The privatisation of the Green Investment Bank (GIB) risks leaving taxpayers “short-changed”, former government ministers have warned.
The new owner is set to reap a windfall amounting to “hundreds of millions of pounds”, according to former business secretary Vince Cable and former energy minister Greg Barker.
In an open letter to business and energy Greg Clark, they wrote that Green Investment Bank (GIB) has been investing in the construction phase of “a range of high-value infrastructure assets over the past few years.” They said the unfinished projects, which include the Rampion and Galloper offshore wind farms, will be worth “significantly more than they are now” once construction is completed.
“While it is not possible to calculate the exact amount without all the detailed information on the two of the offshore wind assets currently under construction,” they wrote, “it is clear that this could amount to a windfall of hundreds of millions of pounds to Macquarie, at the expense of the taxpayer.” There have been unconfirmed reports that Australian bank Macquarie is the government’s preferred bidder, having submitted a higher offer than its rivals.
The letter also raised fears that the Treasury’s accounting methods may be “manufacturing excessively high discount rates on future cash flows in order to justify this significant discrepancy in taxpayer return”. The former ministers warned the government against being dragged into an “economically irrational decision” which conflicts with its energy and climate change agendas, as a result.
“We therefore urge you, in taking your decision, to ensure that the interests of the taxpayer are put front and centre,” they concluded.
Earlier this month the chair of the Environmental Audit Committee Mary Creagh wrote to energy minister Nick Hurd to demand an explanation for the restructuring of the GIB ahead of its sale.
Creagh repeated concerns that a series of ‘special purpose vehicles’ had been created in order to prepare the bank for asset-stripping by Macquarie. She had previously warned the government not to repeat the “Royal Mail debacle” with the privatisation of the GIB.