Publicly owned investment bank to be ‘corner stone’ of Scottish economy

9 May 18

A new publicly owned bank is to invest £2bn over the next decade to make Scotland’s economy fairer and more prosperous, the Scottish Government has said.

Economy secretary Keith Brown said the Scottish National Investment Bank would become a cornerstone of the economy, operating on a commercial basis with a strong ethical focus.

Although ministers would set strategic missions for the bank, it would be independent of government, he said.

“A publicly owned investment bank will become a cornerstone of the economy that we want to create in Scotland,” Mr Brown told MSPs in a Holyrood debate.

“It has the potential to be transformative and will operate under a core set of principles and missions.

“It will support sustainable growth and bring benefits to individuals and communities across the country, in the process making Scotland a fairer and more prosperous country.”

All 21 recommendations of an implementation plan drawn up by former Tesco Bank CEO Benny Higgins had been accepted, he said, and a bill would be brought forward in 2019 to establish and capitalise the bank.

The bank would play an important role in creating and shaping new markets and tackling big societal challenges, he added.

“That is why we are committed to investing £2bn over ten years to capitalise the bank,” he said.

“This scale is deemed to be ambitious, achievable and realistic, at a level that will make a material difference to the supply of capital to the Scottish economy and can lever in additional private investment.”

However, the plan was condemned as “timid” by Labour MSP Jackie Baillie, who said Labour would invest ten times more in order to create transformational change in the Scottish economy. 

“We want to see the money invested in SMEs, because they make up the overwhelming majority of our economy, in environmentally transformative projects and renewables, and, of course, in innovation,” she said.

Conservative MSP Dean Lockhart backed the objectives behind the Government’s proposals, but raised concerns over duplication and lack of alignment.

“The bank is being introduced in an enterprise landscape that is already cluttered and confused, and through an economic policy framework that lacks strategic direction,” he said.

Around £150m allocated under the 2018-19 budget for the Building Scotland Fund is expected to come under the bank’s remit, with a further £340m to be made available between 2019 and 2021.

Mr Brown said the sums already identified were the starting point to building up a significant asset base for the bank. He added that the planned £2bn investment amounted to 1.3% of Scottish GDP, towards the upper end of public capitalisation provided by international comparators, whose investment ranged from 0.5% to 1.5% of GDP.

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