The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It has been an interesting debate, but I must confess that I do not agree with many of the arguments advanced by the Opposition, so I hope that hon. Members will not support any of the new clauses.
If I may deal with things in reverse order, I will first address new clause 8, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas), which seeks to ensure that the Green Investment Bank continues its green investments plans post-privatisation. We agree on what we want the bank to continue to do. We are seeking bidders who can fund the GIB’s legally binding commitments and who have the deep pockets to fund its ambitious green business plan. The bank’s management is clear that it needs access to private capital to fund its green business plan. That could be equity capital raised as part of the sale process, debt capital, which the GIB can raise when it is in the private sector, or private capital raised as part of a fund structure.
Business plans change and evolve as new opportunities arise, and we will not bind new owners into the current plan, so I cannot accept the hon. Lady’s new clause. The new owners of the GIB will have views on the future strategy and business plan. They will assess it as part of their due diligence and make it a part of their offers. Whoever the new owner or owners are, the special share ensures that the business plan, like the GIB, will continue to be green.
It must be said in response to many of the points and arguments that it is almost impossible to understand why anybody would want to buy the Green Investment Bank—the clue is in the name—unless they wanted to ensure that it continued to invest in green projects.
Callum McCaig (Aberdeen South) (SNP)
We welcome the general direction of travel, given the special share. The Government will have a clear say during the privatisation process in the selection of the new owners, so will the Minister expand on how they will ensure that appropriate owners, who will respect not only the special share but the green agenda, are put in place?
Everyone will, of course, have to comply with the due diligence. I welcome the hon. Gentleman’s comments and will dwell on that topic in a moment. I want to make it absolutely clear that it is difficult to believe that anybody would buy the Green Investment Bank unless they absolutely wanted to continue its great work, for which I pay tribute to the bank.
I will give way, but I want to move on to specifically why Opposition new clause 4, relating to the special share, is wrong and why the Government’s proposals are absolutely right.
I have two points. First, this is not just about green purposes. We should remember that the Green Investment Bank has particularly focused on complex and novel innovations, which take longer. It is not such a quick win, which is precisely why a private investor might not want to do the same and why public money is needed. Secondly, the special share is not legally underpinned, which gives us no long-term reassurance.
I disagree with the hon. Lady, because the privatisation and sale of the Green Investment Bank is about ensuring that more money is available from the private sector to carry out that particular sort of investment. Forgive me, but it really is not the role of Government to gamble and make investments with taxpayers’ money. That was right in 2012 when, as mentioned by the hon. Member for Brent North (Barry Gardiner), the Green Investment Bank was set up because of an accepted market failure. However, the idea that the Government are throwing it away, as he put it, could not be further from the truth. The Green Investment Bank is a real success story. No one is seeking to pretend that it is anything else. We want its success to continue, but in the private sector.
Does the Minister actually believe that there is no longer any market failure that needs to be addressed? The figures on infrastructure suggest quite the opposite. The point made by the hon. Member for Brighton, Pavilion (Caroline Lucas) about the innovative and novel projects that the Green Investment Bank was set up to support is that they pay much less return into the private sector, which is precisely why risk-sharing between the Government and the private sector was necessary to launch the bank in the first place.
The fact that the Green Investment Bank has been so successful absolutely proves that such investments can be profitable and worth while. In other words, the bank has shown through its success that there is market failure no longer.
David Mowat (Warrington South) (Con)
Members on the Opposition Benches seem to be saying two things. The first is that the private sector does not do long-term projects. Well, Shell, BP and others do many projects over decades. They also say that the private sector does not do innovative projects well. Those suggestions are just nonsense.
I thank my hon. Friend for his excellent intervention, which I wholeheartedly endorse. We have always said the Green Investment Bank would stay green after privatisation. Green investment is what it does, as its management have made clear. We have explained that the only reason we are repealing the green protections from legislation is to allow the GIB to move to the private sector, by removing state control over the bank. However, we understand the concerns raised by hon Members and noble Lords, and we have found a device to protect the GIB’s green purposes without legislation.
I am very grateful to Lord Smith of Kelvin, who, as has been mentioned, has written to Opposition Members in the other place explaining the view of those currently in charge—I shall put it in that way—of the GIB about this special measure and why they absolutely have all confidence in it actually achieving what we all want to achieve. This is the device that cures the mischief.
