Explanation demanded for GIB restructure

The chair of the Environmental Audit Committee has written to business & energy minister Nick Hurd to challenge government's plans to privatise the Green Investment Bank.

Mary Creagh repeated concerns that the formation of twelve new companies – known as “special purpose vehicles” (SPVs) – was designed to facilitate “asset stripping” by the new owner of the bank.  

“The committee would like to know why this restructuring has taken place and whether there are implications for the bank’s green purposes,” wrote Creagh. “In particular, the committee would like to ask how the creation of these SPVs stands to facilitate the injection of private capital into GIB’s offshore wind assets?”

She noted that some of the SPVs appeared to correspond to three of the bank’s largest assets – the Galloper, Rampion and Westermost Rough offshore windfarms

The GIB was founded in 2012 to help funnel investment into riskier green infrastructure projects which might not otherwise secure financing. In June 2015, the then business secretary Sajid Javid announced that the bank would be sold off to enable it to access greater pools of capital, and the following March he began the process of privatisation.  

In line with the recommendations of an Environmental Audit Committee (EAC) report published in December 2015, he said a “golden share” would be created which would enable the holder – a government-formed Green Purposes Company – to reject any changes to the banks’ green ethos.

Creagh asked whether the SPVs would have to comply with the bank’s environmental mission, and whether the holder of the special share would have any say over the transfer of assets between the GIB and these newly created entities.

She continued: “Was this restructuring action taken at the request of UK Government Investments, who are overseeing the sale? If so, what is the intention of the restructuring?”

Creagh has previously called on energy ministers to appear before the EAC to explain what is happening with the sale. She thanked Hurd for offering his attendance, but said she was disappointed that his department thought such a hearing would be “inappropriate” at this time. She pointed out that stories about the sale have been appearing in the press on “a daily basis”, whilst parliament appears to have been “kept in the dark”.

Since the sale process began there have been unconfirmed reports that Australian bank Macquarie is the government’s preferred buyer, having submitted a higher offer than its rivals. A number industry figures have raised fears that Macquarie will break up the bank and sell of its most valuable assets, among them former energy minister Greg Barker.

The Sunday Times reported in January that the sale of the GIB to private insvestors could be scrapped and the bank floated on the stock exchange.