Leading economists back plans for Scottish National Investment Bank

Lord Adair Turner and Professor Mariana Mazzucato welcome the Scottish Government announcement to create a Scottish National Investment Bank to help transform Scotland into a low carbon economy

TWO LEADING economists have backed the Scottish Government’s proposals to create a Scottish National Investment Bank.

Both Lord Adair Turner and Professor Mariana Mazzucato believe that creating the bank will help transform the Scottish economy for the better by having large-scale public investment to build a low carbon economy.

Mazzucato, professor of economics at University College London and a member of Scotland’s Council of Economic Advisors, said: “I welcome strongly the decision to establish a Scottish National Investment Bank.

“It shows that the Scottish Government is looking seriously at ways to increase flows of investment and to direct them to support key public policies like reducing greenhouse gas emissions, increasing productivity and building an inclusive economy.

“There is a lot of experience from other countries of what works and what doesn’t and if we draw from that, the bank can make a real difference to Scotland’s economy."

“There is a lot of experience from other countries of what works and what doesn’t and if we draw from that, the [Scottish National Investment]bank can make a real difference to Scotland’s economy." Professor Mariana Mazzucato

Turner, the former chair of the Financial Services Authority and now chair of the Energy Transition Commission, added: “All economies need to make an energy transition, to accelerate change towards low-carbon systems, and our Energy Transition Commission has looked at how to make that happen.

“It will need a joined-up public policy framework, and I am pleased to see that emerging in Scotland, and a big shift in patterns of investment.

“I hope I can contribute some understanding of how to do that.”

Both Turner and Mazzucato were speaking ahead of the ‘Building the Future: Investment for the Just Transition to a Low-Carbon Economy’ event in Edinburgh on Monday (23 October), organised by both Friends of the Earth Scotland and the Scottish Trades Union Congress (STUC)

“All economies need to make an energy transition, to accelerate change towards low-carbon systems, and our Energy Transition Commission has looked at how to make that happen.” Lord Adair Turner 

Last month, the Scottish Government announced that it would create a Scottish National Investment Bank and a Just Transition Commission.

And earlier this month, Scotland’s first minister, Nicola Sturgeon, announced that her government would establish a government-owned energy company by 2021.

Richard Dixon, director of Friends of the Earth Scotland, said: “If the bank develops the right remit, it could create thousands of green jobs by transforming our transport, heating, housing and electricity. By working closely with the recently unveiled Just Transition Commission and government-owned energy company they can deliver a joined-up economic strategy that puts tackling climate change at its heart.”

The STUC is urging the Scottish Government to make sure that that it plans any transition to a low carbon economy in a way that is fair for workers.

“If the [Scottish National Investment] bank develops the right remit, it could create thousands of green jobs by transforming our transport, heating, housing and electricity.” Richard Dixon

STUC general secretary Grahame Smith said: “It is also imperative that every investment made by the bank honours the principles of fair work and that the jobs developed are high quality, providing security, respect, and an effective voice for every worker. We look forward to working with the Scottish Government to ensure that the new bank functions effectively and to that end, its governance should include representatives of trade unions and the environmental sector in order ensure a just transition.”

The Common Weal, along with Friends of the Earth Scotland and the New Economic Foundation, first proposed the idea of a Scottish National Investment Bank in 2016 as a way of creating jobs and substantially boosting the Scottish economy. Part of the proposal is to fund a transition to a low carbon economy, creating a new industrial base within Scotland. The proposal has also gained support from Labour leader Jeremy Corbyn and the Scottish Greens.

A Scottish Government spokesperson said: “As set out in the programme for government last month, we will create a Scottish National Investment Bank to deliver infrastructure development, finance for high growth businesses and strategic investments in innovation.

“The first minister has made clear that the transition to a low carbon economy presents important economic opportunities for our country, which has a strong track record on research and innovation, as well as outstanding sources of renewable energy.

“Benny Higgins – CEO of Tesco Bank – has been appointed to develop an implementation plan, and a consultation is underway seeking views on how the bank can best support Scotland’s economy and work for the benefit of the people of Scotland. We welcome the support of Lord Turner and Professor Mazzucato and look forward to working with a variety of stakeholders as proposals are developed.”

Picture courtesy of Paul James

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Comments

Peter Dow's picture

Peter Dow

Mon, 10/23/2017 - 12:41

Actually any "leading economist" would point out that a new "investment bank" with no new money to invest isn't worth the cost of the nameplate on the door.

Scottish Enterprise already has a "Scottish Investment Bank", details at this link.
https://www.scottish-enterprise.com/about-us/what-we-do/investment/sib

There's no difference in concept between that existing government investment bank and the new "Scottish National Investment Bank".

This is SNP-numpties REARRANGING THE DECK-CHAIRS ON THE TITANIC.

What matters is THE MONEY.

If there is NO MORE MONEY then it doesn't matter if you change the name of the "Scottish Investment Bank" to "Scottish National Investment Bank" and bring in somebody from Tesco to run it.

The problem is that we have a numpty SNP First Minister - Sturgeon - who AGREES WITH a bad fiscal framework that leaves the Scottish government with NOT ENOUGH MONEY to invest.

So Sturgeon has to be TARGETED for political condemnation and ridicule for signing and sticking by that bad deal fiscal framework.

We can't get beyond this failure of government for so long as we are stuck with a First Minister who insists on agreeing with a bad deal fiscal framework.

Peter Dow's picture

Peter Dow

Mon, 10/23/2017 - 12:46

The Scottish National Investment Bank WILL FAIL - not necessarily go bankrupt but simply under-deliver simply because there's NO NEW MONEY - not enough capitalisation, meaning NO new £ billions a year borrowed interest-free from the central bank.

And there won't be £ billions a year more, not with this FISCAL FRAMEWORK which Sturgeon signed up to and which those running Common Weal keep letting Sturgeon off the hook about, refusing to hold her, Sturgeon, accountable for signing up to that bad deal fiscal framework.

The only way to avoid failure is to do what Common Weal have refused, refused and refused again to do - HANG STURGEON on the FISCAL FRAMEWORK HOOK.

Sturgeon's fiscal framework allows a few £100 million a year of borrowing for a few years before the total debt limit is reached so yes there could be some £ millions invested in the investment bank for Sturgeon's Tesco pal to have fun investing in a few projects and one or two might be quite nice.

But THAT scenario is not "growth and prosperity of the people" but rather it is the FAILURE of the investment bank which follows from FAILURE to secure macro economic investment that is only possible from a new fiscal framework allowing for £ billions a year more of interest-free borrowing.

Don't be Fiscal Framework Fibbers.

We owe the truth to ourselves.

Gemma Bone

Tue, 10/24/2017 - 21:48

Hi Peter,

The new SNIB is indeed hopefully going to be different - the whole point is to make sure it is a) a bank, b) properly capitalised, and c) given a remit that enables it to fund public projects and a just transition.

There is a danger that it could go down a bad route (i.e. like the Green Investment Bank) but so far the language of the consultation is good. Keep an eye here and on Friends of the Earth Scotland for more information on how civil society can input into this process.

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