Several hon. Members rose—
I am not going to give way because I just want to put on the record my thanks to Lord Smith for his letter, which was sent out by my excellent Parliamentary Private Secretary, my hon. Friend the Member for Rugby (Mark Pawsey), to all Members of this House. I hope all hon. Members, on both sides, have had the opportunity to read it, because it could not be clearer about why what the Government have proposed will ensure and protect those green purposes, and why legislation in this area is absolutely not necessary. One reason why we do not want the Opposition’s new clause 4 to be successful and to put this provision into legislation is that we feel the Office for National Statistics will take the view that what we seek to do will not be achieved in this way—the bank will not be off the books—and that is why it is so important that this is done in the way we propose.
In support of what my right hon. Friend says, let me read from Lord Smith’s letter. He says:
“We are 100% committed to delivering the full intent of the amendment passed in the Lords. I hope that by committing to implement this plan, and doing so transparently, we can secure the necessary confidence of shareholders, and members of Parliament that a special share solution can be delivered without the need for it to be mandated in legislation.”
I am very grateful to my hon. Friend for reading from the letter. Obviously, I am not going to read it out. You will be pleased to hear that, Madam Deputy Speaker, as we would be here for half the afternoon if I did so. I have, however, placed a copy of it in the Library, as it best explains why this new clause is no longer required and why it is so incredibly important that we get the right device to ensure we keep the green principles of the bank.
Lord Smith of Kelvin may or may not be the chairman of the bank when this sale proceeds, so I therefore ask the Minister to answer the question I asked in the debate: will this special share apply if the bank is sold by any future owner, yes or no?
This is a short answer—yes. The hon. Lady will have seen this letter and I hope she will have read it—upside down, inside out, backwards and everything else. It is well over two pages long and it could not be clearer as to the way the special share is going to be set up. I shall rely on the fact that it talks about the special shareholder and how difficult it would be to undo this device. That could be done only with the permission, in effect, of the special shareholder. This House can therefore be sure that this is the right way to achieve what we all want to achieve.
That is why it is important to pay tribute—some may say that this is a first, and indeed it may not be the last—to the Scottish Government and to the Scottish National party. I have seen the letter John Swinney has written on behalf of the Scottish Government, quite properly as he is the Deputy First Minister and has responsibility in Scotland for finance, the constitution and the economy. He, too, rightly and understandably, has raised his concerns about how we best protect the green credentials of the GIB. As a result, he, too, has contacted Lord Smith, and letters have been sent back and forth. In short, to the credit of the SNP, it takes the view—I will be corrected if I am wrong—that this device, which is up and running, with the work already having been started by the GIB to secure this special shareholding, means that everybody can be confident that this is the way to secure what we all want, but without the need for legislation, which could completely scupper this privatisation and selling off of the GIB.
The Minister has said on many occasions that she is confident that introducing the special share in this way will work. Our case all along has been that we would like to hear her say to the House that she can guarantee, rather than just be “confident”, that the ONS will approve this approach. Can she now say, in terms, on the Floor of the House and on the record, that she can guarantee that?
I hope I am being parliamentary when I say that the hon. Gentleman is being a bit of a minx—I mean that in the nicest way.[Interruption.] He quite likes that, which is good, although I do not think he will like the next bit. I have already explained in Committee that we cannot give that guarantee, and he was a bit naughty, calling the ONS a bunch of boffins. I think he rather regretted it because the people in the ONS are not that; they are absolutely independent of government and will rightly come to their own conclusions. We are confident that if the measure goes into legislation, the ONS will not take this bank off the books, because it will not be properly in the private sector. If, however, we do it in the way that we are all suggesting—I include the chairman of the GIB in that—there is every chance in the world that this will then become a successful privatisation. It is confusing to work out what people’s real views are; the hon. Member for Wakefield (Mary Creagh) says that she does not object to the GIB being sold off, although she has raised her concerns. She is in favour of it in principle, but it is not certain whether others are.
Let me now deal with amendment 17, which was tabled by the hon. Member for Wakefield and the right hon. Member for Don Valley (Caroline Flint). Again, we firmly believe it is not required. The GIB is currently required to report to higher standards—the standards for quoted companies—which include the level of detail required by this amendment. That is appropriate because it is currently entirely publicly owned. Post-privatisation, there is no reason why the GIB should be singled out to report on its remuneration to Parliament, especially if it is not spending any public money. It is a matter for the board of a company and its shareholders to agree remuneration policy. I note that there was an exchange of letters between the hon. Lady and the GIB’s chair, Lord Smith, where she asked about future remuneration policy, and I am sure her Committee will publish the letter in full. If the Government retain a minority stake in the GIB—we have made it clear that our intention is to sell a majority of it—we could express views on this and other aspects of corporate policy. We could agree with other shareholders what level of reporting might be appropriate on this and other matters, but we do not consider that this matter should reside within legislation.
