CommonSpace columnist and Common Weal director Robin McAlpine explains how the pitch for a Scottish National Investment Bank became a painful process
AT the risk of jinxing it by beginning to feel some real hope, could Scotland finally be about to get a national investment bank?
I think the possibility is much higher than at any time I can remember, but still this idea seems beset by obstacles and hurdles and attitudes which can perhaps best be understood through the prism of the dynamics of modern Scottish politics and policy.
And I’m afraid the prism doesn’t cast a particularly sympathetic light. So a recent history of the idea of an investment bank may be helpful.
The idea of a national investment bank is not new – if you lived somewhere like Germany or Japan it would be a routine and fundamental part of the architecture of your economy.
Of course, the idea of a national (which is to say, publicly owned) investment bank is not new. Indeed, if you lived somewhere like Germany or Japan it would be a routine and fundamental part of the architecture of your economy.
But general ideas need to turn into real action if we are to get progress. And it is here that I fear Scotland, while having had a great awakening to new ideas, is ill served by the extent to which any of these ideas have been progressed towards implementation.
In 2014 we published the first Common Weal book in which we called for the establishment of an investment bank. This was simply a short paragraph or two explaining the case for such a bank and why it would be of real benefit to an independent Scotland.
When we ended up with a No vote, Common Weal began to look at what policies could be implemented in Scotland now, without the powers of independence. For 18 months we worked on purely domestic policy issues.
These were pulled together in our Book of Ideas which I believe stands up well a couple of years later and outlines policy agendas which are gradually coming to be recognised as important routes forward.
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But a large part of the point of Common Weal is to do more than just support good ideas (the Greens have been in support of a Green Investment Bank in Scotland for a while), but rather to develop them in ways that mean they can actually happen.
So one of our priorities was to build further the case for a bank. We created a project jointly with Friends of the Earth Scotland and the New Economics Foundation to develop a much more detailed case for an investment bank.
That was published in 2015 and makes a clear case with an outline of how it could be achieved. We think it’s a compelling case, but we also realised that while it established an outline of how a bank would be set up there were clear legal and procedural hurdles.
So because this was a priority for us we published a second report last year. This was prepared by the New Economics Foundation and it involved lengthy discussions with the Treasury and detailed assessment of EU competition law.
Despite the substantial amount of very serious work done by this stage, we couldn’t get a single Scottish media outlet to cover the publication of either report (the National excepted, of course).
It explains how to capitalise the bank, how to deal with Scotland’s limited borrowing powers and still be legally compliant, and how to get round somewhat restrictive EU law.
We have had this paper reviewed by experts and we believe that it shows that, subject to two clear requirements that need to be negotiated, there is a path ahead to a Scottish National Investment Bank.
It is worth noting at this point that, despite the substantial amount of very serious work done by this stage, we couldn’t get a single Scottish media outlet to cover the publication of either report (the National excepted, of course).
We then sent a copy of the report directly to the Scottish Government and requested a brief meeting to discuss it. We got a reply from an official saying the Scottish Government was not considering this policy and so declined a meeting.
Not long after that we were called by Jeremy Corbyn’s policy team (with whom we have some contacts). They told us Corbyn was coming to Scotland and wanted to back proposals for an investment bank.
We got a reply from an official saying the Scottish Government was not considering this policy and so declined a meeting. Not long after that we were called by Jeremy Corbyn’s policy team.
What they wanted to know was how it could be done, what were the constitutional barriers, how we believed they could be resolved and so on.
We were, of course, delighted to help and Corbyn then came up and announced proposals very similar to ours (the main difference was that he saw a Scottish bank as part of a network of regional development banks across the UK which, for a unionist, is a sensible position).
We, of course, didn’t get name-checked, but then that’s politics.
There were then a couple of occasions on which there were major media stories about the Scottish economy which related to investment issues. We tried a number of times to get any media outlet in Scotland – any media outlet at all – to even mention our work on an investment bank.
For days the Scottish press was caught up in a negative story about the Scottish Government signing a memorandum of understanding with a Chinese venture capital consortium.
dogged as Common Weal is, we kept trying. We contacted a number of SNP branches to encourage them to submit resolutions to the party’s conference to try and make support of an investment bank party policy.
We did contact journalists trying to explain that they were missing the important part of the story – it wasn’t all about the corporate ethics of the company involved and was largely about the fact that we could fund (and therefore own) the same developments in Scotland if we had an investment bank.
