Publication - Consultation responses

Scottish National Investment Bank consultation: analysis of responses

Published: 11 Feb 2019
Directorate:
Chief Economist Directorate
Part of:
Economy, Money and tax
ISBN:
9781787815346

Analysis of responses to Scottish National Investment Bank consultation which ran from 5 September to 31 October 2018.

55 page PDF

837.6 kB

55 page PDF

837.6 kB

Contents
Scottish National Investment Bank consultation: analysis of responses
6. Analysis of stakeholder workshops and bilateral meetings

55 page PDF

837.6 kB

6. Analysis of stakeholder workshops and bilateral meetings

In addition to the public consultation on the Bank, officials engaged in stakeholder consultations. In total nine stakeholder workshops and twelve bilateral meetings were held between the 26 September 2018 and 1 November 2018. The table below identifies the stakeholders and their respective sector.

Stakeholder Workshops Sector Bi-lateral Meetings Sector
Ethical Finance Finance Business in the Community N/A
Homes for Scotland Property Common Weal Voluntary
Scottish Property Federation Property Equalities and Human Rights Commission Legal
SCDI Finance Scottish Financial Enterprise Finance
Scottish Trades Union Congress N/A Women’s Enterprise Scotland N/A
Royal Society Edinburgh Science and Research World Wildlife Foundation Environmental
Business in the Parliament Conference N/A Clyde Blowers Capital Engineering
Friends of the Earth Environmental LINC Scotland Finance
ICAS   Par Equity Finance
-   Institute of Directors N/A
-   Green Investment Group Finance
-   Investing Women Finance

A summary of the views and insights gathered through the engagements is detailed in the following sections. Although discussions were not framed within the prescriptive question format of the public consultation, the themes and views identified have been presented within the same format as the analysis seen in section 5.

a. The opportunity and the Bank’s objectives and purpose (Questions 1 and 2)

Stakeholders were largely supportive of the Bank and its vision, objectives and purpose. The potential for the Bank to be a transformative force in the Scottish Economy was acknowledged.

One stakeholder group suggested the language used regarding the vision of the Bank was “too public service oriented”, and could discourage co-investment.

It was proposed that the Bank should act as a single point of entry for public finance, consolidating the existing landscape. It was also noted that the existing public finance landscape made it difficult for businesses to understand where to access finance.

Several stakeholders emphasised that the transition and consolidation of existing finance schemes to the Bank should cause as little disruption as possible to businesses.

Stakeholders agreed that the Bank should work closely with enterprise agencies to ensure the market is ready for the investment opportunities that the Bank will provide.

b. The focus for investment activities (Questions 3 to 7).

Mission-led Approach

Several stakeholders felt that the early possible missions identified were too high level, and further clarification and refinement was needed. Conversely, some stakeholders suggested missions may be restrictive, and that the Bank should focus on a demand-led approach, as missions may exclude the Bank from investing in other markets.

Concerns were also raised that investing in three or more separate missions would dilute the Bank’s potential to create significant change.

Debt and Equity Products

There were varying views regarding whether the Bank should provide primarily debt or equity products. Debt products were seen as less complicated for the Bank to provide, whilst allowing businesses to maintain control. There was broad agreement that equity products would provide additional support to allow businesses to grow, and be protected against predatory business practices.

Risk Appetite

Stakeholders were supportive of an alternative risk appetite for the Bank, and recognised its ability to create and shape new markets; however the respondents wanted to understand how this would be managed.

Stakeholders welcomed the proposals for the Bank to offer long-term patient capital.

Stakeholders emphasised the need for risk to be evenly shared with private investors.

Guarantees

Several stakeholders suggested that the Bank should offer guarantees as one of its financial products from the outset.

Whole of Lifecycle Investment

Stakeholders stated that later stage investment, such as patient capital, was harder to secure, and that the Bank could address this gap in the market to allow businesses to expand.

Conditionality

It was suggested that the Bank could apply conditionality to loans to promote certain key values and principles, particularly around gender equality and fair work. Minimum standards must be met regarding these areas before investment could be employed, with provisions in place to not adversely affect small businesses, or the Bank’s ability to invest.

c. Operating model, classification and capitalisation (Questions 8 to 10)

Stakeholders stated that £2 billion over 10 years may not be sufficient to make a significant impact on the market. The importance of co-investing and crowding-in the private sector was emphasised.

A small number of stakeholders suggested that the Bank should take deposits to increase capital, whilst helping ensure the Bank remains “for the people of Scotland”.

d. Governance Arrangements (Questions 11 to 13)

Advisory Group

There were differing views from stakeholders regarding the role of the Advisory Group as a whole; however it was largely agreed that more clarity was desired on the function and remit of the Advisory Group, and that having the opportunity to feed in views to the Bank was important. Several stakeholders expressed an interest in being represented on the Advisory group.

One stakeholder group suggested the Advisory Group should have a formal remit, in order to scrutinise the actions of the Board, as a way of providing formal oversight to the Bank’s activities.

However, some stakeholders recommended the Advisory Group only offer advice on activities, and provide insight into the Scottish Market.

Other stakeholders warned that decision making within the Bank would be hindered if the Advisory Group was part of a dual oversight structure, as it would be difficult to reach agreement if individuals and organisations hold a diverse range of interests and views.

Appointment of Board

Stakeholders emphasised the importance of having the right skills and experience within the Bank’s Board and a variety of backgrounds represented, as well as ensuring it is representative, particularly in terms of gender balance.

One stakeholder group suggested that the Scottish Government should make the first three appointments to the Board, and allow the Chair to complete the appointments, ensuring a range of expertise and experience is achieved.

Strategic Framework

Stakeholders requested that proposals for Bank governance should be clearly set out in the Strategic Framework, displaying clear lines of reporting.

It was largely agreed that the Board should be operationally and administratively independent from Ministers, as autonomy over investments was key to the Bank’s success. Further information on how the Minsters and Bank’s Board relationship would operate was requested.

e. The Bank’s staffing and employment arrangements (Questions 14 to 16)

Stakeholders largely agreed that the majority of Bank staff should fall under public sector pay, however that there was a need to pay more to secure the required skills for the Bank. Several stakeholders emphasised the importance of on boarding the right experience and skills, as this was crucial to ensure the Bank could attract the best investment opportunities.

Stakeholders noted it would be important that the Bank have regional links to ensure benefits reach across the entire country, and the location of the Bank would be important.


Contact

Email: Alison.McDonald@gov.scot