Council of Economic Advisers minutes: December 2020

Attendees and apologies

• Julia Unwin
• Marianna Mazzucato
• Martine Durand
• Sara Carter
• Craig Clark
• Jim McColl
• Harry Burns

Also in attendance:

• Willie Watt, Chair of SNIB Gary Gillespie, Chief Economist
• Joanne Briggs, Senior Economist, Office of the Chief Economic Adviser – Economic Strategy (OCEAES)
• Juan Pedro Castro, Assistant Economist, OCEAES
• Lucy Geoghegan, Head of Green New Deal
• Sasha Maguire, Senior Economist, Office of the Chief Economic Adviser – Energy and Climate Change

Apologies:

• Anton Muscatelli
• Crawford Beveridge
• Joseph Stiglitz
• Brynhildur Davíðsdóttir

Items and actions

Update on the Scottish National Investment Bank

The Chair of the Scottish National Investment Bank, Willie Watt, provided Council members with an update on the Bank. 

The Bank launched in late November and started its mission-led investment. Through its missions, the Bank will support communities and places, fuel a just transition to net-zero, and invest in innovation. They will play the role of a strategic catalytic investor, in close collaboration and interaction with investors, universities, businesses, and civic society, etc. The Bank will aim to leverage public capital by crowding-in private investment through various channels. 

The following points were raised during the discussion on this topic:

• Members highlighted the importance of putting the Bank’s missions at the centre of all its activities and of adding value and creating markets. The importance of using a framework/criteria, based on the missions, to guide investments was discussed.
• Members noted the potential for the bank to contribute to Scottish Government objectives such as Internalisation and attracting Inward Investment.

Green Recovery

Members were updated on the Scottish Government’s approach to the Green Recovery. The Government has committed to build back to a fairer, greener, more equal society from COVID-19. 

The green recovery approach focusses on public investment to stimulate immediate demand in key low carbon markets and draw in private investment. It requires a holistic and long-term lens and encompasses: 

• skills and training for people to access green jobs coming from this investment, building future resilience (including adaptation to climate change); 
• capturing positive behaviour changes from the crisis and; 
• a place-based approach to ensure regional empowerment and tailored solutions.

The updated Climate Change Plan is the next step in delivering this green recovery, including further investment announcements and a coordinated approach across policy areas to accelerate decarbonisation. 

The Council were asked for reflections on how to effectively link short-term recovery actions with long-term goals, international best-practice examples, and key mechanisms to deliver a just transition.

The following points arose during discussion on this topic:

• Members emphasized the need to consider how the net zero transition is at the centre of policy making, including procurement. For example, Sweden’s net-zero mission was influencing the approach to procurement across government, down to school meals. 
• Members highlighted France and Germany as good examples of linking immediate recovery actions to long-term objectives. Both countries had directed significant shares of their recovery packages to green areas. They did not tackle green issues in isolation, but hand in hand with innovation, competitiveness, and growth areas, etc.
• Members highlighted the importance of skills and human capital, often an area of underinvestment, for a successful transition. The Scottish Governments plans in this area were outlined. 
• Members highlighted the opportunity to accelerate or expand already existing projects, and to target local projects, to support recovery. 
• Members noted the importance of using a place-based lens that works to engage all communities in the conversation on the Just Transition. New Zealand and Norway’s efforts to apply a place-lens to energy transitions were highlighted.
• Members discussed what net-zero means from a business perspective and the potential opportunities in circular business models.