Copyright (Rights and Remuneration of Musicians, etc.) Bill

Debate between Graham Stuart and George Freeman

Friday 3rd December 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)]

It is a great pleasure to be here today. Is not this a wonderful example of what Fridays are for—a proper cross-party debate that tackles a serious issue? I pay tribute to the hon. Member for Cardiff West (Kevin Brennan) and the Select Committee for their substantial report in the summer; I assure them that I and officials in DCMS and the Department for Business, Energy and Industrial Strategy have read it carefully. Indeed, it is because of that report that we are having this debate today.

I pay tribute to all colleagues who have spoken so far. I know that more want to speak, but I wanted to take this opportunity to set out the headlines of the Government’s response for Opposition Members before they decide to respond. I cannot pay tribute to everyone who has spoken, but I particularly want to mention: my right hon. Friend the Member for Maldon (Mr Whittingdale), who is a former DCMS Secretary and was a distinguished Chair of the DCMS Select Committee, whose comments were important and well noted; and my hon. Friend the Member for Warrington South (Andy Carter), who demonstrated his experience in the industry. I also thank a whole range of voices to which I have been listening carefully. The tone of the debate has been extremely welcome, and I pay tribute to the hon. Member for Cardiff West for bringing the debate to the House in that way, with this level of cross-party engagement. It is all to the good and this is what the public expect us to do on a Friday in private Members’ business: come together and tackle key issues.

I am responding on behalf of the Government as Minister for Innovation at the Department for Business, Energy and Industrial Strategy, and Minister for copyright and intellectual property, which is what the Bill before us actually amends in law. I am here as a member of a Government who are taking this issue seriously, especially through my Department working closely with DCMS.

One of my primary responsibilities is for innovation across Government, so I want to put this issue in the context of the broader opportunity for digital innovation in the economy, including through the deep digital technologies of AI, quantum and such technologies, which I am looking to support through our science and innovation budget. We should also look at this issue with reference to the role of important digital clusters—the gaming community and others—that are driving innovation in medical technologies and a whole range of other parts of our digital economy. Indeed, earlier this summer, I took the Big Tent Foundation to Coventry, where we were joined by the Secretary of State for BEIS, to celebrate the work of the often unseen digital entrepreneurs in the gaming cluster, who are not often seen in the newspapers, but who are driving huge investment, innovation, and opportunity for people to engage in the digital economy.

It was for that reason that yesterday at the levelling-up Cabinet committee, we had a long conversation about the importance of the digital creative sector in supporting opportunities around the economy. Many of our now most celebrated digital and technology clusters started with strong cultural, artistic and musical elements. In fact, silicon valley started in the ’60s as a home for non-conformist, free-thinking, fresh-thinking entrepreneurs, before the term was really widely understood. It was the lifestyle, the surfing and the music that laid the foundations for what is now the world’s greatest technology cluster. Similarly, in Cornwall we are seeing the merger of lifestyle and recreation tech entrepreneurs linked to surfing and music. Music is not just in a silo.

I am also here in a personal capacity. My family has substantial interests in the industry, although I am not declaring commercial interests, as I have none myself. My brother works in the film industry, where people are better paid. It is a bit feast or famine. When there is a film, people tend to get paid pretty well, and between films it is a bit famine-ish—but they are paid well in general. My wife is a theatre director. People in theatre are paid rather less well than in film, although many of them sometimes work in films, if they are lucky.

In our house, we have a lodger who is a family friend. He is a nocturnal entrepreneur —I see him only at the beginning and end of the day—and I asked him the other day, “What are you doing upstairs?”. He is a digital music entrepreneur, making music at night. I asked him how the streaming sector is working. His response was very interesting and I want to share it with the House, as he said: “If it wasn’t for Spotify, no one would know me. I’m using the streaming platform to get noticed. I don’t make any money out of it, but what happens is that people then pick me up on TikTok, they pick me up on Instagram, they then reach out and message me.” He said, “I’m now selling cassettes”, at which point I looked at him! I am old enough to have had a collection of cassettes—indeed, when I bought my last car but one I was worried that there was not a cassette player and what I was going to do with my old cassettes. Then I had the same problem with my CDs. I looked at my lodger and said, “Cassettes?” and he said yes. As colleagues around the House more knowledgeable than me have highlighted, there is now a huge market in cassettes, as indeed there is in the renaissance of vinyl.

