Government criticised over handling of Green Investment Bank sale
There are concerns that the Government may again need to stimulate investment in green energy.
The Government has been criticised for failing to secure long-term commitments when it sold off the Green Investment Bank (GIB), raising concerns that a new body may be needed to help achieve Britain’s climate change goals.
A new report by the National Audit Office (NAO) shows that in its decision to sell the bank, the now-named Department for Business, Energy and Industrial Strategy (BEIS) “lacked clear criteria or evidence” to prove that it had achieved its “intended green impact”.
The ultimate sale to Australia’s Macquarie Group – which led a consortium that bought the bank for £2.3 billion earlier this year – was within the Government’s valuation range, though was “at the lower end”.
The NAO also said that the process – which lasted nearly 18 months and more than two times longer than expected – affected GIB operations and resulted in a number of key staff departures, limiting its ability to invest.
Macquarie has said the GIB will continue to finance green projects that help the UK meet its climate change goals in its first three years under private ownership.
But the NAO noted that those commitments are not legally binding and highlighted that the Government has climate change commitments beyond 2020.
Amyas Morse, head of the NAO, said: “Ultimately the value for money of the Green Investment Bank intervention will only be seen over time.
“A key test will be whether the Government needs to intervene again in this way to stimulate growth in the green economy and to help it achieve its climate change commitments.”
Established in February 2010, the bank financed 100 projects by March this year, having attracted £8.6 billion in private capital – equal to £2.50 for every £1 invested by the GIB.
Created with an intention to “accelerate the UK’s transition to a greener, stronger economy” by investing in green projects, the NAO said that the GIB was set up with a “clear rationale and mission” as well as a “sound basis” for its success.
However, the department did not set out how it would judge the GIB’s success in terms of its green impact.
“It also wanted GIB to be an ‘enduring institution’, but it was not clear what this would mean in practice,” the report noted.
The Government ultimately decided in June 2015 that further public funding was “not affordable” and considered a range of options that would help take the GIB off the public sector balance sheet.
Labour MP and Public Accounts Committee chairwoman Meg Hillier said: “The Green Investment Bank has played an important role in boosting the UK’s offshore wind industry, creating green jobs and cutting harmful carbon emissions.
“It might have gone on to achieve much more if the Government hadn’t been so keen on the idea of selling it.
“I am deeply disappointed that the Government has only managed to get short-term commitments from Macquarie that the bank will carry on with its green goals.”