans last June, the Secretary of State assured the House in a written statement:
“This should bring a number of important benefits, giving GIB greater freedom to operate across a wider range of green sectors in accordance with its green purposes, which are enshrined in legislation.”—[Official Report, 25 June 2015; Vol. 597, c. 27WS.]
He emphasised that the green purposes of the GIB were protected by the legislation in which its duty to pursue them are enshrined. After that, something obviously went wrong with the Government’s proposals. They received advice from the ONS that led them to say instead that they intended to repeal the very legislative protection that the Secretary of State had prayed in aid on 25 June 2015 when he announced the decision to privatise the bank. By October, they were effectively saying that it did not really matter whether they repealed the statutory protection, as long as they made sure the bank did not appear on their books. In his letter of 15 October, when he announced his intention to repeal the relevant measures in the Enterprise and Regulatory Reform Act 2013, the Secretary of State offered no assurance that the bank’s green purposes would definitely be maintained.
We have been demanding assurances on how we can ensure that the bank maintains its green purpose when it is privatised and does not simply become yet another bank—albeit a very small bank, but one that could easily be gobbled up by somebody else in the marketplace. That is why Labour and other parties defeated the Government on this issue in the other place and introduced the special share that we are trying to reintroduce in new clause 4.
The Government say that the GIB can create the special share itself. In Committee, the Minister quoted a letter from the chairman of the bank, Lord Smith, to Lord Mandelson and Lord Teverson. She may well quote it again today; we will find out in a moment. In Committee, she said that she was confident that that approach would satisfy the ONS, but could not give us a guarantee. As I said then, we need an absolute assurance on that before we relinquish the legislative opportunity to future-proof the purposes of the GIB.
Since Committee stage, the bank has written to hon. Members, as is its right, outlining its plan to issue the special share envisaged in new clause 4 itself, rather than through the Bill, which is what we are proposing. Its reason for doing that is its belief that the ONS will then allow it to be classified as off the Government’s books. I asked the GIB whether it could guarantee that. Colin Faulkner, its director of government affairs, responded to me by email, writing:
“You’ll likely be aware that ONS doesn’t engage directly with arms length bodies like GIB. At the same time, however, we have been engaging closely with the Government over all matters relating to the sales process, and this is an issue where we’ve been as close as we can to Government throughout. We understand that Government has been engaging closely with ONS on this whole issue, including the special share structure which GIB is putting in place, and we understand that on the basis of those discussions the Government were sufficiently satisfied to allow the sales process to proceed.”
On that basis, if the Government say they are satisfied, they should be able to guarantee categorically, here on the Floor of the House, that their special share proposal will definitely be acceptable to the ONS. I hope the Minister will say that. If she wants to intervene and say that now, she can, but I hope she will at least be able to say it in her response. She is not indicating that she wishes to intervene.
Mary Creagh
Once the bank is sold, my Committee will have no locus in scrutinising what it does. We could look into it only as a matter of interest. This is the final legislative opportunity that we have collectively as parliamentarians to say what we want to happen to the bank. We might have a chance to discuss it further if the matter is debated upstairs in Committee, but the process is now at its penultimate stage. The starting gun has been fired; the first round of the bidding process has already started. If the Government decide that they want to sell 100% of the bank by, say, September or Christmas, the Environmental Audit Committee could look into whether best value had been achieved, but only as a matter of interest. However, we want to test the proposals on the special share today to ensure that the public interest is protected, as the hon. Gentleman says, and that the green vehicle can continue to move forward. The Green Investment Bank is a really important financial institution for enabling us to meet our climate change targets.
The Chancellor said in January that the sale of shares in Lloyds would be postponed because of market turbulence. The sell-off was scheduled for the spring, but he has now said that it will come after Easter. We shall wait and see when that happens. Since the start of the year, we have seen a bear market, great turbulence in the financial markets, panic selling of crude oil, and oil prices at a 13-year low. These are worrying times for the global economy and the market is hugely volatile. All bank shares are currently falling in price, whether they are UK bank shares, European bank shares or US bank shares. Just this morning, we have heard that the Bank of England has announced it will give commercial banks three exceptional opportunities just before and after the EU referendum to borrow as much as they like to offset any threat of a run on banks and to prevent a repeat of the chaos of the financial crisis in 2007 and 2008. In the light of that bleak, turbulent and choppy financial picture, we have to ask whether the Government’s decision to launch the sale of the bank last Thursday was the right one. Whatever one’s views on privatisation, this hardly seems to be the most auspicious time to sell off a state asset, let alone a state-owned bank.
