‘(1) Prior to a sale of shares of a UK Green Investment Bank Company (as defined in section 30(2)) the Secretary of State shall—
(a) ensure that the objects of the UK Green Investment Bank Company contained in its articles of association (“the Objectives”) shall be—
(i) the reduction of greenhouse gas emissions;
(ii) the advancement of efficiency in the use of natural resources;
(iii) the protection or enhancement of the natural environment;
(iv) the protection or enhancement of biodiversity;
(v) the promotion of environmental sustainability;
(b) ensure the articles of association of the UK Green Investment Bank Company require its directors to act and review their actions against the Objectives;
(c) create a special share; and
(d) establish a company limited by guarantee registered with the Charity Commission (“the Charitable Company”) that will own the special share.
(2) Any amendment to the Objectives shall require the consent of the Charitable Company, as holder of the special share.
(3) The special share shall—
(a) have no income or capital rights;
(b) have no voting rights except on a vote to amend the Objectives and on a vote to alter the rights of the special share.
(4) The rights of the special share shall be deemed altered by the issue of any other special share of the same class.
(5) The Charitable Company that will own the special share shall—
(a) have three members, none of which shall be public bodies;
(b) have as initial members legal persons appointed by the Committee on Climate Change established under the Climate Change Act 2008;
(c) provide that if any member ceases to be a member the remaining members shall nominate the replacement member;
(d) provide that the members will be required to act unanimously in exercising the rights attached to the special share.
(6) For the avoidance of doubt, the Committee on Climate Change shall play no role in the conduct of the Charitable Company or its members following the initial appointment of those members prior to the sale of UK Green Investment Bank company shares by the Secretary of State.”—(Kevin Brennan.)
Brought up, and read the First time.
With this it will be convenient to discuss the following:
‘Before any sale of the Crown’s shares in the UK Green Investment Bank Company takes place each prospective purchaser must enter an enforceable undertaking to fully fund the Bank’s current five year business plan.”
This new clause would ensure that the Green Investment Bank is maintained as a single, functioning institution and can continue to invest in the UK’s low carbon economy at the same level as was planned prior to privatisation.
Amendment 17, in clause 37, page 54, line 44, at end insert—
“6B Report on remuneration of chair, non-executive directors and executive team
(1) For each year following a disposal of shares held by the Crown in a UK Green Investment Bank company the Secretary of State must lay before Parliament a report on the remuneration of the company’s chair, non-executive directors and executive team by the company.
(2) The report shall include a statement of the framework or broad policy for the remuneration of the above individuals.
(3) The report shall include the value of the following, where applicable, in respect of each individual—
(a) salary or fee,
(c) other cash or non-cash benefits, including bonus or performance-related payments, and
(d) shareholdings in a UK Green Investment Bank company.”
This amendment would require, following a disposal of shares in a UK Green Investment Bank company, that the Secretary of State to report annually on the remuneration of the Chair, non-executive directors and Executive Team of the company.
New clause 4 might be referred to as the “hokey-cokey clause” because it has been in, out, and shaken all about during the passage of the Bill. I am not exaggerating when I say that, because this new clause should still be in the Bill. You may not be aware of this, Mr Speaker, so I will read briefly from the record about what happened with this clause in Committee.
In Committee the Chair put the question that clause 32 stand part of the Bill, and hon. Members responded “Aye”. The Chair asked for votes to the contrary, and said, “I think the Ayes have it.” The Minister then moved that the clause should not stand part of the Bill, and I raised a point of order to the Chair to point out that the Committee had just voted that the clause should stand part of the Bill, and that the Minister could not then move that it should not. The Chair then said:
“For clarity, I will put the question again.”––[Official Report, Enterprise Public Bill Committee,
The clause was accepted in Committee, but the vote was taken a second time because the Chair, in a spirit of extraordinary generosity and to save the Minister’s blushes, allowed a second vote. First the clause was in, then it was out, and today we are suggesting that new clause 4 should again be included in the Bill. It is not really a new clause; it was clause 32 when we considered the Bill in Committee.
The Government are wary of new clause 4, or old clause 32, because they fear that the Green Investment Bank’s borrowing would, because of the position taken by the Office for National Statistics, remain on the Government’s books and be classed as public sector debt after privatisation. If there were any suggestion of statutory control of the Green Investment Bank’s purpose, the ONS would insist that it stayed on the books.
There is currently statutory control of the Green Investment Bank’s purpose, to ensure that it is green and not just like any other investment bank. The Green Investment Bank is supposed to be a different kind of entity; it is not supposed to be like the bank that the Secretary of State worked for when he earned £3 million a year, and which was fined £600,000 by the European Union for fiddling interest rates. It is not supposed to be that kind of institution; it is supposed to be completely different and focused on sustainable investment in green projects, not based on the unsustainable culture of greed that brought the world economy to its knees in 2008, with millions of hard-working families still suffering the consequences of that. If the Green Investment Bank is meant to be a new kind of institution, how do we ensure that it remains so if the Government strip it of its statutory purpose, which is to invest in green projects?
In Committee we asked whether the Government should allow that potential ruling by the ONS to drive completely policy in this important area of sustainable public policy, but the ONS point is a technical matter. If the Green Investment Bank remains on the books after privatisation, that does not reflect any problematic public debt. It may cosmetically spoil the look of the Chancellor’s forecasts on public debt, but it would not change the fundamental underlying substance of public finances. In other words, statutory protection for the Green Investment Bank’s purposes is to be removed by the Government because of an accounting convention that is inconvenient to their political narrative. It is spin over substance on stilts.
As we discussed in Committee, the Green Investment Bank is not getting the same treatment as the Asian Infrastructure Investment Bank. The Treasury is all too ready to allow UK borrowing to be part of financing that bank, and it was not worried at all that public debt will be part of its financing. However, it is extremely reluctant to allow the same treatment for the Green Investment Bank.
You will not be surprised to hear, Mr Speaker, that I praised the former coalition Government for introducing the Green Investment Bank. Policy in that area can be difficult to implement, because by its very nature it is new and innovative—in Committee I quoted the wise words, as ever, of Kermit the Frog who said, or sang or croaked, “It’s not easy being green”. That is true. It is not easy, and this is an innovative and effective piece of public policy, and I praise the former coalition Government for introducing it.
Is one benefit of the Green Investment Bank that in large part it addressed some of the market failure that had gone before? We risk losing some of the benefits that it brought in terms of securing green investment. All that will happen—an unforeseen consequence, perhaps—is that taxpayers will have to pay more through a larger subsidy.
