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It is my great pleasure to open the debate in support of Edinburgh’s bid to host the United Kingdom green investment bank. Of course, this is not the first time that Parliament has had an opportunity to discuss the matter; in June 2011, the Parliament welcomed a united campaign to bring the green investment bank to Edinburgh during the members’ business debate that was led by my colleague Marco Biagi, from whom we will no doubt hear later.
I was pleased that in December last year I was able to write to Vince Cable to confirm all-party support for Edinburgh’s bid. I was heartened that my colleagues Rhoda Grant, Liam McArthur, Mary Scanlon and Patrick Harvie were able to join me in signing that letter on behalf of all the parties in the Parliament. Earlier today, I was pleased to take part in a photo call with members of all the parties that are represented in the Parliament. More unity of purpose one could not imagine.
The support, of course, is not only political; it comes also from the business community, from a joint letter that Scotland’s universities have signed and from Glasgow City Council and the City of Edinburgh Council, which is an alliance that does not always necessarily exist—it is pleasing that Glasgow and Edinburgh have united on this important issue.
Today, following the submission of Edinburgh’s bid and as we await the UK Government’s decision on where the green investment bank will be located, I ask that Parliament again show unanimity in recognising the strength of Edinburgh’s bid and the considerable benefits to the UK of the green investment bank’s being located in Edinburgh. I acknowledge the work of the Edinburgh green investment bank group in putting together such a compelling argument for the green investment bank to be located in Edinburgh. An impressive range of interests from industry, government and politics working together have produced a substantial bid. I ask that all the interests in Parliament show similar co-operation in endorsing the bid and in working together in the future to ensure that Scottish projects are successful in securing funding from the GIB, just as we wish projects elsewhere in the UK to be successful. I once again have departed slightly from my written text.
I am sure that we are all convinced of the merits of the bid. Edinburgh has been ranked as the best large European city—that is, a city that has a population of between 500,000 and 1 million—for foreign direct investment in the recently announced FDI Intelligence Ltd’s European cities and regions of the future ranking. The fDi Magazine is a specialist division of the Financial Times Ltd. Edinburgh came top, ahead of all the cities in Europe, including important and beautiful cities such as Oslo, Gothenburg and Leipzig. Edinburgh is number 1. The list ranked cities and regions according to seven categories: economic potential, human resources, cost effectiveness, quality of life, infrastructure, business friendliness and promotion strategy. It is worth noting that several of those criteria are also key criteria for assessing bids to host the GIB. Therefore, that endorsement by a prestigious and influential division of the Financial Times significantly strengthens Edinburgh’s bid.
I am delighted that the UK Government recently recognised Scotland’s leading role in the development of the green economy when it decided to locate the headquarters of the United Kingdom offshore renewable energy catapult centre—ORECAT—in Glasgow. The UK Government funding for ORECAT will be between £50 million and £100 million over 5 to 10 years. The decision demonstrates not only Scotland’s leading position in the development of offshore renewables, but a commitment to Scotland. The appetite for investment is stronger than ever. I trust that the UK Government will further strengthen its commitment by deciding to locate the GIB in Edinburgh.
The decision on ORECAT also shows that the transition to a low-carbon economy that has been set out by the Government is delivering investment and jobs not only in Edinburgh but throughout Scotland.
We are, indeed, united on the need for investment in green technologies and on the opportunity that Scotland has for that investment. However, do we not also need to unite on the wider issue? There are already in the UK publicly owned banks that are much bigger than the green investment bank will be and which are doing precisely the opposite and are investing in destructive, environmentally unsound industries and technologies. Should not the minister join all the parties together in putting pressure on the UK Treasury, UK Financial Investments Ltd and the Royal Bank of Scotland to de-invest from those destructive industries and technologies?
To be candid, I did not come to the chamber to opine on that matter. However, the other side of the coin—if, indeed, we have seen one side of the coin—is that significant investment from banks in green projects is welcome. The Co-operative Bank, Barclays Bank, RBS and many others make significant investments in the green economy. Plainly, we would all like more to be done, but with all respect to Patrick Harvie and recognising his obvious commitment to the matters that are under discussion, I will decline the invitation to stray beyond the territory of the debate.
We now have the opportunity to make Edinburgh and Scotland a pan-European and global hub for renewables investment. Locating the GIB in Edinburgh will help to cement a cluster of expertise that would be comprised of finance, academia and industry that are all centred here.
However, we should not be complacent: Edinburgh is only one of 32 locations that are bidding to host the green investment bank. I will outline why I believe that it should prevail.
Locations were asked to self-assess against the following criteria: the ability to recruit and retain specialist staff, the ability to enable the green investment bank to work closely with other parties in deals, and a location that provides good value for money.
First, Scotland has a long and proud history in banking and it has a growing reputation as an innovative and high-quality hub for financial services, such as investment management and asset servicing. The green investment bank will bring between 50 and 100 full-time equivalent jobs and will be able to recruit from a cluster of top-quality financial services companies—a sector in which 60,000 people are employed across Edinburgh’s travel-to-work area.
It is not just financial expertise that makes Edinburgh the correct location for the green investment bank. Edinburgh has an experienced pool of world-class professionals in engineering, green infrastructure, company clusters and university campuses, all of whom play vital roles in the areas in which the green investment bank will be active. The bank would be supported by world-class research and specialist skills in low-carbon technologies, which will come from Edinburgh’s strong and internationally connected academic and company base. I have had the fortunate experience of meeting a great many world leaders in research and intellectual activity in those areas in and around Edinburgh.
Edinburgh is unique in being the only location in the United Kingdom that brings together finance and the clean energy industry in a single place. It has an unrivalled concentration of industries, skills and experience to support effective commercialisation. Given that Edinburgh is part of the UK’s leading region in green infrastructure and has a disproportionate share of renewables investment, locating the green investment bank in the city will ensure that the UK has the best possible chance to develop as the European centre of excellence in the sector.
In addition, people wish to come to Edinburgh. It is recognised as having world-class quality of life and a global profile that has been proven to attract and retain the best in professional talent. Moreover, property and transaction costs in Edinburgh are highly competitive in comparison with those in other cities, and Edinburgh is one of the UK’s best-connected cities—it has strong domestic and international transport links, as well as world-class information and communications technology links, which are the sine qua non of success these days.
I therefore ask the Parliament to join me in agreeing that, as is set out in the bid,
“Given the quality of Edinburgh's transaction ecosystem, the GIB will have a greater economic impact at a UK level, than if the Bank were sited in other locations. This in turn will help the UK Government to deliver its low carbon objectives.”
I turn to the support that the Government can offer to ensure the successful location of the green investment bank in Edinburgh. I believe that the Government must be able to demonstrate its credentials and its commitment to the aims of the bank—namely, that it will provide the necessary financial solutions and accelerate private sector investment in the transition to a green economy, for it is that that will create the certainty that must exist if we are to persuade people to take major investment decisions in Scotland’s favour.
The Scottish Government has put a low-carbon economy at the centre of its economic agenda. Growth in the low-carbon energy sector, particularly in renewables, will be a significant contributor to that agenda. The green investment bank has the potential to deliver significant benefit to the green economy in Scotland. We have committed to achieving ambitious low-carbon headline targets by 2020 and 2050. As we move towards 2020, we have interim targets for carbon emissions reductions, particularly in the electricity generation sector, for a major increase of renewables in the energy mix and for improving energy efficiency. We have been crystal clear about our commitments.
In June last year, we published our renewables route map, which outlines the actions that are required if we are to achieve the 100 per cent equivalent gross annual electricity consumption target. We will soon publish the updated electricity generation statement, which will give the latest position on the role of renewable electricity and fossil-fuel thermal generation from coal, gas and oil in Scotland’s future energy mix, and we will publish the second report on proposals and policies in the first half of 2012 or thereabouts, which will report on our progress on emissions reductions. We have been clear about our plans on how to achieve our objectives for a low-carbon economy. We can point to all those strategic facts that demonstrate our commitment to the green economy and which therefore contribute in a vital way to investor confidence.
The Parliament has previously recognised the considerable benefits that the green investment bank would bring to Scotland and to Edinburgh. When I last spoke in Parliament on the matter, I stated that the task that was before us was for Edinburgh to be seen not, as Vince Cable described us, as “a front-runner” for location of the green investment bank, but as the front-runner and, ultimately, to be the chosen location. I commend that approach to Parliament, and I look forward to hearing all my colleagues’ contributions to the debate.
That the Parliament endorses the bid submitted to the UK Government to have the green investment bank (GIB) located in Edinburgh; believes that the Edinburgh bid fully satisfies the criteria set out by the UK Government and that Edinburgh is the ideal location for the new institution through its unique business ecosystem and highly advanced network of financiers, developers, investors, asset managers, researchers, academics, think tanks and government agencies; recognises the breadth of support for the Edinburgh bid across Scottish civic society, the academic sector and commerce, and acknowledges that Scotland’s ambitious low-carbon economic agenda will facilitate a GIB based in Edinburgh becoming an enduring financial institution with visibility and a distinct identity with which to mobilise significant investment into green projects across the UK.
I am pleased to open the debate for Labour on the green investment bank. I assure the minister that we will vote for the Government’s motion this afternoon.
I suspect that the debate will be broadly consensual. We should take encouragement from the fact that members from all shades of the political spectrum have been able to unite around our common desire for the green investment bank to be located here in Edinburgh. The word “consensus” is often used and—dare I say it?—misused in the chamber, but it is heartening that we are able to unite today on the need to tackle climate change and face up to the importance of our environmental challenges.
The need for a green investment bank rests primarily on two factors. First, the Climate Change Act 2008 and the Climate Change (Scotland) Act 2009 from the UK Government and the Scottish Government respectively have not only set ambitious targets for reducing carbon emissions but enshrined those targets in legislation. We now need a series of practical measures to meet those goals.
Secondly, there is a recognition that traditional funding and investment streams that are delivered through our high street and investment banks are not delivering the radical transformation to the low-carbon economy that we need. We know, for example, that, although there has been tremendous expansion in the renewables industry in recent years, investment decisions that are taken solely for commercial return are more wont to stick with tried and tested—and, at this stage, cheaper—generating technologies.
I am, of course, pleased that it was Alistair Darling as Chancellor of the Exchequer who first promoted the green investment bank to the political main stream in 2010, but I am also pleased that the current UK Government has continued to give the proposal its backing. It seems that there has been some tension between the more environmentally minded members of the Government and those at the Treasury. That may have had an impact on the nature of the bank, but it is crucial that the bank is still going ahead.