My lodger has used the streaming sector to create a footprint for himself, but of course what he really wants to be able to do is fill venues. When I asked, “Could you fill a venue here in London?” he said, “I could half-fill one in London, but I could fill 10 venues in Los Angeles.” I think that speaks volumes about the level of global digital entrepreneurial activity going on in this country—of course, the pandemic has robbed many of our musical artists of those venue-related, event-related incomes—and highlights a lot of the issues that the Select Committee has rightly brought to the fore about the impact of the level of digitalisation in the music industry.

My headline message is that we in Government want to view this area as a creative industries ecosystem, and make sure that Britain is the best place in the world for musicians to practise, innovate and create, recognising that we are in an incredibly competitive global environment; nobody wants to pass a well-intended law that inadvertently undermines the UK’s position as a leading centre. In this debate, we need to think about the artists—in this case, the musicians—and the labels and the platforms, as well as the relationships among those three in creating a functioning, vibrant, innovative and, indeed, profitable ecosystem in which revenues are distributed fairly and in a way that leads to UK leadership.

My commitment, on behalf of the Government, is that we will take this moment, with the report and this very well presented Bill, to do what many in the House have urged us to do, which is to look quickly—not to delay, but to look quickly—at all of the issues and the impacts, and make sure that we frame a Government response that does not just deal with the immediate issue today, but means that our successors in this House in 10 or 20 years’ time say that this Parliament got it right and tackled it in the right way.

That is really about, yes, fairness. Fairness is an important word, and I think an important value that most people listening to this debate, who may not understand the complexities—and, boy, there are many—of the modern digital music streaming ecosystem, understand. People understand that fairness does not mean everybody being paid the same amount every day, which tends to lead to a communist society in which very little is to be distributed. Fairness means that people are rewarded properly and appropriately for their part in an ecosystem, reflecting the role of others and of competition. It is also about making sure that the UK remains a powerhouse in the global digital ecosystem, and in particular that our musicians, on which this Bill focuses, are properly rewarded.

I want to highlight that “musician” is one word but covers a multitude of different people—singers, bands, DJs, instrumentalists, non-featured artists, session musicians, backing singers, lyricists and composers. There is a huge range of people, and before we legislate we just need to be cognisant that we will be legislating to shape their lifestyles and their livelihoods. It is part of my responsibility as a Minister to make sure that we listen to all of them, even those who are not so noisy, and make sure that, before we change the law, we are cognisant of any unintended side effects. We need to make sure that all musicians are benefiting from the UK legal framework, and not just be pushed by one group without being cognisant of the effects on others.

I also want to highlight—indeed, I did not know this before preparing in the last two or three weeks for this debate—how musicians actually make their money. If we look at the data, we see that, at 31%, live performance is the main revenue stream. That has of course been hit very hard by the pandemic, which is what has brought this issue to the fore. Then there is teaching of music at 9%, audio streaming royalties at 6%, physical sales at 5%, digital sales at 5%, sessional orchestral work at 5%, broadcasts at 5%, public performances at 4%, commissions for stage at 3%, merchandise at 3%, video streaming royalties at 3%, and a whole raft of others. The truth is that there are multiple revenue streams for most musicians, and some of course only receive some of those, but we need to be cognisant of the broader musician revenue stream, and indeed of how complex it is, before we legislate.

When a song is streamed on a service such as Spotify, revenue from that stream flows through a streaming value chain that has taken shape in the past few years. At the start, the streaming service takes its cut, which is typically around 30%, although there is no industry standard, and the rest is split among all the other parties back down the supply chain. People’s ability to negotiate depends, of course, on their strength in the market. I dare say that if I produced a piece of music, my negotiating power in the market would be very weak, whereas the band led by colleagues here in the House have established that they have an audience and a market. I pay tribute to their work in not only using those revenues to support charities but in highlighting issues in the House.