I believe that the proposals on privatisation that the Government quickly brought forward following the election were seriously undercooked, if I can put it that way. The Green Investment Bank has only just started to turn a profit. We are glad that it is doing that, but it is a very small amount. When the Government said that they intended to privatise the bank, they prayed in aid the statutory obligation to invest in green projects that they now wish to remove from statute, because of what the ONS said about public debt and the Green Investment Bank being on the books. That proposal has been in trouble all along, and the way that the Government are scrabbling around for a solution shows that the original proposal was undercooked.
I praise my hon. Friend for tabling this new clause, and for the way that he scrutinised the Bill in Committee. Does he agree that things have moved on substantially since we met in Committee, with the Government’s publication last Thursday of the prospectus and the announcement that the sale was to proceed and will be a two-stage auction? It certainly looks as though the bank will be fully privatised, so all the debate and discussion that we had in Committee about whether the Government would keep a minority share in the bank, as recommended by the Environmental Audit Committee, seems to have been pretty much for the birds. The Minister probably knew that in Committee.
I congratulate my hon. Friend on her election to the Chair of the Environmental Audit Committee. I am sure she will be as assiduous in scrutinising this proposal and other areas of Government policy as she was in Committee and on the Back Benches, along with my other hon. Friends. She is right to say that the publication of the Government’s intentions last week was interesting, and I hope that the Minister will answer her point about the Government’s intentions, and clarify whether they intend to maintain a stake in the Green Investment Bank after privatisation. When we probed the Minister on that in Committee, answer came there none. From the way that the proposals have been published, it would appear that the Government intend to fully privatise the bank, even though—as we discussed in Committee—it must be the worst possible time, given the current state of the market, to consider privatising this important public asset, if part of the purpose is to get good value for the taxpayer.
I will develop this point in my speech, but in Committee two weeks ago I mentioned the bear market, the slide in value of all bank shares since Christmas, and the softening of growth in China. Only this morning, Mark Carney and the Bank of England revealed the large amounts of liquidity that they are preparing to inject into the UK banking economy in the event of an exit from the European Union after the referendum, to avoid a complete meltdown and financial crisis such as the one that took place in 2007-08.
My hon. Friend is right to point that out, and, by implication, to point out that the privatisation would of course occur after the referendum in the summer. The implications of a leave vote on the attempt to privatise the UK Green Investment Bank would be highly significant, as she points out.
I wholly support my hon. Friend’s remarks. What impact does he think it might have on the prospects for full privatisation of the Green Investment Bank were the official Opposition to indicate that they were minded to purchase back the bank into the public sector?
My hon. Friend will understand that I am not going to speculate on that, given that it is not current party policy or under discussion. What I will say is that the Government have a duty, if they go ahead with a privatisation that we do not support, to be absolutely sure they get value for money for the taxpayer, as well as to give an absolute guarantee that they will protect the bank’s green purpose.
I have praised the Government for the introduction of the Green Investment Bank, but why would they do anything to place its central green mission in grave doubt? I remind the House that the bank was first proposed under the previous Labour Government. It was first mentioned as a proposal for development by the former Chancellor of the Exchequer, Alistair Darling, in one of his Budgets. It was developed in the Cabinet Office and the Department for Business, Innovation and Skills when I was a Minister in those Departments. It was introduced under the coalition Government, and it has made a good start. It has been able to participate in the financing of projects that would otherwise not have taken place and that make a real contribution to meeting our commitments under the Climate Change Act 2008.
I think we all agree, throughout the House, that the creation of the bank is a good news story. I do not see any dissent from that proposition from anyone in the Chamber. We have therefore come to a strange pass when even something we all agree is a good thing—good borrowing for sustainable purposes—is classified as bad for no other reason than that it appears on the Government’s books.
During the difficult years following the banking crash, in which we were sometimes in recession, a significant part of the UK economy’s growth came from the green economy. By some estimates, it accounts for 1 million jobs in the low-carbon sector and is worth more than £100 billion. It is disappointing that the Government are in danger, if they are not careful, of undermining one of the key drivers of that sector. If we could tap into our country’s wind, wave and tidal power, we could create thousands more high-quality, sustainable jobs for our economy as well as doing the right thing for the environment.
When the Government announced their privatisation plans last June, the Secretary of State assured the House in a written statement:
“This should bring a number of important benefits, giving GIB greater freedom to operate across a wider range of green sectors in accordance with its green purposes, which are enshrined in legislation.”—[Official Report,
Vol. 597, c. 27WS.]
He emphasised that the green purposes of the GIB were protected by the legislation in which its duty to pursue them are enshrined. After that, something obviously went wrong with the Government’s proposals. They received advice from the ONS that led them to say instead that they intended to repeal the very legislative protection that the Secretary of State had prayed in aid on
We have been demanding assurances on how we can ensure that the bank maintains its green purpose when it is privatised and does not simply become yet another bank—albeit a very small bank, but one that could easily be gobbled up by somebody else in the marketplace. That is why Labour and other parties defeated the Government on this issue in the other place and introduced the special share that we are trying to reintroduce in new clause 4.
The Government say that the GIB can create the special share itself. In Committee, the Minister quoted a letter from the chairman of the bank, Lord Smith, to Lord Mandelson and Lord Teverson. She may well quote it again today; we will find out in a moment. In Committee, she said that she was confident that that approach would satisfy the ONS, but could not give us a guarantee. As I said then, we need an absolute assurance on that before we relinquish the legislative opportunity to future-proof the purposes of the GIB.
Since Committee stage, the bank has written to hon. Members, as is its right, outlining its plan to issue the special share envisaged in new clause 4 itself, rather than through the Bill, which is what we are proposing. Its reason for doing that is its belief that the ONS will then allow it to be classified as off the Government’s books. I asked the GIB whether it could guarantee that. Colin Faulkner, its director of government affairs, responded to me by email, writing:
“You’ll likely be aware that ONS doesn’t engage directly with arms length bodies like GIB. At the same time, however, we have been engaging closely with the Government over all matters relating to the sales process, and this is an issue where we’ve been as close as we can to Government throughout. We understand that Government has been engaging closely with ONS on this whole issue, including the special share structure which GIB is putting in place, and we understand that on the basis of those discussions the Government were sufficiently satisfied to allow the sales process to proceed.”
On that basis, if the Government say they are satisfied, they should be able to guarantee categorically, here on the Floor of the House, that their special share proposal will definitely be acceptable to the ONS. I hope the Minister will say that. If she wants to intervene and say that now, she can, but I hope she will at least be able to say it in her response. She is not indicating that she wishes to intervene.
I wonder whether my hon. Friend has had the chance to look at annex C, which was presented to Parliament last Thursday, on the proposed disposal of shares in the bank. It states:
“As a key part of any sale discussions, potential investors will be asked to confirm their commitment to these values”— that is, green values—
“and to set out how they propose to protect them. Bidders’
stated intentions will be taken into account in the overall assessment of bids.”