The case for locating the bank here in Edinburgh is very strong. I pay tribute to all those in the public, private and voluntary sectors who have united in presenting such a strong case for Edinburgh. One of the criteria for deciding on its location is the ability for the bank to recruit and retain the specialist staff who are needed. It is clear that Edinburgh has one of the biggest financial sectors in the whole of Europe, let alone the UK. The city therefore has immediate access not only to the necessary financial expertise but to the sizeable and expanding renewable energy industry that is already located in Scotland.
The bid team for Edinburgh has brought together some of the key organisations that will need to work side by side with the new bank. Those include Edinburgh’s prestigious universities; the country’s banks and some of the leading investment houses; public sector bodies such as Scottish Enterprise and Scottish Financial Enterprise; environmental organisations; and, of course, our power companies.
I have already mentioned the cross-party consensus behind the bid, but it is worth noting—as the minister did in his opening remarks—that Edinburgh has the support of all Scotland’s major cities, including Aberdeen, Dundee, Glasgow and Stirling. I genuinely doubt that there is anywhere in the United Kingdom that can beat Edinburgh on access to financial and industrial expertise, on the totally united political backing and on the proximity not only to existing renewables capacity but to the tremendous potential that exists offshore and onshore from the north of England right up to the northern and westernmost islands.
I believe that the bank will be of tremendous potential benefit to Scotland, which is one of the reasons why I am sure that we are all united in wishing to see it here. However, I will flag up a few points, not so much for the Scottish Government but for the UK Government as the body that is establishing the bank. First, I understand from recent statements that the new bank is to lend at commercial rates and to return a profit at all times. I see no reason why it should not return a profit, but I believe that at the very least we need further clarification of that criterion, given that the bank is being established essentially to address market failure. At its heart, the bank must have the intent to deliver on an environmental policy imperative rather than a solely commercial motivation.
Does Mr Macintosh agree that there is a double bottom line, in that the bank needs to deliver against environmental objectives but it will be able to do so only if it can get a return on its investments that it can reinvest to meet those environmental objectives?
Absolutely. I could not agree more. That was clear at the genesis of the bank. The only reason why there is anxiety is that it is felt that some political momentum might have shifted from the environmental objectives to the commercial ones. The issue is balance, which is why I asked for further clarification, rather than suggesting that the bank is heading in the wrong direction.
Like many in the environmental movement, I am anxious that the bank should invest in infrastructure and manufacturing but should also support small-scale community and co-operative enterprises. The RSPB put that point well in its briefing for the debate, in which it said that the challenge for Scotland and the UK is to ensure that the climate and renewables targets are met sustainably. The RSPB points out that many energy projects claim environmental credentials but can be damaging to landscapes, wildlife and natural habitats. It argues that, although it makes financial sense for the big energy firms to invest in large-scale renewables projects, the ambition for smaller-scale and community projects is limited by a lack of credit and the financial risks to those who are involved. The green investment bank can therefore provide value in making that possible.
I am slightly concerned that the green investment bank will, for the first few years at least, simply be a green investment fund, in that its borrowing powers are unlikely to be established before 2015 or 2016. Ministers have suggested that even then, those powers will be dependent on the UK Government hitting deficit reduction targets. Most environmental commentators believe that, if we are to make the significant move that is required to a low-carbon economy, the bank needs borrowing powers. To meet our climate change targets, the borrowing powers should come sooner rather than later.
If we are to meet the climate change targets, it is important that the bank supports energy efficiency as well as renewables capacity. The bank will have a remit in promoting non-domestic energy efficiency, but we still need to change attitudes and behaviour across Scotland. We need demand-led energy efficiency reforms that are about consumers reducing demand, rather than generators simply expanding the supply to meet it. The bank might be crucial in helping to achieve that.
I do not know whether many members have had the benefit of a smart meter in their homes. I had that joy recently when Scottish Gas came round and I have to say that I am a total convert to smart meters. A young engineer came round to fit the meter and then showed me the difference that switching a kettle on makes and so on. The meter works on a traffic light system, with red, amber and green lights. Now, as soon as my kids come into the house, they are conscious of whether the green light is on. That is working. That was a little plug for Scottish Gas and its work on that.
I do not want to cause consternation among Scottish National Party members, but I want to pose a question to the Scottish Government minister that I believe he will need to answer if the bid is to be successful. Why should a UK Government want to locate a UK bank in a separate Scotland? I am not trying to break the consensus, but I genuinely believe that that question needs an answer and that the issue is a potential barrier to our bid winning.
To be honest, I have huge doubts about how the Scottish Government’s plans for separation sit alongside its renewable energy policy. The renewables industry is based on Scotland being part of the UK economy. Even with a Scotland-based company such as SSE, its funds for investment come in large part from consumers who are based in the south of England. That is not simply a political question or point; it is an anxiety that already exists in the renewables industry and was most recently raised by Citigroup. There is a paradox at the heart of SNP policy in its support for renewables and for separation. I would welcome the minister’s comments on that paradox and dilemma in his concluding remarks.
To return to a more consensual note, I am pleased to be part of Scotland-wide unity in calling on the UK Government to site the green investment bank in the best possible location in the UK, which is here in the city of Edinburgh.
There are occasionally debates in the Parliament in which all members pretty much agree with one another on the substance and it is extremely difficult to disagree with a single word of the Government motion. I intend to be extremely consensual—so much so that I think that my colleague Murdo Fraser, who was sitting next to me earlier, has run away from the chamber so that he does not have to listen to my speech.
One of the best things about the bid for the green investment bank is how it has united politicians across the Parliament and across Scotland, because having the bank in Edinburgh would be good not just for the city but for all parts of Scotland, as many members from the north-east and the Highlands and Islands said during the members’ business debate on the matter.
More important than the unity among politicians is that the bid has united institutions, companies and organisations throughout Scotland. The Edinburgh bid was pulled together from several areas of expertise in a highly professional fashion. We should not pick out favourites and give special praise, but mention should be made of the Edinburgh Chamber of Commerce, which I think was first out of the traps in spotting an opportunity—I see Sarah Boyack nodding and I acknowledge her previous comments about the chamber of commerce. The chamber seized the initiative and pushed the issue, to the extent that things probably went further and faster than they would otherwise have done. Indeed, Edinburgh had a professionally produced draft business case ready well in advance of the formal call for business cases.
Edinburgh has many strengths. A look at the assessment criteria that were published in December, to which the minister referred, shows that Edinburgh scores particularly highly across the board. The criteria are
“(i) The ability to recruit and retain staff with the necessary specialist expertise ...
(ii) The quality of the transaction ‘ecosystem’ in the locality;
(iii) Cost effectiveness considerations.”
The Department for Business, Innovation and Skills described the criteria as being set out
“in descending order of importance”.
Therefore, although cost effectiveness is important, the ability to recruit and retain staff with the necessary expertise is the number 1 criterion for BIS.
When we delve a little deeper into criterion 1, we find that BIS talks about three important groups of experts,
“Financial services experts ... Green economy experts” and
“Other professional experts”, and highlights that the financial services industry is extremely important—perhaps more important than the other two areas.
The minister’s comments about Edinburgh and Scotland’s financial services industry were well made. It is well known that Edinburgh has the fourth largest financial services industry in Europe. We are rich in relation to pensions, life assurance, investment management, banks, insurance and asset servicing. Across the spectrum of financial services, Edinburgh scores extremely well. I have not seen the other 31 bids or the formal bid from Edinburgh, but it will be difficult for any of the 31 to beat Edinburgh on financial services expertise.
On the call for green economy experts, a number of organisations in Edinburgh, including Edinburgh Chamber of Commerce, have shown green thought leadership. During the past couple of years, the Scottish low-carbon investment conference, which was attended by ministers and numerous VIPs from around the world, put Edinburgh on the map. The green investment bank would add to that. We have the technical and engineering skills and we have the universities, as the minister said. I am told that there are 11 universities within an hour’s drive of Edinburgh. I have not seen all the detail, but I am led to believe that, across those universities, there are no fewer than 87 low-carbon and environmental research units.
With regard to the second main criterion, which is the ability to work closely with others—or what is described as the “transaction ecosystem”—the assessment criteria paper points out that
“Specialist businesses have a natural tendency to form clusters in particular locations to optimise their performance.”
It is almost as if that had been written with Edinburgh in mind. After all, we are strong in financial services, green energy and the infrastructure that will be required for the green investment bank.
Edinburgh also scores pretty highly on the third criterion, cost effectiveness, particularly in relation to one of the other potential riders and one of our biggest competitors for the prize: London. Obviously, we score far more competitively than London in that regard.
As I have said, Edinburgh was first out of the traps, producing a very strong business case before it was required. The bid has pulled together all the political parties and organisations across Scotland, and the Scottish Conservatives are very happy to vote with the Government and very much hope that Edinburgh’s bid is successful.
I have a sense of déjà vu as I rise to support the Edinburgh bid for the green investment bank. However, in the spirit of the debate—and perhaps in the spirit of the bank itself—I will begin with a bit of recycling.
I am sorry—it does not get any better than that.
Back in June, I described Edinburgh as the most natural, the most logical and in all respects the best location for the green investment bank. Like Gavin Brown, when the criteria were published, I thought that the people who had put them together must have had Edinburgh in mind. Looking at them, one cannot help but think that the bank was designed for us.
As other members have pointed out, there are three requirements: the ability to recruit specialist staff; the opportunity for close working with other parties involved in the deals; and a location that is good value for money. As the formal bid points out, Edinburgh scores incredibly highly in each category. In the Edinburgh travel-to-work area, 60,000 people are employed in the financial services industries; 80 per cent of the world’s largest banks are present in the city either directly or through subsidiaries; and Edinburgh accounts for 25 per cent of all UK life and pensions employment. Surely that already answers the question of recruiting specialist staff.
The formal bid also points to the world-class quality of life in Edinburgh. Obviously, as the member for Edinburgh Central I will talk up the city in any way possible. Recently, however, I was reading about the great success of the property market in the new town, which is already attracting very high-status individuals who have been priced out of London. Although they might cause some displacement in the rest of the market, I welcome them and their economic contribution to the city. It simply shows the quality of life that Edinburgh can offer. In fact, at the moment, we cannot seem to build hotels fast enough.
