Are Britain’s Green guardians clueless on future investments for this country post Brexit?

GPC_Trustees

Safeguarding UK green interests or clueless watchdogs?The five new trustees of the Green Purposes Company – James Curran,Trevor Hutchings, Tushita Ranchan,Robin (Lord) Teverson and Peter Young. Pic Credit: Green Purposes Company

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At the end of last year this blog published a highly critical piece on the sale of the Green Investment Bank which brought a  mint of money for the City and uncertainty for those who want to see a carbon free future.

The  blog was based on the findings of the National Audit Office report into the sale which showed the taxpayer had lost out yet again and the biggest beneficiary was the  Aussie private equity investment bank Macquarie for £1.6 billion  which had a bad rating on green issues and its subsidiary Thames Water is better known for polluting the Thames and failing to repair  burst water mains.

As reported before  business secretary Greg Clark let the bank get away with a non binding public statement to finance green projects for the next three years and instead set up a trust – the Green Purposes Company  -which could shame the new owners if they fail to keep to their pledge.  In theory they have powers to prevent changes to GIB’s green purposes, but this does not extend to control of, or input to, investment decisions.

The five trustees are independently appointed and include James Curran, former chief executive of the Scottish Environmental Protection Agency: Lord Teverson, a former Liberal Democrat energy spokesman and Peter Young, an environmental management consultants But they are not paid to monitor such a big private equity company .

Hardly surprising the Commons Public Accounts committee has backed the scepticism of the National Audit Office. In a report  it condemned the way it was sold

Sir Geoffrey Clifton-Brown MP, Committee Deputy Chair said:

” The manner in which it was sold off is therefore deeply regrettable. Government did not carry out a full assessment of the Bank’s impact before deciding to sell, nor did it secure adequate assurance over the Bank’s future role.

This was a UK initiative but the rebranded Green Investment Group is not bound to invest in the UK’s energy policy at all, nor to invest in the kind of technologies that support its climate objectives.”

But since the sale there has been worse  disclosures.

Mps on the environment audit committee decided to grill two of the trustees, Peter Young and Lord Teveson, and the head of the company, Edward Northam. They were equally sceptical.

Here is an extract of some of the trustees response ( or lack of) to MPs written   questions.

5. How will leaving the EU affect the UK’s ability to leverage investment into low-carbon and environmentally friendly projects in the UK?
No response
6. What options are there for the UK’s future relationship with the European Investment Bank? What would be the implications for green investment in the UK?
No response
7. Given the work being carried out by the EU’s High Level Expert Group on Sustainable Finance,where should the UK’s newly created Green Finance Taskforce concentrate its efforts?
No response

At the oral hearing both the head of the company and the two trustees were closely questioned by the chair, Mary Creagh; Green MP Caroline Lucas; Tory MP. Zac Goldsmith among others and they did not seem impressed. They were offered excuses why the new Aussie owners had hardly invested in any new projects and until the company revealed that the trustees have a budget of £100,000 a year ( small feed for a multi billion pound company) to monitor developments by the company head, were even reticent to discuss that.

You can get the text of the  full hearing or watch it here.

It is hardly an impressive performance and seems to suggest the first fears expressed on this blog are well justified. The government has dumped Britain’s green investment future and it will be interesting to see if the trustees really do have any teeth to do much about it.

 

Gove takes the lead in a Whitehall Brexit spending spree to bypass Parliament

michael gove

Michael Gove – top of the great Brexit spenders- and first to use a dodge to bypass Parliament.

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The government is planning a Brexit spending spree  this year without any say by Parliament.

Hundreds of millions of pounds of taxpayer’s money will be spent  setting up   bodies  to replace work done by the European Union some using a Whitehall  wheeze devised by a Treasury mandarin to get round  scrutiny by MPs.

Michael Gove, the environment secretary, is poised to be the first to use the new  system to allow ministers to spend large sums of money on Brexit without the approval of Parliament.

