My Lords, our first concern is that this is a blunt instrument to amend the previous legislation. In fact, it brings to my mind the son of Stalin taking up residence in BIS to obliterate all evidence of this institution, so I am grateful to the Minister for saying that the Green Investment Bank has been a great success and was one of the achievements of the last Government. From our side and for the record, we are not going to see it written off, eliminated or wiped clean. There is too much at stake and quite a significant government investment has been made into it.
Let me express our concerns. This is a long-term investment institution. The projects take two to three years to build and begin to earn any operational return, at which point they start to provide a long-term profit stream. We hope that the Government will be trying to take a long-term view and not resort to the short-term thinking which is too common in the City and in the market. It has been very successful. We have already seen £2 billion loaned, matched by £6 billion of private funds, and it is beginning to look as though the bank is a successful operation. But nobody will invest at a premium when we have had less than a year of profit. If the Government are to get their return and the bank is to be put into safe hands, our view is that they should not rush into this. The bank cannot really realise its potential until it has been in operation for at least five years. Having said that, we also recognise that the Government are not really fully committed to it. I suspect that one of the reasons that the executives have been supportive of this proposal is that they have been told that there is no further government funding, so if they do not go down this route they will hit a dead end.
Our final concern is that anybody with the slightest experience of setting up an organisation like this, which has been in place for only three years, will know that it is at its most critical stage when it is trying to approve projects with profitable streams and manage projects that it has already set about investing in. We are now going to have a huge distraction for the executive team over the next six months, as to how it is going to be sold and who is going to buy it. This is another case of where the Government should be setting an example and seeing something through, just as we should be telling the Stock Exchange that it should see more companies through in long-term decision-making and investment, rather than simply trying to get a quick return.
Those are some of our longer-term concerns. Turning to the future, I hope that the Government will confirm that they are going to freeze future funds so that there is no alternative to what they are doing, which is to privatise this organisation. In those situations, we are more understanding: if the Government have limited interest in the green economy then it is better for the bank to go it alone.
There are three objectives in the amendments that we have put forward. We do not think it is good enough simply to amend past legislation without saying what will be in its place, and what restraints on investment there will be in the Green Investment Bank. This organisation has had a central role in promoting green technology, innovation and supply-chain development. How do the Government intend to protect its purposes? The bank has shown that it is sustainable and has long-term objectives. How are we going to make sure that it does not lose its green focus? We do not want it to be like a different organisation, 3i, which was set up by the banks a long time ago. 3i was set up to support businesses but became yet another sort of investment bank. In my view, it lost some of its focus. Are we going to allow that to happen to the Green Investment Bank? We certainly should not when it is there with a specific purpose, set down in the original legislation. We want that protected somehow but it will not be easy.
Inevitably, whoever takes control of the Green Investment Bank—unless there is some controlling shareholding—will find it quite easy to change the articles and objectives. We want to ensure some ongoing green focus which continues the purpose of this organisation, and we have to ensure that the Government get the best return from their investment. There have been some pretty poor examples of this in the past, even in the recent past, and there has been criticism. If necessary, we want the Government to have an ongoing stake in this organisation so that they can get the return and exert some control over an organisation that is only three years old.
We accept that this bank has had real success. It has mobilised investment, shown that green investment can be profitable and set down a marker that we want to see it continuing. We therefore think that before the Government invoke the obliteration of the previous legislation they must set out exactly what they will do, what controls they will insist on and how they will maintain the success of the investment that the Government have already put into this and should see coming forward in future.
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