On Thursday 25th of June Chancellor George Osborne confirmed plans to privatise the Green Investment Bank (GIB). The announcement was made by Business Secretary Sajid Javid when speaking at the GIB Annual Review event, he stated: “The Green Investment Bank has shown that investment into green technologies can be a profitable business, the challenge now is to build on this success.”
Opening in 2012 in Edinburgh, the bank had £3.8bn of government capital. The projects backed by the GIB are now worth £8 billion, and upon completion will generate enough renewable electricity to power the needs of approximately 4.2 million UK homes annually.
It is unclear how much of the GIB the government plans to sell, although it was reported by the Financial Times that it could be up to 70% - with the sale price well above £1bn. The bank will be valued at a small premium to its assets or loans – the bank was thought to be the first of its kind, with around 2bn of public money invested into around 50 projects. The reason behind the sale is to pay down the deficit – money owed by the Government – by selling off the assets of the bank.
There have been criticisms of the Governments latest move. Tim Farron, MP for Westmorland and Lonsdale, said the government should retain a majority stake in the investment bank. “The decision is incredibly reckless and will damage investor confidence in the sector,” he said. “But more than that, it will bring into question the Tories’ commitment to the low carbon economy.”
Caroline Lucas, Green MP for Brighton Pavilion, called the sell-off plan "rash and irresponsible" and said any such move called into question the UK's commitment to investing in a low-carbon economy. "The government should keep at least a majority stake in the Green Investment Bank to ensure investor confidence is upheld and the commitment to low-carbon lending remains."
Think-tank E3G, which advised on the original plans to establish a green bank, said a sell-off would be "reckless" and damage investor confidence. Chief executive Nick Mabey said: "The Green Investment Bank is not just the government's most lauded innovation in the war against climate change. It has kept investment in the real economy going at a time when bank lending had fallen to an all-time low. It has played a critical role in supporting the UK economic recovery.”
Osborne has made the argument that privatisation would actually be of benefit the GIB: “In 2012 we set up the Green Investment Bank to support important investment in the UK’s green infrastructure and since then it’s gone from strength to strength,” he said. “That is why we can now begin exploring options for moving the bank into the private sector to enable it to access larger pools of capital and act more freely to invest in a broad range of green sectors.”
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.