Saturday, 20 April 2024
Scottish government to launch national investment bank
The Scottish government has committed to a publicly owned national investment bank that campaigners and leading economists hope will tackle the country's lack of investment.
Speaking at the launch of the implementation plan, the first minister, Nicola Sturgeon, said the “truly transformative” measure would be operational by 2020.
Scotland’s first minister, who announced the idea in her programme for government last autumn, said she had already accepted several key recommendations from Benny Higgins, the CEO of Tesco Bank, who developed the plan. They include establishing the bank as a public body, that it should be ethical and inclusive, and that it should be “mission-driven”, funding big ideas such as the transition to a hi-tech, low-carbon economy.
Higgins said the outlook for the Scottish economy was “languid at best”, in part because of Brexit, and recommended the bank be supported by long-term capitalisation of at least £2bn over the first 10 years, with the aim of making it self-sustaining in the longer term.
Sturgeon said almost £500m would become available for new investment over the next three years.
The plan sets out a range of products, including microloans for small enterprises, loans of up to £10m for businesses wanting to scale up operations and targeted debt support.
Ric Lander, a finance campaigner for Friends of the Earth Scotland, said: “The mission-led approach takes the bank away from just pumping money into businesses, and back to public policy and a focus on the common good. It is fundamental that this is a bank whose job is to benefit society, while at the moment we have a financial sector that is self-serving and toxic.”
The plan was influenced by the work of the University College London professor on “patient finance”. Mazzucato, who has been one of the Scottish government’s council of economic advisers since 2016, points to international evidence that investment banks succeed when they are “mission-focused” on providing strategic finance to organisations that want to invest in innovative technologies and solve global issues.
Speaking after the launch, Mazzucato said: “Innovation requires patient strategic finance, and there is simply not much of that in the UK. Yet around the world state investment banks are taking centre stage in providing such finance for key social and environmental challenges of the 21st century.
“Importantly, the bank will not just seek to simply correct market failures. It will help steer the path of innovation towards overcoming key challenges by creating and shaping new markets.”
Re-disseminated by The Asian Banker from The Guardian
