Green Investment Bank (Leeds)

Mark Prisk Excerpts

Monday 14th November 2011 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I begin by adding my congratulations to my hon. Friend the Member for Leeds North West (Greg Mulholland) on not only securing the debate but leading a remarkable song of harmony. He talked about music to my ears, and I must say—I say it with due care, as you are a professional Lancastrian, Mr Deputy Speaker—that I have not seen quite so many Yorkshiremen together and singing in such harmony, not just from west and north but from the south part of Yorkshire as well. It is very nice to see and hear. I hope that that same harmony can be maintained as proposals are put forward.

If I may say, my hon. Friend put his case very effectively. I might also congratulate him on his genius of having 57 different points as to why we should have the green investment bank in Leeds but under only three headings. That was a masterful performance.

Let me say from the start as someone who regularly goes to Leeds that I totally share the view that it is a first-class city with many advantages and a strong commitment to going green in our economy. I thank, for example, the local enterprise partnership and its partners for the comprehensive business case they have submitted for locating the green investment bank in the city. I was lucky enough to be in Leeds just a few weeks ago at the unveiling of the Yorkshire Post business club, when I heard first hand just how much support there is for this institution to be located in the city.

The green investment bank is a key component of this Government’s commitment to a transition to a sustainable low-carbon economy, which will complement other green policies, which I will touch on briefly later, to drive forward growth in the sector, which by 2009-10 was already worth some £116 billion.

As we have heard from several hon. Members, Leeds has a long and illustrious industrial history, often at the forefront of innovation. It is one of the UK’s largest manufacturing bases. We have heard that it is home to many international businesses. Leeds has also been able to make that difficult transition from industrial powerhouse to a thriving hub for financial services. It is true that outside the City of London, it is the largest financial centre in the UK.

As several hon. Members have pointed out, Leeds has a number of other important emerging strengths, including environmental sciences, bioscience, and even digital and creative industries. Even in these challenging times, growth can clearly be seen in the increase in exports not just from Leeds, but from the Yorkshire and Humber region, which grew to £3.8 billion in the first quarter of this year compared with last year. When I go to the city, I see a sense of confidence and optimism when I look, for example, at the investment of £350 million in the Trinity retail and leisure development, or at the £60 million investment in Leeds arena.

As several hon. Members have said, the green economy has become increasingly important, and the Leeds city region demonstrates its focus on a sustainable economy in several ways. I had the pleasure of attending the official launch of the Aire valley enterprise zone. Its focus is on low-carbon industries and it expects to create up to 9,500 new jobs by 2025, and to add something in the region of £550 million of economic output to the city region. As my hon. Friend the hon. Member for Leeds North West mentioned, the enterprise zone in the nearby Humber region should generate nearly 5,000 jobs by 2015, particularly through its focus on offshore wind manufacturing.

When I went to the city, I was also struck—several right hon. and hon. Members mentioned this—that there is a genuine local commitment to going green in local initiatives, such as the better business environment forum or the Leeds climate change charter. Leeds is one of only four cities in the UK that is designated as an environment city. Local people recently celebrated the European year of volunteering environmental theme with projects including river cleaning, action mornings to maintain the Gledhow valley woods—I am getting a generous nod so I trust my pronunciation was correct—and a comprehensive scheme of planting bulbs and flowers in public places. That happens in other parts of the world regularly, but it is nevertheless part of that voluntary wish to recognise the value of a genuine sustainable community and economy.

I appreciate that there is a genuine commitment to a green, low-carbon future right across Leeds. Nationally, the Government are taking real action to try to put the whole economy on that path. Over the summer, the Department for Business, Innovation and Skills, the Department for Environment, Food and Rural Affairs and the Department of Energy and Climate Change published plans that map out the Government’s approach to building the green economy and show what that means in practice for business. The plans set out the range of policies we are using to support the transition to a green economy and the opportunities that we have created, but also the implications for some of those traditional businesses, which, as various right hon. and hon. Members have mentioned, will need to change how they operate to develop in future.

We understand that to invest the substantial resources required in this area, business needs to be certain that the low-carbon sector is not a passing fad, as some sceptics might believe. That is why we are seeking to provide certainty and why, for example, we are committed by law to providing a 50% reduction in carbon emissions by 2025. We have launched the world’s first incentive scheme for renewable heat, which should increase investment in green-heat technologies by £7.5 billion by 2020. We have also announced the green deal, under which householders, businesses and landlords will be able to improve the energy efficiency of their homes and buildings at no up-front cost. We have also introduced a carbon price floor, proposals on electricity market reform and a range of initiatives to encourage the roll-out of low-carbon vehicles.

To that end, good progress is being made on the green investment bank. It will be the first of its kind in the world, which is why it is one of this Government’s first priorities. Capitalised with £3 billion, the green investment bank will complement other green policies to help accelerate the leveraging in of additional private capital. The key is that the green investment bank must be a new but enduring institution, rather than a series of Government interventions, and an institution that addresses the areas of under-investment that have persisted in spite of the other measures that I have mentioned. Our green objectives are ambitious, and to achieve them we need tailored and targeted financial intervention to overcome under-investment in those key areas. The green investment bank will work towards the double bottom line of both achieving significant green impact and making financial returns.

As we have seen from this and other debates in the House, there is a real interest in the operation of the green investment bank and how it will be established, so let me turn to that. To assist us, we have appointed an advisory group, led by Sir Adrian Montague, to advise on a range of issues, including not just the institution’s strategic priorities, but the conditions and the market in which it will operate. The priorities will be decided by the Secretary of State and reviewed regularly by Ministers and the institution’s corporate board.

The question at the heart of this debate is the bank’s location. The location is critical to the bank’s success, and although it will not be a large institution, it is clear that people already see it as a valuable organisation—an asset, as I think one hon. Member described it—to wherever it is located. I can tell the House that we have received applications from 20 cities and towns, including Leeds. They have indicated that they would like to be considered as the location of the green investment bank. We intend to set out the details of the criteria and the process for determining the location of the green investment bank before Christmas, in just a few weeks, with a view to making the final decision in 2012. Our proposals for the green investment bank will need to be approved by the European Commission before we can establish it as a fully independent financial institution. We expect approval by mid-2013. In the interim, to accelerate our transition to a green economy, the Government will begin making early investments in green infrastructure from April 2012.

We are committed to taking action now to enable the transition to a green and growing economy, and we welcome Leeds’ active, positive and energetic contribution to this debate. We will continue to build on the progress that we have made, which is why we welcome the support from all the main political parties for the principle of an enduring and independent institution that will help to set the UK firmly on its course towards a green and growing economy.

To summarise briefly, I congratulate my hon. Friend the Member for Leeds North West on raising this important issue and emphasise that no decisions have yet been made—if that is an assurance to him—on the location of the bank. We will ensure a fair and transparent process when we decide on the location. All interested parties will be given an equal opportunity to submit an expression of interest, so that due consideration can be given to all submissions to ensure a full and equitable process.

Question put and agreed to.