I wonder whether we will hear what percentage will be allocated to that in the bidding process. All bids will be marked against a schema. I, for one, would be curious to know what weight and relevance will be given to the protection of green purposes when the Government decide to sell.
I think we would all be interested to know that. Perhaps the Minister will be as informative as she possibly can and tell the House about that in her response. We have a legislative opportunity here, because after privatisation anything could happen. What guarantee do we have that the bank will not simply be swallowed up by somebody else, and that all the guarantees given by the original investors will not evaporate?
Does my hon. Friend share my disappointment that, although the Government have bent over backwards with the ONS to create a special purpose vehicle—a special charity—with independently appointed people to protect the green purposes, they have refused to make any such moves on another matter we debated in Committee, which is the transparency of executive pay, on which the bank is a rare exemplar in the banking sector? I hope to speak about that shortly.
I agree. My hon. Friend has been dogged in her pursuit of that both in Committee and in tabling her amendments on Report, and I look forward to her contribution on that subject.
Will the Minister guarantee that privatisation will not dilute the bank’s green purposes, or must we just keep our fingers crossed? The Government still need to adequately answer questions that were not answered properly in Committee. Am I right that the legislative lock on the green purposes is being repealed purely to get the bank off the Government’s books? If that is the principal reason, is it a good enough reason to give up the statutory guarantee, given what I said about the technical nature of the accounting issue that the ONS raised?
Will the Minister indicate the Government’s view of the stake they expect to retain in the bank, if any, following privatisation? I understand that it is a market transaction, but we need an idea of the kind of return they expect from the sale. As was mentioned earlier, market conditions are so poor that the Chancellor had to abandon the sell-off of Lloyds shares, but we need to know whether they really expect a significant return from the privatisation, given all the pain associated with the process and the record of poor value for money for the taxpayer in previous privatisations. I do not expect her to be able to be precise, but she will want to avoid the criticism the Government encountered over the lack of value achieved previously, so will she gives us an idea of what she expects the Government to get from privatisation?
Is the Minister concerned that these matters will provide further uncertainty for low-carbon investors, at a time of real concern about the Government’s retreat from investment in wind power? We have learned over many years that making policy in haste is not wise—it is certainly not wise to privatise in haste—and we might well repent at leisure if this innovative and effective piece of public policy is lost as a result of a lack of care and a rush to privatise. That is no way to make sustainable policy, particularly in an area where we are trying to create a sustainable future for the country, which is why we have tabled new clause 4.
I am happy to be able to speak to my new clause 8, which I would like to press to a vote, but first I wish to associate myself with the shadow Minister’s case in favour of new clause 4, to which I have also put my name.
Essentially, the context of new clause 8 is my dismay at the Government’s determination to push through privatisation of the Green Investment Bank despite concerns expressed by the House of Lords, Members of this House, the Environmental Audit Committee and civil society. Through this and other actions, I fear that the Government have demonstrated that their desire to get the bank off their balance sheet is taking massive precedence over their interest in whether the bank is genuinely contributing to the green economy to the fullest extent possible.
The EAC, on which I am proud to serve, noted in its report on the future of the bank back in December:
“Whilst we recognise there are potential benefits resulting from an injection of capital, we found that the Government has taken the decision to privatise GIB without due transparency, publication of relevant evidence, consultation, or proper consideration of alternatives. The absence of these steps is likely to lead to the suspicion that the move and its timing are not evidence-based policy.”
Nothing has changed my view since December. The Government are again acting without looking at the evidence. My new clause is therefore intended to ensure that the bank is maintained as a single functioning institution that can continue to invest in the UK’s low-carbon economy at the level planned prior to this deeply regrettable privatisation.
As well as being regrettable, the privatisation will not be easy. The Government say they aim to sell 75% of the bank, which equates to roughly £1.5 billion up front, which is a considerable sum. Indeed, it is huge, even by the standards of the behemoth investment funds. According to Bloomberg New Energy Finance, one of the largest successful green energy sales in 2015 was worth just $688 million. Given that few notable deals even touched the £1 billion mark in 2015, how can the Government be sure of making a sale of £1.5 billion in one round? There is a risk that it will turn out to be fanciful.
In addition, investor confidence in the UK’s green economy is at an all-time low. One need only look at last week’s Energy and Climate Change Committee investor confidence report to see that. In that context, it is even more unlikely that the Government will sell a majority stake in the bank in one round or that the taxpayer will get value for money on any sale. Furthermore, any equity stake bought would require the buyer to follow through on their equity annually—in other words, to bankroll the bank’s annual business plan—which would mean another £500 million to £600 million a year.
The huge sums involved make it highly likely that come October, the desired 75% will not have been sold. Given the Government’s determination to hold on to only a 25% stake, if that, there is a good chance of the Government saying that they have done what they can but not been able to make the sale, and therefore proceeding to dismantle the bank and sell off its assets. In other words, we could essentially face a fire sale. That is even more likely given that the most attractive parts of the bank are ripe for asset sell-off, particularly the £1 billion offshore wind fund and the £500 million waste to energy fund.
Furthermore, there is a risk of the bank’s owners—the new ones and the Government—not committing to fully funding the bank’s business plan for new investments in the UK’s green economy. It would then become little more than a fund manager, as opposed to a bank driving additional investment in the UK’s green economy. It is really important that the Government do not just sell to any investor. New investors must be committed to maintaining the bank as a going concern, fully funding its business plan, driving the expansion of the UK’s low-carbon economy, addressing market failure to crowd in additional private investment, implementing best-in-class governance, transparency and public accountability standards and facilitating and scaling up citizen investment in the UK’s low-carbon economy.
Quite simply, my new clause is intended to inoculate the bank against the risks that I have described by committing the Government to maintaining its integrity as a single functioning institution with a fully funded business plan, not simply selling off its assets.
Unfortunately, the special share has no legal underpinning, so we cannot have reassurance about that. In addition, the Government’s overestimation of the ease with which they will sell the bank is a real problem, as I am demonstrating. They have massively overestimated the speed at which they can sell, which I fear will lead to a temptation to asset-strip. My new clause is a simple way of ensuring that that does not happen. I suggest we ensure that anyone buying the bank commits to the full five-year life of round one.
The hon. Lady is a credit to our Committee, and I am grateful for the many points she is making on this issue. Does she share my concern that the proposed special share might not be carried forward in any future sale of assets? Will she join me in asking the Minister to clarify that in her response? The bank may be sold once, but the danger is that the next time it is sold, it may well be a case of, “We want to get rid of all this stuff about the green part of what the bank does”.
