Green Investment Bank to be privatised
Business Secretary Sajid Javid announced plans today (25 June) to sell ‘at least a majority’ of the government’s shares in the Green Investment Bank (GIB) to private investors over the duration of current parliament.
The proposed privatisation was detailed in a speech delivered at the GIB’s annual general meeting at London’s Gibson Hall, where Javid told AGM attendees that the government’s plan was “very clear: to sell at least a majority of the government’s shares to private investors during the lifetime of this Parliament”.
Former Business Secretary Vince Cable originally launched the ‘world’s first investment bank dedicated to greening the economy’ in November 2012, to support environmentally-friendly projects struggling to gain funding from the private sector.
Javid claimed that “It is no secret that we have always planned to bring private capital into the GIB when the time is right”, a statement that appears to go against the description of the bank on the GOV.UK website, which explains the role of the bank as to invest ‘in innovative, environmentally-friendly areas for which there is a lack of support from private markets’.
Javid justified the current privatisation plans as a means to increase the banks access to capital and reduce the impact of EU regulations on state aid.
According to Javid, selling off the bank will set it “free from the shackles of state ownership” which will be “good news for GIB, good news for the environment, and good news for Britain”.
Javid pre-empted criticisms of the move in his speech, saying: “Some people will say this shows the government is reneging on its environmental commitments, but such cynics could not be more wrong.
“The bank will still be green, it will still be profitable, it will still be a market-leader in financing environmentally-sound infrastructure.”
He concluded: “GIB has grown up. It’s time to let it go.”
A ‘rash and irresponsible’ move
Speaking of the proposed privatisation, Caroline Lucas Green MP for Brighton Pavilion, is reported on the BBC as saying that the move was “rash and irresponsible” and risks calling into question the UK’s commitment to investing in a low-carbon economy.
She added: “The government should keep at least a majority stake in the Green Investment Bank to ensure investor confidence is upheld and the commitment to low-carbon lending remains.”
Chief Executive of environmental think-tank E3G Nick Mabey said: “The Green Investment Bank is not just the government’s most lauded innovation in the war against climate change. It has kept investment in the real economy going at a time when bank lending had fallen to an all-time low. It has played a critical role in supporting the UK economic recovery.”
The speech follows continuing criticisms of the Treasury’s refusal to let the GIB borrow money, and more recent criticisms of the GIB’s investments in the waste and recycling industry by environmental consultancy Eunomia, which claimed that the bank’s interventions risked ‘hindering the country’s efforts to increase recycling and decarbonise energy’.
While undertaking a review of the GIB’s projects, Eunomia found that out of a total waste sector investment of £269.7 million, over 90 per cent has been invested in projects that are mostly or wholly energy-from-waste (EfW) residual waste treatment facilities.
Read Javid's full speech.