Very simply the dodge involves turning on its head a procedure called an accounting direction – normally used  when a senior mandarin -wants to challenge spending by a minister as illegal or questionable. It was most famously used when a senior civil servant questioned aid to pay for  Malaysia’s Pergau Dam – when he discovered the money was being authorised by Margaret Thatcher as part of a secret defence deal. It was also used to question extra costs on the Millennium Dome under Tony Blair. More recently a civil servants challenged the government paying for a survey requested by a UKIP council in Kent.

Now Whitehall mandarin Richard Brown has devised a scheme which will allow ministers to get round Parliament by using the same procedure to spend money on Brexit without waiting for legislation to be passed by Parliament. The letter is here. 

It has been sent to 25 ministerial departments, 20 non ministerial departments and over 300 agencies.

It followed a letter from the Treasury and the Department of Exiting the EU which also allowed ministries to raid the contingencies fund without waiting for laws to be passed.

Both senior civil servants are claiming that the requests for extra cash will be known to Parliament as they have informed the chairs pf the public accounts committee and the public administration committee. Some people might think that in all the huge coverage of Brexit they might be overlooked.

Today  Civil Service World reports that a massive £245million has been routed by a supplementary estimate to spend money on Brexit with Michael Gove’s Defra department taking the lion’s share of £67m closely followed by HM Revenue and Customs with £47m and £42m for the Home Office to work out a new immigration system.

On top the permanent secretary of Defra, Clare Moriarty, has asked Michael Gove to approve £16m of cash for a whole series of projects without waiting for legislation.

These are:

The new national import control system for animals, animal products and high risk food and feed. Scheduled to commence building: mid-January 2018. Estimated cost before Royal Assent: £7m.
– Delivery of new IT capability to enable registration and regulation of chemical substances placed on the UK market. Scheduled to commence building: February 2018. Estimated cost before Royal Assent: £5.8m.
– Delivery of systems for the licensing and marketing of veterinary medicines. Scheduled to commence building: end-January 2018. Estimated cost before Royal Assent: £1.6m.
– Development of a new catch certificate system for UK fish and fish products being exported to the EU on Exit. Scheduled to commence: building end-January 2018. Estimated cost before Royal Assent: £1.0m.
– Development of a UK system to manage the quota of fluorinated gases and ozone depleting substances required under the UN Montreal Protocol. Scheduled to commence: March 2018. Estimated cost before Royal Assent: £0.5m.
– Development of data exchange arrangements to identify the movement of EU and third country vessels in UK waters and the movement of UK vessels in EU or third country waters. Scheduled to commence: April 2018. Estimated cost before Royal Assent: £0.1m

This gives a small glimpse of how complicated the change will be. One mistake and Britain could be thrown into chaos as it has relied on the EU for authorisation and will have to sign up for everything again , including international conventions.

Imagine what would happen if there are errors in the licensing of veterinary medicines for example. It could mean that it will be illegal for your pet to get the proper medicine from the vets.

Also it reveals that large sums of taxpayers money are going to have to go on new bureaucracies to administer all this.  So where will be the Brexit dividend?

And all this is being pushed  out ” under the counter” by mandarins and ministers. If the coverage of errors and waste endemic in Whitehall are anything to go by, Britain could easily face total chaos after 2019. It’s going to be a hell raising time as we leave the EU.

 

 

Time to bin Keep Britain Tidy

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Time for Keep Britain Tidy to be put in the bin

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Nearly three years ago Parliament produced a damning report saying England was one of the worst developed countries in the world for litter and fly tipping. Worse than most of the rest of Europe, worse than Japan and worse than the United States and Canada.

Furthermore this situation has remained the same for 12 years under successive Labour, Coalition and Tory governments. And this is despite tens of millions of pounds of taxpayers money being poured into the former quango Keep Britain Tidy to provide leadership to tackle this problem.

The deregulatory coalition government of Tories and Liberal Democrats  thought they would find a solution by abolishing the quango and turning it into a charity  which now has to raise funds from cash strapped local authorities and big business.

The knee jerk reaction of a Left minded blogger might be to persuade an incoming Labour government to push taxpayer’s money back to Keep Britain Tidy. But after an investigation looking at its precarious finances and its rather lacklustre approach to tackling the problem this would be the worst thing it could do.