As for enabling close working, I note that there is both SSE and Iberdrola. On the third criterion, the formal bid shows that the figures for value for money are singularly impressive. For example, the figure of £27 per square foot per year is half that for London and, to any potential inward investors who might be listening, I point out that it is lower than the figure for Glasgow. That might well be in the next Labour leaflet in Glasgow. Finally, I note that, of the 10 locations that the formal bid suggests could be used, nine of them are—crucially—in Edinburgh Central.
In the debate in June, Gavin Brown set out a strength-by-strength list for Edinburgh. As far as financial services are concerned, the list is second to none and includes banking, asset servicing, asset management, insurance, private equity and, above all, committed institutional project sponsors. I hope that that analysis is still supported unequivocally by all parties. Indeed, back then, Sarah Boyack singled out the huge investment in the renewables industry. Tavish Scott reminded us that the prize is not just for Edinburgh but for the whole of Scotland, and he might have given a friendly dig on behalf of Aberdeen when he was doing so.
The coalition of support for the green investment bank is impressive. It includes Edinburgh Chamber of Commerce, SSE, McGrigors, Forth Energy, the City of Edinburgh Council, Scottish Power, and Scottish Enterprise. The Scottish Environment Protection Agency has been involved, as have PricewaterhouseCoopers, Anderson Strathern and the Scottish Government. We might have disagreements over the detail—that is perfectly natural—but it serves to emphasise the importance of our underlying agreement. There are disagreements about what the green investment bank might invest in, how it would interact with the fossil fuel levy, the importance of borrowing powers and other things, but those disagreements have arisen because of the shared desire for a successful green investment bank. They do not get in the way of our combined support for Edinburgh as its natural and automatic location.
Last night, a group of MSPs were at a reception to mark the opening in my constituency of the first Scottish high street branch of Triodos. Although it is an international company, Triodos is what we might call a boutique bank. It has about 30,000 savers in the UK and it uses their deposits to lend to businesses that meet its criteria for sustainability, such as renewable energy, agricultural and social enterprises. In a way, it is like a small-scale, private sector, green investment bank. I first heard of Triodos 10 years ago when I was researching ethically motivated investment schemes. Back then, there was an impression that Triodos was an oddity that one could bank with by post and whose chequebooks were printed using soya ink. Now, it is open for business and trading right there on Hanover Street in the heart of Edinburgh. I can see how its time has come as a model and I hope that it grows even further, but such small, specialist houses will never fuel the renewables revolution that Scotland and the rest of the UK so desperately need. I hope that the GIB will follow in Triodos’s footsteps.
Indeed, I am happy to echo Patrick Harvie’s point that the more we see the big banks looking like Triodos in their investments and support for the green industries, the more we will be able to welcome their contributions, but we should not forget that, in this debate, we have the unusual situation of all parties supporting the GIB coming to Edinburgh and we have the unlikely alliance of the Royal Bank of Scotland and Friends of the Earth Scotland.
The prize is great and therefore worth fighting for. When investors are looking for finance for green projects in the future, they should automatically think of Edinburgh and of making their base here, thereby bringing all their benefits to this city and this country.
Areas of renewable energy, green options, waste processing and recycling have captured much of and promised more to the public’s imagination. Until now, the reality has been that, in the absence of substantial Government and public subsidy, making credible business cases for developments to meet those promises has been a challenge. In that context, the UK Government’s proposal to create a green investment bank is to be welcomed and the bid for the bank to be located in Edinburgh makes even more sense.
The concept of a financial institution being created to deliver in one area of investment activity is not without precedent. As many members will know, the Agricultural Mortgage Corporation was formed in 1928, largely as a response to those in agricultural communities who found it virtually impossible to obtain financial support for their businesses. The Agricultural Mortgage Corporation, which is now maintained as part of Lloyds TSB Bank plc, was created with the declared aim of developing investment in farms and equestrian, rural and horticultural businesses. As an area of investment deemed to be alien by many bankers and investors, it was in need of experience and knowledge of the particular challenges and benefits that were attached to agricultural businesses and consequently the corporation worked with professionals in the field. The corporation now deals with almost 40 per cent of all the mid and long-term needs of that industry.
In the realm of green investments, a similar level of specialism is required, based on the experience and knowledge necessary to enable appropriate business decisions to be made in areas of finance deemed as risky by those with insufficient expertise.
The first priorities of the bank will be offshore wind farms, commercial and industrial waste processing and recycling, energy from waste generation, non-domestic energy efficiency, and support for the green deal. As the minister indicated, it is anticipated that up to 100 quality jobs will be created to manage the bank and its business deals. Those are jobs that Scotland sorely needs, given our current situation.
Importantly, the presence of the bank as part of UK financial services will create the culture necessary to identify and pump-prime the new ideas that are necessary to allow Scotland to grow the technologies and processes to place us to the fore of commercial and competitive businesses.
The committed budget of more than £3 billion sounds like big money but pales into insignificance in comparison with the forecast £200 billion required before 2020 to deliver on Britain’s requirements. Important, though, is the immediate availability of £100 million next financial year to invest in smaller waste infrastructure projects.
Given the criteria laid out for the green investment bank, there is no doubt that Edinburgh, with its experience as a financial centre, will be able to recruit and train staff. That has already been commented on by many members. Equally, the proximity of Edinburgh to various supreme academic institutions and programmes could see the green investment bank situated close to the leading edge in research and development, as well as the global players in the green industries.
Edinburgh’s bid demonstrates value for money that competes with any of the other 31 locations under consideration. In spite of comments from Mr Moore in the lead-up to a decision, my only fear about Edinburgh’s competitive advantage in the process is whether the on-going doubts that the SNP Government has created about separation from UK institutions will result in the UK deciding to maintain the green investment bank within the confines of those countries directly and definitely part of a future UK relationship. Ken Macintosh was right to invite the minister to comment on that in his closing speech to quell the worries outside this place.
Whatever the impact of that element of concern, I fully support our efforts to persuade the Department for Business, Innovation and Skills of Edinburgh’s supreme suitability for the bank. I hope that Nathan Goode’s observation yesterday in the media that Scotland’s nuanced approach of being highly developed and competitive while ensuring collaborative responses wins the day.
As the deputy convener of the Economy, Energy and Tourism Committee in the previous session of Parliament and a member of the Transport, Infrastructure and Climate Change Committee when it considered the Climate Change (Scotland) Bill, I argued early on, at the time of the previous Labour Government at Westminster, that the green investment bank should be in Scotland. In August 2010, I suggested that the new £2 billion green investment bank should be based in Scotland to bring it closer to the industry and the parts of the country that will contribute most to building a low-carbon economy.
That argument is reinforced today. It is important for the whole UK that Scotland has a stable platform for the development of the energy revolution that we are talking about. That is why I take issue with the suggestion that it is not in the UK’s interests to site the green investment bank in Edinburgh. The fact is that the UK will require Scotland’s green electricity output to help it to meet its climate change target. That will not change no matter the political circumstances—for or against independence though members may be.
There is cross-party commitment to a UK-wide green investment bank that will help to direct investment to the industries, improvements and key areas that can help to build a new green economy. As members have said, Edinburgh is the best place because it is where all those facets meet.
Above all, we need to have a stable renewable energy development policy across the UK and in Scotland. I note that the Energy and Climate Change Committee at Westminster warned last week that the UK Government must not miss the boat on renewables development, as it has previously.
With that stability of policy in mind, one priority should be a focus on having a green investment bank in the best place possible. However, the recent call by 100 Tory MPs to halt land-based wind developments hit a very jarring note. I think that David Cameron wants to be seen as a green leader, so he might bat that call aside. However, the situation is not helped by BBC presenters such as Matt Baker, who was yesterday quoted, as the presenter of “Countryfile”, criticising wind turbines springing up in the countryside as the greatest threat to rural work—that is the BBC view, balanced as ever.
I note that the embryo green investment bank has been set up in London and that it will then have to grow in some other place. I also note that the advisory committee that was set up to help with the development and structure of the bank has, in my view—I may be proved wrong—very little experience of Scottish conditions and attributes. That aspect of how the bank is being set up bothers me considerably, as it may affect its direction towards our part of the country.
The proximity to companies and individuals who are working on the front line of decarbonising our economy is not available anywhere other than Edinburgh. My concerns about the need for a stable policy and about some of the mixed signals that come out of what is said down south are considerable.
I recognise the focus that the green investment bank will have on offshore renewables. The cutting-edge developments in offshore renewables are being made by companies in the north of Scotland. Of course, there have been offshore developments of considerable size down south, but the world-beating materials that are now being developed in the Moray Firth represent the kind of intellectual knowledge that will be sold on to America, Brazil and so on. Those have to be developed and backed.
We talk about the £2 billion public investment. As Graeme Pearson said, we know that a vast amount of money will be required for developments to meet the targets for energy production and emissions reduction in the green investment bank’s remit. Scotland is widely recognised as having enormous potential in that area. In my constituency, the Pentland Firth provides potential for, in particular, tidal power. That is a great goal. Many other places in the UK can contribute to the targets but, proportionally, Scotland has far more potential. It is almost like the proportion of peatlands in Scotland compared with the whole of the rest of the UK—about 80 per cent are in Scotland. The emphasis on the things that we can do here will not only help us but will be vital to both the UK and the European targets to reduce climate gases.
The UK Government needs to ensure that we have access to the rest of the fossil fuel levy. It should not keep it for three years, as we need that money to develop now. The green investment bank might be seeded with some of that money, which will help Scotland to access it, but we also need the transmission charging regime to be sorted out. The green investment bank has a lot of hurdles to cross before it can make the major contribution that we require and which the UK and Europe is looking forward to us achieving.
I welcome the opportunity to speak in this debate, which, as we have heard, unites this chamber, business, financial institutions, agencies, universities and councils across the country.
Scotland must establish itself as the undisputed energy powerhouse of Europe; with our unrivalled wind, wave and tidal resources, we certainly have the potential, and the ambition, to do so. Since 2007, our Government has made world-leading progress, placing Scotland at the forefront of the green energy revolution. The offshore valuation study of 2010 estimated Scotland’s total practical offshore wind, wave and tidal resource at 206GW. Harnessing just a third of that clean energy would position Scotland as a major net exporter of renewable energy.