It is and should be a competitive market. I think we would all accept, as people who make their living on their feet, speaking to issues, that if we went to Hyde Park corner, some of us would attract bigger audiences than others. I do not think we would pass a Bill that compelled the public to listen to us all for the same amount of time with the same level of interest. We cannot legislate for that and we all know that. We do, though, want to make sure that successful artists who generate quality music are rewarded properly.

We accept that there is a problem and we accept the fundamental case made by the Select Committee. We have already started by launching the Competition and Markets Authority. The industry is very vertical, if I can put it that way, and we want to make sure that the revenues flow fairly and there is no anti-competitive practice. We are also looking, through the Intellectual Property Office, at how other countries have done it: there have been a number of reforms around the world and we want to be sure that we have collected the data on any reforms that have worked positively for musicians across the board and on those that have had negative effects.

In the past two weeks, I have had extensive meetings with the hon. Member for Cardiff West, in a positive spirit, and with colleagues on the Government Benches, including my right hon. Friend the Member for Tatton (Esther McVey), and around 40 or 50 other colleagues who have taken interest. I have also taken the time to meet people in the industry.

Before colleagues decide how they wish to proceed, they should know that views are very mixed. I have had 50 submissions this week that I was reading late last night. The Association of Independent Music accepts the Select Committee’s case that there is a problem, but does not accept that

“the solutions this Bill proposes will lead to the outcomes its supporters hope for—and the Bill risks damaging independent music”

by making

“the UK a less attractive place to invest and record”.

The British Phonographic Industry said:

“The Bill is premature in rushing to a legislative solution before the market impact…has been properly explored”.

We have had submissions from a huge range of hugely creatively and entrepreneurial UK labels. I will not even begin to read out the whole list, but I have here a letter with at least 20 logos on it. In November, a group of them wrote to the Prime Minister: “We are writing as a group of British independent record labels concerned about the unintended impact”—I do not think anybody has any doubt about the intent behind the Bill or, indeed, the Select Committee’s work behind it—“on our industry of the copyright Bill that is due to be debated in the House”. They urged us not to accept the Bill quickly as it is written but to take it as a spur, as the hon. Member for Cardiff West himself urged, to do the necessary research.

Jeepster Recordings, which is based in Hackney, wrote to the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) to say:

“I am writing to you from Jeepster Recordings in Stoke Newington. We are an independent record company based in your constituency. We began in 1996 and have a very small creatively successful back catalogue which includes the early Belle and Sebastian and Snow Patrol albums…We have deep concerns about the impact of this Bill on the future of our business and feel that there are parts of it that, if approved, will destroy a business we have managed to keep going for 26 years…As with a lot of small labels, we invested a large amount of money in our artists and struggled as a company at a financial loss for several years whilst promoting them in a market skewed in favour of the major labels”,

which is the point that the Bill seeks to tackle.

We are keen to make sure that we get this right and pass a piece of legislation, if that is what it takes, or work with the Competition and Markets Authority to put in place the right measures to make sure that the industry—the labels—respond in the right way. Ultimately, before the long and slow process of legislation, we would like to find an industry solution, if we can, which is why we have brought together a series of working groups with industry to start to put feet to the fire and ask some hard questions about what they are doing to make sure that we properly remunerate artists.

[Graham Stuart]

There is huge interest and real concern across the House about getting this right. Often the House comes together like this on an issue, but then somehow in the Government it goes into the sidings. Can the Minister reassure all colleagues across the House who want to see action that he and the Government are committed to taking it forward energetically?

[George Freeman]

I am grateful to my hon. Friend, a distinguished Back Bencher and former Minister, for raising that point. I myself have had private Members’ Bills, including ten-minute rule Bills, adopted by the Government; I have withdrawn them on the basis of an undertaking from the Minister. I have spoken to the hon. Member for Cardiff West, and obviously I understand that he wants to make his point, but I ask politely at the Dispatch Box, for the record, whether he might be prepared to withdraw the Bill today, work with me on tackling the measures in it, and bring it back in due course if he feels that the measures that I have put in place are inappropriate.