I am grateful to the hon. Lady for her intervention and kind words, and I congratulate her on her chairmanship of the Environmental Audit Committee. I do indeed share her concern that we have no real legal guarantee that this special share mechanism will be safe over time. We need a guarantee that it will protect not just the bank’s green purposes but the focus on complex and novel investments that a public green investment bank is uniquely fitted to be able to fulfil.
I fear that this privatisation is being done in haste. It has not been properly thought through, and the guarantees that we are being offered are not watertight. I therefore commend my simple new clause 8, which would provide at least some reassurance that the Green Investment Bank will be maintained as a single functioning institution that can continue to invest in the UK’s low-carbon economy at the same level as was planned prior to privatisation. If the Government are so sure that that is possible, I hope they will accept the new clause.
I shall speak to amendment 17, which stands in my name and that of my right hon. Friend Caroline Flint. Before I come on to the substance, I would like to congratulate previous speakers in the debate. The fact that the Government have moved substantially on some of these issues is a testament to the scrutiny provided by the Environmental Audit Committee and the Labour party as the Bill has passed through the House. I put on record my anxiety about the fact that this asset sale was rushed out last Thursday, before the Bill had had a chance to pass through the House, which suggests that we are moving on the basis of a timetable not dictated by the Minister or the market conditions that would achieve the best possible value for a Government asset of this kind, but driven by the Chancellor, who is going to have make some difficult announcements in his Budget on
To meet the climate change targets that were agreed at Paris, we will need billions of pounds of green investment to upgrade the energy and transport infrastructure of the UK. So far, the Green Investment Bank has done a really sterling job in attracting capital to low-carbon infrastructure projects in the UK that might otherwise have struggled to find funding. The Bill allows the Government to sell off the bank. I stress that I am pretty certain that this bank is going to be sold in one piece at one time, with the risk that it will not achieve best value for the taxpayer. I am not opposed to privatisation, if it can be shown that it is the right policy tool to get the job done, but this decision seems to have been rushed through just to get the bank off the Government’s balance sheet.
The Environmental Audit Committee, on which Caroline Lucas and I both sit, produced a report before Christmas that concluded that the Government took
“the decision to privatise GIB without due transparency …consultation, or proper consideration of alternatives.”
Ministers have simply not yet proven to Parliament that the bank will achieve its aims better in the private sector. The Government have relied heavily on assurances from potential shareholders and executives who stand to benefit personally from the sale.
Amendment 17 would ensure that, if the sale goes ahead, the Green Investment Bank would remain accountable to Parliament and taxpayers by reporting annually on the pay of its top team. The Environmental Audit Committee recommended that the Government undertake proper consultation and evidence gathering before any sale and that protecting the GIB’s green identity should be paramount. While I welcome the Secretary of State’s pledge to protect the bank’s green status with a special share, as the Committee recommended, I am concerned that without locking that in legislation, it may not be secure. I am concerned that the special share will not be worth the paper it is written on in any future sale of the bank and that it will be forgotten because, of course, the bank’s onward sale value is depressed if we are limiting the nature of the activities in which it can invest.
When the bank was established, it was intended by the Government to be an exemplar of transparency in the financial services sector in reporting executive pay. That particularly important point was accepted on a cross-party basis, given the recent banking scandal and the low levels of public trust in bankers and their bonus culture, which rewarded recklessness and persists to this day. It is therefore disappointing that that welcome clarity will not continue under the Minister’s proposals to privatise the bank. Ministers are happy for the bank and its executives to revert to the status of any other bank or fund with minimal reporting of remuneration that is limited to the highest paid member of staff and the chairman of the board. My amendment would commit the Government to providing full disclosure to Parliament of the remuneration of the Green Investment Bank’s senior management and board after privatisation.
This point was hotly disputed and argued by the Minister in Committee, but it is fair to say that the Committee saw a certain irony in her stout defence of allowing Green Investment Bank executives to have the freedoms to increase their pay under the Bill and privatisation, although the Bill simultaneously caps the pay of people working in private sector companies such as Magnox with salaries of around £25,000. That stands in sharp contrast to the salaries of the executive team at the Green Investment Bank, which range—we know this because of the transparency—from £125,000 to £325,000, plus bonuses and benefits.
The bank began in 2012 to invest in green infrastructure projects. It has invested in 58 projects with a total value of more than £10 billion. Last June, as my hon. Friend Kevin Brennan said, the Government announced their decision to privatise the Green Investment Bank. The Bill provides the means to do so by reclassifying it as a private sector organisation so that its finance will not contribute to public sector net debt, and by removing reference to the GIB’s green purposes and identity from the Enterprise and Regulatory Reform Act 2013.
It seems to me that the Green Investment Bank has been a success since it was set up by the coalition Government. One reason why it should go into the private sector is to liberate more investment and increase the possibilities.
That has indeed been the argument from Ministers. We want the bank to be able to fund more projects, and the hon. Gentleman might say that the Government have called this privatisation a “natural next step”. However, who else supports the move? The Green Investment Bank certainly supports it, and the Government have drawn on that support as a primary motivation for their plans to proceed, but we have not had the same transparency and consultation that accompanied the bank’s establishment.
The Environmental Audit Committee heard in evidence to our inquiry that the Government’s decision was taken
“without due transparency, publication of relevant evidence, consultation, and proper consideration of alternatives.”
The hon. Gentleman will be aware that there are many different ways to raise money. When the GIB was established in 2013, the idea of privatisation so soon after its creation was not discussed. Our Committee also heard that the Government have not presented enough evidence for privatisation, or considered a wide enough range of alternatives to a sell-off.
In their response to the EAC report, the Government claimed that they had undertaken unpublished market testing over the course of two years. In Committee, I asked the Minister for Small Business, Industry and Enterprise whether she would be willing to publish that market testing. She declined, and said that she would not publish the impact assessment either, because there were no regulatory or significant cost impacts of the GIB sale or changes to its pre-existing policy goals. Our Committee disputes that because of the risk to the green purposes of the bank.
What concerns us is that a bank that was set up to invest in green projects is being privatised without consultation or transparency, and that, although it might have more money, it may not retain its laser focus on green purposes following any future sale. We know that when assets are sold—transport assets, for instance—they tend to be sold on by the pension fund or the other establishment that ends up holding them, hence my question to the Minister.
I hope that the hon. Lady will forgive me for intervening, given that I was not a member of the Committee. It seems to me that the special purpose of the Green Investment Bank will be maintained through the special share and the special share ownership. Any change to the bank’s original purposes will have to come back to Parliament one way or another.
The Minister has said that a report will be presented to Parliament before the bank is finally sold. In Committee, I asked her how the report would be considered by Parliament. I asked if it would it be considered on the Committee corridor as part of statutory instrument proceedings and if it would be subject to the affirmative or negative procedure. Will we have a chance to vote on this issue again? The Minister is nodding, so I am sure that she will clarify the position when she responds to the debate.