The real problem is that successive gutless ministers of all parties  (perhaps they have at the back of their minds that they could take lucrative directorships after leaving politics)  won’t tackle the real cause of much of our litter – the  products of big multinationals like McDonalds and Wrigley’s and the tobacco companies –  who take no or little responsibility for the problem.

There is a parallel here  with  Her Majesty’s Revenue and Customs – who connive with big multinationals to avoid paying their fair share of tax which would go a long way to providing better public services and a cleaner  public space.

There is a simple solution here either these companies pay up for a clean up or the Government levies a tax on them ( not us) to employ someone else to do it. I bet the firms would come up soon with some innovative solutions to avoid either.

Now why have I concluded that Keep Britain Tidy is a no no solution  despite being told by some people that its  new director,Allison Ogden-Newton is much livelier than her predecessor, Phil Barton.

The charity has a guilty secret. It has a pension deficit of  £4.5m  for a closed scheme on a turnover of just £5m and assets worth £2.5m. For some private companies this  could lead them to cease trading.

The 2015-16 accounts lodged with the Charity Commission say :

 “The pension deficit as at 31st March 2016 is £4.511m. Future contributions to the scheme have been negotiated with the Trustees of the scheme.
The Company is the principal employer and paid approximately £131,000 to reduce the deficit this year. Keep Britain Tidy will continue to make contributions in line with terms agreed at the last triennial review until any new scheme of payments is agreed. In the financial year to March 2017 it will pay approximately £134,000 towards reducing the deficit in addition to the scheme running costs of approximately £72,000.”

 

The report reveals that the trustees – who would be liable if  Keep Britain Tidy went bust – certify it is a going concern. But to do this they have had to put aside £2m – equivalent to six  months operating costs -to ensure that it stays afloat.

Allison-Ogden-Newton_1

Allison Ogden-Newton, new chief executive of Keep Britain Tidy

When I put this to the charity – who first ignored my request – I got this reply from Ms Ogden-Newton.

 “Our Annual Accounts have been audited by RSM UK Audit LLP and a clean audit opinion has been given. Standard audit procedures include an assessment of Keep Britain Tidy as a Going Concern and this specifically includes an assessment of our ability to meet the agreed pension scheme contributions. No issues were raised in this respect.
 “We have an agreed schedule of contributions between Keep Britain Tidy and the Pension trustees in order to address the pension deficit and this has also been submitted to the Pensions Authority whom have accepted this plan.
 “To that end we and the relevant authorities consider our agreed repayment programme to be satisfactory and sustainable for both the fund and Keep Britain Tidy.”
Now that is all well and good – but I don’t believe it doesn’t restrict its activities. It has got some income from the 5p levy on plastic bags ( notably £500,000 from Lidl) but as a Defra paper reveals most private companies use the levy to fund other worthy causes whether it is the Alzheimer’s Society, the Woodland Trust, animal welfare or Kew Gardens.
The other major reason why Keep Britain Tidy does not seem to be working well was shown up when MPs questioned the former chief executive at the Commons communities and local government committee.
 He was taken apart by MPs of all parties in an evidence  session.
He produced figures which he couldn’t defend, evidence that MPs found flawed and finally admitted that Keep Britain Tidy refused to talk to the tobacco industry. Given cigarette stubs are a source of litter MPs found this extraordinary.
Clive Betts MP

Clive Betts MP, chair of critical House of Commons report on the state of England’s litter.

Clive Betts, the Labour chairman of the committee, also made this observation.

 ” Frankly Keep Britain Tidy was not a main part of our report or inquiry,. We were more interested in some of the innovative work down by local authorities to tackle fly tipping and litter.”
 Now this is really damning with faint praise given Keep Britain Tidy was meant to be the leadership body.
Since then nothing has improved much. A House of Commons library briefing on litter last July said this :
“Levels of litter in England have hardly improved in over a decade and 81% of people have said they are angry and frustrated by the amount of litter in the country. Local government net expenditure on street cleaning (which includes but is not limited to clearing litter) in 2015/16 was £683 million.”
It also clear that by dividing up responsibility between four Whitehall departments doesn’t work. Perhaps the Cabinet Office should take over responsibility for a national litter strategy. At the moment neither Keep Britain Tidy nor the various ministries seem capable of negotiating with a paper bag.