Green Investment Bank

Debate between Graham Stuart and George Freeman

Thursday 29th October 2015 Westminster Hall

[George Freeman]

I respect that. The point I am making is that the Government have a strategic commitment to the British people, and it was not the least of the reasons we were returned to office—to get our public debts under control. The hon. Gentleman’s party may take a more cavalier view of public debt, and I respect that, but our view is that we need to get it under control. For that reason, but not only that reason, institutions that can borrow today, thus contributing to exacerbating the public sector debt problem, need to be liberated to get access to the flourishing private capital markets that the Green Investment Bank has played no small part in creating. The figures that I gave earlier on the extent of the global sector are relevant to that.

To complete my comments on the rationale for the decision, I looked this morning at research on market interest, and interest in acquiring a stake in the Green Investment Bank is likely to come from large-scale institutional investors such as UK pension funds, infrastructure private equity funds and sovereign wealth funds—specialist investors with an interest in green infrastructure. The bank has already successfully attracted similar investors into its managed fund for investment in offshore wind. Many of those investors do not currently invest in individual green projects. Allowing them to acquire a stake in the bank will provide a vehicle for them to invest in the area for the first time. That is a part of developing a more active private sector market in renewables and green energy. Through the bank’s portfolio of renewable energy and green infrastructure projects we hope to widen the pool of investor exposure and stakeholders in the sector. The sale of the bank is partly about enabling that new pool of capital to be brought to bear, helping to accelerate investment.

[Graham Stuart]

Do the Government have any preference, then, as to the number of investors that might come to the Green Investment Bank? He has talked about some taking a stake—perhaps pension funds; but what if a major international bank offered for 100% of the bank, and that was the highest offer? Would they sell to a single institution, and would there then be a danger that that would just be swallowed up in a much larger organisation, so that the purpose of the bank could eventually be diluted?

[George Freeman]

The overriding principle is that we want to ensure that the bank is put on a footing where it has the freedom to operate and is able to raise the necessary capital without being jeopardised by having an investor base that is too fragmented and small to be effective, or too small or too large an interest to be sustainable. Both of those represent risks. We will need to take a view and ensure that we give it the best possible chance to be able to carry on and fulfil its remit. I will say something about its green remit in a minute.

[Graham Stuart]

I know that it is difficult and, I imagine, sometimes commercially sensitive but I would like to press the Minister. Is it the Government’s view that the sale to a very large global bank would be a bad thing? He has described it as a risk. I know that the Government will take a view but do they have a view that they can share with the House today? We are trying to find out what the Government are going to do with this bank.

[George Freeman]

Our view is that we want to give the Green Investment Bank the best possible chance of having a stable and secure future and being able to raise the sort of money that it needs out of the market. Having been an investor myself in much smaller companies, I would say that anyone involved—my hon. Friend is aware of this—will know that there is no perfect shareholder structure. Often having a very small number, particularly if it is one, can create risks of its own. Having far too many small investors can mean that it is a struggle to raise the capital needed. A happy balance will need to be struck, but the judgment will have to give the Green Investment Bank the best chance of fulfilling its remit. I will say something about its green remit in just a moment. My hon. Friend made an important point.

Crucially, the plans are not being imposed by the Government on a reluctant bank. They have the full support of the company and its independent board and chair, Lord Smith of Kelvin, and others. Lord Smith of Kelvin said:

“I welcome this. You can’t keep going back to the Government for more and more money. If we want to build something that is sustainable and durable, we need private capital. This was always going to happen.”

He also said:

“The UK Government led the world in their vision and commitment in setting up the world’s first dedicated green investment bank, so we are delighted to have their support as we enter a new phase and seek additional investors in our business.”

Shaun Kingsbury, the chief executive officer, said:

“That is why I believe the decision announced by the Business Secretary is the right one. It is the option that gives us the best chance of creating the greatest green impact.”

