Scottish National Investment Bank: consultation paper

This consultation paper will focus on the Bank’s objectives, purpose and governance, as well as its relationship with Ministers and stakeholders.

3. The Opportunity and the Bank’s objectives and purpose

" The Bank should be an enduring institution, set-up as a public sector institution in perpetuity that aligns with the Scottish Government and its agencies to provide financing leadership"

3.1 The Implementation Plan proposed a vision for the Bank. The Government will ensure that the Bank contributes to the Scottish Government's priority to increase sustainable economic growth by aligning its aims and objectives with Scotland's Economic Strategy and National Performance Framework. A purpose for the Bank will be set out in the Bill, and the Bank will act within devolved economic development powers to focus on provision of financial assistance for commercial activities for the purpose of enabling, promoting or sustaining economic development or employment in Scotland.

3.2 The Vision proposed by Mr Higgins and endorsed by Government is:

"Provide finance and act to catalyse private investment to achieve a step change in growth for the Scottish economy by powering innovation and accelerating the move to a low carbon, high-tech, connected, globally competitive and inclusive economy."

3.3 Through its delivery of missions and the provision of patient capital (see section 4) the Bank will also be focussed on enabling transformative change in society, harnessing innovation and releasing untapped potential within Scotland's wider economy. This means greater access to debt and equity investment for business, both those starting out as well as for those who are seeking to transition into the next stage of business growth and scale up their activities. As part of this, and subject to state aid, the Bank will take a different approach to risk and return on investment than other providers of finance.

3.4 There is some precedent to this approach. The "Green Purposes" of the Green Investment Bank were set out in Enterprise and Regulatory Reform Act (2013) and provided a statutory purpose for the remit of the Bank. The Articles of Association and this Bank's statutory mandate will also describe its purpose and objectives.

3.5 Whilst Ministers will set the mission-orientation for the Bank, the Bank should be given powers to make a range of types of investment as part of its response to Ministers, and to enable it to prepare a robust Investment Strategy. The types of investment that the Bank should be able to make include loans, equity stakes and the provision of guarantees. The Bank is not intended to have a retail banking function. Including a retail banking function now would require the agreement and co-operation of the UK Government because this is a reserved power, and it would substantially increase the period for establishing this Bank and introduce an additional layer of complexity to these proposed arrangements. Further, required compliance with retail banking regulations would both delay and dilute the desired impact of the Bank as set out above. Establishing the Bank in this manner does not exclude the possibility for the Bank to have a retail banking function in the future, once the body is fully established.

Question 1:

Are the proposed objectives and purposes for the Bank the most appropriate to deliver the Implementation Plan's recommendations, and to fulfil the Bank's potential contribution to increasing sustainable economic growth?

Question 2:

Do you have views on the statement of the Vision which has been set for the Bank, in paragraph 3.2?


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