The socioeconomic impact of green investment resonates with the economic growth of rural areas, skills development, construction sector growth and, of course, jobs. The improvement of storage capabilities, the strengthening of grid connections and the delivery of a North Sea grid all demonstrate the degree to which Scotland and this Government are committed to investing in renewables technologies. That commitment alone is one reason why the green investment bank is best placed in Scotland.
The bank’s mission is to accelerate private sector capital investment in the UK’s transition to a green economy, in response to the rapidly increasing worldwide investment in renewables technologies. As the Grant Thornton report argues, locating the bank in Edinburgh would bring it to the heart of the clean energy sector without losing the benefits of being in a major financial centre. As we have heard this afternoon, there is no other place in the United Kingdom that meets the description.
The UK Government’s policy of spreading business opportunities more evenly across these islands is sensible, and I hope that it is acted on. There is a real danger that a London-based green investment bank would be lost among numerous institutions, meaning that its presence would not be felt so strongly. In Edinburgh, it would be a focus, a driving force and a transparent institution.
As Gavin Brown and Marco Biagi said, Edinburgh comfortably meets the location criteria for the green investment bank. Scotland is where the UK’s clean energy sector is concentrated, and it is home to companies—including Scottish and Southern Energy and ScottishPower Renewables—that are responsible for some of the UK’s most innovative green infrastructure projects. A real international clean energy network is taking shape, with firms implementing a wide range of projects. Offshore wind is a leading example of a sector in which developers are locating in Edinburgh, increasing Scotland’s attractiveness to other supply chain companies. In 2010, Mitsubishi Power Systems chose Edinburgh for the creation of a centre for advanced technology worth around £100 million; and the Doosan Power Systems £170 million investment in Scotland has the potential to create 1,700 jobs. Global clean energy companies from Germany, Italy, Norway, the Netherlands, Spain, Portugal and beyond have already created bases here.
Scotland’s financial sector employs just over 86,000 people, and just under half of them are based in the capital. Some of the UK’s largest private and public sector organisations, and around 15,000 small and medium-sized businesses, are at the very heart of the city’s economy. We have the most extensive UK financial services centre outside London, with world-class expertise in banking, insurance, pensions and investment management, as well as strong links to the global markets. The deep pool of talent that exists in Edinburgh would ensure that the bank had the skills required to deliver its key functions. The benefit of having a high concentration of world-leading universities and other research establishments gives Edinburgh a competitive advantage. Close links between the green investment industry and universities already exist, and locating the bank in Edinburgh would continue to foster that relationship.
Another key factor in this debate is connectivity. A green investment bank would need to be well linked to other parts of the UK, Europe and beyond. As the MSP for Edinburgh Western, I take pride in representing an increasingly expanding international airport, while the construction of the new Forth crossing will be absolutely pivotal in connecting the capital with Fife and the north-east of Scotland—where many of the green investment projects are being located. Make no mistake: if there were no Forth crossing, the chances of the green investment bank coming to Scotland would be diminished.
Finally, on cost effectiveness—whether in relation to office, transaction or workforce costs—an Edinburgh-based green investment bank would be considerably more attractive and affordable than one that was based in London.
Regardless of whether Scotland becomes an independent nation, there is one word that will determine the success of the green investment bank in the UK: location. The virtuous circle of technology, finance and supply tells us that Edinburgh not only ticks all the boxes but is the prime candidate. I am delighted that the Parliament is unanimous in its support, and I hope that the UK Government recognises the huge potential that Edinburgh and Scotland have to offer. I support the motion.
I very much welcome the debate and hope that it is timely. We are getting close to an announcement on the location of the green investment bank, and I hope the fact that we are able to rehearse for a third time the arguments in favour of the green investment bank coming to Edinburgh is helpful to the wider discussions.
I was very enthusiastic when the proposal for the green investment bank was suggested by Alistair Darling in the 2010 budget. It had been discussed for quite a while before that and lots of lobbying had been going on, particularly by the environmental movement, on the need for dedicated green investment in the riskier end of the renewables field. We know that not all that investment will come from traditional banking, so we need something that is prepared to go in there before the market is ready to invest. That is how the green investment bank could be transformative. We should, therefore, lobby not only for its location to be in Edinburgh, but for it to be up and running soon, with the maximum amount of financial resource to enable it to have the maximum impact. That is critical.
It is significant that colleagues across the parties are all in agreement. Even on an issue such as this, agreement cannot be taken for granted. Over the past few months, a huge amount of work has gone into putting together a robust and, I hope, persuasive case for the green investment bank to come to Edinburgh. Colleagues have talked about the expertise that we have in Edinburgh, including expertise in fund management and legal experience. A lot of projects have been managed through the Edinburgh area, but this is also about our capacity to expand and our linkages outwith Edinburgh, across the rest of Scotland and the UK. We are well placed in that respect.
Gavin Brown made an excellent point about the higher education institutions in and around Edinburgh, but this is not just about them. In Edinburgh, Glasgow, up towards Aberdeen and even as far as Orkney, we have a huge amount of readily accessible academic expertise. The challenge is to turn that academic expertise into business development. We have the ideas and there is connectivity. One thing in particular that we bring to the debate is the integrated approach that we have in Scotland to these topics. Our geography helps. That is part of the reason why we moved faster to establish a new industry in Scotland, but it was also partly political. The first target that we set—that 18 per cent of our electricity should come from renewables by 2010—was ground breaking at the time, and we have moved on hugely over the past 12 years. The challenge, however, is to go a lot further.
Colleagues have talked about renewables in other parts of the UK, and there is huge ambition down the north-east coast and in Cornwall to match what we are doing, and to exceed it. Some of the offshore developments in England are beginning to happen very quickly, so we should not be complacent. We know that bringing the green investment bank to Scotland would be a sensible decision, but we must make a hard case for it.
For me, this is about getting to the next stage in all these industries. We have made a huge amount of progress over the past decade, but we are getting to the difficult stuff. We need to look at the potential for local combined heat and power schemes and community schemes, which we are terrible at setting up in Britain. There are only one or two examples, of which the one in Aberdeen, where we have a network, is probably the best in Scotland. That required local political buy-in, drive by the council and buy-in from local firms. We do not have that in our other cities in Scotland, although other European countries would take that approach much more as standard. RSPB Scotland has commented that we should argue for a range of investment, and it is critical that we solve the problem of unlocking finance at the community or city scale. That would be something the bank could do. The UK is certainly well behind other parts of the world in that regard.
The other big challenge is that investment in new green technologies in Europe is not huge, so having the bank would enable us to get ahead of the game. Again, we should not be complacent. In other parts of the world, including China and Taiwan, there is a lot of green investment, so the bank is critical for the UK. It gives us a one-off opportunity to lift us up from where we are. We have a good track record in Scotland, with lots of linkages that would help the bank to be transformative. A lot of money is involved, and it must be used as well as it possibly can be. We all know that this is a hard time from the point of view of money being spent by the public sector, and that makes the bank all the more important.
If I were sitting in the UK Government, I would want the bank not just to have a big impact in the short term, but to lever in a huge amount of private sector capital. That is the opportunity that the bank presents, and I think that Edinburgh, with our links across Scotland and the rest of the UK, is the front-runner. That does not, however, guarantee that we will get the bank, which is why the timing of the debate is useful. We need to rehearse the fact that Tesco Bank, Virgin Money, the Co-operative Bank and Triodos Bank are coming to Edinburgh. Even though there has been massive restructuring in the sector and it has been incredibly difficult for the thousands of people whose jobs have been lost and who have been forced to find different employment, there is still talent, capacity and drive. There is a big opportunity to seize here.
We need to argue that in Edinburgh the proximity to our mainstream banking sector would have a transformative impact, because UK banks are based here that still have significant capacity to make decisions, which would have an impact not just at the Edinburgh end of the banks but in London. The banks talk to one another all the time. It is not just about physical location but about connectivity, and people being able to pick up the phone and make the connections that are so important for business. There are opportunities here, and the timing is good for us. The challenge is to ensure that we do the best lobbying that we can.
I am not complacent. Rob Gibson’s comments about long-term political stability and renewables are important. There is a case to be made for renewables—the issue cannot be taken for granted. The UK has lots of experience with good ideas, but, for example, the Salter’s duck was never taken forward as the Dutch and the Danes got ahead of us in wind power. Since this Parliament was set up, we have been determined not to let that happen again. The challenge is to get into the new forms of not just renewables but other green energy technologies, including battery technology. We have lots of good ideas about a whole host of things on which we are still ahead, but we need the lift-off that will come from the transformative capacity of the green investment bank, and that is why I am glad we are having this debate. This is not just a question of our agreeing with one another. There are bits of political fencing, which it is absolutely right for us to have in the chamber, but I hope that today will help anyone who has any capacity to persuade those who will make the decision that Edinburgh is the right choice.
I declare an interest as a member of Aberdeen City Council.
Colleagues often accuse me of being Aberdeen-centric, and there is probably a suspicion that I will make a last-minute bid for Aberdeen to be the site for the green investment bank. I can put members’ minds at rest: I fully support the Edinburgh bid. I agree with the leaders of the six cities in Scotland, who believe that this is the right place for the bank, and I am pleased that there is that unity of purpose.
I agree with the member and I do not agree with the member. I agree that all cities should welcome this opportunity, but I urge him not to undersell Aberdeen. Glasgow and Aberdeen are just as fine as Edinburgh, and we should encourage the bank to grow and go to all those cities.
I agree with Mr Malik. Glasgow is a fine city, and Aberdeen is, of course, top of my list.
In the past, there was competition between Glasgow, Edinburgh and Aberdeen for the Energy Technologies Institute. Unfortunately, we could not get together on that, and it ended up in Loughborough, when it would probably have been better placed in Glasgow, Edinburgh or Aberdeen, so I am glad that there is unity of purpose with regard to the green investment bank. However, I would never undersell any of Scotland’s great cities—particularly not Aberdeen.
Scotland is lucky with regard to the renewables activity that it has attracted to its shores from outwith the country. I am sure that Liam McArthur will tell us about the European Marine Energy Centre in Orkney, and I am pleased that Aberdeen will—I hope—be the home of the European offshore wind development centre. Those centres are immensely important. Many parts of Scotland are benefiting from the renewables revolution, and there is more to come. I hope that the siting of the green investment bank in Edinburgh will mean that it will be easier to get investment for some of the brilliant ideas that are out there.
Sarah Boyack talked about district heating systems, and Aberdeen is at the forefront in that regard. Thanks to the Scottish Government, an extra £1 million went to the Aberdeen combined heat and power programme recently, which means that the network now goes into the centre of the city.
