Scottish National Investment Bank

Part of the debate – in the Scottish Parliament at on 16 November 2021.

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Photo of Jamie Halcro Johnston Jamie Halcro Johnston Conservative

I apologise to the Presiding Officer and others that, due to unforeseen circumstances, I am not able to be in the chamber with you today or to take interventions.

As we know, the creation of a Scottish National Investment Bank, under various guises, was a long time coming. That words have become action is a positive. The creation of the bank earned qualified support across the chamber, and I believe that members are still largely behind it. In the previous session, I was a member of the Economy, Energy and Fair Work Committee, which led on the SNIB bill. The creation of the bank also played a part in a number of other areas of the committee’s work programme.

There is a lot to be said about the approach taken to the SNIB, but I will have to limit myself to a few key areas. One of those is the continuing issue—cautioned against by the committee—of a cluttered landscape for enterprise support in Scotland. There were concerns that a new institution could add to an already confusing array of bodies, funds and agencies. That was an important enough concern to see John Swinney drop proposals for a development bank in 2016, calling instead for enhancing the remit of existing bodies. Perhaps inevitably, the past two years have seen the situation balloon even further, as Covid support and post-pandemic support have played an important role in keeping businesses operating. If the SNIB is to be its own institution, it must be collaborative and work in tandem with other organisations in the enterprise space.

Another key issue is the regional element. We must not forget that Scotland is more than just one economy. Yes, we are part of a highly integrated UK single market with a flow of goods and services, but, on a local level, we see differences within Scotland. For example, we can see that the Highlands and Islands and the south of Scotland are quite different from the central belt or, at an even more granular level, how small island economies such as mine work.

One consequence of the bank’s creation has been the leapfrogging of the regional focus of the existing enterprise agencies. In my region, we can look to the work of Highlands and Islands Enterprise, which carries on the tradition of the Highlands and Islands Development Board, which was a body with a specific focus on what would now be called holistic regional growth, or even levelling up. The SNIB is a new body working in those areas, and one without links that have been built up over decades.

With work, however, a national investment bank can also be a local bank. The committee pointed to the model of the Welsh Development Bank, which has offices across Wales and is better integrated with local economic development agencies. However, it became clear that that was not the direction in which the Scottish Government was travelling. If—as was posited at the time—the SNIB’s solution was to work closely with enterprise agencies such as HIE to build on their local knowledge and promote similar social objectives, it is far from apparent in its current investment portfolio.

The third area that I will touch on is purpose. There were warnings that the diversification of the bank’s objectives would prevent it from having a clear mission. I appreciate the stresses that such an institution will have in promoting economic growth through patient capital, promoting innovation, investing sustainably, supporting work towards net zero and investing in communities. The main concern voiced during the passage of the SNIB bill was that the bank would risk trying to do too much, but it now appears that the risk is one of inertia, at least in relation to its core objectives. If we are to make a real assessment of progress, the information emerging from the SNIB must be expanded and more detailed.

The challenge behind publicly sponsored investment in business is to find clear purpose. To go back to first principles, simply replicating the role of private finance and investment fails to add value. However, as we have seen with the SNIB, that purpose has to be clear and well understood, and it must provide more than simply an abstract vision. The worry must be that that purpose seems, if anything, less clear than it was during the early stages of the bank’s inception. Combine that with a lack of clear performance indicators and we have a report card that we cannot, in all sincerity, mark properly. The SNIB is now part of our economic framework. However, although it may provide patient capital, there is a reasonable cause for impatience to see evidence that it is playing an important role in that landscape.