For many the auction of a very large and successful asset built and shaped by Conservatives between 2010 and 2015 is going unnoticed. Evidence that sometimes what government designs, creates and builds delivers excellent value to the tax payer. So you might be surprised that the very young Green Investment Bank (GIB), the world’s first investment bank dedicated to greening the economy, is about to be sold.
The bank has been a great economic Conservative success story shaped by our commitments to the green agenda. It has already stimulated investment across a wide range of modern technologies and energy solutions. The question energy and low carbon developers and entrepreneurs are asking is will its success continue to thrive in the private sector?
This timing coincides with the Prime Minister announcing at the UN this week she was ratifying the Paris Climate Change agreement and follows the Conservative Government reasserting its commitment to emissions reduction targets and carbon budgets. These commitments mirror Greg Clark’s new industrial strategy. He wants that strategy to “capitalise on our strengths while constantly seeking new opportunities that will determine how we make our way in the world .” The Bank can and must continue to play an important part of that industrial policy whether in government hands or not. It has established itself as part of the low-carbon “eco-system” and needs to play an on-going part in modernising our economy through new technology and low carbon investments.
We start from a good place thanks in part to the GIB and the leadership it provided. Turnover in the low carbon sector now exceeds £120 billion more than twice that of UK car manufacturing and the food and drinks industry. But we must do more.
The sale of shares in GIB will allow it to raise more capital for UK green infrastructure investment at scale. Beyond the immediate cash injection it will be free to borrow and also invest in a less restrictive range of green assets than presently.
As the Government’s National Infrastructure Commission has made clear wind solar and hydro will continue to be important but a new priority should be building a modern energy system. The current centralised model with losses in generation transmission and distribution is completely unacceptable and so last century. Helping to re-risk and pump prime new technologies and new businesses are crucial to deliver us a modern clean energy system and in particular focus on productivity and greater efficiency.
But voices in the wider low carbon community are right to be asking questions. While few are questioning its sale – whole or in part – most are much more committed to the ambition of the bank than who or how its owned. They are asking how can Government ensure that in the private sector the GIB remains a champion for the green, the clean and the modern? The answer is that whoever takes the reins of the Bank it is crucial that they are committed to maximise the wider industrial value of the bank for the benefit of UK plc. They must be able to demonstrate two important “values” that we should expect from the new owner.
First they will not only rely on investing in well established low carbon technologies but novel innovative solutions – we need it to stay brave. Second, they continue the Bank’s commitment to the British green technology and industrial sector. The Government’s new industrial strategy is about UK plc prospering and the Green Investment Bank under new ownership has to show it will put the British green investment growth first. The UK needs to take a lead as it has in the past in the innovation required to transition our economy from the old to the modern – let us ensure that one of our newest successful institutions goes from strength to strength amplifying its ambition not diluting its mission.
The author was Conservative MP for South Thanet 2010-2015