Vince Cable: Green Investment Bank risks being "broken up and destroyed"
Green Investment Bank sale has been “clouded in secrecy and rumour”, Vince Cable tells Holyrood
Vince cable - credit: Paul Heartfield
Sir Vince Cable has warned that the UK Government’s sale of the Green Investment Bank has been “clouded in secrecy and rumour” and that the bank risks being "broken up and destroyed".
The GIB was established by the coalition government in 2012 to support emerging green technologies.
But with the bank due to be privatised, opposition parties have expressed fears the bank, expected to be sold to private investment bank Macquarie, could be asset stripped and lose its green purpose.
Cable, who served as Secretary of State for Business, Innovation and Skills during the GIB’s creation, has expressed concern over the process, telling Holyrood that it is difficult to see how the Government’s ‘golden share’ scheme – in which independent trustees would have a special share to safeguard the environmental purpose of the bank – could stop the break-up of the bank.
Meanwhile opposition MPs called on the Government to halt the sale to allow Parliamentary scrutiny of the plans.
SNP MP Callum McCaig said: “The UK Government says the bank’s HQ will remain in Edinburgh and that the UK Government will retain a symbolic ‘golden share’ but if the bank is to be entirely privately owned it is unclear how the Tories can maintain these promises.”
He added: “The sale is happening at precisely the worst time for renewables. After years of counterproductive decisions from the UK Government, renewable investment is expected to fall by 95 per cent between 2017 and 2020, and the adverse consequences of the UK's decision to leave the EU could plunge the sector into further uncertainty.”
Cable said that he made the decision to establish the bank in Edinburgh, despite opposition from the London banking community.
Approached for comment by Holyrood, Cable said: “Macquarie have acquired a bad reputation in Australia and here, through their ownership of Thames Water, as a result of securing very high rates of shareholder return at the expense of long term re-investment of profit.
“Since the whole process of sale has been opaque we do not know whether the sale is to go ahead and on what terms. But there is a widespread assumption that the bank wishes to sell off the portfolio and that delays are caused by their valuation exercise.
“The government has been considering the idea of a ‘golden share’ to protect the ‘green’ purpose of the bank. But it is difficult to see how this could stop a break-up of the bank if the purchaser is primarily motivated by the short-term profit and the Shareholder Executive (now in the Treasury rather than BIS) is primarily interested in getting maximum short-term value.
“There is an optimistic view that the government is caught up in legal processes and really wants to save the bank. Pessimists question whether there is the will or the competence to do so. I am inclined to give my former colleagues in government the benefit of the doubt, though many wouldn’t. It would be tragic if the government drifted into a position where it allowed the destruction of a very effective and successful institution which embodies the Prime Minister’s declared objective of building a long term industrial strategy mobilising patient capital investment.”
Green MP Caroline Lucas led a debate in Parliament calling for a halt to the sale, saying: “This preferred bidder, Macquarie, not only has a dismal and terrible environmental record, it also has an appalling track record of asset-stripping.”
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But GIB chair Lord Smith of Kelvin backed the sale following commitments to uphold GIB's green investment principles and report transparently on its green impact
UK Low Carbon and Renewable Energy (LCRE) Economy Survey suggests 58,500 people employed in Scotland in low-carbon activities in 2015