Enterprise Bill [Lords]

Caroline Lucas Excerpts

Tuesday 8th March 2016 Commons Chamber

[Kevin Brennan]

I agree. My hon. Friend has been dogged in her pursuit of that both in Committee and in tabling her amendments on Report, and I look forward to her contribution on that subject.

Will the Minister guarantee that privatisation will not dilute the bank’s green purposes, or must we just keep our fingers crossed? The Government still need to adequately answer questions that were not answered properly in Committee. Am I right that the legislative lock on the green purposes is being repealed purely to get the bank off the Government’s books? If that is the principal reason, is it a good enough reason to give up the statutory guarantee, given what I said about the technical nature of the accounting issue that the ONS raised?

Will the Minister indicate the Government’s view of the stake they expect to retain in the bank, if any, following privatisation? I understand that it is a market transaction, but we need an idea of the kind of return they expect from the sale. As was mentioned earlier, market conditions are so poor that the Chancellor had to abandon the sell-off of Lloyds shares, but we need to know whether they really expect a significant return from the privatisation, given all the pain associated with the process and the record of poor value for money for the taxpayer in previous privatisations. I do not expect her to be able to be precise, but she will want to avoid the criticism the Government encountered over the lack of value achieved previously, so will she gives us an idea of what she expects the Government to get from privatisation?

Is the Minister concerned that these matters will provide further uncertainty for low-carbon investors, at a time of real concern about the Government’s retreat from investment in wind power? We have learned over many years that making policy in haste is not wise—it is certainly not wise to privatise in haste—and we might well repent at leisure if this innovative and effective piece of public policy is lost as a result of a lack of care and a rush to privatise. That is no way to make sustainable policy, particularly in an area where we are trying to create a sustainable future for the country, which is why we have tabled new clause 4.

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

I am happy to be able to speak to my new clause 8, which I would like to press to a vote, but first I wish to associate myself with the shadow Minister’s case in favour of new clause 4, to which I have also put my name.

Essentially, the context of new clause 8 is my dismay at the Government’s determination to push through privatisation of the Green Investment Bank despite concerns expressed by the House of Lords, Members of this House, the Environmental Audit Committee and civil society. Through this and other actions, I fear that the Government have demonstrated that their desire to get the bank off their balance sheet is taking massive precedence over their interest in whether the bank is genuinely contributing to the green economy to the fullest extent possible.

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[Bob Stewart (Beckenham) (Con)]

Would not inoculation, to use the hon. Lady’s word, be guaranteed by the special share the Government intend to operate?

[Caroline Lucas]

Unfortunately, the special share has no legal underpinning, so we cannot have reassurance about that. In addition, the Government’s overestimation of the ease with which they will sell the bank is a real problem, as I am demonstrating. They have massively overestimated the speed at which they can sell, which I fear will lead to a temptation to asset-strip. My new clause is a simple way of ensuring that that does not happen. I suggest we ensure that anyone buying the bank commits to the full five-year life of round one.

[Mary Creagh]

The hon. Lady is a credit to our Committee, and I am grateful for the many points she is making on this issue. Does she share my concern that the proposed special share might not be carried forward in any future sale of assets? Will she join me in asking the Minister to clarify that in her response? The bank may be sold once, but the danger is that the next time it is sold, it may well be a case of, “We want to get rid of all this stuff about the green part of what the bank does.”

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[Caroline Lucas]

I am grateful to the hon. Lady for her intervention and kind words, and I congratulate her on her chairmanship of the Environmental Audit Committee. I do indeed share her concern that we have no real legal guarantee that this special share mechanism will be safe over time. We need a guarantee that it will protect not just the bank’s green purposes but the focus on complex and novel investments that a public green investment bank is uniquely fitted to be able to fulfil.

I fear that this privatisation is being done in haste. It has not been properly thought through, and the guarantees that we are being offered are not watertight. I therefore commend my simple new clause 8, which would provide at least some reassurance that the Green Investment Bank will be maintained as a single functioning institution that can continue to invest in the UK’s low-carbon economy at the same level as was planned prior to privatisation. If the Government are so sure that that is possible, I hope they will accept the new clause.

[Mary Creagh]

I shall speak to amendment 17, which stands in my name and that of my right hon. Friend the Member for Don Valley (Caroline Flint). Before I come on to the substance, I would like to congratulate previous speakers in the debate. The fact that the Government have moved substantially on some of these issues is a testament to the scrutiny provided by the Environmental Audit Committee and the Labour party as the Bill has passed through the House. I put on record my anxiety about the fact that this asset sale was rushed out last Thursday, before the Bill had had a chance to pass through the House, which suggests that we are moving on the basis of a timetable not dictated by the Minister or the market conditions that would achieve the best possible value for a Government asset of this kind, but driven by the Chancellor, who is going to have to make some difficult announcements in his Budget on 16 March.