The Committee had a series of concerns, and I still worry that the bank might be sold on at some future stage as the Bank of America Merrill Lynch Investment Bank. Investment banks are going through a very tricky time, and things are not at all well in their sector. Any purchaser of the GIB will be looking for maximum freedoms so that potential future sale capital receipts can be maximised.
The only robust consultation that the Government can point to, given that they will not publish the market testing and have not carried out an impact assessment, is consultation with the bank itself. They relied heavily on the bank and its executives in evidence and their response in Committee and, of course, those executives stand to benefit from the sale.
Amendment 17 invites the Government to commit themselves to providing Parliament with information on the remuneration of the bank’s senior management and board after privatisation. That information is currently provided in the bank’s annual report. For instance, how much will the executive team who are in charge of the bank stand to gain personally from the privatisation? How objective can their views be if they are to gain personally from the bank’s privatisation?
Are not private sector companies and their directors already under disclosure obligations in relation to executive compensation for directors? What would be the rationale for going further and making the requirements of the Green Investment Bank over and above those of any other company in the economy?
This company has been financed by more than £3 billion of taxpayers’ money at a time when my constituents have had the third lowest pay increase in any part of the country since the financial crisis of 2008. The pay of my constituents and those of the hon. Gentleman has been eroded and depressed over the past year as a direct result of the actions of reckless bankers. Given that, and given the journey on which we have travelled in the past 10 years, it would be negligent of us to privatise a fully owned state bank without introducing protections to prevent the huge increase in remuneration that tends to take place when state assets are privatised.
The hon. Lady’s arguments are, of course, very persuasive while the bank is in public ownership and in receipt of public finance, which justifies the current disclosure regime, but surely, once the bank is in private hands and financed principally—75% or more, I believe—by private money, they will no longer apply.
The bank will not be financed principally by private money. We do not know how much it will be sold for, but at present it is financed 100% by public money. I do not know whether whoever takes it over will put in the £3 billion match funding that the Government have put in, but they will certainly not be putting in that money on day one.
This bank was set up to be an exemplar to the banking and financial industry. It was not set up to be just another bank; it was set up to do something special, and to be something special. The Minister has reassured us—we hope it is the case—that the special share will protect the specialness of its green purposes, although I think there is a question mark over how long that will last. What I want to know, given that the bank was also set up to be an exemplar in respect of executive pay, is why that part of it should be lost.
May I develop my arguments? I shall be happy to take further questions a little later.
Following a discussion with my colleagues in the Environmental Audit Committee last week, I wrote to Lord Smith of Kelvin, the chair of the Green Investment Bank, asking for clarification of the proposed remuneration for the bank’s senior executives. Our shareholders—taxpayers—could potentially remain as minority shareholders in the enterprise. I think that as long as the UK taxpayer has even a 1% shareholding in the bank, that should be carried forward. Taxpayers have committed £3.8 billion to the bank, and rather than talking about what a future owner will put into it, let us wait until we see the colour of that future owner’s money.
In that letter, I made it clear that the Environmental Audit Committee could see no reason for increasing remuneration as a result of a change in the bank’s status. We were particularly interested to know the proposed structure both of the management fee that the privatised bank would charge investors, and of any form of profit share or participation rights for management proposed in the offering to new shareholders. We wanted to know the board’s view regarding the quantum and structure of executive profit share incentives. We also sought an assurance from the board and management of their commitment to maintaining the staffing levels that the public purse has funded, to ensure that the bank continues fully and effectively to serve the UK’s needs for investment in green infrastructure.
Lord Smith’s reply to me reassured the Committee that the proposed business plan
“will require the current staff complement with possibly a small number of additions.”
That was reassuring, but less welcome was his response that the information memorandum for investors, which includes projected revenues and costs, including staff costs—this therefore has already been decided and written at board level, and had probably been decided and written when the Minister was in Committee with us—is commercially confidential and cannot be shared.
The hon. Lady has special knowledge in this regard, so may I tease out some information from her? She mentioned the £3.8 billion of public money that had been invested at a time of public expenditure reductions in certain areas. What consideration did her Committee give to what valuation would be appropriate when the Government sold the bank? She rightly said that it had constituted an inspiring start by the coalition Government, and that she wanted it to be an exemplar. Do the Government not have a special responsibility to ensure that they let it go into the private sector at the right time?
The Committee’s remit was not to second-guess what the Government could or could not get for the bank. I am sure that there are people in the City who are much better able to do that than I am, and I am sure that some Members, certainly Conservative Members, could make a good stab at it.
When I worked with small businesses, it was possible to get multiples of income, but that depends on what is being bought. In this case, what is being bought is an asset book with, it is to be hoped, future revenues from the investments that have been made—as well as what might be described as senior bank management intellectual capital—but what is also being bought is £3.8 billion of Government investment in green projects from which the purchaser will hope to gain revenue and capital streams as, at some point, they are sold off. The situation will also depend on what the purchaser will put into capital projects.
The hon. Lady rightly says that there has been a series of investments in the bank, but it would be possible to calculate the net present value of those assets, given certain assumptions. Has her Committee attempted to do that? Such a calculation could provide an evidential base that would enable us to understand whether, if the bank is sold in future, it has been sold on a fair basis.
We have not calculated the net present value, but I am sure that it would be quite a simple process and that there will be a number of attempts to calculate it as the sale proceeds. No doubt the Government will wish to let us know whether they think that that has been achieved.
May I make a point about the issue of longevity? There is plainly a public interest in the bank’s remaining a green investment bank because of the amount of public money that has already been invested, and because of public interest in the development of green fuels and energy. That, together with the work that the Committee will do in scrutinising the bank’s future, surely provides enough protection to ensure that it will indeed remain a green investment bank.
Once the bank is sold, my Committee will have no locus in scrutinising what it does. We could look into it only as a matter of interest. This is the final legislative opportunity that we have collectively as parliamentarians to say what we want to happen to the bank. We might have a chance to discuss it further if the matter is debated upstairs in Committee, but the process is now at its penultimate stage. The starting gun has been fired; the first round of the bidding process has already started. If the Government decide that they want to sell 100% of the bank by, say, September or Christmas, the Environmental Audit Committee could look into whether best value had been achieved, but only as a matter of interest. However, we want to test the proposals on the special share today to ensure that the public interest is protected, as the hon. Gentleman says, and that the green vehicle can continue to move forward. The Green Investment Bank is a really important financial institution for enabling us to meet our climate change targets.