Lack of ownership is one of the major problems in the Scottish economy and is closely linked to lack of domestic investment. But the media once again showed no interest and much preferred its addiction to gossip and pound-shop ‘scandals’.
At this point we were contacted and told that the Council of Economic Advisors wanted our paper to be on the agenda for their next meeting. We prepared slides for one of its members to speak to. I don’t know the outcome but I understand they wanted to progress the idea.
So, dogged as Common Weal is, we kept trying. We contacted a number of SNP branches to encourage them to submit resolutions to the party’s conference to try and make support of an investment bank party policy.
The resolution made it onto the agenda, so earlier this year we headed to Aberdeen to hold a large and well-attended fringe meeting (along with Friends of the Earth Scotland) on the subject of an investment bank. We did briefings and contacted everyone we could to make the case.
The resolution passed, so support for an investment bank became formal SNP policy. At Common Weal we tried again to get the Scottish media to show some interest in this development. Again, we failed.
The resolution passed, so support for an investment bank became formal SNP policy. At Common Weal we tried again to get the Scottish media to show some interest in this development. Again, we failed.
Then we reached a surprise UK General Election. We tried to get to the SNP quickly to encourage them to make the Westminster steps necessary to set up an investment bank a core part of their manifesto. We didn’t succeed (though in part that was because the process moved so incredibly fast that we were told we were too late rather than because it was rejected).
However, Corbyn did indeed put it in his manifesto. I think everyone now understands how important his ambitious manifesto was to the success Labour achieved.
So this is now Scottish Labour Party policy (though, of course, Labour has dropped the word ‘national’ from our proposals since one shouldn’t dwell too much on the idea that Scotland is a nation).
Equally, Scottish Labour has never talked to us. But it is to be welcomed that it now backs this proposal and that it is putting pressure on the Scottish Government.
If the media covers only he-says-she-says triviality and won’t engage in big ideas, it becomes exactly the driving force for the mediocrity and failure which it then goes on to decry in others.
And now, the Scottish Government is making slightly more encouraging noises about an investment bank – though why it continues to argue that substantial new borrowing powers would be required is beyond me.
We’ve already explained that the correct route is to request that a bank’s borrowing should not be included in public sector borrowing figures in exactly the same way that other publicly-owned banks currently get an exemption. I hope very much this is not a straw man designed to be knocked down.
And that’s where we seem to have arrived. I think there are quite a few lessons here.
First, I think it is not unreasonable to repeat that the Scottish Government has simply not been open enough to big ideas, and that it has shown insufficient interest in vision or big ambition.
Second, I think that it shows that the Scottish media has a serious problem. It may be simply because it is so underfunded. It may be because journalists have never escaped their gossip-and-smear obsession, the hallmark of much of the coverage of the independence campaign.
Big ideas really can transform things – it worked for Corbyn, it worked during the independence referendum, so why is institutional Scotland so averse to big ideas?
It may just be that much of the Scottish media seems to save up a particular kind of contempt for Common Weal – but then can any other ‘big thinking’ organisation in Scotland say the media pays them any attention either?
If the media covers only he-says-she-says triviality and won’t engage in big ideas, it becomes exactly the driving force for the mediocrity and failure which it then goes on to decry in others.
Third, I think it shows that big ideas really can transform things – it worked for Corbyn, it worked during the independence referendum, so why is institutional Scotland so averse to big ideas?
Finally, I think it shows that the constitutional issue in Scotland is a long way from resolved. The unionists say ‘put this behind us’, but who exactly is putting the constitutional debate behind us?
Scottish Labour? Ruth Davidson? The Daily Mail? Unionist Scotland won’t consider a good idea if it comes from independence-supporting Scotland (and visa versa, to be fair).
The bureaucracies that run Scotland (and the politics that are supposed to run the bureaucracies) have become scared and complacent and unable to see the limitations of mistaking press releases for action.
It shows that we lack powers and we lack borrowing capacity to do things we should be able to do domestically, so it certainly doesn’t suggest we’ve got devolution right.
I’m told that a former Scottish science advisor said at a meeting that Scotland seems to be in a perpetual race to finish second. I think she means that the bureaucracies that run Scotland (and the politics that are supposed to run the bureaucracies) have become scared and complacent and unable to see the limitations of mistaking press releases for action.
The case for a Scottish National Investment Bank has been strong for a while now. The fact that it has been so damned painful to get anyone at all to take any notice does not speak well of Scotland in 2017. But it’s not too late to change this.
Picture courtesy of Documenting Yes
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