As I said, the GIB has been a terrifically successful venture. It is important to understand that it was set up in 2012 because of a market failure. Opposition Members certainly do not like to reminded of the perilous financial situation our country faced in 2010, and it certainly was not all the fault of the banks—it was also a pitiful failing of Government policy at the time. What the GIB has done is help investors in the market to better understand the risks of green investment, and this comes back to the point being advanced by the hon. Member for Brent North. We know that, since 2012, long-term debt markets have significantly improved, which suggests an improvement in market conditions. Frankly, we would not set up the Green Investment Bank today, because those market failures no longer exist. The Green Investment Bank has proved that an organisation can be green and profitable, and its success demonstrates that the market can deliver green, which must be a good thing.
I have dealt with the point about the Office for National Statistics, so I will not repeat myself. The hon. Members for Cardiff West (Kevin Brennan) and for Wakefield asked whether the Government will retain a minority stake in the Green Investment Bank. I have to say that our position has not changed since the Committee stage. I explained then that we intend to sell a majority of the Green Investment Bank. We may retain a minority, but we cannot commit to that. Our report to Parliament makes it clear that decisions on the size of stake in the Green Investment Bank to be sold will depend on the outcome of confidential commercial discussions with investors.
I pay tribute to the Secretary of State for his announcement last week that the Green Investment Bank is now available to be sold. Unfortunately, I can say no more than that, other than that we are confident that this sale will be successful and will be done at the time when the market is in the right place. Having said that, we will not sell the bank unless of course we know that we will get the right price. For some time now, we have had strong market interest in the Green Investment Bank, which has strong underlying assets that are less exposed to market volatility. The large infrastructure sales that have recently been made, such as that of City airport, have also been very successful, and that gives us confidence in this part of the markets.
Nobody—not even Scottish National party Members—has asked this question, but if they were to, it would be a good question, so I will pre-empt it and say that one reason why the Green Investment Bank has been so successful is that it has been primarily based in Edinburgh, which is an excellent place in which to do business, especially as it is still within a United Kingdom. I can see no good reason—again, this is something that we explored in Committee—why the Green Investment Bank would want to move away from Edinburgh. Why on earth would it? [Interruption.] If the hon. Member for Aberdeen South (Callum McCaig) wants to intervene, I am happy to give way. [Interruption.] No, he has changed his mind. That is probably because I reminded him about the price of oil, so we will move swiftly on.
The hon. Member for Cardiff West asked me whether the Government can guarantee that the Green Investment Bank will be off the balance sheet. I think that I have dealt with that. I said that we cannot give a cast iron guarantee about the ONS, but we have confidence, and I hope that that confidence will be shared by the whole House.
We do not need this new clause, because of the assurances that have been given by the noble Lord Smith in his extensive letter to all Members of the House. In that letter, he goes into quite considerable detail about the mechanisms that he is already putting in place to ensure the future green credentials of the Green Investment Bank. That is why we say that this new clause, which will be tested, should be resisted.
The hon. Member for Wakefield and the right hon. Member for Don Valley have quite rightly raised their concerns about the Green Investment Bank and tabled amendment 17. When the bank is sold, it will be a private sector company—this is an important point to put on the record—and, as such, it will be subject to normal company law. For a company the size of the Green Investment Bank, which is unquoted—that means that it is not listed on the stock exchange—the minimum requirement will be to report aggregate information in relation to total remuneration and specific information relating to the highest paid director. As I have said, it is currently required to report to higher standards—the standards for quoted companies—which include the level of detail required by this amendment. That is appropriate because it is currently entirely publicly owned.
I have given considerable praise to the Green Investment Bank—[Interruption.] I have just been handed a note, which will doubtless be a blessing to everybody who, in due course, has the great good fortune either to read this in Hansard or to be following these proceedings. I will, if I may, pay tribute again to the bank and to all those who work for it, especially the chairman, the noble Lord Smith.
In conclusion—[Interruption.] Cut it out. I certainly shall not forget the heckling of the hon. Member for Nottingham East (Chris Leslie).
The Government have listened—that is the most important point—to the concerns of hon. Members and noble Lords of all parties. We have been open and transparent about our intentions for the Green Investment Bank not only since June of this year, but as far back as the autumn statement in 2013 when we made our position clear. We want what is best for the Green Investment Bank, which is to increase its green impact with greater access to private sector capital. As Lord Smith said in his letter, he wants us to do it our way, and not the Opposition’s way, so that it has the access to equity that it so badly needs. We need to give it the freedom to continue doing what it does best, so I hope that all hon. Members will join me in the No Lobby to resist the new clause.
