Last week saw the SNP administration unveiling legislation for a national investment bank to be up and running by 2020. A total of £2 billion has been committed for investment in Scottish businesses over ten years.
Splendid news, you might think. But we already have such a bank. It’s called, funnily enough, the Scottish Investment Bank. It’s been going for years. In the financial year 2017-18 it invested £43.5 million in 147 Scottish companies and leveraged more than £206m of investment. And it generated some £17.6m of income from its investments.
The Scottish Investment Bank – sorry, I mean the one already in existence – is long-standing. Its director is the personable Kerry Sharp. You can read all about the bank and the companies it has supported on its website.
So why do we need another one? Because the existing bank is run out of… Scottish Enterprise. And that, in the view of some, is why the SNP feels the need for a new one. It has tolerated SE but has never really much cared for it, because it was set up long ago… by a Labour administration. And as such, say sceptics, it has never been quite as under the thumb as ministers would wish it to be.
Or to put it more gently, the SE bank has found itself shrouded in a sporadic, low-lying mist of government inattention, like some historic monument, run by some forgotten national heritage quango where the direction sign for visitors has gently rusted.
So, well established as it is, it is to be folded and its functions transferred to the new bank. “The creation of the Scottish National Investment Bank”, said the Scottish Government last week, “will build on the success of the Scottish Investment Bank in recent years and take forward the recommendations of the Implementation Plan” that it will transfer into the new bank.
“The bank will be part of the ecosystem of support and advice delivered by the Scottish Government and its agencies to ensure that businesses and communities receive advice and finance at every stage of their journey.”
Ah, ecosystems and journeys! It’s been reported that the bank – sorry, the new one – was first announced by First Minister Nicola Sturgeon in her 2017 programme for government speech – though this is not quite fair. Her predecessor Alex Salmond had long championed the cause of a national investment bank, separate and distinct from the one operated by SE. And previous SNP administrations kept announcing new developments and imminent progress, though little new emerged.
Now the new bank is on the ecosystem and journey launch pad. And Benny Higgins, the former chief executive of Tesco Bank who advises the Scottish Government on its plans, has described the legislation as “another important milestone… The bank will play a critical role in ensuring that the Scottish economy is structurally fit for thriving in the 21st century.”
Might the new bank succumb to neglect once established? Whatever the many other talents of the ever-available Mr Higgins, he is sure to be out there at the signpost with the Brasso can and polishing cloth – Mr MessGone! If it’s the government one, it’s got to sparkle!
But where else might there be a difference? One reason may be to do with scale – the main role of the new bank will be “to make longer-term investments in Scottish firms, over a period of 10 to 15 years”.
As for the bank about to be uprooted and transferred, it says on its website: “We help companies to identify appropriate sources of finance, engage with funders and secure the investment they need to grow their business… Our work also involves aiming to increase the supply of finance for businesses in Scotland. We want to help Scottish SMEs with growth and export potential to get this finance… Its investment, with that of our private sector partners and co-investors, has helped its portfolio companies achieve turnover of more than £400m.” So why shift it?
However, the critical difference may be the shorter length of the arm between the new bank and political direction from Holyrood. The government said last week ministers would be “given the power to guide its strategic direction” by “setting missions” for it to “tackle socio-economic challenges”.
Now this is an activity in which governments of all colours have indulged. Not all such indulgences have been successful. And the Scottish Government is not without form here. A glaring current example is the loss-making Prestwick Airport, which the administration bought for £1 in 2013. It has now pumped in a thumping £48m of public money – more than double the £21m ministers originally said would be needed. Of this total, some £1.67m has gone to GE Aviation’s overhaul facility and £1.1m to Spirit Aerosystems Europe. A further £12m has been spent on upgrading work. In addition, £650,000 has been provided to Ryanair.
But still the airport is running at a loss. In 2015 Audit Scotland said it would take ten years for Prestwick to repay the money. Since then, in 2017, Holyrood MSPs were told that it would take until 2032 for the money to be refunded.
Now there may have been a case back in 2013 for a time-limited funding while a buyer was found and the airport put on a care and maintenance basis. But this seemingly open-ended commitment is worrying.
A persistent questioner has been Scottish Labour’s Jackie Baillie, a member of the Scottish Parliament’s Economy, Energy and Fair Work Committee. She has been stalwart in persistently questioning ministers on the Prestwick Black Hole but has received little assurance for her or the public that the airport has been able to attract a private sector buyer, still less that it is in sight of any payback after six years.
If this is an example of “setting missions”, tackling “socio economic challenges”, ecosystems and journeys, it is not so much a “Welcome Here” landmark that Benny Higgins will need to keep polishing – more a red warning sign: “Danger –Potholes Ahead!”