Other important commentators have concurred. Richard Howard, head of environment and policy at the think-tank Policy Exchange, said at the evidence session of the Environmental Audit Committee yesterday that the legislation may not be needed to maintain the green focus, and that if we remove that legislation and allow someone to invest, that investor would come along and invest because they are interested in supporting what the Green Investment Bank is doing. He said that private capital funds have got involved precisely because the bank has a track record in these areas and that they are buying into a pool of expertise in investing in green projects.

The Environmental Audit Committee’s report on green finance in March 2014 said that the Green Investment Bank

“needs to be able to raise significant further private sector capital for investment alongside the Bank’s programmes, and to borrow itself to enlarge the scale of its work…The Government must make an early and clear statement about the Green Investment Bank’s long-term future beyond the 2015–16 horizon of its Spending Review funding settlement”,

which answers one of the points made earlier.

--- Later in debate ---

[Graham Stuart]

rose—

[George Freeman]

I will take these two interventions, and perhaps I can then crack through the questions.

[George Freeman]

I want to take specific advice, but I will write to the hon. Gentleman on whether any constraints are envisaged on what may or may not constitute green investment. My understanding is that we want to give the bank the freedom to invest in a range of different technologies. Indeed, part of the bank’s mission is to be able to catalyse investment in a much wider range of technologies that will be key to building a 21st-century green economy.

[Graham Stuart]

The Government announced that they will privatise the bank so that it can access capital, as the Minister has set out. The letter announcing that privatisation stated that the bank will be guaranteed by the statutes. Those statutes have suddenly gone, and promises have been made to the Treasury. It feels as if the Government machine has already decided to privatise this bank, but the basis on which the Government are privatising the bank has changed. Will it be possible to go back? The Treasury is rightly trying to address the deficit and the debt, but there is a conversation to be had, because the bank is not being privatised on the basis that was originally proposed. There is a risk that this thing will not do what we want it to do. The Climate Change Act 2008 commits us to action, and if that action costs more, we would be back to cutting off our nose to spite our face.

[George Freeman]

My hon. Friend makes a good point, and I know he has raised it with my right hon. Friend, the Secretary of State for Business, Innovation and Skills. It flows from everything I have said that we are determined to ensure that the Green Investment Bank is able to continue being a green investment bank. Given the constraints under which we are operating, we need to be creative in exploring every option. I am open to my hon. Friend’s suggestions about how we might be able to do that in a way that does not compromise the bank’s ability to operate in the way we want.

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[George Freeman]

Well, the shadow Minister should see the list of questions I have been asked, not least by the shadow Minister himself. I will try to answer those questions and, if I fail, the hon. Member for Hartlepool (Mr Wright) can intervene at the end.

I was asked whether the management of the Green Investment Bank would prefer a statutory lock. The chief executive officer allegedly said that he is “agnostic” about privatisation, but he did say that he prefers a statutory lock. He also said that he wants the ability to raise funds from the private sector, and he understands the need to remove the statute and the statutory constraints.

My hon. Friend the Member for Beverley and Holderness asked how the shareholder framework document will change. Clearly, the framework document will need to change as the shareholding changes. When the bank was set up in 2012, the document’s primary purpose was to set out that the bank should operate independently so that the Government could not interfere in its investment decisions and to ensure the bank’s green ethos. Privatisation will further increase that operational independence, but the bank’s green ethos is now entrenched. The Green Investment Bank is what it is, and it is what is in its business plan, which will be a material document in the shareholder subscription round.

My hon. Friend also asked whether the market failures that the bank was set up to address have now improved to such an extent that we no longer feel the bank needs to operate in the same way. He is right that the bank was set up shortly after the banking crisis in the depths of the dark period of 2010, 2011 and 2012, when the economy was moving very slowly, to rectify a lack of long-term liquidity in the market. It is true that long-term funding for infrastructure projects has recovered strongly, as illustrated by the data I gave earlier. There was a lack of specialist green infrastructure investors, particularly at scale, which is what the bank has now become. The bank has helped to support such infrastructure projects, and we intend that the bank will remain a specialist green investor after privatisation. That is what the bank does, and it is what an acquirer will be buying. We want to let the bank off the leash to do more of that.

The hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in her place—she gave her apologies—asked whether a profit-maximising bank would be in danger of crowding out investment because it would be just like any other bank. In fact, the Green Investment Bank is already profit maximising; it has turned its first profit. It exists to prove that it is possible to be green and profitable. That is in the bank’s very DNA; we want to show that the green economy is a real economy. That is how we will attract the private sector capital that we need. The GIB’s expertise can do so regardless of whether it is in the private or the public sector, of course, but we want to give it the freedom to raise that money.

The hon. Lady also asked whether other countries are copying us. It is true that we were in the vanguard when the Conservative-led coalition set up the Green Investment Bank, and we have been copied. It is our ambition to be in the vanguard as we take the market forward. We need to raise not just hundreds of millions or billions, but tens of billions—actually, over the next decade or so, we need to raise hundreds of billions—of money for green infrastructure. There is no way that any Government could fund all of it, even if they wanted to. We need to go to the next stage by leading private sector capital into the market.

Several hon. Members, including my hon. Friend the Member for Beverley and Holderness, asked whether the bank cannot raise debt anyway, and whether we had explored all the options. The truth is that equity raising by the bank will effectively score like debt to the public sector once that equity is invested, so this is not just about debt, but about ensuring that the bank has the right financial mix to operate. My hon. Friend also asked about the European fund for strategic investments, a £300 billion pot for capital raising, and whether the bank will still be encouraged and able to access that money.

The Government are aware of the European funding for infrastructure investment, and are examining how best to make use of that facility—my hon. Friend makes a good point. In our view, that does not alter the case for moving the bank into private ownership. We absolutely need to ensure that it can access funding. The Government and devolved Administrations are actively considering, along with other UK institutions, how they can work alongside the bank to maximise the impact for the bank and others of accessing that European funding. The EFSI guarantee can be used by the bank to co-invest in and co-finance with both public and private institutions, so privatising the bank does not in itself preclude benefiting from the European fund.

[Graham Stuart]

For the record, is the Minister saying that the bank’s change from its current status to privatised will have no impact whatever on its ability to access those funds, to which we are contributing so many billions of pounds?

[George Freeman]

I would not want to go as far as to say that it will have no impact. What I am saying is that we are actively ensuring that the bank will still be able to access funds from the EFSI. It may have to do so through consortiums with other parties, in a slightly different way from how it did when it was a state-owned bank.

My hon. Friend asked whether citizens would have the opportunity to invest directly. We are exploring all options as part of the sale. I would point out that the bank is still a very young company that has only just broken even, meaning that it is pretty unlikely to have a sufficient track record to attract much interest from the retail market, but we are obviously keen to grow the level of retail investor exposure into the market as it matures. He and others asked whether we and the bank had considered raising green bonds. Issuing bonds is absolutely one of the things that the bank will be free to do if it chooses. At present, it is prevented from doing so, as it would score against public sector debt in the same way as borrowing.

Several hon. Members have asked why we are repealing the legislation. I have touched on this already, but in order to grow in line with its ambitious green business plan, the bank needs the freedom to borrow and access much larger pools of private capital, and it will have that freedom if it can borrow without affecting public sector net debt. That means getting the bank reclassified as a private enterprise and off the Government’s balance sheet. To do so, we must do two things: sell a majority of the company, and repeal the legislation. Otherwise, the company could still be classified in the public sector, even after a sale.

One or two hon. Members have asked why we cannot just retain the bank in Government ownership and allow it to borrow, citing the statement by my right hon. Friend the Chancellor that as and when debt starts to fall as a percentage of GDP, we can release borrowing restrictions on the economy generally, so why not on the bank? The problem is that, in Government ownership, the bank’s borrowing and capital raising would still count against public sector debt. Equally, it still has to compete for funding, along with all Government expenditure needs and with the pressure on the Exchequer, even as we get the debt under control. In my own field of health, for example, health demand is rising substantially, and we want to liberate the bank from having to fight in the Whitehall corridors in the same way as every other Department in spending rounds.

