Parliament’s spending watchdog has lambasted the UK government for the “deeply regrettable” way that it sold off the Green Investment Bank last year without guaranteeing its future.
MPs on the public accounts committee said in a report published on Wednesday that ministers could have secured a better return for taxpayers from the bank’s £2.3bn sale to Macquarie, the Australian financial group, last August.
They also said that the GIB had failed to live up to its original ambitions, adding there was no guarantee that it ever would.
“In making decisions about GIB’s future, the department prioritised reducing public debt and how much money could be gained from the sale over the continued delivery of GIB’s green objective,” the committee said.
The Green Investment bank was set up in 2012 by Vince Cable, business secretary at the time in the coalition government, as a way to shoehorn private investment into green projects such as offshore wind farms.
By March of last year, GIB had committed £3.4bn to fund or partly fund 100 projects. It attracted £8.6bn of private capital alongside those investments, which were typically in offshore wind, waste and bioenergy, as well as energy efficiency and onshore renewables.
But the bank’s sale to Macquarie was roundly condemned by senior Labour and Liberal Democrat MPs, as well as environmental campaign groups.
The bank was sold for a total price of £2.3bn, consisting of £1.7bn of equity paid to the government and a further £600m that the GIB had previously committed to construction projects.
The public accounts committee said on Wednesday that measures put in place by ministers were insufficient to ensure that the bank would continue to support the government’s energy policy or have an impact on Britain’s climate change goals.
Macquarie agreed to invest more than £3bn in green energy projects over three years after the sale. But those commitments are not legally binding, and rely on several factors, including market conditions and future government policy decisions.
MPs said the government had made a “misjudgment” by asking for “so little assurance” over the bank’s future investment strategy in the UK.
Macquarie had told the committee it would have paid the same price whether or not the government had secured firmer commitments protecting GIB’s green investment obligations.
As a result, the PAC concluded it was “unclear” why the department did not look to strengthen the commitments from Macquarie to continuing to make green investments.
The government also repealed legislation ensuring the GIB would invest in the green economy ahead of the sale, in order to ensure the bank would be removed from the public balance sheet.
“It was a mistake to repeal legislation protecting GIB’s green investment obligations without securing firmer commitments from potential buyers,” said Geoffrey Clifton-Brown, the Conservative MP who is deputy chair of the committee. “The manner in which it was sold off is deeply regrettable.”
Rebecca Long-Bailey, shadow business secretary, said the report was “further proof the Tories cannot be trusted on the environment or the ability of British businesses to compete in the global low-carbon and renewables market”.
“Selling the Green Investment Bank reveals this government is more interested in making a quick buck from the family silver than in driving innovation in environmental objectives,” she said.