In August 2015 I began a three month placement with Friends of the Earth Scotland (supported by the ESRC), who have been working on the intersection of finance and the economy in Scotland. I initially reached out to Common Weal, a leading think tank in Scotland who have been doing stellar work on the economy, especially a paper by Iain Cairns on a Scottish Investment Bank; the New Economics Foundation, who are experts in stakeholder banking; and Move Your Money, who are at the coalface of communities left behind by bank closures.
The aim was to build upon this coalition of actors interested in banking reform and to create something that would bring it back onto the agenda. After researching the current banking landscape in Scotland, and comparing it with other countries which have better, more sustainable banking systems, I wrote a report called ‘Banking for the Common Good’. This report crucially outlines a plan to transform the banking system within the limitations of the devolved government. It recommended that Scotland’s political parties should i) discuss and endorse our model; ii) the Scottish Government should convene a taskforce to examine these proposals in greater depth and iii) commission legal and regulatory advice on the technicalities of creating a Scottish National Investment Bank.
The report was initially launched in the Scottish Parliament with cross-party support in March 2016. In October 2016 the report formed part of a workshop with Scottish MP’s in Westminster alongside a follow up report ‘Blueprint for a Scottish National Investment Bank’ by Laurie McFarlane. The SNP, Labour and the Scottish Greens all welcomed the report, and the SNP adopted the proposals at their Spring part conference in early 2017. Behind the scenes, both Friends of the Earth Scotland and Common Weal have been working hard to get these two reports into the right places, with Banking for the Common Good being presented to the Scottish Council of Economic Advisors in 2017.
Today, I was delighted to see Nicola Sturgeon announce the development of the in-depth plans we recommended in our report. In the announcement for the ‘Government’s Programme for Scotland 2017/18’ she stated of the plans:
It is time to go further and to provide a fuller investment vehicle to deliver our economic vision. The Council of Economic Advisers have set out the importance to Scotland’s economic growth of supporting infrastructure development, providing finance for high growth businesses, and supporting strategic investments in innovation. They recognised the scale and scope of our investment and intervention in infrastructure and business development, but also identified national promotional banks as a cornerstone of a number of European countries’ approaches to support the delivery of long-term investment to support economic development. They also recognised that there were presently barriers, including UK Government budgetary rules, which would need to be considered and overcome for such a bank to be internationally competitive and successful.
We will now develop a full implementation plan for a Scottish National Investment Bank, including its remit, governance, operating model and approach to the robust management of financial risk. We will discuss the implementation plan with Scottish Parliament’s Finance Committee and UK Government to ensure that it has the full necessary support to allow the Bank to operate effectively.
Benny Higgins, CEO of Tesco Bank will be leading the work on developing the proposals for the Bank but I and my colleagues who have been working on these proposals will be continuing to try and ensure they deliver the following:
- That the model ensures that the SNIB functions as a proper national investment bank, unlike the Green Investment Bank or other current investment models in Scotland, to secure the benefits that public banking can bring and to maximise the impact of the levels of investment.
- That the remit of the bank is designed in consultation with a wide range of stakeholders from across Scotland to include existing public investment and business support bodies, credit unions, civil society groups, trade unions, local authorities and businesses. The remit is vital in ensuring that the SNIB delivers on the needed investment in transitioning to a low-carbon economy whilst supporting job creation and infrastructure investment. See the FOES blog here.
I look forward to the on-going development of the SNIB and with my colleagues will continue to ensure that the proposals are bold and recognise the vast potential that can flow from this momentous decision to change the Scottish banking system for the common good.