The UK government has been rebuked by the National Audit Office (NAO) for failing to guarantee the continued green credentials of the Edinburgh-headquartered Green Investment Bank through the terms of its sale to a consortium headed by Australian venture capital firm Macquarie.
The criticism comes after voices from across the political spectrum issues stern warnings over the ethical merits of the deal prior to August’s selloff, with Vince Cable, who launched the GIB when UK business secretary in 2012, saying the sale was “environmentally irresponsible”.
Now, in a report published following its analysis of the deal, the NAO said that the government had overseen a sale that “lacked clear criteria or evidence” to prove that the GIB, which was set up in 2012 and has now been renamed Department for Business, Energy and Industrial Strategy, will allow it to achieve its “intended green impact”.
Having been set up by the UK Government with what the NAO said was a clear rationale and mission to “accelerate the UK’s transition to a greener, stronger economy”, as well as a “sound basis” for its success by investing in green projects, by last March the bank had financed 100 projects and attracted £8.6bn in private capital.
However, the the NAO said that in selling the bank, the government did not set out how it would judge the GIB’S success in terms of its green impact going forward.
The report noted that the UK government “also wanted GIB to be an ‘enduring institution’, but it was not clear what this would mean in practice”.
While Macquarie has said the bank will continue to finance environmental projects that help the UK meet its climate change goals in its first three years under private ownership, the NAO noted that those commitments are not legally binding and highlighted that the government has climate change commitments beyond 2020.
The report also found that the £2.3 billion sale to the consortium led by Macquarie Group earlier this year was “at the lower end” of Whitehall’s valuation range.
It added that so drawn out was the sale process, which lasted nearly 18 months, that it affected GIB operations and caused key staff to leave.
Amyas Morse, head of the NAO, said: “Ultimately the value for money of the Green Investment Bank intervention will only be seen over time.
“A key test will be whether the government needs to intervene again in this way to stimulate growth in the green economy and to help it achieve its climate change commitments.”