Enterprise Bill [HL] — House of Lords, 2015-11-30
Topic: Mixed Topics
Lucy Neville-Rolfe (Conservative, Centre-right): My Lords, Amendments 69, 70 and 74 relate to the Green Investment Bank. They intend to repeal some of the legislation in Part 1 of the Enterprise and Regulatory Reform Act 2013, which places controls on the GIB. In moving Amendment 69 I will speak to the other amendments as a package For the benefit of those who were not present during Grand Committee, I will set out the Government’s rationale behind these amendments and explain the changes since Grand Committee to address some of the concerns raised there. I have held a number of meetings involving noble Lords in which we have all agreed that the GIB needs further capital to continue its green mission. Frankly, we have all shared our frustration about the statistical rules by which we have to operate. In the spirit of transparency, my department has also issued a policy paper on the GIB that explains the history and policy background of this matter, as well as the Government’s proposals for bringing in private capital and an explanation of some of the classification issues we face. I have placed a copy in the Libraries and I hope some noble Lords have had a chance to read it I believe that noble Lords in all parts of the House agree that the Green Investment Bank was one of the success stories of the last Government. It was set up in 2012 to mobilise private sector investment in the green economy, and it has done so remarkably well. It has leveraged more than £10 billion in green investment since it was set up—£2.3 billion from the GIB’s government funding and the remainder from the private sector. Of course, government funding for the GIB has an opportunity cost elsewhere in the public sector purse That is why the Government’s policy, as the Secretary of State announced in June, is to move the GIB into the private sector. Government ownership is holding back the GIB’s ambition, limiting the amount of funding it can access, limiting its freedom to borrow and raise capital, and limiting the sectors in which it can operate because of state aid rules. This is holding it back from growing its business, increasing its green impact and expanding into a wider range of green sectors, as the noble Lord, Lord Smith of Kelvin, the chair of the GIB, has told noble Lords recently As the Prime Minister said in May, it is time that the market got to work on climate change. We want to bring private capital directly into the GIB rather than leaving it to compete for public funds. During Grand Committee, noble Lords were in broad agreement that private capital was the right next step for the GIB; indeed, it has been the intention ever since it was established. The Government’s policy paper published in 2011 made it clear that the GIB would, "initially be owned by the Government", and would be, "designed to allow for a possible eventual transfer of ownership from Government to the private sector" A crucial part of the Government’s proposal is to ensure that the GIB becomes classified to the private sector so that it can borrow and raise capital freely without affecting public sector net debt. The Office for National Statistics is the body which decides whether an organisation is classified to the public or private sector, using internationally agreed guidance and rules set out in the European System of Accounts 2010 and the accompanying Manual on Government Deficit and Debt. ESA is part of EU law and the rules apply to all countries across the EU In making its decision in accordance with these rules, the ONS will look at whether the Government have significant control over the organisation. Control is the key concept, and it covers a range of types of control, including regulation, legislation and contractual arrangements. I must also point out that Parliament and Government are equivalent in the eyes of the statisticians—curiously—in determining who exercises control. That is why, as I explained in Committee, legislation in the ERR Act 2013 is highly likely to constitute government control over the Green Investment Bank, whatever the size of the Government’s stake. This is the only reason why we intend to repeal the legislation, as a necessary and technical step in the privatisation process. It is not something we have decided on lightly, and I can assure noble Lords that it is not a step we would be taking if we did not have to. Indeed, that is the reason why we did not include these provisions in the Bill as introduced, for which I apologise The Government have had a number of discussions with potential investors while considering a sale, which have demonstrated that bidders are not generally concerned about the statutory lock on green. I make that point to demonstrate that it is not for reasons of price that the Government are removing the control; indeed, it should also demonstrate that the kind of bidders we are seeking are supportive of the GIB’s important green mission We have listened carefully to the concerns that were raised in Committee, and the amendments that I present today reflect this. We must still repeal the controls in legislation but we understand that we can do more to ensure that noble Lords and those in the other place are kept informed about the Government’s proposals. Let me outline the changes compared with our amendment in Committee. Our Amendment 70 ensures that the repeal of legislation cannot come into effect until the Government have laid a report before both Houses setting out their plans for a sale. The noble Lords, Lord Stoneham and Lord Teverson, tabled a similar amendment during Committee, and I am pleased that we have been able to accept the spirit of their amendment.