My written statement of 25 June provided an update on work to move UK Green Investment Bank plc (GIB) into private ownership. It was always our intention that GIB should mobilise maximum private investment in the green economy. This reflects our policy aim of getting the market to work in tackling green policy challenges.
Bringing private ownership directly into GIB is part of this aim and a natural next step for the company now it has proved itself a successful commercial enterprise capable of operating with private sector capital rather than relying on public funding for its investments. It will allow the bank to access a much greater volume of capital than would be the case if GIB were to remain in Government ownership meaning it can grow its business, move into a wider range of sectors and have greatest possible impact in mobilising investment so that more green projects get financed more quickly than would otherwise be the case. The plans have the full support of the company and its independent Board, including Chair, Lord Smith of Kelvin.
As I said in my previous statement, a key objective in moving the company into the private sector is that it should be free to borrow and raise capital without this affecting public sector net debt. Giving GIB this freedom is essential if the company is to invest in accordance with its ambitious green business plan.
It is now clear that to achieve
re-classification of GIB as a private sector enterprise, we need to remove the public sector controls imposed on the company by the Enterprise and Regulatory Reform Act 2013. Unless we remove these controls, there is a real risk GIB would remain classified to the public sector even after a sale so would remain subject to Government control over its capital raising. This unintended effect of the legislation has only become apparent in the course of our work to facilitate GIB’s transition into the private sector.
In view of this, as a necessary part of the privatisation process, we now propose to use the Enterprise Bill, through an amendment shortly to be tabled at the Lords Committee stage, to repeal the relevant sections of the Enterprise and Regulatory Reform Act 2013 relating to GIB.
I recognise that in taking this step, people will wish to be assured GIB will nevertheless continue to invest in green sectors as Parliament envisaged. I wish to make clear that the Government also wants and expects a privately owned GIB to continue this clear focus on green sectors - mobilising more private capital and further accelerating the transition to a green economy.
It is clear from preliminary feedback that potential investors are interested in acquiring a stake in GIB precisely because of its unique green specialism and its green focused business plan. As part of any sale process, we would expect potential investors to confirm their commitment to GIB’s green values and to set out how they propose to ensure these are protected.
I will provide further updates about the transaction as soon as possible.
This statement has also been made in the House of Lords