The UK’s newly elected Conservative government has attracted criticism from environmental groups after announcing plans to sell most of its £1.4bn stake in the Green Investment Bank (GIB).
The plan was announced yesterday by Sajid Javid, the business secretary, at the bank’s annual review meeting. The government is likely to keep some of its shares in the bank but could sell off as much as 70%.
Javid said: "The bank will still be green, still be profitable, still be a market-leader in financing environmentally sound infrastructure. But free from limitations on where it can borrow money and EU regulations on state aid, the bank will be able to access a much greater volume of capital.Â
Selling off a majority stake in the GIB would be completely reckless– E3G
"This is the right decision for the GIB, the right decision for the environment and the right decision for taxpayers."
George Osborne, the Chancellor of the Exchequer, said: "We want the GIB to attract more investment and we will use the money we raise to pay down the national debt and deliver lasting economic security for working people."
The GIB, which invests in environment-friendly infrastructure projects, is the first of its kind. It was conceived by the former Tory-Liberal Democrat coalition government in 2010 and launched in November 2012 with £3.8bn of public funding.
So far, it has committed £2bn to 50 UK projects worth more than £8bn. Once built, these investments will produce enough renewable energy to power 4.2 million UK homes.
The bank backed a further 22 green energy projects in the 2014/15 financial year.
The GIB recently announced that after two and a half years of operations, it has reached profitability.
E3G, the thinktank that developed the original plans for the GIB, said: "Selling off a majority stake in the GIB would be completely reckless. It has kept investment in the real economy going at a time when bank lending had fallen to an all-time low. It has played a critical role in supporting the UK economic recovery.
"Privatisation threatens to destroy investor confidence, which in turn will damage both energy security and the UK economy. On no account should more than 49% of the public stake in the GIB be sold now."
Caroline Lucas, a Green Party MP, was quoted by The Guardian as saying: "The government’s rash and irresponsible plan to sell off a large chunk of the GIB calls into question their commitment to investing in a low-carbon economy.
"The government should keep at least a majority stake in the GIB to ensure investor confidence is upheld and the commitment to low-carbon lending remains."
The GIB’s board has been discussing privatisation for at least a year. It is based in Edinburgh and has an office in London.
Read more on the GIB website.
Image: A UK wind farm (Iain Thompson/geograph.org.uk/Wikimedia Commons)