The Chancellor said in January that the sale of shares in Lloyds would be postponed because of market turbulence. The sell-off was scheduled for the spring, but he has now said that it will come after Easter. We shall wait and see when that happens. Since the start of the year, we have seen a bear market, great turbulence in the financial markets, panic selling of crude oil, and oil prices at a 13-year low. These are worrying times for the global economy and the market is hugely volatile. All bank shares are currently falling in price, whether they are UK bank shares, European bank shares or US bank shares. Just this morning, we have heard that the Bank of England has announced it will give commercial banks three exceptional opportunities just before and after the EU referendum to borrow as much as they like to offset any threat of a run on banks and to prevent a repeat of the chaos of the financial crisis in 2007 and 2008. In the light of that bleak, turbulent and choppy financial picture, we have to ask whether the Government’s decision to launch the sale of the bank last Thursday was the right one. Whatever one’s views on privatisation, this hardly seems to be the most auspicious time to sell off a state asset, let alone a state-owned bank.
I congratulate my hon. Friend Mary Creagh, who chairs the Environmental Audit Committee, on her speech. I wholly agree with what she has said. I also congratulate her and her Committee on all the work that they have done to tease out the details of this sale.
In 2012, the Green Investment Bank was set up for a purpose. It was stated quite clearly that its purpose was to address specific market failures and investment barriers in a way that would achieve emission reductions at the lowest cost to taxpayers and consumers. It was going to achieve that by working within the framework of the Climate Change Act 2008 and by risk-sharing between the public and private sectors, identifying and addressing market failures and limiting private investment in low carbon infrastructure, thereby accelerating and delivering green investment on a large scale and with significantly lower capital costs. That was the whole point. The bank was set up precisely because there was a market failure. The private sector was not able to achieve this. It is not just me, an Opposition Member of Parliament, who is saying that. Labour supported the bank. Indeed, it was our idea in the first place when we were in government, and we were delighted when the coalition put it into place.
The coalition Government also set up the Green Investment Bank commission. It was an independent, non-partisan advisory group brought together by the Chancellor himself. It took three years and two official rounds of rigorous market testing and evidence gathering to establish that a green investment bank was needed. The commission collected evidence to inform the bank’s aims, its design and the operating model under which it would function. Let us compare the three years and two official rounds of market testing it took to set the bank up with the sudden shock decision to sell it off, which was taken with a complete lack of consultation.
What did the commission find? It found that without a way of directly addressing market failure and risk-sharing between the public and private sectors through a green investment bank, higher levels of direct subsidy would be required to facilitate low carbon investment. That would mean higher costs to the consumer and the taxpayer. That is what the Chancellor’s own commission, with the hand-picked people he put on it, agreed. That rationale is now being undermined by this sale. Let us be absolutely clear that, according to the Government’s own commission, this sale will result in an increased cost to the consumer and the taxpayer.
The Chancellor has given himself something of a problem. By committing to achieve a public finance surplus every year in normal economic times, the Government have ruled out borrowing to fund public infrastructure. The exception is investments through the private finance initiative, which do not affect the headline public finance numbers. Since the financial crisis, there has been less private finance available to invest in either public-private or private infrastructure projects. At the same time, direct public investment has also decreased.
One of the concerns expressed by investors relates to the political risks that have manifested themselves as a result of potential changes in Government policies. Those changes have already been criticised and I will not go into them again today. However, the way in which the Government have chopped and changed the regulatory framework for low carbon investment has resulted in a decline in the UK’s attractiveness for investment, as Caroline Lucas has commented from the Green Benches. According to the Ernst and Young rubric, we fell out of the top 10 best places for investment for the first time last year.
The way in which this issue has been tackled by the Chancellor has been twofold. The Pensions Infrastructure Platform has sourced less than £1 billion in total over its first four years of operation, despite its aim being £20 billion. Furthermore, instead of the projected £40 billion from the UK guarantees scheme, only £1.7 billion in guarantees was actually issued in the first two years. Let us contrast that dire financial performance with the performance of the Green Investment Bank. Having been set up with just £2.3 billion of public money, it has mobilised more than £10 billion of investment in British infrastructure in the past three years.
Actually, I wish the bank had had a few more failures. It adopted a very specific policy at the beginning, which was to go for safe projects. It went for those projects because it wanted to build up a track record of successful investment so that, at about this point, it could attract much more private sector capital and take on riskier projects. That is the point of a green investment bank. The point is not to do what the market is going to do anyway by investing in areas that will obviously attract a return on capital. The whole point of the Green Investment Bank was to take on those much more difficult technical projects that the market would not finance.
Three years in, we have reached precisely the point at which we should be thinking, “Great! The bank has a successful track record behind it. Now it needs to move into slightly riskier projects.” Some of those projects might have failed—that is the nature of banking and investment—but the overall balance of investment flowing into UK infrastructure would have been hugely enhanced. So what do the Government decide to do just at the point of lift-off of the Chancellor’s only successful lever to get money into infrastructure projects in this country, the performance of the other two having been quite dismal? They pull the plug. They throw it away—send it off into the private sector, the very place that could not manage this market failure in the first place.
Bob Stewart said earlier that the bank is a success so why can it not go on being a success in the private sector? That was the question that had to be posed by the Green Investment Bank commission in the first place and the question that the bank was set up to answer. The former chair of the bank, Bob Wigley, pithily provided the best response to the hon. Gentleman’s question when he said that there was an “inherent tension” between the GIB’s continuing to invest in novel, more complex projects that are profitable over the long term and shareholder pressure to maximise short-term returns on high-value investments, given the focus on quarterly performance.
There you have it. There is a tension in the private sector. It is one that we all recognise. It is well-known. It is one that the Governor of the Bank of England has spoken about at great length over the past year. He called it the “tragedy of the horizon.” The investment horizon is so short that investors cannot see the payback in these sorts of projects. It is tragic that Government are privatising—neutering—one of the best things that they have established.
My hon. Friend is making a persuasive argument. Does he agree that if we are to be a country represented by, as the Chancellor said, a “march of the makers”, part of that is being at the front of the queue when it comes to leadership and supporting innovation in the green energy and green environmental products marketplace? Does my hon. Friend feel that privatising the Green Investment Bank will just create yet another bank—one that will not do the job for which it was intended?
My right hon. Friend has enormous knowledge in this area and I absolutely agree with her. The most successful instrument that the Government have created for energising and putting investment into infrastructure projects in this country is now being neutered. That is a tragedy, which these amendments seek to address.
It has been an interesting debate, but I must confess that I do not agree with many of the arguments advanced by the Opposition, so I hope that hon. Members will not support any of the new clauses.
