The Secretary of State for Business, Innovation and Skills (Vince Cable)
On 12 December 2011, I published details of the criteria I would take into account in reaching decisions about the location of the Green investment bank (GIB). The two primary criteria were concerned with (i) the ability to recruit and retain the necessary specialist staff and (ii) the ability to engage effectively with the “ecosystem” for originating and negotiating transactions. A further consideration related to how the choice of location would affect the overall costs of operating the GIB.
Interested parties were invited to make representations about the merits of particular proposed locations by 30 January. We received 32 such representations and these have been reviewed carefully. I have now reached conclusions on this matter and am today publishing a decision document with reasons. A copy of this and other supporting documents have been placed in the Library of the House and these may also be found on the GIB page of the Department of Business, Innovation and Skills website.
Our assessment concluded that London and Edinburgh were the two leading candidates of the proposed locations. In light of the strengths that these two cities offer, I have decided that the headquarters of the GIB should be in Edinburgh, with the GIB’s transaction team and project financing team based, initially, in a London office.
Edinburgh is an established centre for financial services, coupled with a thriving green sector. It has the excellent transport and communications links that will enable GIB staff to engage with partner organisations as necessary. As the GIB develops into one of the UK’s leading investors in green infrastructure, it will benefit from the asset management skills for which Edinburgh is well known.
The assessment also underlined the strength of London in large-scale project and structured finance transactions. To be effective in originating transactions and participating fully alongside other commercial investors, it is clear to me that the GIB’s major transaction team must be located, at least initially, in London, though capacity may be developed over time in Edinburgh. In coming to this decision, I have concluded that the challenge of recruiting teams of project financiers of the necessary skill and experience outside London would represent a significant risk to the successful operation of the GIB in its early stages.
I believe this decision will ensure the GIB is able to operate effectively and achieve its mission of mobilising the additional investment needed to accelerate the UK’s transition to a green economy. Meeting the Government’s ambitious environmental and carbon reduction goals will require sustained investment over many decades, developing a whole new financial sub-sector. It is with that vision in mind that I have taken the strategic decision to ensure a commercial reach throughout the country, initially through significant presence in both Edinburgh and London. Over time I would envisage further offices being opened as the bank develops its activities, though this will be a decision for the GIB board to make. I would also expect that as the GIB stimulates the national green financial services sector, it would move some functions out of London over time, helping to contribute towards the Government’s goal of rebalancing the UK’s economy.
It is unusual for Government to decide the location of a new company. However in this case, the importance of the role of the GIB and the widespread national interest in the bank’s location has justified a thorough and open process. The Edinburgh headquarters will be specified in the company’s constitutional documents. The GIB will operate at arm’s length from Government, with the Government acting as its sole shareholder. As such, further detailed decisions about its structure and organisational arrangements will be a matter solely for the GIB’s senior management.
My principal aim, which I know is widely shared, is to ensure the GIB is successful and has a real impact in the green economy as soon as possible. I believe that this location decision will deliver that aim. We are now pressing ahead with the recruitment of the GIB’s chair and senior independent director, so that the bank will be in a position to be fully operational this autumn, subject to obtaining the necessary state aid approval.