Barry Gardiner
I congratulate my hon. Friend the Member for Wakefield (Mary Creagh), who chairs the Environmental Audit Committee, on her speech. I wholly agree with what she has said. I also congratulate her and her Committee on all the work that they have done to tease out the details of this sale.
In 2012, the Green Investment Bank was set up for a purpose. It was stated quite clearly that its purpose was to address specific market failures and investment barriers in a way that would achieve emission reductions at the lowest cost to taxpayers and consumers. It was going to achieve that by working within the framework of the Climate Change Act 2008 and by risk-sharing between the public and private sectors, identifying and addressing market failures and limiting private investment in low carbon infrastructure, thereby accelerating and delivering green investment on a large scale and with significantly lower capital costs. That was the whole point. The bank was set up precisely because there was a market failure. The private sector was not able to achieve this. It is not just me, an Opposition Member of Parliament, who is saying that. Labour supported the bank. Indeed, it was our idea in the first place when we were in government, and we were delighted when the coalition put it into place.
The coalition Government also set up the Green Investment Bank commission. It was an independent, non-partisan advisory group brought together by the Chancellor himself. It took three years and two official rounds of rigorous market testing and evidence gathering to establish that a green investment bank was needed. The commission collected evidence to inform the bank’s aims, its design and the operating model under which it would function. Let us compare the three years and two official rounds of market testing it took to set the bank up with the sudden shock decision to sell it off, which was taken with a complete lack of consultation.
Caroline Flint (Don Valley) (Lab)
My hon. Friend is making a persuasive argument. Does he agree that if we are to be a country represented by, as the Chancellor said, a “march of the makers”, part of that is being at the front of the queue when it comes to leadership and supporting innovation in the green energy and green environmental products marketplace? Does my hon. Friend feel that privatising the Green Investment Bank will just create yet another bank—one that will not do the job for which it was intended?
Barry Gardiner
My right hon. Friend has enormous knowledge in this area and I absolutely agree with her. The most successful instrument that the Government have created for energising and putting investment into infrastructure projects in this country is now being neutered. That is a tragedy, which these amendments seek to address.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It has been an interesting debate, but I must confess that I do not agree with many of the arguments advanced by the Opposition, so I hope that hon. Members will not support any of the new clauses.
If I may deal with things in reverse order, I will first address new clause 8, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas), which seeks to ensure that the Green Investment Bank continues its green investments plans post-privatisation. We agree on what we want the bank to continue to do. We are seeking bidders who can fund the GIB’s legally binding commitments and who have the deep pockets to fund its ambitious green business plan. The bank’s management is clear that it needs access to private capital to fund its green business plan. That could be equity capital raised as part of the sale process, debt capital, which the GIB can raise when it is in the private sector, or private capital raised as part of a fund structure.
Business plans change and evolve as new opportunities arise, and we will not bind new owners into the current plan, so I cannot accept the hon. Lady’s new clause. The new owners of the GIB will have views on the future strategy and business plan. They will assess it as part of their due diligence and make it a part of their offers. Whoever the new owner or owners are, the special share ensures that the business plan, like the GIB, will continue to be green.
It must be said in response to many of the points and arguments that it is almost impossible to understand why anybody would want to buy the Green Investment Bank—the clue is in the name—unless they wanted to ensure that it continued to invest in green projects.
Anna Soubry
I disagree with the hon. Lady, because the privatisation and sale of the Green Investment Bank is about ensuring that more money is available from the private sector to carry out that particular sort of investment. Forgive me, but it really is not the role of Government to gamble and make investments with taxpayers’ money. That was right in 2012 when, as mentioned by the hon. Member for Brent North (Barry Gardiner), the Green Investment Bank was set up because of an accepted market failure. However, the idea that the Government are throwing it away, as he put it, could not be further from the truth. The Green Investment Bank is a real success story. No one is seeking to pretend that it is anything else. We want its success to continue, but in the private sector.
Barry Gardiner
Does the Minister actually believe that there is no longer any market failure that needs to be addressed? The figures on infrastructure suggest quite the opposite. The point made by the hon. Member for Brighton, Pavilion (Caroline Lucas) about the innovative and novel projects that the Green Investment Bank was set up to support is that they pay much less return into the private sector, which is precisely why risk-sharing between the Government and the private sector was necessary to launch the bank in the first place.