We should not have to rely on public grants to move such programmes on. Private companies should be willing to invest, too. I think that the green investment bank will encourage that.
I have talked in the chamber before about hydrogen technology, and Aberdeen’s bid to have hydrogen buses and to expand that technology. That is extremely important, not only for Aberdeen and the north-east of Scotland but for the whole of Scotland. I believe that we can also be at the forefront of that technology, if the investment is right and we are able to push that forward.
I thank the organisations that provided members with briefings today, particularly Scottish Renewables, because its bullet-point briefing gives all the reasons why the green investment bank should be sited in Edinburgh. The announcements about recent jobs and investment in the renewables sector represent a great story to tell. The briefing lists a number of such announcements, and it goes back only to last November. It mentions Mitsubishi in Fife; the establishment in Glasgow of the headquarters of the effort to develop technologies to capture and use power from offshore wind; Moray Offshore Renewables; and SSE investment.
That is all great news, but I think that there can be even more, and the siting of the green investment bank in Edinburgh will ensure that we have even greater things ahead of us.
Far from being parochial about Aberdeen, I fully support Edinburgh’s bid. The siting of the green investment bank in Edinburgh will benefit Aberdeen, as well as the rest of Scotland. That is why I am fully behind the motion and the bid.
With due respect to Paisley and Angus, both of which I understand to have expressed an interest in hosting the UK green investment bank, few would dispute that Edinburgh represents Scotland’s best hope of landing this prestigious prize.
Ever since the UK coalition Government announced its intention to create such a bank, the campaign in support of Edinburgh’s bid to host it has been strong and building steadily. The minister and all other members who have spoken during the debate have been right to highlight the enduring cross-party, cross-sectoral and widespread civic support throughout Scotland for the campaign. Gavin Brown was also right to pinpoint the role that Edinburgh Chamber of Commerce has played in the process. I do not think that it would be unduly partisan of me to pay tribute to the role played from the outset by my colleagues, Michael Moore, Mike Crockart and Margaret Smith.
All those who have submitted bids in recent weeks will have been able to point to undoubted strengths. However, I firmly believe, as I have from the start, that Edinburgh’s credentials as a location for the green investment bank are compelling. It meets the criteria that have been set. Indeed, as Gavin Brown and Marco Biagi have suggested, the criteria almost seem to have been designed with Edinburgh in mind—but it also has much more to offer. The debate is welcome, because it allows Parliament once again to express its strong and, I am sure, unanimous support for Edinburgh’s case.
We should not lose sight of the bank’s purpose and function, which will be of central importance to Scotland’s ability to achieve our renewables and climate change ambitions. Ken Macintosh, Sarah Boyack and Rob Gibson drew on the RSPB briefing, which addressed a number of the issues. It is telling that, in its excellent briefing, which Kevin Stewart mentioned, Scottish Renewables began by asking
“What will the green investment bank do?”
Helpfully, it goes on to provide an answer, pointing to the £3 billion of capital that will allow the bank to play a vital role in addressing market failures that affect green infrastructure projects throughout the UK.
In particular, the bank will be critical to stimulating a significant increase in private investment, which will be essential in meeting the costs of the UK’s move to a low-carbon economy. For that to happen, it is essential that the Government acts in a way that is seen as credible by private investors and markets.
That is why I am pleased that the decision has been taken not to set up just another fund—Ken Macintosh suggested that that was a risk at one stage—but to ensure that the green investment bank does what it says on the tin. It will be an investment bank and will be at arm’s length from ministers, making loans and investments in the expectation of earning a return and reinvesting the proceeds.
The distinction with other investment banks is that there will be a clear political steer in relation to the public policy objectives that must be achieved, as well as the market failures that need to be addressed. The future success of the bank will be measured against meeting those policy objectives, as well as delivering positive financial returns.
I take issue somewhat with Ken Macintosh’s observations on the timescale. It is not necessarily surprising that the establishment of the bank will take place in phases. However, I do not dispute the need for it to be established as quickly as possible. That is why, as well as setting aside £3 billion to capitalise the bank up to 2015, it is right that the UK Government takes steps to enable early interventions to be made from this April.
Those interventions will be delivered through the green investments team, which will have £775 million to spend on commercial terms and which will operate under the guidance of an investments committee. That will not only allow time for the necessary state aid clearance and legislation to establish the bank, but ensure that no time is wasted in developing our green infrastructure.
In due course, around 2015, the bank will be able to borrow. The decision on how that will be done can only be reasonably made nearer the time. Nevertheless, the approach of creating not simply a fund, but an enduring financial institution, with early investment potential ahead of the phased introduction of the bank itself, very much reflects the needs and aspirations of the key stakeholders.
Even so, there will be a challenge, particularly in the early stages, in determining the priority areas for investment. The range of potential areas that need to be tackled if we are to move to a low-carbon economy is extensive. In each case, the levels of investment required, as Graeme Pearson indicated, are eye-watering. The identification of offshore wind, commercial and industrial waste processing and recycling, non-domestic energy efficiency, energy from waste, and the green deal all have a certain logic. However, I welcome the commitment from ministers that the strategic priorities will be reviewed regularly. That is essential if we are to take advantage of technological advances and respond to things that are, or are not, working well.
As well as emphasising the importance of the role that the UK green investment bank can play, Scottish Renewables rightly sets out the benefits of basing the institution in Edinburgh. Indeed, the urgent need that the sector sees for having the bank up and running lends further weight to Edinburgh’s case. Given its highly advanced network of financiers, developers, investors, asset managers, researchers, academics, think tanks and public agencies—all helpfully mentioned in the motion—Edinburgh appears to be ideally placed to ensure that the bank hits the ground running.
Earlier today, along with the minister and colleagues from across the parties, I had the pleasure of meeting Owen Kelly and some his colleagues, who have been involved in marshalling the arguments in support of locating the bank in Edinburgh—we enjoyed some fairly windswept, panoramic views of the Athens of the north. Owen Kelly and the Edinburgh green investment bank group deserve high praise for their work over the final weeks of the process, building on the excellent foundations that I referred to earlier.
The case that Edinburgh has been able to put forward is a powerful one. Edinburgh is the fourth largest financial centre in Europe, and its financial services expertise has both depth and breadth, which enhances the scope for recruiting and retaining staff, including key posts that may require to be filled following an international recruitment process. We have seen over a number of years how successful Scotland has been in attracting new and expanding businesses in the financial services sector, drawn by the skills on offer, the cluster effect and, no doubt, wider quality-of-life considerations.
The bid team also highlights Edinburgh’s experienced pool of world-class engineering professionals, its green infrastructure and its university campuses. Those are all areas in which the green investment bank will be active and where Edinburgh appears to have a distinct advantage over competitors. More generally, Scotland is showing progress and ambition in moving towards a low-carbon economy, particularly in relation to renewables investment. In that context—and so as not to disappoint Kevin Stewart—I am happy to namecheck the European Marine Energy Centre in my constituency. That all chimes well with the role that the bank is to play and underlines the impact that its location in Scotland could have. Add to that Edinburgh’s transport network, digital connectivity and cost-competitiveness as a location, and the overall package is remarkably strong.
The creation of a green investment bank will be a critical tool in helping to deliver a low-carbon economy. The bid demonstrates the profound benefits of partnerships across political parties and the public, private and third sectors, and across borders within the UK. The contributions to the debate and the vote this evening can only help to reinforce the powerful case for Edinburgh to be chosen as the location for the bank. I am happy to support the minister’s motion.
I welcome the motion in the name of Fergus Ewing and the debate initiated in the name of the Scottish Government to have the green investment bank located in Edinburgh. I also welcome the mainly consensual nature of the debate in the chamber.
Before I move on to the main part of my speech, I want to refer what Kevin Stewart said about the role that Aberdeen has played. I was reminded that in the 1970s, when oil exploration was first taking place in the North Sea, the UK Government of the day decided to locate its main oil department—Britoil—in Aberdeen. Therefore, there is a history of UK Governments realising the benefits of locating departments near or close to energy resources.
That situation links to the issue of the green investment bank’s location. I recognise that the UK Government’s criteria for the location of the bank are centred on ensuring that it has international links, a financial centre and, of course, good research capacity. As Gavin Brown said, there are 11 universities within an hour’s journey of Edinburgh, many of which play a vital role in renewable energy and low-carbon developments. The Scottish Government has placed the low-carbon economy at the heart of its economic strategy—I believe that that is how we should look forward as a nation—which should fit well with the policy context of a green investment bank.
The Scottish Government previously set out the need to harness renewables. That was followed up by practical action in the form of the national renewables infrastructure fund, with a commitment of up to £70 million. In highlighting the job opportunities from the development of green investment in Edinburgh, we should be aware that the report prepared for the UK Government’s Department for Business, Innovation and Skills by Vivid Economics in October 2011 clearly emphasises the importance of unlocking finance and ensuring the implementation of green economic objectives. There is more that all of us—including the energy companies—can do to take us in the direction of an economy that is based on sustainable growth, on which the Government can deliver through the detail of its policies.
Given its respect agenda, the UK Government should recognise that the City of London, although an important international financial centre, is not the only financial capital in the UK. Locating the green investment bank in Edinburgh would ensure that a highly trained workforce with specialist expertise was utilised to the full. Edinburgh has expertise in asset-backed financial services that maintains its pre-eminence in fund management.
The Scottish Government has shown its commitment to meeting targets under the Climate Change (Scotland) Act 2009. The location of the green investment bank in Scotland would assist creation of a necessary step change in low-carbon delivery. The development of a green economic strategy aims to make Scotland’s economy more resilient and capable of resisting the volatility that is associated with ever-increasing energy prices.
Promoting growth that is sustainable in the long term is vital in taking Scotland forward. A sustainable economy is dependent on achieving capital injections. The report produced by Vivid Economics stated that investment by pension funds in renewables is rare and referred to two Danish pension funds taking a 50 per cent stake worth $1.1 billion in Denmark’s largest offshore wind farm as an exception. According to a 2011 KPMG report, only 20 per cent of industry experts expected pension funds to play an active role in renewable energy over the following 18 months.
I hope that the siting of the green investment bank in Edinburgh will lead many fund managers to realise that they could start investing pension funds and other finances that are available to them in the economic and environmental developments that are required if we are to meet our green targets.
