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Blueprint for a Scottish National Investment Bank

Overview —

This paper presents a detailed case for a Scottish National Investment Bank that would provide secure, stable finance for long term investments in Scotland.

Credits—

Laurie MacFarlane

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Investment – both by the private sector and by government – is crucial to the long term economic, social and environmental health of any economy. As part of the UK, Scotland has a longstanding problem of underinvestment relative to other countries. This has contributed to low levels of productivity, growth and innovation.

In many countries, national investment banks play a key role in financing and directing investment. In this report we develop the arguments for a Scottish National Investment Bank (SNIB) and set out in detail what a SNIB might look like and how it could be established in the Scottish political, legal and economic context.

KEY POINTS

― The SNIB’s overarching mandate should reflect a broader economic strategy developed in a democratic process, controlled by the Scottish Government, and reviewed periodically.

― The core activities of a SNIB should be to support investment in infrastructure and SMEs and to direct investment towards innovation for social and environmental objectives.

― The SNIB should be publicly owned but operated independent as a fully commercial entity, free of day-to-day political interference.

― Robust ownership and governance structures should be put in place which promote the highest levels of transparency and accountability.

― The Scottish Government should inject £225 million of capital, increased to at least £1.35 billion over six years.

― The SNIB should be allowed to raise funds on capital markets by issuing bonds up to a leverage of 2.5 times its subscribed capital.

― The Scottish Government should request that the UK Government grant SNIB dispensation from Treasury rules which would otherwise mean that SNIB lending counts against Scottish Government borrowing limits.

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