Abandoning the sale of the Green Investment Bank to the vampire kangaroo creates the opportunity to create a real Citizens’ bank.
The public debate over the risk of selling the Green Investment Bank to Macquarie has snow balled over the last few weeks. A previously neglected privatisation process, followed only by environmentalists and die-hard MPs, has been capturing the business headlines day after day.
The emergence of this scandal is of critical importance. The Australian investment house, nicknamed the “vampire kangaroo” for its track record in asset stripping, is the wrong owner for the GIB. A post-Brexit Britain needs a strong GIB investing in driving clean economic growth across the whole country. By halting the sale now there is a huge opportunity to make this world leading institution work for, and be owned directly by, the British people.
To understand this opportunity you need to understand the history of the GIB. It was an idea generated in the midst of the financial crisis in 2008. As the world economy crumbled in the wake of weak bank regulation, the call went up for financial reform to ensure banks worked in the interests of citizens and not the profiteers.
The Green Investment Bank was set up as the UK’s first ever public bank, to invest in green infrastructure which was strategically vital to the development and security of our economy. Low carbon energy infrastructure was at the heart of this investment. The UK had a huge shortfall in investment. The Bank was designed to overcome multiple market failures and leverage high levels of additional private investment into the creaking UK energy system.
It has been hugely successful in delivering on this mission with £3 billion of public capital leveraging in £10 billion of private investment. The GIB has playing a critical role in cementing the UK’s place as a world leader in the deployment of low carbon technologies like offshore wind.
The GIB has been the Government’s only successful mechanism for bringing private capital from institutional investors into the UK economy. In contrast the Treasury’s flagship Infrastructure Pension Platform and £40bn Guarantee Scheme have completely failed.
Just as the Green Investment Bank was beginning to take off George Osborne announced in 2015 it would be privatised to help the Treasury reduce the national debt. The decision made no economic or environmental sense before Brexit. Following the European referendum, and at a moment when the Government has prioritised the development of a clean industrial strategy, the case for privatisation completely falls apart.
Yet at a time of crisis there is always an opportunity. When E3G first devised the idea of the GIB, we wanted it to develop into a Citizens’ Bank. A Bank owned by the British people through a special green ISA or Savings Bond which would give good reliable returns for individual savers, backed by returns from real UK infrastructure. In return the “People’s GIB” could be used to invest in the low carbon projects of most importance to normal people; helping them to reduce energy bills and wipe out fuel poverty by making all homes highly energy efficient. It could invest at scale in community energy projects to wean us off dependence upon the big energy suppliers. It could work with cities to reduce pollution and improve public transport, and with businesses to modernise green supply chains and support exporters.
The Government still has the choice to halt the current sale process and instead create a Citizen’s Green Investment Bank which benefits everyone. Global Britain cannot be built on dirty, inefficient foundations. It needs the People’s Green Investment Bank in order to succeed.