Scotland has a role on the global stage, given that it has a quarter of Europe’s offshore and wind energy potential. I note that the aim of the Scottish Government’s low-carbon economic agenda is that 60,000 jobs will be created by 2020. The prospects for Scotland’s green economy are healthy, particularly given the financial context that the global low-carbon economy is forecast to grow to £4.3 trillion in the next four years.
I hope that the establishment of the green investment bank in Edinburgh will ensure that companies are able to tap into growing market sectors of the economy, such as renewables.
A key component of ensuring that Scotland has a global reach is a real sense of renewal in respect of Scotland’s capital infrastructure needs. The Scottish Government is committed to developing the climate challenge fund, and funding of £10.3 million is in place for 2011-12. That will no doubt ensure that Scotland develops an international profile for its development of a greener economy.
The debate is timely. I look forward to the green investment bank being sited in Edinburgh. I hope that we can develop a financial context that delivers an energy future that ensures real benefits for the Scottish people. I also hope that Scotland can not only play a major role in developing low-carbon technologies in Europe but become a powerhouse for capital investment funding for energy production in Europe. That can be achieved if we get the green investment bank in Edinburgh and are able to drive forward the low-carbon economy that Scotland is striving to create. The £3 billion from the green investment bank would ensure that we had the funds to stimulate the involvement of other financial sectors in the development of low-carbon technologies.
I welcome the opportunity to speak in the debate. There is cross-party support for the motion and broad support across the Parliament for the bid that has been submitted to the UK Government for the green investment bank to be located in Edinburgh. That reflects the support that the bid has received across civic Scotland from council leaders, chambers of commerce, the renewables sector and academics alike.
In the short time that I have been a member of the Parliament, the best outcomes have been achieved when the Parliament has been able to unite behind solving a particular problem or supporting a particular project. I hope that that continues to be the case with the Edinburgh bid for the bank.
The green investment bank is the first of its kind in the world. Its location will become a focus for investment, expertise and leadership in the green economy. Already, 32 bids to host the bank have been submitted from across the UK. The competition is fierce, but I hope, as we all do, that with the support of the Parliament, the Government and wider Scotland, the Edinburgh bid will be successful.
It makes sense to locate the bank in Scotland, given that we have almost half of the UK’s total renewable energy capacity. It should follow that a high proportion of the projects that secure investment will be based in Scotland. It also makes sense to locate the bank in Edinburgh, given that it is ranked as the fourth-largest financial centre in Europe, with 60,000 people in the surrounding area being employed in the financial services sector. In addition, Edinburgh is home to four universities and it clearly has the research capability to develop and deliver some of the projects that the green investment bank would be likely to invest in.
Although the investment bank group anticipates that it will create only 70 jobs initially, against the backdrop of 60,000 people being employed in the financial services sector, those 70 jobs will still be warmly welcomed by people who are looking for work. It is expected that, in time, many more jobs will come to the city as it establishes itself as the financial centre for renewable energy. That will be another big boost for anyone who is out of work at the moment, even for people who live as far afield as Kilsyth, as I do, since the city is only a 40-minute train journey away.
Locating the green investment bank in Edinburgh would be a big boost for the city and for Scotland, but the big prize would not be simply the hosting of the bank; it would be the concentration of renewables firms—and expertise—in and around the city, bidding for part of the £3 billion-worth of funding that will be available over the next three years. If the bank is located here and that concentration of businesses materialises, we can expect the local economy to benefit massively, with the result that we can start to overcome the challenges that Scotland faces in achieving the renewable electricity generation targets.
One of the biggest challenges for the renewables sector is how to manage demand at peak times and what to do with the surplus electricity that is generated when demand is low. The excess electricity that is generated could be exported when demand is low, but that would not address the issue of high demand when the wind is not blowing.
Large-scale electricity storage schemes will be required, such as the proposed £800 million hydroelectric storage scheme at the west end of the Great Glen that is planned by Scottish and Southern Energy. Such projects have massive storage potential, but they would have a significant impact on the landscape, and the availability of suitable sites is limited.
The green investment bank could invest in large-scale electricity storage, which has been described by a respected American academic as
“an energy game-changer, unshackling alternative energy from the constraints of intermittence.”
Technologies such as compressed-air storage, battery technologies and hydrogen fuel cell technology will be vital for storing surplus electricity for use when demand increases at peak time. Investment in research and development is needed to create projects that use those technologies on the sort of scale that is required to store significant quantities of energy.
Such technology is much needed if we are to achieve our ambitious targets for renewable electricity generation, and the funds that the green investment bank could provide, if it was located in Edinburgh, would be crucial. The bank could create jobs for engineering apprentices and graduates like me. Who knows? If things do not work out for me in politics, funds from the green investment bank might mean that there will be a job for me to move into.
I am grateful for that support.
My career prospects aside, the funds of the investment bank mean that there is massive potential for job and wealth creation.
I am still in touch with a lot of my colleagues from the mechanical engineering department at the University of Strathclyde, and I know that many of them have struggled to find work. Many of those people who are struggling to find meaningful employment are waiting for something to kick-start the renewables revolution in Scotland, and the locating of the green investment bank in Edinburgh could be that catalyst.
I urge all members and the Government to continue to support the bid so that Edinburgh and Scotland can benefit from the obvious advantages and employment opportunities for our young apprentices and graduates that would come about as a result of the green investment bank locating in Edinburgh.
There is an inescapable logic to locating the green investment bank in the capital of a country that has such laudable ambitions to be the renewables centre of Europe. Although the number of jobs—around 50 to 100—that come with the bank is relatively small, they will come at a time when jobs are scarce and banking jobs even scarcer.
However, it is not just about jobs, but about the correct decision being made for the right reasons. In terms of equity assets, Edinburgh is the fourth-largest financial centre in Europe, and it is home to the headquarters of more FTSE 100 companies than any other UK city except London. The expertise and the skills that will be needed to run the bank and make it a success are readily available locally. In particular, skills related to project finance are represented by major banks that are present in Scotland, and many advisers have a capability in green infrastructure.
Edinburgh has strong capabilities in structured finance. The city has an enviable record in investment management—it is home to around 13 per cent, or approximately £750 billion, of total UK assets under management—coupled with expertise at the high-risk, early-stage end of the green infrastructure sector.
In terms of advisory expertise, Edinburgh boasts a network of specialist advisers, particularly in the green infrastructure sectors. Significantly, Edinburgh operates globally as an international financial services centre—the only location outside London to do so—and 80 per cent of the world’s major banking companies have a presence in the city.
All of the above means that the green investment bank will be able to access locally the expertise that is necessary to deliver its analytical and appraisal functions.
I mentioned earlier Scotland’s ambitions in relation to renewables. Edinburgh has a proximity to levels of green infrastructure development that are not found elsewhere in the UK. It would be fitting if Scotland’s drive towards a new future in energy resources was to be endorsed by the location of the green investment bank in Edinburgh.
That drive has resulted in Scotland becoming a key part of the UK renewables targets. About half of the UK’s renewable energy capacity is in Scotland, and Scottish Renewables has highlighted that almost £750 million of renewable projects started last year and that there is a £46 billion pipeline of Scottish projects. Inserting the green investment bank into that environment can have only a positive and beneficial impact on the bank and on the industry in general.
Around 32 cities and towns throughout the UK are submitting proposals to host the bank, but only one—Edinburgh—is in Scotland. That reflects the reality, which is clearly seen in Scotland, that Edinburgh has the expertise and the ability to host the green investment bank, and that, although other centres in Scotland may have legitimate claims as renewables centres, Edinburgh brings together all the diverse elements that are needed to give it a commanding position in the bid to host the bank.
Locating the green investment bank in Edinburgh will place that bank close to a major clustering of renewable energy businesses and initiatives. That will in turn result in a greater economic impact for the UK as a whole, which will improve the UK’s efforts to deliver on its low-carbon objectives.
It is not just Scotland’s ambitions in relation to green energy that qualify Edinburgh above all others. Time and again, Edinburgh has been highly rated for quality of life, most recently in 2010 when it was rated as the top city in the UK and the eighth in Europe. I am not sure whether the trams project was taken into account, but the city came out well anyway.
As a location for work and recreation, Edinburgh remains second to none, with easy access to all areas of Scotland. Culture and the arts are well represented and available locally, and the world-famous Edinburgh festival brings life and vitality to a city that is steeped in history. Edinburgh is also a UNESCO—United Nations Educational, Scientific and Cultural Organization—world heritage site. Families locating to Edinburgh have a wide range of housing options and internationally renowned schooling on their doorsteps, all located in an enviable environment.
Uniquely among major cities, 20 per cent of commuters walk to work and around 7 per cent cycle. The city is easily walkable due to its compactness, and that encourages networking and informal meetings, which are easily facilitated.
The city is surrounded by academic and research capabilities, with no fewer than 11 universities within an hour’s journey from Edinburgh. Such facilities would complement and strengthen the breadth of resources that would be available to the bank and its clientele.
International transport links are first class. Rail, road, and air links are easily accessible. Edinburgh is one of Europe’s best-connected cities. ICT and broadband links are excellent. Office space is readily available and rents are highly competitive, with the City of Edinburgh Council offering the first three years of accommodation rent free. Salary and related costs are less than the UK average. For example, managers’ salaries are at 82 per cent of the median and 57 per cent of the London average. Employee salaries are 90 per cent of the UK average and only 53 per cent of the London average.
The bid has mustered support from a wide spectrum of Scottish businesses and from across the political parties. Significantly, despite the global downturn and the increasingly fierce market for foreign investment, Edinburgh has continued to attract top companies. Foreign direct investment in Edinburgh was up 72 per cent in 2010 and has more than doubled since 2008. Edinburgh does not sit on its laurels, but has a proactive, energetic and supportive pro-business attitude that major companies that move into the city appreciate and benefit from. Scotland is the only nation in the UK that has a zero waste strategy, which results in policy-driven solutions nationally and within local authorities.
The risk of not choosing Edinburgh is that the bank would be located in a city that either lacks the breadth of resources to support the work of the green investment bank or does not have the commitment to developing renewable energy sources that has been evidenced in Edinburgh. A failure to be close to renewables businesses would simply not make sense and would dilute the bank’s impact on the very sector that it seeks to support. I strongly support Edinburgh’s bid and fully support the motion.
Thank you, Presiding Officer—that is extremely generous. I signal that I would be delighted to accept interventions, should any member wish to pad out my rather threadbare remarks.
