Meeting of the Parliament 21 January 2020
We are agreed that national investment banks can play a valuable role in facilitating economic growth. I am not sure that I understood—or misunderstood—Alex Neil’s speech or whether he was advertising himself for a future role in promoting the Scottish national investment bank.
Investment banks can play an important and positive role, but there is a significant caveat: to do so, they have to be well run, with clear policy objectives, and they must be given relative freedom from direction by state-run interests, the public sector and national Government. That is what we see in other successful examples of such banks around the world.
Over the past decade, the Scottish Government has spoken positively about the possibility of creating a body such as the one we are discussing and about its potential role in our investment in the future of Scotland. It is therefore good that the dream has not turned into rust—unlike Richard Leonard’s paper clip—and that we have this bill before us in the Parliament.
As most of us know—I hope—in general terms, business and investment function far better when the long arm of the state does not lie heavily on their shoulders and when business leadership and expertise are able to decide the direction of travel. However, national investment bodies can make a real difference in pursuing wider public goals when they operate successfully alongside private enterprise—for example, on targets for sustainability.
Nevertheless, we must be cautious that such a body does not crowd out private finance, as we have seen happen on some occasions with certain similar bodies such as the European Investment Bank.
As Willie Rennie has emphasised, we need proper leadership for the bank. That means leadership that seeks to prevent public money being used to prop up failing ventures. We have seen too many of those, throughout history and more recently, and the massive cost that poorly placed public investment can have economically and on the taxpayer and people’s pockets.
The Economy, Energy and Fair Work Committee heard evidence that the Scottish national investment bank could deliver better and more sustainable approaches to investment. I welcome its commitment to investing patient capital across a wide range of sectors—investment that will be intended for long-term prosperity and not just for aesthetically pleasing short-term gains.
As has been touched on, there is a disparity between the proposed public body, with a capitalisation of £2 billion, and the example of an existing bank, the Royal Bank of Scotland, which alone has a Scottish loan book of £14 billion. Let us hope that the bank is successful and can build on that rapidly to move beyond the £2 billion figure.
In countries such as Finland, where national investment structures are particularly good at offering instruments like debt financing to major infrastructure investors and at supporting guarantees, we have an example of a successful approach.
We would like more clarity on where the SNIB is to sit in the already-crowded landscape in Scotland, with Scottish Enterprise and the Scottish growth scheme. I would appreciate it if the cabinet secretary could give us a bit more clarity on that in his closing remarks. The bank will be joining a crowded field, and we do not want a false start for it. Let us hope that this is the start of something new, positive and constructive that we can, and will, all support.
17:10