Jessica Morden – 2016 Parliamentary Question to the Department for Business, Innovation and Skills
The below Parliamentary question was asked by Jessica Morden on 2016-01-19.
To ask the Secretary of State for Business, Innovation and Skills, what assessment his Department has made of the cost and benefits of using (a) Green ISAs and Citizen Finance, (b) UK Pension Funds, (c) the European Investment Bank and (d) co-funding with devolved administrations as a means of increasing its capital base.
Anna Soubry
I assume that the Hon. Member’s question is referring to increasing the capital base of the UK Green Investment Bank (GIB), rather than increasing the capital base of the Department for Business, Innovation and Skills.
The Government’s policy is to move the Green Investment Bank (GIB) into private ownership, minimising the Bank’s use of public funds, and where it will have the freedom to borrow and raise capital without impacting on public sector net debt.
a) Green ISAs and Citizen Finance
At present, GIB has insufficient track record for the retail market. Most of its portfolio is in relatively high risk construction projects that will not provide steady returns in the short term. More importantly, GIB’s current focus is growth, for which it will need to make regular cash calls on investors, which would be hard to meet in the public markets. However there is no reason why a privatised GIB could not raise capital through Green ISAs or other forms of citizen finance in the longer term.
(b) UK Pension Funds
Large scale institutional investors such as UK pension funds are likely to be interested in acquiring a stake in GIB, as part of the Government’s plans to move GIB into the private sector. GIB has already successfully attracted such investors into its managed fund for investment in Offshore Wind and other investments (e.g. Strathclyde local authority pension fund), many of whom are investing in green projects for the first time.
(c) The European Investment Bank (EIB)
The EIB’s focus is on providing debt products, rather than equity investment which is where GIB expects to concentrate. It is unlikely that the EIB would make an investment in GIB itself. However, GIB is already partnering with EIB as a co-investor (such as on the recent Galloper offshore wind investment) and it may continue to do so in future.
(d) Co-funding with devolved administrations
The Government’s policy is to move GIB into the private sector. Co-funding GIB with the devolved administrations would simply be another form of public sector funding.