 

Have the Tories already sold our future green investments down the dump?

GPC_Trustees

Safeguarding UK green interests?The five new trustees of the Green Purposes Company – James Curran,Trevor Hutchings, Tushita Ranchan,Robin (Lord) Teverson and Peter Young. Pic Credit: Green Purposes Company

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The present government has two song sheets. One is that Britain must big up everything we do to become a ” world leader ” after Brexit. The second is that we must do everything we can to cut the deficit – whether it is fresh benefit cuts or selling off anything the government owns as fast as possible..

The two came into conflict recently with the sale of the Green Investment Bank – and the deficit cutters won. The story of the sale of the Green Investment Bank is told in a recent report by the National Audit Office. Unfortunately the detail  did not lead to much coverage in mainstream media which is why I am writing about it now. I have written a news story for Tribune magazine.

The deal which has allowed the sale to go ahead to Australian private equity bankers Macquarie for £1.6 billion is at the lower end of the its worth and without waiting for returns from big wind farm projects which are still under construction with public money.The NAO said this could have netted another £63m. This is the same company, by the way, that owns Thames Water, responsible for some of the worst pollution in the River Thames and also locally on the Wendover Arm of the Grand Union Canal (see an earlier blog).

The companies  behind the sale did very well. The business department paid out a £1.1m success fee to Bank of America Merrill Lynch and a retainer of nearly £300,000 for completing the sale – part of a bill for £4.5m to sell the bank.

Macquarie picked up the bill for another £5m success fee paid  to UBS by the Green Investment Bank itself to handle the sale.

The Department appointed Herbert Smith Freehills (HSF) to act as its legal adviser for the sale. HSF’s fee increased from £1 million to £2.36 million owing to the extended period required to complete the sale, the need for advice on restructuring GIB, the retained assets, the special share arrangements and judicial review which failed to challenge the sale.

Altogether Macquarie paid over £10m of the state bank’s fees to get their hands on the state bank. But what did they get in return?

An article in the This is Money website gives us a clue. It shows the government removed the restriction that the Green Investment Bank should only concentrate on the UK so Macquarie  could make money  worldwide and ignore the UK if it wanted. Greg Clark, the business secretary, personally signed this concession.

Macquarie of course denies this pointing out that it had invested £38m in a West Yorkshire waste from energy  from waste project and insisting it will be a big player in the UK and Europe.

But events since the take over suggest otherwise – and there is no guarantee either that it will continue to focus only on green energy. Greg Clark let the bank get away with a non binding public statement to finance green projects for the next three years and the setting up of a trust – the Green Purposes Company  -which could shame the new owners if they fail to keep to their pledge.

The evidence of backsliding comes from the trustees. In theory they have powers to prevent changes to GIB’s green purposes, but this does not extend to control of, or input to, investment decisions.

The five trustees are independently appointed and seem to be sound environmental figures. They include James Curran, former chief executive of the Scottish Environmental Protection Agency, and Lord Teverson, a former Liberal Democrat energy spokesman.But they are not paid to monitor such a big private equity company and a check on the website of the Green Purposes Company does not give much comfort either.

It reveals the first project  is in Sweden – with a 300 million Euro investment in what will be Europe’s largest onshore wind farm joint with the US listed company GE which is in financial trouble in the United States.

The second is in a £30m investment in solar power in India – admittedly with a UK solar park company, Lightsource, partly owned by BP. The company is concentrating on green power in the Middle East, Asia and Europe as part of its partnership with BP.

And the third investment will  be a 136 million Euro energy from waste scheme in Dublin, jointly run by a New Jersey incineration company, Covanta.

So far the new bank has invested £38m in the UK and over £400m (partly with GE) abroad.

The NAO conclude in their report  the future direction of GIB’s investment focus and its relationship with the trustees remain untested. From the first four projects it seems quite clear that the UK will be on the sidelines. The 436 million Euro investments will be great news for Donald Trump’s ” America First ” policy but not such great news for Theresa May.

