Enterprise Bill [HL] — House of Lords, 2016-04-19
Topic: Mixed Topics
Jonathan Mendelsohn (Labour, Centre-left): My Lords, before I speak to the amendment, I would like to congratulate noble Lords on the Liberal Democrat Benches for their work on this. The noble Lord, Lord Stoneham, made a very powerful speech in Committee. I pay extraordinary and particular tribute to the noble Lord, Lord Teverson, who has done a simply outstanding job in all the spadework that was done, and in speaking to a range of people; he has come up with a very elegant formula. I also congratulate the noble Lord, Lord Smith of Kelvin, and his colleagues at the Green Investment Bank, in moving to embrace this model. In fact, the special share provides for a much better Green Investment Bank and for the green purposes to be more extensive than they would have been with any form of government participation because of the state aid rules, so I think we are in a much better position The rationale behind this amendment relates, of course, to the problem we had in determining the structural issues. In June 2015, the Business Secretary announced the Government’s intention to privatise the bank to allow it to borrow more capital without adding to government debt, as reported in Business Green. However, the ONS ruled that, in order for the bank to obtain status as a private body, the Government must repeal any of their involvement in or control over the Green Investment Bank’s operation. As part of the privatisation process, the legislation in the Enterprise Bill, enshrining the Green Investment Bank’s green ethos, must be removed from the statute. This requirement has prompted fears that the bank could be hijacked by a private investor seeking to make investments not aligned to its core values The department’s November policy statement described the situation as follows: "The decision on whether an organisation is classified to the public or private sector is made by the Office for National Statistics (ONS) and is considered in accordance with the EU-wide regulations, set out principally in the European System of Accounts 2010, (ESA 2010) and supplemented by guidance in the accompanying ‘Manual on government deficit and debt’" In the light of the Government’s discussions with the ONS and HM Treasury, and the department’s assessment of the regulations, it was clear that even if the Green Investment Bank was no longer owned by the Government, current legislation on the bank was highly likely to be assessed by the owners as constituting government control over it, preventing it being reclassified to the private sector. It also said that the ONS would be in a position to take a substantive decision on the bank’s classification only once a transaction had actually taken place. Of course, that involves in part the question of contractual arrangements, but it is also about procedure This leads to a highly unsatisfactory process, which we faced when the Green Investment Bank provisions were first introduced into this Bill, which was something of a rush. It involved a lot of panicked conversations and an extensive repeal of existing legislation, without particular rhyme or reason being properly articulated. We have had an unseemly mess, which has only been adequately resolved by the efforts of the noble Lord, Lord Teverson. That could all have been avoided if there had been a reasonable discussion and a proper statement of reasons by the Office for National Statistics We have to consider that there are other opinions about whether this provision would breach those rules, and whether what was being said was likely to be actually true. Many experts in this field, given the opportunity, would have liked to make the case that classification was not necessary and the ONS was not just being overly cautious, but went way beyond the mark in making such an assessment. Indeed, there are examples in other countries of similar models which statistical bodies have applied without any real difficulty Finally, from the discussions that have taken place I am led to believe that the provision of a special share and the new structure of the Green Investment Bank enhance its value and the possibility of the overall sale of the bank. It is sensible for us to put in not some form of government or parliamentary oversight but a broader ability for ONS decisions to be made public earlier, for experts and practitioners in this field to have the chance to review them, and for the ONS to make a much more timely assessment and make those reasons well known. This is a simple amendment, which we hope the Government will look at carefully and consider a probable enhancement to the process as we look to change the status of certain assets in the Government’s control and move them towards the private sector. This would be a helpful addition, and I beg to move.