Enterprise Bill [Lords]
Debate between Mary Creagh and Steve Brine
Mary Creagh
The Minister has said that a report will be presented to Parliament before the bank is finally sold. In Committee, I asked her how the report would be considered by Parliament. I asked if it would be considered on the Committee corridor as part of statutory instrument proceedings and if it would be subject to the affirmative or negative procedure. Will we have a chance to vote on this issue again? The Minister is nodding, so I am sure that she will clarify the position when she responds to the debate.
The Committee had a series of concerns, and I still worry that the bank might be sold on at some future stage as the Bank of America Merrill Lynch Investment Bank. Investment banks are going through a very tricky time, and things are not at all well in their sector. Any purchaser of the GIB will be looking for maximum freedoms so that potential future sale capital receipts can be maximised.
The only robust consultation that the Government can point to, given that they will not publish the market testing and have not carried out an impact assessment, is consultation with the bank itself. They relied heavily on the bank and its executives in evidence and their response in Committee and, of course, those executives stand to benefit from the sale.
Amendment 17 invites the Government to commit themselves to providing Parliament with information on the remuneration of the bank’s senior management and board after privatisation. That information is currently provided in the bank’s annual report. For instance, how much will the executive team who are in charge of the bank stand to gain personally from the privatisation? How objective can their views be if they are to gain personally from the bank’s privatisation?
Steve Brine (Winchester) (Con)
Are not private sector companies and their directors already under disclosure obligations in relation to executive compensation for directors? What would be the rationale for going further and making the requirements of the Green Investment Bank over and above those of any other company in the economy?
Mary Creagh
This company has been financed by more than £3 billion of taxpayers’ money at a time when my constituents have had the third lowest pay increase in any part of the country since the financial crisis of 2008. The pay of my constituents and those of the hon. Gentleman has been eroded and depressed over the past year as a direct result of the actions of reckless bankers. Given that, and given the journey on which we have travelled in the past 10 years, it would be negligent of us to privatise a fully owned state bank without introducing protections to prevent the huge increase in remuneration that tends to take place when state assets are privatised.
Steve Brine
The hon. Lady’s arguments are, of course, very persuasive while the bank is in public ownership and in receipt of public finance, which justifies the current disclosure regime, but surely, once the bank is in private hands and financed principally—75% or more, I believe—by private money, they will no longer apply.
Mary Creagh
The bank will not be financed principally by private money. We do not know how much it will be sold for, but at present it is financed 100% by public money. I do not know whether whoever takes it over will put in the £3 billion match funding that the Government have put in, but they will certainly not be putting in that money on day one.
This bank was set up to be an exemplar to the banking and financial industry. It was not set up to be just another bank; it was set up to do something special, and to be something special. The Minister has reassured us—we hope it is the case—that the special share will protect the specialness of its green purposes, although I think there is a question mark over how long that will last. What I want to know, given that the bank was also set up to be an exemplar in respect of executive pay, is why that part of it should be lost.