 

Nuclear decommissioning: How Whitehall turned toxic waste into a dirty mess

wylfa nuclear power station

Decommissioned power station at Wylfa in Anglesey

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It is possibly Whitehall’s biggest blunder. it certainly involves one of the biggest contracts ever let by government. And you will have shelled out hundreds of millions of pounds for very little in return.

The subject is the decommissioning of 10 nuclear power stations and two research centres – now all past their sell by date – and all leaving the taxpayer with an almighty bill to detoxify them and make them safe.

The total bill to do this was meant to be £3.8 billion but it turned out to do it properly would cost £6.2 billion- making it possibly one of the biggest contracts ever let by Whitehall.

And what a mess Whitehall civil servants and their ministers made of it. The whole sorry story was revealed in a report by Parliament’s financial watchdog, the National Audit Office, this month.

. The  £6.2 billion contract was approved by the Treasury because it promised to save taxpayers £904m by loading risks on the contractors. Instead it has only saved £255m and this has been partly wiped out by a botched tendering procurement which ended up with a rival consortia being able to sue the government for damages.

The company that won – an American led consortium Cavendish Fluor Partnership (CFP) based in Texas- was awarded the contract illegally.

We know this because its rivals Energy Solutions which includes Bechtel successfully sued  the government in the High Court last year and the High Court ruled that Fluor should have been disqualified because the final contract was nothing like the one put out to tender.The Business, Energy and Industrial Strategy ministry has just settled the bill with Energy Solutions by agreeing to pay then £97.3m in compensation.

But the real bill was even more. The NAO found that the full cost amounted to £122m.  It spent £13.8 million on legal and external advisers. Of this, £3.2 million was spent on the competition and £8.6 million was spent on legal fees in the ensuing litigation. The NDA estimates that in-house staff time has cost £10.8 million. This excludes the cost of staff time of senior central government officials who were heavily involved in decisions, particularly about the National Decommissioning  Authority’s settlement and its decision to terminate the contract.

One reason for this debacle is believe or not is that officials  did  not know the state of some of the decommissioned  power stations so had to revise its estimates as more problems came to light- changing the terms of the winning bidder’s contract.

Amyas Morse, head of the National Audit Office: “The NDA’s fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier.

In light of these issues, the Department must consider whether its governance and oversight arrangements surrounding the NDA are sufficiently clear and effective in providing the scrutiny and assurance it requires to meet the standards expected in managing public money.”

There is now an inquiry going on under Steve Holliday, former chief executive of the National Grid. Its terms of reference include whether disciplinary action should be taken against the civil servants who made such a botched job and cost us even more money. It could mean heads should roll.

And it leaves the government another big problem because the contract with the present consortium has had to be terminated in 2019 – nine years before it is due to end.

And the axe is due to fall just as Brexit comes in – leaving more unfinished business just when Britain may well leave Euratom. What a mess.

I have written about this in Tribune. The full NAO report is here.

 

 

 

The Treasury: Destroying Britain’s world leadership in green technology

cop 21 carbon capture

Carbon capture from Cop21

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There has been much said that Britain doesn’t capitalise on its own innovation – and leaves other countries to do so. Much of the blame is put on companies not wanting to invest – but it is often acknowledged that the state has a role to pump prime innovation.

In green technology Britain is seen to have surrendered the lead it once had on wind farms – with nearly all the technology now being imported.

What has not been really reported is the role of the Treasury in encouraging or discouraging green technology. Until now.

A report by the Commons Public Accounts Committee in the dying days of Parliament shows just how baleful the Treasury has been in destroying Britain’s world prospects coupled with writing off taxpayers money. And the main culprit in the last six years must be George Osborne and to a lesser extent, former Liberal democrat energy secretary, Chris Huhne- despite the Liberal  Democrats green image.

Officially the report was on the abandonment of carbon capture technology. –

The Commons  criticised the handling of decisions by the last coalition and Conservative governments to waste some £168m by cancelling competitions to develop new carbon capture technology before its potential could be realised.

