Investing in Scotland's future: A vision for inclusive growth - Chris Cummings, Investment Association

Watching Chancellor Rachel Reeves’ maiden Budget and Mansion House speech, one thing was clear - this is a UK government focused on long-term economic growth.

Reeves’ plan to “invest, invest, invest”, and the provision of Scotland’s largest financial settlement since devolution demonstrates a clear government mandate to drive growth and boost investment both into and from Scotland.

This is a vision shared by the investment management industry, which channels some £1.4 trillion into the UK economy on behalf of households across the country. Our industry has a long heritage in Scotland. Edinburgh remains the second largest centre of investment management in the UK, managing £490 billion in assets, and the Scottish investment management industry employs about 13,000 people. Much to be proud of.

Chris Cummings, chief executive of the Investment Association (IA).

As investors, we know there is great potential in Scotland and in the UK to deliver inclusive economic growth. However, to reach that potential, we need to enable investment into green infrastructure to deliver net zero. We must also invest in the skills of our workforce for the economy of both today and tomorrow. Finally, working together with industry, regulators and Scotland’s law makers, we must improve our efforts to make investing more attractive, so that more people can achieve their financial goals and enjoy secure retirements.

Scotland is at the forefront of the green transition. Both the Holyrood and Westminster governments have indicated they see Scotland at the heart of the UK’s net zero ambitions, with Labour’s flagship GB Energy to be headquartered in Aberdeen. Net zero will be achieved through innovative investment in sustainable finance and advancements in clean energy - ambitions that the investment management industry is proud to support.

UK investment managers have already invested £268 million in the Moray East offshore wind farm, a project that will power 1.4 million homes with green energy. In addition, at the recent International Investment Summit, a £1.3bn investment into new green infrastructure was announced, which will include the Island Green Power solar farm in Stow.

To support similar investments into green technologies, GB Energy and the National Wealth Fund will aim to catalyse private investment into the UK’s clean energy and growth. If designed well, the National Wealth Fund could attract much-needed investment into innovative, growth-driving sectors. But this depends on a pipeline of investable projects being “shovel ready”, and improvements to planning processes to unlock development.

A recent IA survey of Scottish adults found that cash savings are the most popular financial product in Scotland.

No industry or economy thrives without a skilled workforce. Crucial to Scotland’s future economic growth is building an education system that works with business to offer the skills of the future, as well as supporting those already in work to up-skill so they can secure high value jobs in technology-driven, green industries. We must collectively tap into the diversity of talent and skills that exist in Scotland and invest in our workforce, while developing an environment which also attracts talent from around the world. Since 2013, the investment management industry’s career programme, Investment20/20, has enabled more than 2,700 people to begin a career in investment management, including with firms here in Scotland.

Finally, economic growth comes from people making smarter choices about how they save and invest.

More than 15 million adults in the UK currently have over £10,000 sitting in the bank, earning pitiful levels of interest. That money could be working harder if it was invested in a stocks and shares ISA. However, many people feel that investing is not for them.

Too often, it is seen as financially out of reach, too daunting, or too complicated. A recent IA survey of Scottish adults found that cash savings - such as a regular savings account - are the most popular financial product in Scotland. Less than half of Scots are confident they could open a stocks and shares ISA.

We have urged the UK government and financial services regulators to create a culture of inclusive investment to boost households' financial security. £10,000 put into a cash ISA a decade ago would now be worth £8,500 in today’s spending power - but if it had been invested in a stocks and shares ISA, that could now be worth £18,500. While saving is good for the short-term, investing is better.

Many in Scotland are missing out on the potential of investment growth, while being exposed to the detrimental impact of inflation. It also means that the economy is missing out on capital that could be channelled into businesses and infrastructure programmes, creating jobs right here.

An inclusive investment strategy can bridge the gap between precautionary cash savings and long-term investment and help kickstart growth.

That’s why we are calling for rapid progress to enable more people to take financial advice when they need it and urging the government to simplify the existing ISA regime to encourage more people to invest. Finally, we are encouraging a rethink on issues such as risk warnings and regulated disclosures to rebalance the approach risk - because when it comes to saving for retirement, as often in life, often the biggest risk is taking no risk at all.

It is time for a new approach between government, regulators and industry to herald in a new era of inclusive investment-led growth. If we get this right, Scotland will play a defining role on the global stage - but most importantly secure valuable investment for Scottish businesses and households.

- Chris Cummings is the chief executive of the Investment Association (IA).