Meeting of the Parliament 21 January 2020
I genuinely believe that today is an important day in the history of this Parliament. A quarter of a century ago, I was calling, on behalf of the Scottish trades union movement, for the establishment of a Scottish investment bank.
I have with me the original report and the original press release, dated December 1995. I point out, for the record, that the demand for a Scottish investment bank has gone unanswered for so long that the paper clip holding the report and the press release together has turned to rust, but the argument still shines and the idea still endures.
At the time, I wrote:
“Scotland is one of Europe’s biggest financial centres, yet there is an acute shortage of suitable finance for industrial investment here. This is preventing Scotland from achieving its full economic development potential, and so hampering job growth. This is an area where a Government lead is badly needed”.
The truth is that that description of the Scottish economy, which was written back in 1995, could just as easily have been written yesterday. We have already wasted too much time—20 years of devolution—when the long-standing and most rudimentary problem of underinvestment in the Scottish economy has not been confronted.
That failure has, in turn, led to chronically low levels of productivity, slow rates of economic growth and job losses. The tragedy is that that has not been tackled head on by this Parliament, even though we have had the powers to do so. Of course, that investment gap has a very long history, with deep roots based on a fixation with short-term shareholder dividends, and with funds accumulated not as capital for investment, but as wealth to be exported. It has its roots, too, in the failure of successive Governments to provide sources of patient capital and long-term investment.
So, Scottish Labour supports the establishment of a Scottish national investment bank with the passing of this bill. Its focus on sustainable economic development and tackling climate change is welcome. Our amendments to drive up ethical standards and labour standards were right, and the people of Scotland will observe that the Scottish National Party lined up with the Tories to oppose many of those proposals. The clear focus on small and medium-sized enterprises is welcome, because, as we have said before, too much of the Scottish Government’s economic strategy is based on the attraction of big foreign direct investment.
I said in the stage 1 debate that the investment bank’s role should not just be to act when there is
“market failure”.
Instead, it must be an agent for change as part of the innovative state—the
“active state”,
not the reactive one; the
“developmental state”,
not simply the defensive one.
I remain as convinced now as I was 25 years ago that we need bold and ambitious legislation if we are to tackle the long-term, deep-rooted challenges that we face. Scottish Labour will support the bill, but we do not believe that it is bold and ambitious enough. There is too much of an air of tame mediocrity about it, when what we need is courage and ambition.
In the policy memorandum, the Government describes the bank as a catalyst, but the scale of the challenge that we now face requires more than the light touch of a catalyst. We need much more than just a spark. The people of Scotland need a comprehensive economic plan, a proactive industrial strategy and a renewed commitment to full employment in an economy undergoing a just transition to a net zero carbon economy. The bank is undercapitalised, but it must not become an undercapitalised vanity project. It needs to be a meaningful and decisive actor in the Scottish economy, making a meaningful and sustainable difference.
We support the bill, we have amended the bill, we will vote for the bill and we will the success of the bank—this new institution that is long overdue—but the Government must also find the courage of its convictions and will the means to it, too. The cabinet secretary described the bill as world beating. Well, time will tell. With the right direction and the necessary resources, it may be world beating, but in the end, what the people of Scotland need is not world-beating legislation but world-beating action.
16:51