Government amendments 3 to 9 will enable Welsh Ministers to make regulations on exit payments that they feel are suitable and devolved to them through the Government of Wales Act 2006. That has been agreed with Welsh Ministers through the Welsh Assembly, and I am grateful for that.
The Conservative manifesto was very clear that we would introduce the cap and that we would set it at £95,000. It is extremely important to remember that this relates to redundancy pay. The cap will curb only the top end of exit payments—just the top 5% in value of all exit packages across the public sector. Amendment 15 is merely a device based on an article in The Daily Telegraphwritten by my right hon. Friend the Member for Witham (Priti Patel) back in January 2015. It was not part of the manifesto promise that was made. There is no honour, if I may say, in putting that forward as anything other than a junior Treasury Minister praying it in aid in an article she wrote in The Daily Telegraph.
I want to make it absolutely clear that the cap will not affect a classroom teacher earning the maximum of the upper pay range of £38,000 with a normal pension age of 60. It will not affect anyone working in the NHS earning below £47,500 or firefighters. I am told that police officers cannot be made redundant, and in any event no police officer earning below £54,000 would be caught by the cap. The Cabinet Office has confirmed that no civil servant earning below £25,000 will be captured. Some earning around £25,000 may be captured, but we can find no such example. A librarian earning £25,000 with 34 years’ experience could still retire on an unreduced pension at the age of 55.
We also think it unlikely that anyone earning less than £27,000 would be hit by the cap. It is important that we remember that it is extremely rare in the private sector for anyone on a wage of £25,000 to expect, on redundancy, a payment of £95,000—nearly four times their annual earnings. Having said all that, my hon. Friend the Member for Bedford (Richard Fuller), who is no longer in his place, made one of the most important points: it is right that we look at the value of the cap, as opposed to the salary or income someone is earning when they leave.
Finally, I want to address the important points about new schedule 1 and ask hon. Members not to support it. I listened with great care to the excellent points made by my hon. Friend the Member for Aldershot (Sir Gerald Howarth)—I pay tribute to the workers he mentioned—and the hon. Member for Ynys Môn (Albert Owen). I must make it absolutely clear, however, that we oppose the new schedule because we think it wrong to put the exemptions in the Bill. The relaxation provisions allow for special circumstances but only after proper ministerial scrutiny. I can assure them that I will continue to speak to right hon. and hon. Friends in the Treasury.
I agree with the helpful and wise interventions from my right hon. Friend the Member for Cities of London and Westminster (Mark Field), and I hear the points hon. Members are making. I will continue to speak to them, but now is not—
Sir Gerald Howarth
Will the Minister give way?
No, forgive me, but the clock is against me.
No it’s not.
No, there may be reasons. There is no need to interrupt.
Now is not the time to do what some hon. Members propose. There are other ways of doing it, if it is the right thing to do. It is right, however, that we be true to our clear manifesto commitment to set the cap at £95,000.
On a point of order, Mr Deputy Speaker.
Mr Deputy Speaker (Mr Lindsay Hoyle)
It is not a point of order. Come on.
Mr Deputy Speaker
Mr Brennan, I think it is for me to decide. I am sure it was going to be about time, and I am sure we are all aware of the time and what time the debate has to end.
I was bobbing up and down like a November the fifth apple, Mr Deputy Speaker. In any event, I do not know what all the fuss is about, because I am concluding my comments.
I believe that all points have been made, and based on everything I have said, I urge hon. Members to support the Government’s new clauses and to reject all the other amendments; they are not necessary.
I respect your ruling, Mr Deputy Speaker, that my point of order, which I did not make, was out of order.
Mr Deputy Speaker
Order. It was going to be about time, but it is not for me to tell you how much time is left, as you know better than I do.
Thank you, Mr Deputy Speaker. I simply note that the Minister was unwilling to give way because of time.
On the comments by the former Treasury Minister, now the Minister for Employment, the right hon. Member for Witham (Priti Patel), I thank the Minister today for confirming to the House that we cannot believe a word Ministers say. I thank her for putting that officially on the record.
Would the Minister like me to give way? I am happy to do so, if it is in order, Mr Deputy Speaker.
Mr Deputy Speaker
Minister, are you commenting from a sedentary position, or would you like to make a point of order?
The record will confirm that I did not say that a Minister’s word could not be trusted. I was talking about a comment in a newspaper that does not form part of Conservative party policy and was not in the manifesto. That is what matters the most.
Mr Deputy Speaker
The Minister has clarified her position.