To meet the climate change targets that were agreed at Paris, we will need billions of pounds of green investment to upgrade the energy and transport infrastructure of the UK. So far, the Green Investment Bank has done a really sterling job in attracting capital to low-carbon infrastructure projects in the UK that might otherwise have struggled to find funding. The Bill allows the Government to sell off the bank. I stress that I am pretty certain that this bank is going to be sold in one piece at one time, with the risk that it will not achieve best value for the taxpayer. I am not opposed to privatisation, if it can be shown that it is the right policy tool to get the job done, but this decision seems to have been rushed through just to get the bank off the Government’s balance sheet.

The Environmental Audit Committee, on which the hon. Member for Brighton, Pavilion (Caroline Lucas) and I both sit, produced a report before Christmas that concluded that the Government took

“the decision to privatise GIB without due transparency …consultation, or proper consideration of alternatives.”

Ministers have simply not yet proven to Parliament that the bank will achieve its aims better in the private sector. The Government have relied heavily on assurances from potential shareholders and executives who stand to benefit personally from the sale.

Amendment 17 would ensure that, if the sale goes ahead, the Green Investment Bank would remain accountable to Parliament and taxpayers by reporting annually on the pay of its top team. The Environmental Audit Committee recommended that the Government undertake proper consultation and evidence gathering before any sale and that protecting the GIB’s green identity should be paramount. While I welcome the Secretary of State’s pledge to protect the bank’s green status with a special share, as the Committee recommended, I am concerned that without locking that in legislation, it may not be secure. I am concerned that the special share will not be worth the paper it is written on in any future sale of the bank and that it will be forgotten because, of course, the bank’s onward sale value is depressed if we are limiting the nature of the activities in which it can invest.

When the bank was established, it was intended by the Government to be an exemplar of transparency in the financial services sector in reporting executive pay. That particularly important point was accepted on a cross-party basis, given the recent banking scandal and the low levels of public trust in bankers and their bonus culture, which rewarded recklessness and persists to this day. It is therefore disappointing that that welcome clarity will not continue under the Minister’s proposals to privatise the bank. Ministers are happy for the bank and its executives to revert to the status of any other bank or fund with minimal reporting of remuneration that is limited to the highest paid member of staff and the chairman of the board. My amendment would commit the Government to providing full disclosure to Parliament of the remuneration of the Green Investment Bank’s senior management and board after privatisation.

This point was hotly disputed and argued by the Minister in Committee, but it is fair to say that the Committee saw a certain irony in her stout defence of allowing Green Investment Bank executives to have the freedoms to increase their pay under the Bill and privatisation, although the Bill simultaneously caps the pay of people working in private sector companies such as Magnox with salaries of around £25,000. That stands in sharp contrast to the salaries of the executive team at the Green Investment Bank, which range—we know this because of the transparency—from £125,000 to £325,000, plus bonuses and benefits.

The bank began in 2012 to invest in green infrastructure projects. It has invested in 58 projects with a total value of more than £10 billion. Last June, as my hon. Friend the Member for Cardiff West (Kevin Brennan) said, the Government announced their decision to privatise the Green Investment Bank. The Bill provides the means to do so by reclassifying it as a private sector organisation so that its finance will not contribute to public sector net debt, and by removing reference to the GIB’s green purposes and identity from the Enterprise and Regulatory Reform Act 2013.

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[Anna Soubry]

Everyone will, of course, have to comply with the due diligence. I welcome the hon. Gentleman’s comments and will dwell on that topic in a moment. I want to make it absolutely clear that it is difficult to believe that anybody would buy the Green Investment Bank unless they absolutely wanted to continue its great work, for which I pay tribute to the bank.

[Caroline Lucas]

rose—

[Anna Soubry]

I will give way, but I want to move on to specifically why Opposition new clause 4, relating to the special share, is wrong and why the Government’s proposals are absolutely right.

[Caroline Lucas]

I have two points. First, this is not just about green purposes. We should remember that the Green Investment Bank has particularly focused on complex and novel innovations, which take longer. It is not such a quick win, which is precisely why a private investor might not want to do the same and why public money is needed. Secondly, the special share is not legally underpinned, which gives us no long-term reassurance.

[Anna Soubry]

I disagree with the hon. Lady, because the privatisation and sale of the Green Investment Bank is about ensuring that more money is available from the private sector to carry out that particular sort of investment. Forgive me, but it really is not the role of Government to gamble and make investments with taxpayers’ money. That was right in 2012 when, as mentioned by the hon. Member for Brent North (Barry Gardiner), the Green Investment Bank was set up because of an accepted market failure. However, the idea that the Government are throwing it away, as he put it, could not be further from the truth. The Green Investment Bank is a real success story. No one is seeking to pretend that it is anything else. We want its success to continue, but in the private sector.