Ministers missed out on tens of millions extra on the sale of the Green Investment Bank (GIB) in August, according to the spending watchdog.

The National Audit Office said the £1.6bn paid in cash by the Australian bank Macquarie came in at the low end of the government’s valuation. Macquarie agreed to spend a further £500m to cover the bank’s existing commitments.

Moreover, the government could have increased the value of the sale by £63m if it had waited until some of the windfarms owned by the bank had finished construction. One option under consideration was a phased sale, where the government retained ownership of the bank until 2018 when most of its investments were operational and then privatised it through an initial public offering.

“It was likely that assets would have been worth more if it waited for a sale,” the spending watchdog said in a report on whether ministers achieved value for money on the sale. However, it added that ministers had avoided construction risks by selling when they did.

Caroline Lucas, the Green party co-leader, said: “It’s simply shocking that the government wasted millions of pounds by not going ahead with the phased sale option.”

The bank was a centrepiece of the coalition government’s efforts to kickstart the green economy. It invested £12bn of public and private capital in offshore windfarms, waste-to-energy plants and energy-saving projects, but, three years after it was launched, ministers said it would be sold to pay off public debt.

Even though the decision was made to sell as soon as possible rather than wait until 2018, the process still took longer than expected, with negative effects on the bank.

Delays stemming from legislative scrutiny, haggling over the price and legal challenges led the transaction to take more than 17 months – more than twice as long as expected.

The delay hit day-to-day operations as key staff fled the bank and contributed to the cost of government legal fees, that more than doubledto £2.36m.

“GIB told us the delay and uncertainty throughout the sale process led to the loss of key GIB staff, and affected GIB’s ability to continue investing in projects,” the NAO said.

Vince Cable, the Liberal Democrat leader and the minister who launched the bank, said the decision to privatise the institution showed the Conservatives did not care about the environment.

“Sadly, the mishandled sale process has created uncertainty, particularly through key staff losses, at a time when the GIB should have been growing and helping the UK hit international carbon reduction targets by fostering the green economy,” he said.

The National Audit Office said that while officials had secured some commitments from Macquarie to continue its green goals, they were not legally binding.

Labour MP Meg Hillier, chair of the public accounts committee of MPs, said she was “deeply disappointed” at the guarantees the government had won on the green objectives.

The NAO report laid bare the lack of serious competition in the bidding process, particularly after a member withdrew in September 2016 from Macquarie’s main rival, the SDCL consortium.



“The Macquarie consortium became aware of this, and saw itself as the only credible bidder left in the process. This led to a loss of competitive tension in the sale process,” the report said. The NAO also noted that the drawn-out completion process effectively meant the government lost a further £14.5m on the sale on top of the £63m.

The government defended selling when it did, saying it offered a higher degree of certainty and shifted risks to Macquarie.

“The sale of the Green Investment Bank made £186m profit for the taxpayer. The UK led the world in setting up the GIB to drive investment in renewable technology,” the UK government said.

Edward Northam, the head of the Green Investment Group, Europe, said: “We’ve made very positive initial progress and look forward to lots more to come, delivering pioneering green investment in the UK and internationally.”