The Mps concluded: “ The UK has now missed opportunities to be at the forefront of a growing global industry” but say this is part of the pattern where the Treasury halts projects for short term financial gain over the last decade.

“The UK may now have lost any competitive advantage to export CCS technology to countries that are seeking options to reduce their own carbon dioxide emissions, which could have created engineering and R&D jobs in this country. This is reminiscent of government decisions in the 1980s not to develop renewables, meaning the UK lost its position as the world leader in emerging technologies such as wind power.

“Neither the Department nor the Treasury evaluated the potential benefits for the UK’s economy of having a globally competitive CCS sector prior to the competition being cancelled.”

What is more damning is how MPs go on to provide a shopping list of failure to support green technology.

“These included cutting feed-in tariffs for solar and onshore wind; scrapping the zero-carbon homes regulation; withdrawing the grandfathering support policy for biomass projects; privatising the Green Investment Bank; and cutting subsidies for low-emission vehicles.”

The original decision to halt the first attempt at carbon capture technology was made by Chris Huhne when he cancelled an experiment at Longannet power station in Scotland. Then George Osborne halted for short term savings a development at Drax coal fired power station in 2015.

Mean while in the rest of the world 20 projects are going ahead. As Mps conclude:

“Halting CCS’s deployment means that the UK will have to pay billions of pounds more to meet its decarbonisation targets, has missed opportunities to be at the forefront of a growing global industry, and has damaged investors’ confidence in working with the government on CCS in the future.”

Given we are supposed to be proudly standing alone -post Brexit – and need to develop new technologies here, this is doubly damaging. But then it seems politicians are more interested in rhetoric than action.

I have written a piece in Tribune on this.

 

Thames Water: Unfit to protect our environment

 

Sewage around Marlow pc credit Environment Agency

Raw Sewage and foam around sailing boats on the Thames. pic credit: Environment Agency

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The record £20m fine for  Thames Water’s multiple pollution of the River Thames and its tributaries  with over 1.4 billion tonnes of untreated sewage shows  how badly the company was managed.

It makes the incident where the company polluted the Wendover Arm of the Grand Union Canal seem small fry compared to the damage the company caused to humans, livestock. wildife and fish across Hertfordshire,Buckinghamshire, Berkshire  and Oxfordshire.

Thames Water admitted 13 breaches of environmental laws over discharges from sewage treatment works in Aylesbury, Didcot, Henley and Little Marlow, and a pumping station at Littlemore.

It also pleaded guilty to a further charge on March 17 over a lesser discharge from an unmanned sewage treatment plant at Arborfield in Berkshire in September 2013.

The court at Aylesbury also took into account seven further incidents at sewage sites on the Thames in 2014.

thames waterWhat was extraordinary was the lax attitude of  top managers who ignored warnings from staff about failures in the system

 No wonder the judge Francis Sheridan said: “This is a shocking and disgraceful state of affairs. It should not be cheaper to offend than take appropriate action.”

He added: “What a dreadful state of affairs that is.

“Logbook entries reflected the pathetic state of affairs and the frustration of employees.

“Thames Water utilities continually failed to report to the Environment Agency despite (managers) being fully aware of the issues and reporting governance.”

He later said of the firm: “There is a history of non-compliance.”

Anne Brosnan, the Environment Agency’s chief prosecutor, said in The Guardian: “Thames Water was completely negligent to the environmental dangers created by the parlous state of its works. Our investigation revealed that we were dealing with a pattern of unprecedented pollution incidents which could have been avoided if Thames Water had been open and frank with the EA as required.”

But should  we be surprised? Thames Water is a remote multinational making huge profits – and a £20m fine – large as it is – will still hardly dent a £742m annual profit.It is also only a quarter of the annual dividend paid to investors.

And it’s owners include Kuwaitis, the Chinese, Canadians and other international foreign investors . What will they care if fish die in Oxfordshire and  humans running sailing clubs become ill.

They are now claiming it is better managed and promising tigher controls. But they won’t want to sacrifice the bottom line and have a captive audience who can’t live without water or disposing their waste.

If ever there is a case for the return of  public ownership Thames Water have made it today. They have proved themselves unfit to protect the environment.