First Minister announces plans for a National Investment Bank

Nicola Sturgeon

A Scottish National Investment Bank will be created to take a “new approach” on capital investment, First Minister Nicola Sturgeon has announced as part of the Programme for Government 2017-18.

Tesco Bank’s outgoing chief executive Benny Higgins will lead the development of the bank’s remit.

The commitment has been partly informed by advice from the Council of Economic Advisers (CEA), which highlighted the role National Investment Banks play in providing long-term investment to support economic growth in many European countries.

Nicola Sturgeon said, “A significant constraint faced by many businesses with growth potential is access to long-term, patient capital. I can therefore announce today that we will begin work to establish a Scottish National Investment Bank.

“Benny Higgins, CEO of Tesco Bank has agreed to lead work on developing the Bank’s precise remit, governance, operating model and approach to managing financial risk.

“The Scottish Government has already taken steps to improve access to finance through, for example, the establishment of the Scottish Growth Scheme. However, if we are to succeed in raising our ambition, this is a challenge we must do more to address. We believe that the time is now right to take a new approach on capital investment.”

Homes for Scotland (HFS) “cautiously” welcomed the Investment Bank plans and stressed the importance of ensuring the nation has a housing system that “works for everyone”.

HFS chief executive Nicola Barclay said, “With the number of new homes being built in Scotland flatlining, tackling our country’s housing crisis requires a broad approach that includes all market segments.  The private sector has a huge role to play by not only helping to meet the aspiration of Scots to own their own home but also in relieving pressure on social housing.  Key to the Scottish Government’s objectives will be its delivery of an effective planning system and the provision of the infrastructure that is needed to support development. We therefore cautiously welcome the announcement of a Scottish Investment Bank, however will need to see the detail on how it can facilitate this provision.

Nicola Barclay

“By providing a policy framework that supports housing delivery, the Scottish Government can reap the benefits of the significant economic contribution and job creation opportunities home building can offer.”

The Federation of Master Builders (FMB) Scotland accused the Scottish Government of snubbing construction in its Programme for Government.

Gordon Nelson, FMB Scotland director, said the construction industry was “notable by its absence”. He added, “The appointment of a new Strategic Board to focus Scotland’s enterprise and skills agencies on supporting the growth of key sectors is welcome but construction seems to have been overlooked. As the second largest industry in Scotland, comprising of more than 48,000 firms and employing 180,000 people, the construction industry is vital to the health of the wider Scottish economy. Indeed, the industry generated a total output of £14.5 billion in 2016.

“However, the construction sector’s workforce is ageing. Figures from the Office for National Statistics indicate that over the next decade, close to 20% of the industry’s workforce will retire. Without enough skilled workers, Scotland will struggle to build and refurbish the homes, schools, hospitals and transport infrastructure that Scotland requires to flourish. I am calling on the Scottish Government to reconsider its approach and identify the construction industry as a key sector. We want to work with the new Strategic Board, and the relevant enterprise and skills agencies, to ensure that we are recruiting and developing the skills base that Scotland demands.

“We look forward to seeing more detail on the new National Investment Bank and how it might help small firms grow and prosper. 98% of the construction industry’s employers are small or micro businesses; with many struggling to access the right type of finance. It would be welcome if the National Investment Bank were to step in where the major banks have not been able to provide a solution.”