If I may deal with things in reverse order, I will first address new clause 8, tabled by Caroline Lucas, which seeks to ensure that the Green Investment Bank continues its green investments plans post-privatisation. We agree on what we want the bank to continue to do. We are seeking bidders who can fund the GIB’s legally binding commitments and who have the deep pockets to fund its ambitious green business plan. The bank’s management is clear that it needs access to private capital to fund its green business plan. That could be equity capital raised as part of the sale process, debt capital, which the GIB can raise when it is in the private sector, or private capital raised as part of a fund structure.
Business plans change and evolve as new opportunities arise, and we will not bind new owners into the current plan, so I cannot accept the hon. Lady’s new clause. The new owners of the GIB will have views on the future strategy and business plan. They will assess it as part of their due diligence and make it a part of their offers. Whoever the new owner or owners are, the special share ensures that the business plan, like the GIB, will continue to be green.
It must be said in response to many of the points and arguments that it is almost impossible to understand why anybody would want to buy the Green Investment Bank—the clue is in the name—unless they wanted to ensure that it continued to invest in green projects.
We welcome the general direction of travel, given the special share. The Government will have a clear say during the privatisation process in the selection of the new owners, so will the Minister expand on how they will ensure that appropriate owners, who will respect not only the special share but the green agenda, are put in place?
Everyone will, of course, have to comply with the due diligence. I welcome the hon. Gentleman’s comments and will dwell on that topic in a moment. I want to make it absolutely clear that it is difficult to believe that anybody would buy the Green Investment Bank unless they absolutely wanted to continue its great work, for which I pay tribute to the bank.
I have two points. First, this is not just about green purposes. We should remember that the Green Investment Bank has particularly focused on complex and novel innovations, which take longer. It is not such a quick win, which is precisely why a private investor might not want to do the same and why public money is needed. Secondly, the special share is not legally underpinned, which gives us no long-term reassurance.
I disagree with the hon. Lady, because the privatisation and sale of the Green Investment Bank is about ensuring that more money is available from the private sector to carry out that particular sort of investment. Forgive me, but it really is not the role of Government to gamble and make investments with taxpayers’ money. That was right in 2012 when, as mentioned by Barry Gardiner, the Green Investment Bank was set up because of an accepted market failure. However, the idea that the Government are throwing it away, as he put it, could not be further from the truth. The Green Investment Bank is a real success story. No one is seeking to pretend that it is anything else. We want its success to continue, but in the private sector.
Does the Minister actually believe that there is no longer any market failure that needs to be addressed? The figures on infrastructure suggest quite the opposite. The point made by the hon. Member for Brighton, Pavilion about the innovative and novel projects that the Green Investment Bank was set up to support is that they pay much less return into the private sector, which is precisely why risk-sharing between the Government and the private sector was necessary to launch the bank in the first place.
The fact that the Green Investment Bank has been so successful absolutely proves that such investments can be profitable and worth while. In other words, the bank has shown through its success that there is market failure no longer.
Members on the Opposition Benches seem to be saying two things. The first is that the private sector does not do long-term projects. Well, Shell, BP and others do many projects over decades. They also say that the private sector does not do innovative projects well. Those suggestions are just nonsense.
I thank my hon. Friend for his excellent intervention, which I wholeheartedly endorse. We have always said the Green Investment Bank would stay green after privatisation. Green investment is what it does, as its management have made clear. We have explained that the only reason we are repealing the green protections from legislation is to allow the GIB to move to the private sector, by removing state control over the bank. However, we understand the concerns raised by hon Members and noble Lords, and we have found a device to protect the GIB’s green purposes without legislation.
I am very grateful to Lord Smith of Kelvin, who, as has been mentioned, has written to Opposition Members in the other place explaining the view of those currently in charge—I shall put it in that way—of the GIB about this special measure and why they absolutely have all confidence in it actually achieving what we all want to achieve. This is the device that cures the mischief.
I am not going to give way because I just want to put on the record my thanks to Lord Smith for his letter, which was sent out by my excellent Parliamentary Private Secretary, my hon. Friend Mark Pawsey, to all Members of this House. I hope all hon. Members, on both sides, have had the opportunity to read it, because it could not be clearer about why what the Government have proposed will ensure and protect those green purposes, and why legislation in this area is absolutely not necessary. One reason why we do not want the Opposition’s new clause 4 to be successful and to put this provision into legislation is that we feel the Office for National Statistics will take the view that what we seek to do will not be achieved in this way—the bank will not be off the books—and that is why it is so important that this is done in the way we propose.
In support of what my right hon. Friend says, let me read from Lord Smith’s letter. He says:
“We are 100% committed to delivering the full intent of the amendment passed in the Lords. I hope that by committing to implement this plan, and doing so transparently, we can secure the necessary confidence of shareholders, and members of Parliament that a special share solution can be delivered without the need for it to be mandated in legislation.”
I am very grateful to my hon. Friend for reading from the letter. Obviously, I am not going to read it out. You will be pleased to hear that, Madam Deputy Speaker, as we would be here for half the afternoon if I did so. I have, however, placed a copy of it in the Library, as it best explains why this new clause is no longer required and why it is so incredibly important that we get the right device to ensure we keep the green principles of the bank.
This is a short answer—yes. The hon. Lady will have seen this letter and I hope she will have read it—upside down, inside out, backwards and everything else. It is well over two pages long and it could not be clearer as to the way the special share is going to be set up. I shall rely on the fact that it talks about the special shareholder and how difficult it would be to undo this device. That could be done only with the permission, in effect, of the special shareholder. This House can therefore be sure that this is the right way to achieve what we all want to achieve.
That is why it is important to pay tribute—some may say that this is a first, and indeed it may not be the last—to the Scottish Government and to the Scottish National party. I have seen the letter John Swinney has written on behalf of the Scottish Government, quite properly as he is the Deputy First Minister and has responsibility in Scotland for finance, the constitution and the economy. He, too, rightly and understandably, has raised his concerns about how we best protect the green credentials of the GIB. As a result, he, too, has contacted Lord Smith, and letters have been sent back and forth. In short, to the credit of the SNP, it takes the view—I will be corrected if I am wrong—that this device, which is up and running, with the work already having been started by the GIB to secure this special shareholding, means that everybody can be confident that this is the way to secure what we all want, but without the need for legislation, which could completely scupper this privatisation and selling off of the GIB.
The Minister has said on many occasions that she is confident that introducing the special share in this way will work. Our case all along has been that we would like to hear her say to the House that she can guarantee, rather than just be “confident”, that the ONS will approve this approach. Can she now say, in terms, on the Floor of the House and on the record, that she can guarantee that?
