Green Investment Bank

Callum McCaig Excerpts

Wednesday 25th January 2017 Westminster Hall

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to serve under your chairmanship, Mr Owen. I thank the hon. Member for Edinburgh West (Michelle Thomson) for securing this important debate. Like her, I am deeply concerned by the way in which the Government are proposing to sell off the Green Investment Bank. It is widely known that the Government’s preferred bidder is the Australia-based firm Macquarie. As has now been well documented, there are serious concerns about Macquarie’s corporate record and its commitment to the GIB’s environmental goals.

Macquarie has admitted rigging the Malaysian foreign exchange markets. It has settled charges in the US for violating underwriting laws related to a China-based coal company. It is currently facing legal action in the US for rigging Australian interest rates. In a separate investigation, it was found to have breached market integrity rules in Australia and to have “systemic deficiencies” in its compliance with financial services laws. Closer to home, its ownership of Thames Water has also been deeply controversial, with £10 billion of offshore debt loaded on the company and a £250 million pension deficit allowed to accumulate while profits were extracted.

Macquarie also has an appalling environmental record, funding fossil fuel extraction projects across the world. From open-cast coal mines in China to fracking here in the UK, it has a track record of supporting climate-wrecking projects. By any measure, Macquarie is unfit to be custodian of the UK Green Investment Bank; if anything, there is a very clear risk that it will destroy it.

The Government have so far refused to respond to those concerns. Instead, we see ample evidence that the Government are not only willing to allow an asset strip, but may have actually helped to facilitate it. With the support of Treasury-owned UK Government investment, 11 subsidiary companies of the GIB were set up presumably to allow Macquarie to asset-strip the UK’s Green Investment Bank. The Minister passed on the opportunity to deny Macquarie’s involvement in those changes in response to a written question I tabled last week.

Meanwhile, the Government continue to point to the creation of a special share as the answer to all our concerns. That is simply not true, as the hon. Member for Edinburgh West set out—we know that the special share will not protect the green purposes of the GIB under an owner such as Macquarie. In response to another written question I tabled, the Government made it clear that the special share will not ensure that individual investments are low-carbon. The special share will not stop asset stripping, will not ensure adequate capital is available for future investment and will not ensure an investment focus here in the UK. To protect the GIB as an enduring institution that is investing here in the UK, we ultimately and simply need the Government to stop this sell-off.

[Callum McCaig (Aberdeen South) (SNP)]

I thank the hon. Lady for giving way, and add my thanks to my hon. Friend the Member for Edinburgh West (Michelle Thomson) for her contribution in securing this debate. The whole basis behind the privatisation is that the market failure has been corrected. I simply do not agree with that. We may have seen progress in the power sector, but in transport and heat we are lagging way behind what we need to be doing to meet our carbon reduction targets. Does the hon. Lady agree that the Green Investment Bank can play a critical role in addressing the market failure that continues to exist in those sectors?

[Caroline Lucas]

I thank the hon. Gentleman for his very informed contribution. He will not be surprised to hear that I entirely agree with him. Anybody who thinks that market failures have been corrected is being extraordinarily complacent. Just a quick scan of the way in which we are not meeting the targets that we have—our climate, environmental and energy-efficiency commitments—would lead people to conclude that market failure remains, and therefore that the need for the Green Investment Bank to be in the public domain remains.

I believe that Ministers have it within their power to cancel the sale and pursue a different path. For the GIB to be properly protected, it should remain wholly owned by the UK Government. That is my bottom line, but if Ministers refuse to do that, various other options are available to them. We know that there was and still is on the table an alternative bid—it is the one that lost out to Macquarie. That bid would help to keep the GIB British, green and growing, so why are Ministers not pursuing it if they do not want to keep the GIB in the public domain?