Supplementary written evidence submitted
by Ben Warren Ernst & Young LLP |
Further to your letter dated 2 December 2010, I have
pleasure in setting out below my response to your specific queries:
1. How should government/Green Investment
Bank combine the very different skills of finance and green technologies
into a single organisation?
These skills are not necessarily mutually exclusive.
There are a large number of finance professionals working in the
green and low carbon sector in the UK, whether financial investors,
utility and other trade players, or advisory professionals. Ernst
& Young employs some 70 people working full time in the low
carbon sector itself, all of these people being from an accounting,
banking, finance or engineering background.
Depending on the role and functions of the GIB, there
are likely to be some specific skills and expertise required in
the organisation, such as capital markets experience, the ability
to assess the credit and investment qualities of certain deals,
projects, or investment opportunities. This expertise does reside
in the market place, both in a general sense, but also with specific
The GIB's ability to attract talent will, I suspect,
be largely influenced by the remuneration packages it proposes
to offer, including the provision of market rate bonuses. However,
it might be able to secure some talent on the basis of good will.
In considering the resourcing and staffing needs of the GIB, the
ability to outsource work and expertise should be considered to
avoid building an unduly large overhead for the institution.
2. What (if any) bridging role would you like
to see GIB adopting?
The remit of the GIB should be clear, whether it
is there to invest or co-invest alongside commercial funders,
or in providing certain risk products to stimulate private sector
investment, or in providing a conduit for new capital providers
to enter the sector - ie helping address the liquidity market
failure. In performing these activities the GIB is likely to get
good visibility over some of the barriers and constraints faced
by private sector capital providers. As such, the knowledge
collected by the GIB would certainly be of value to government
and policy setters. However, this should in no way act as a substitute
for Government engagement with the market itself, in particular
the financial market.
3. Financial accounting implications
Unfortunately, we are not able to provide advice
on the relevant public accounting issues that might be faced regards
the products and activities the GIB might provide without a sufficiently
detailed review of this subject, which is inherently complex and
at the moment open-ended regards the possible structure and roles
of the institution itself.
I am sorry I cannot be more helpful in relation to
point 3 above, however this subject matter requires suitably detailed
consideration to ensure robust advice and guidance is given.
21 December 2010