The debate has been consensual and I am afraid that, on this occasion, I have no wish to break the consensus—not yet, at any rate. We have had excellent speeches from throughout the chamber. It is clear from the debate that the Parliament is united and speaks with one voice in sending a clear message that the green investment bank should come to Scotland. As Gavin Brown pointed out, the Scottish Conservatives are delighted to reaffirm our support for that ambition.
If I may, I will make a partisan comment. The creation of the green investment bank is testament to the Conservative-led UK Government’s commitment to drive the UK towards a green and growing economy, although I acknowledge Sarah Boyack’s perfectly fair comment that it was a Labour chancellor—Alistair Darling—who shared the ambition for the project to happen.
The focus of the green investment bank will be to put an investment of £3 billion into a range of initiatives, primarily offshore wind, industrial energy efficiency and waste products projects. The bank will provide up to 100 jobs by 2015. It is one of a number of key policies that are designed to help to meet environmental objectives and promote economic growth. Other initiatives include the creation of a national infrastructure plan; the reforms to the electricity market that are being considered; changes to the climate change levy; the introduction of a renewable heat incentive; the review of waste policy; and the reviews of Ofgem, the Office of the Gas and Electricity Markets, and Ofwat, the Water Services Regulation Authority.
I hope that the Scottish Government takes note of those reforms and reviews and does not hold back from considering its own reviews. Once again, I mention what I and other members consider to be the urgent need for a national strategic review of renewable energy in Scotland specifically in relation to the siting of onshore wind farms.
I am convener of the Economy, Energy and Tourism Committee, so it would be remiss of me not to mention our upcoming inquiry into the Scottish Government’s renewable energy targets. The inquiry is attracting a great deal of interest. Indeed, I read in The Press and Journal this morning that no less a person than Mr Donald Trump is keen to give evidence at our humble parliamentary committee. It remains to be seen whether committee members are prepared to accommodate Mr Trump, but I am sure that the occasion would be interesting, were it to come about.
Does Murdo Fraser agree that Mr Trump’s conversion to an interest in wind energy is mainly due to the impact that he claims a wind farm will have on the Menie estate, which he purchased for his world-class—as he claims—golf course, and that Mr Trump has no other interest in issues to do with wind power?
Far be it from me to understand Mr Trump’s motives for the positions that he takes. We might explore the issue with him, if he were to come to the committee, or perhaps Mr Wilson might like to ask Mr Trump’s close friend Mr Salmond whether he has intimate knowledge of the matter. I am not in a position to shed light on it, I am afraid.
As we heard, the Department for Business, Innovation and Skills has set three main criteria on which applications for the green investment bank will be judged. As Gavin Brown, Marco Biagi and other members said, Edinburgh is extremely well placed to meet all three. BIS is looking for, first:
“Ability to recruit and retain the specialist staff needed to run the organisation”.
We all know the strength and depth of Scotland’s renewables sector, operationally on the ground and in the context of the intelligence that is available in our higher education institutions. We have expertise in financial services, which is vital. Edinburgh might be unique among the candidate cities in having such a combination of knowledge about finance and renewable energy.
Quality-of-life issues are extremely important in attracting and retaining staff, as the minister said. In Edinburgh we have the advantage of a city that has great institutions. We have great schools and universities, so there are great educational opportunities, and we have a very good quality of life, which will attract people.
Secondly, BIS talks about
“Enabling the GIB to work closely with other parties involved in deals as well as other investment bodies, project developers and green technology providers”.
As we know, Edinburgh is one of the top financial centres in Europe—it is the fourth-largest financial centre in Europe. As we heard from Sarah Boyack, John Wilson and other members, there is also superb expertise in our universities. We also have great connectivity. Edinburgh is one of the UK’s best-connected cities, with strong domestic and international transport links and world-class ICT.
Thirdly, BIS is looking for
“A location that provides good value for money, to ensure that the GIB is cost effective.”
Scotland will be extremely competitive compared with London and most other cities. I gently point out that I hope that we have learned from the experience of the Scottish Parliament building and the trams project, which Mr Beattie bravely mentioned, and that if we attract the bank’s headquarters to Edinburgh we will look for economic, appropriate and understated accommodation.
I welcome the broad partnership of private and public sector bodies that are promoting the bid. City of Edinburgh Council, Scottish Financial Enterprise, Edinburgh Chamber of Commerce, Scottish Power, PricewaterhouseCoopers, Aberdeen Asset Management and Grant Thornton, to name but a few, have come together.
I have no wish to bring in a discordant note. However, I must briefly touch on the constitutional issue, which a number of members mentioned. We are talking about investment of £3 billion in a UK institution, which will be important for whoever benefits from it. In the interests of consensus I do not want to dwell on this, but I think that Rob Gibson said that in the event of independence the rest of the UK would still have to buy Scottish renewable energy.
I am not sure that that is correct. According to experts, it is cheaper to build offshore wind projects—which, of course, are the main focus of the green investment bank—around the coasts of England than around the coasts of Scotland because of the shallower waters. Indeed, it would be cheaper for England to import nuclear power from France. Only last week, David Cameron and Nicolas Sarkozy signed an agreement to develop the new generation of clean green nuclear power stations in England. Mr Gibson should reflect on that.
It is already cheaper to import nuclear power from France to England than it is to import Scottish-generated electricity into England. Nevertheless, the point is that the firms that trade across Europe will not suddenly change their patterns of activity and that many of those that are in Scotland are of supreme importance to England’s electricity requirements.
I say gently to Mr Gibson that if he studies the economics of energy he will find that renewable energy is the most expensive form of energy for consumers to purchase. Given the choice between purchasing Scottish renewable energy more expensively than it can be purchased elsewhere and the cheaper option, the rest of the UK might well seek the latter.
Once again, I reiterate the Scottish Conservatives’ support for the green investment bank to be located in Scotland. It would be good for the economy, good for our renewables industry and good for co-ordination of energy policy across the UK but, most important, it would also be good news for Scotland.
I am delighted to wind up on behalf of Scottish Labour in support of the Government’s motion on the green investment bank. I am pleased by the cross-party support, so eloquently highlighted by Mark Griffin, for a proposal that was first mooted two years ago in the House of Commons by Alistair Darling and by the passion with which members across the chamber have argued for the bank to be based in Edinburgh.
As the minister stated, fDi Magazine has endorsed Edinburgh as a number 1 city. That is a significant development. Members have pointed out why Edinburgh is the best place in the UK to host the bank. Those who are behind the bid deserve recognition, because it is not often that a coalition can be formed between environmental campaigners, banks, universities, engineering firms, law firms and the Government. On this endeavour, there has been a united front, which I am sure will pay dividends for Scotland and the UK when the final decision is made. As the minister stressed, Edinburgh is the only city with synergies between finances and green energy.
Gavin Brown and Sarah Boyack highlighted the commitment of the Edinburgh Chamber of Commerce, and Gavin Brown put forward the cluster argument, which is very important. As Marco Biagi said, one would think that the criteria had been designed with Edinburgh in mind and when the bid result is announced we hope that that will be the case. In the words of the business case, no other city in the United Kingdom brings
“finance and the clean energy industry together”.
A pool of nearly 156,000 people is employed directly or indirectly in Scotland’s financial services sector, including 60,000 within the Edinburgh travel-to-work area. Colin Beattie also highlighted the analytical expertise in Edinburgh’s financial sector.
All that is coupled with an unrivalled concentration of skills and expertise in clean energy and skills in the oil and gas sector that can be transferred to offshore renewables. Mark Griffin spoke of his background in engineering and of how some of Scotland’s great institutions can ensure a good field of future employees in the sector. Moreover, Sarah Boyack stressed the necessity of moving ideas from the academic to the commercial sector. Mark Griffin also highlighted the need to kick-start the GIB and unlock employment opportunities and the vital chance to research not only the issue of storage to deal with the problem of intermittency, but other new developments.
The GIB must engage with partners in the sector to deliver on its objectives. If located in Edinburgh, the bank will be in an ideal place to engage with the new European Marine Energy Centre in Orkney as well as with partners in Scotland’s other major cities who are backing this bid. As Rob Gibson pointed out, proximity to intellectual knowledge and projects is essential.
The GIB must be cost effective. With high rents, rates and other general costs, the costs of basing the bank in London far outweigh any benefits that that city can offer. Once again, Edinburgh becomes the obvious choice. In fact, beyond purely financial considerations, basing the bank outside London will allow it to be seen as something new and distinctive. It will not be just another bank in the city of London, but a new endeavour reaching out to all parts of the country. Colin Keir highlighted that point and John Wilson also indicated that Edinburgh has strong international links.
I turn briefly to the bank itself. Although I welcome the cross-party consensus that we have seen today, I am disappointed in the way in which the coalition Government proposals for the bank seem to be developing. Sir Adrian Montague, the financier who has been tasked with overseeing the bank’s launch, has stated that it will act using commercial lending principles and that it will not offer preferential rates. It will be tasked with delivering a dividend for the Treasury. That is fair enough, but on that basis, would the Treasury not be better forcing other banks to lend to the sector on a commercial basis and more than they are doing at present? However, I have been somewhat reassured by Liam McArthur’s remarks. I also highlight the importance of the UK electricity market reform in relation to demand-driven aspects of investment in energy efficiency.
The minister highlighted the Scottish Government’s commitment to the low-carbon economy and many members share that vision of long-term sustainable development for Scotland and Britain. If that is to become a reality, the GIB must be given criteria to ensure that it will bridge the gap between venture capital and the green economy, and be able to kick-start the low-carbon infrastructure projects that we need. As Graeme Pearson stressed by using the example of the Agricultural Mortgage Corporation, a sector-specific bank is invaluable. Energy4All has raised with me the issue of co-operatives being able to borrow to cover start-up costs and told me how it is impossible for most banks to loan 100 per cent of start-up money to a co-operative.
Sarah Boyack stressed the importance of unlocking finance at the city and community level. She argued that the bank must be transformative and must influence other banks. Kevin Stewart, from Aberdeen of course, also stressed that the CHP and hydrogen technology programmes will make a valuable contribution when it comes to deciding on siting the GIB here.
I ask the minister to do all that he can to persuade the UK Government to ensure that the bank becomes not simply another commercial entity, but a real source of financial support to organisations of all sizes that are seeking to develop new green technologies. I reaffirm Scottish Labour’s support for bringing the green investment bank to Scotland and our strong support for the Government’s motion today.