I hope I am being parliamentary when I say that the hon. Gentleman is being a bit of a minx—I mean that in the nicest way. [Interruption.] He quite likes that, which is good, although I do not think he will like the next bit. I have already explained in Committee that we cannot give that guarantee, and he was a bit naughty, calling the ONS a bunch of boffins. I think he rather regretted it because the people in the ONS are not that; they are absolutely independent of government and will rightly come to their own conclusions. We are confident that if the measure goes into legislation, the ONS will not take this bank off the books, because it will not be properly in the private sector. If, however, we do it in the way that we are all suggesting—I include the chairman of the GIB in that—there is every chance in the world that this will then become a successful privatisation. It is confusing to work out what people’s real views are; Mary Creagh says that she does not object to the GIB being sold off, although she has raised her concerns. She is in favour of it in principle, but it is not certain whether others are.
Let me now deal with amendment 17, which was tabled by Caroline Flint. Again, we firmly believe it is not required. The GIB is currently required to report to higher standards—the standards for quoted companies—which include the level of detail required by this amendment. That is appropriate because it is currently entirely publicly owned. Post-privatisation, there is no reason why the GIB should be singled out to report on its remuneration to Parliament, especially if it is not spending any public money. It is a matter for the board of a company and its shareholders to agree remuneration policy. I note that there was an exchange of letters between the hon. Lady and the GIB’s chair, Lord Smith, where she asked about future remuneration policy, and I am sure her Committee will publish the letter in full. If the Government retain a minority stake in the GIB—we have made it clear that our intention is to sell a majority of it—we could express views on this and other aspects of corporate policy. We could agree with other shareholders what level of reporting might be appropriate on this and other matters, but we do not consider that this matter should reside within legislation.
As I said, the GIB has been a terrifically successful venture. It is important to understand that it was set up in 2012 because of a market failure. Opposition Members certainly do not like to reminded of the perilous financial situation our country faced in 2010, and it certainly was not all the fault of the banks—it was also a pitiful failing of Government policy at the time. What the GIB has done is help investors in the market to better understand the risks of green investment, and this comes back to the point being advanced by the hon. Member for Brent North. We know that, since 2012, long-term debt markets have significantly improved, which suggests an improvement in market conditions. Frankly, we would not set up the Green Investment Bank today, because those market failures no longer exist. The Green Investment Bank has proved that an organisation can be green and profitable, and its success demonstrates that the market can deliver green, which must be a good thing.
I have dealt with the point about the Office for National Statistics, so I will not repeat myself. The hon. Members for Cardiff West (Kevin Brennan) and for Wakefield asked whether the Government will retain a minority stake in the Green Investment Bank. I have to say that our position has not changed since the Committee stage. I explained then that we intend to sell a majority of the Green Investment Bank. We may retain a minority, but we cannot commit to that. Our report to Parliament makes it clear that decisions on the size of stake in the Green Investment Bank to be sold will depend on the outcome of confidential commercial discussions with investors.
I pay tribute to the Secretary of State for his announcement last week that the Green Investment Bank is now available to be sold. Unfortunately, I can say no more than that, other than that we are confident that this sale will be successful and will be done at the time when the market is in the right place. Having said that, we will not sell the bank unless of course we know that we will get the right price. For some time now, we have had strong market interest in the Green Investment Bank, which has strong underlying assets that are less exposed to market volatility. The large infrastructure sales that have recently been made, such as that of City airport, have also been very successful, and that gives us confidence in this part of the markets.
Nobody—not even Scottish National party Members—has asked this question, but if they were to, it would be a good question, so I will pre-empt it and say that one reason why the Green Investment Bank has been so successful is that it has been primarily based in Edinburgh, which is an excellent place in which to do business, especially as it is still within a United Kingdom. I can see no good reason—again, this is something that we explored in Committee—why the Green Investment Bank would want to move away from Edinburgh. Why on earth would it? [Interruption.] If Callum McCaig wants to intervene, I am happy to give way. [Interruption.] No, he has changed his mind. That is probably because I reminded him about the price of oil, so we will move swiftly on.
The hon. Member for Cardiff West asked me whether the Government can guarantee that the Green Investment Bank will be off the balance sheet. I think that I have dealt with that. I said that we cannot give a cast iron guarantee about the ONS, but we have confidence, and I hope that that confidence will be shared by the whole House.
We do not need this new clause, because of the assurances that have been given by the noble Lord Smith in his extensive letter to all Members of the House. In that letter, he goes into quite considerable detail about the mechanisms that he is already putting in place to ensure the future green credentials of the Green Investment Bank. That is why we say that this new clause, which will be tested, should be resisted.
Caroline Flint have quite rightly raised their concerns about the Green Investment Bank and tabled amendment 17. When the bank is sold, it will be a private sector company—this is an important point to put on the record—and, as such, it will be subject to normal company law. For a company the size of the Green Investment Bank, which is unquoted—that means that it is not listed on the stock exchange—the minimum requirement will be to report aggregate information in relation to total remuneration and specific information relating to the highest paid director. As I have said, it is currently required to report to higher standards—the standards for quoted companies—which include the level of detail required by this amendment. That is appropriate because it is currently entirely publicly owned.
I have given considerable praise to the Green Investment Bank—[Interruption.] I have just been handed a note, which will doubtless be a blessing to everybody who, in due course, has the great good fortune either to read this in Hansard or to be following these proceedings. I will, if I may, pay tribute again to the bank and to all those who work for it, especially the chairman, the noble Lord Smith.
In conclusion—[Interruption.] Cut it out. I certainly shall not forget the heckling of Chris Leslie.
The Government have listened—that is the most important point—to the concerns of hon. Members and noble Lords of all parties. We have been open and transparent about our intentions for the Green Investment Bank not only since June of this year, but as far back as the autumn statement in 2013 when we made our position clear. We want what is best for the Green Investment Bank, which is to increase its green impact with greater access to private sector capital. As Lord Smith said in his letter, he wants us to do it our way, and not the Opposition’s way, so that it has the access to equity that it so badly needs. We need to give it the freedom to continue doing what it does best, so I hope that all hon. Members will join me in the No Lobby to resist the new clause.
The Minister criticised me in Committee for referring to people who work in the Office for National Statistics as boffins. May I remind her that a boffin, according to Wikipedia and the Oxford English Dictionary, is a person engaged in technical research? In fact, the term originates from the war-winning researchers of world war two, so I do not think that I have anything to apologise for in describing them as boffins. We have been looking for a guarantee that the mechanism that the Government are proposing would indeed satisfy the ONS. The Minister has confirmed on the Floor of the House today that she cannot offer that guarantee to us. We do not want to let this legislative opportunity pass by to ensure the green purposes of the Green Investment Bank. On that basis, I will be asking my right hon. and hon. Friends to join me in the Lobby as I seek to divide the House on new clause 4.
Question put, That the clause be read a Second time.
The House divided:
Ayes 202, Noes 284.