On top of that, private ownership will give the bank much greater freedom to operate, removing a number of constraints. It is worth pointing out that it was always envisaged that the bank should aim to mobilise maximum private capital, and it fits our strategic policy aim of getting the market to work on tackling green policy challenges. As I said, we have the full support of the management and the CEO of the company.

Let me turn to the important question of how we will protect the bank’s green mission and remit in the absence of the legislative lock. As a key part of any sale discussions, potential investors will be asked to confirm their commitment to the bank’s green values, green mission and green business plan, and set out how they propose to protect them. We envisage that that will involve new shareholders agreeing to various specific things: retaining the green objectives in the bank’s articles of association; ensuring that the bank continues to invest in a way that achieves maximum positive green impact; maintaining the bank’s existing standards for reporting on its green investment performance; and providing independent assurance of that.

We fully expect that, as part of a subscription round based on the bank’s offering to the market, its green business plan with clear long-term investment in a range of sectors and projects will deliver the safeguards that Opposition Members have asked for without the need for legislation that would curtail those freedoms. We are absolutely committed to ensuring that the bank continues with that green mission, and I am happy and open to explore mechanisms suggested by any party for safeguarding the bank’s green remit in a way that does not fall foul of those public control tests.

[Graham Stuart]

On that point, as we all know, when a company goes to market, it depends on the conditions at the time. It is at least feasible that when the bank goes to the market, those who wish to invest on the basis that the Minister is discussing will disappear, leaving those who will simply buy the capital and assets invested and treat the bank as a zombie fund, immediately sacking as many of the staff as possible, running it at a minimal level and calculating a reasonable return. What guarantee can the Government give, if those turn out to be the only buyers around, that they will not stay so committed to privatisation—in order to meet, rightly, the need to sort out the national debt—that they end up giving the bank away to be turned into a zombie fund, not only avoiding innovative green projects but not really developing anything at all?

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[George Freeman]

Proceeds will depend on how big a stake is sold, on the outcome of negotiations with investors about the value of the company and on how the company’s business plan is judged. We will need to be satisfied that any transaction represents value for money for the taxpayer, and fits with the Government’s wider policy interests and with the best interests of the bank. The hon. Gentleman would obviously not expect me to speculate this afternoon on what figure we would expect and thus undermine the process.

Importantly, the hon. Gentleman also asked me about the £1.8 billion of funding that is left. As he has highlighted, the bank can carry on for at least another year, given that it has £1.8 billion—roughly—in reserves; he suggested that after that period it could start recycling capital. The truth is that to grow its business and invest in accordance with its green business plan, the bank will need access to a much greater volume of capital from a wide range of sources.

The hon. Gentleman asked why there was urgency about this process. What we do not want is to get to a point where the bank has no reserves and badly needs capital. Anyone who has raised money knows that the time to raise it is not when there is no choice but to raise it, because money is desperately needed, but when a company is in a strong position, and has a pipeline, assets and a good track record. We think the bank is in that situation now. We are confident that we can attract private capital into the bank because of its track record and because it is operating successfully.

[Graham Stuart]

I am grateful to the Minister for giving way again; he is being very generous with his time. My understanding is that the funding agreement runs out in March next year, and that the steady state activity of the bank for the last couple of years is £700 million to £800 million a year. There is not clarity about what happens from 1 April 2016 onwards, and the bank will have no access to that £1.8 billion; according to my calculations, the reserves were more like £1.5 billion, but whatever the exact figure is, it will be quite a lot of hundreds of millions of pounds. Perhaps the Minister, while answering other questions, might seek advice elsewhere about this issue; I would be grateful if he could respond to me about it. I am interested to know how the bank will be taken care of between its current funding provision running out in March 2016 and whatever date it is sold, and how we ensure that there is not a chilling effect.

[George Freeman]

My hon. Friend makes an important point. A key part of the rationale for proceeding with this move now is that the bank’s momentum—its existing status—is a strength; it is an asset rather than a liability in the context of the bank’s fundraising. So we are actively looking at everything we can do to ensure that clarity about the bank’s status, position and momentum is provided to potential investors. It is not in our interests that there is confusion, and we are addressing that issue.