I will try my best, Presiding Officer.
The debate has been enjoyable and, as tends to happen, some surprising information has been imparted during its course. For example, we had a short seminar from Mr Macintosh—or perhaps it was from his children—on how smart meters work. Mr Griffin regaled us with his thoughts about a potential new career should his current one not work out too well, which was unexpected. It was also surprising to hear from Mr Brown that Murdo Fraser had run away; that really is unprecedented.
The debate has been good humoured and consensual as well as useful. The compelling arguments for Edinburgh to be the home of the green investment bank have been well encapsulated by all speakers and all parties. The debate has also gone on to cover how the green investment bank will and should work, which is a perfectly legitimate area of concern.
It is right that we have such debates. I like to think that we are not party automatons in this Parliament, and that we have the ability of independent thought, as we frequently hear from Mr Fraser. It is always interesting to listen to those with whom one usually disagrees. I have enjoyed the debate; the arguments have been made strongly.
I start by congratulating those who have played a part but who are not here and to whom many members alluded. The large cast is set out in the campaign submission from the Edinburgh green investment bank group. As Gavin Brown and Sarah Boyack pointed out in their opening remarks, special mention should be made of Edinburgh Chamber of Commerce.
Edinburgh Chamber of Commerce has been involved not just in this campaign but, as Sarah Boyack pointed out, in the issue over a long period. For example, it promoted the low-carbon investment conference, which, as Gavin Brown pointed out, has been a great success. More than 550 delegates came to its conference in 2010, and Al Gore came to the conference last year. It is redolent of the fact that Edinburgh is not only a strong candidate but a capital city.
Surely an institution of such huge significance and potential value, not just to these islands but to the planet and with its aims and aspirations to increase and promote investment in green technologies, should be located in a capital city—not just a provincial city but a capital city. That point has not been made expressly or as they used to say—at least in the courts—ad longum, which tends to be the way in which I make arguments, particularly when I have 18 minutes to fill.
I am pleased to co-operate with the minister on this occasion.
Has any thought been given to expanding the institution across Scotland? I appreciate that we are determined to ensure that we succeed in Edinburgh in the first instance, but is there a structure in place to encourage other cities, such as Glasgow and Aberdeen?
We want first to establish the objective of the campaign, which is to secure the green investment bank in Edinburgh. That is why we are here. However, Mr Malik is correct that that should not necessarily be an end to the aspirations for the institution.
The bank is a fledgling institution—I believe that the term used is that it is in its incubation period. Therefore, we should see it formally established and go through the initial period, in which, as I think was pointed out by Mr Macintosh, it will operate as a fund rather than as a bank. It will then acquire borrowing powers provided that certain criteria are met by 2015.
Although, initially at least, there would not be a branch of the green investment bank in Glasgow or Aberdeen—I am sorry to disappoint Mr Stewart, but that is not part of the modelling—
I will just finish my reply to Mr Malik first.
The real point is that the benefit will be not simply to Edinburgh but to the whole of Scotland. The headquarters of companies such as Scottish Power are in Glasgow. Scottish Renewables and the Wood Group’s SgurrEnergy are based in Glasgow. Clyde Blowers is based in East Kilbride and Doosan Babcock is based in Renfrew. None of those places is far from here, and the transport links are reasonable and improving. The benefits of the green investment bank coming to this city will therefore go far beyond the boundaries of this city.
The minister will be relieved to hear that I am not about to make the case for a branch of the bank opening up in Orkney. The minister’s point about connectivity is a very real one. Although Orkney has the European Marine Energy Centre, a cluster of enterprises in the supply chain of the renewables sector and the academic base, the connections that Orkney enjoys have been hampered, for example by recent changes to the air discount scheme. Maintaining those services and the affordability of those services will be crucial wherever the bank is located in due course.
Mr McArthur is absolutely right. The campaign submission that I have referred to highlights the global connections that Edinburgh enjoys. The number of international destinations served by flights from Edinburgh airport has increased to 109—[Interruption.]
I hope that that was not someone booking a flight.
Edinburgh airport carries more than 9 million passengers, with more than 40 airlines providing links to international hubs such as Heathrow, Paris Charles de Gaulle, Frankfurt and Newark airport in New York. Edinburgh is now three hours or less from major airport connections in Denmark, Finland, Norway and Sweden, where there are huge developments in clean energy.
The connections with those countries are very important. A couple of weeks ago I had the pleasure of hosting a dinner in Edinburgh castle, where the invitees—the guests—were representatives of companies in Scotland that are German owned. Companies from Germany have a huge presence in Scotland and a large number of them are in the renewables sector. Similarly, other countries are represented in the capital city of Edinburgh.
A point about UK connectivity that has not been made in the debate is that, in the financial sector, there is virtually a corridor between Edinburgh and London City airports, with early morning flights arriving in each city before 9 am. No other town or city in the UK has those connections with London, and that important point is well made in Edinburgh’s campaign submission. There are 40 trains between Edinburgh and London each weekday and 260 trains between Edinburgh and Glasgow each weekday. Connectivity will be very important for the operation of the bank, and the Edinburgh submission makes the case well.
One issue that we need to concentrate on is the benefit to the whole of the UK of the green investment bank being in Edinburgh and in Scotland. It will provide massive opportunities here, but there is also a case to be made for why it is good for the whole of the rest of the UK that we get the project here. We could make it work for the rest of the UK, and it might be worth making a couple of comments on the record about that, should anyone look at our debate to see what we have said.
I am happy to do that. Sarah Boyack is absolutely correct that locating the green investment bank in Edinburgh would be good for the whole of the UK. The prominence that its activities would achieve and attain is likely to be far greater in Edinburgh than in London. Colin Keir made the point that there was a danger that in London the GIB would be a minute institution that is lost among giants and megaliths in the City of London. It would have no visibility.
This Monday, Sir Adrian Montague, who is the chair of the independent advisory board, pointed out that the post of chief executive of the green investment bank is not likely to attract a massive salary. He did not go into any figures, and one might speculate on what the figure may be. However, as a member has pointed out: if the salaries are low, what quality of people will the post attract in London? Those in the financial sector who are motivated simply by high salaries will have no particular urge to go to the green investment bank when it has been made clear that, correctly, there will not be massive salaries of the sort that have caused such public concern in recent times in relation to banks.
For that reason alone, there would be benefits, but I do not think that that is what Sarah Boyack had in mind. I think that she had in mind the promotion of the renewable energy sector in particular and of green technologies more widely. The fact that the offshore renewable energy catapult centre has been won by Glasgow, so that investment is there; the fact that about a half of the renewable energy projects in Britain are in Scotland; and the fact that we have such a huge cluster of academe in Edinburgh—a member referred to the 11 universities and the point is also made in the Edinburgh submission—mean that in Edinburgh the activities of the green investment bank will achieve far greater prominence than they would if they were subsumed into London.
I want to point out something that has not been said in the debate, although Mr Fraser alluded to it. If we want public bodies to operate in a cost-efficient manner—I know that Mr Fraser is very keen on that—it is worth remembering that the mean cost per square foot of office space is £82.50 in London’s west end, whereas it is £27.08 in Edinburgh.
The Edinburgh submission has even identified several potential office premises that could be occupied by the green investment bank. I have visited some of those premises. They are excellent and are the cream of what Edinburgh has to offer. They provide access to the city centre, to the quality of life available in Edinburgh and to its attractions, which are second to none. They would do so at perhaps a third or half of the cost of premises in London city centre or its west end.
All that information is in the submission on the case for locating the green investment bank in Edinburgh, which is detailed and cogent. The submission not only talks about the principle, but says, “Come on down—we have already identified the office premises for you.” It goes into that amount of detail.
In order to buttress the arguments on the credentials of the institutions of Edinburgh, the submission stresses that Edinburgh is the centre of a whole host of significant institutions. It mentions the Chartered Institute of Bankers in Scotland, Scottish Investment Operations, the Chartered Insurance Institute, Scottish Financial Enterprise, the Institute of Chartered Accountants of Scotland, the Financial Skills Partnership, the Institute and Faculty of Actuaries, the Insurance Society of Edinburgh, the centre for financial market research and the Chartered Institute for Securities and Investment centre of excellence at the University of Edinburgh, and, of course, Scottish Renewables. Who among us here could have given that whole list if I had asked them to do so—as some perverse form of quiz? I suspect very few. Indeed, I did not expect to read the list out myself, but there we are.
We broadly support Vince Cable’s outline of how the bank should operate. I listened carefully to what Claudia Beamish and other Labour members said on the issue. We have to remember that the green investment bank is a bank, and Mr Macintosh said that we may need some clarification—he expounded his argument carefully—of how it will operate. If the bank is willing to take risks when technology is not close to commercial deployment, or not as close as we would like, the bank must do so responsibly, avoiding undue risks as it seeks to achieve positive portfolio returns. It must preserve and build up its loan capital over time.
Mr McArthur spoke about wave and tidal projects in his constituency. From resources that it has recently obtained, the Government—[Interruption.]
I was talking about wave and tidal energy. During this debate, many members have spoken about the role of the green investment bank. The proposed approach is reasonable, although—as Mr McArthur suggested—we will review it from time to time.
I was heartened by the conclusion reached in a recent report by a House of Commons committee chaired by Tim Yeo. He gave a thumping endorsement of the Scottish Government’s policies on wave and tidal power. He went on to say—although he did not use a form of words that I would necessarily use—that, when it comes to wave power, Britannia should surely rule the waves. His heart is in the right place. We find ourselves gaining support from the most unlikely of quarters.
Sadly, I see that my time is approaching its close. Joking apart, I feel that this has been an excellent debate. It has allowed members in all parties to express their support for the campaign to bring the green investment bank to this city and this country. We have heard eloquent and detailed rehearsals of the arguments—from Sarah Boyack, Marco Biagi and many others. In my fairly substantial experience, the spirit of cross-party co-operation has been almost unprecedented, and it is very welcome. Mark Griffin has been here only for a short time, but he put it well when he said that this Parliament is perhaps at its best when we are able to unite behind a purpose. There is clearly an overwhelming case for a shared Scottish approach. That will serve us, our constituents and our nation well.
It gives me great pleasure to say that I will be sending a copy of the Official Report to Vince Cable tomorrow morning. I hope and expect that the strength of the case will lead to Edinburgh being chosen as the location for the green investment bank.