We already have a kind of National Investment Bank though we still need a bigger one

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I wrote a few days ago on the need for Scotland to have a National Investment Bank and referred to the suggestion that with an initial investment from the Scottish Government of only £225 million, £3.4 billion could be leveraged in the first year alone.

https://thoughtcontrolscotland.com/2017/10/05/why-scotland-needs-a-national-investment-bank/

I’d forgotten that we already have one. The Scottish Investment Bank which is the ‘investment arm’ of Scottish Enterprise has been investing in Scottish companies for decades. In 2016/17, it invested £63.5 million of government funds into 146 companies. This is up 21% from £52.4 million in 2015/2016 due to the Scottish government’s increased ambitions to grow the economy.

The SIB also leveraged £106 of private funds. So, the idea works in practice. We just need a bigger one, a much bigger one, leveraging £3.4 billion!

https://sbnn.co.uk/2017/10/09/sib-invests-record-63-5m-146-scottish-companies-201617/

 

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15 thoughts on “We already have a kind of National Investment Bank though we still need a bigger one

  1. Willie Hogg October 10, 2017 / 7:09 pm

    As you say the SIB do a good job of developing SMEs, however, when they mature into large companies, they need to be sold on to fund future investments. This is where a SNIB could buy up these proven enterprises to keep the jobs, profits and taxes in Scotland. A SNIB could also hold the existing commercial assets that the Scottish Government own, i.e. Scottish Water, Preswick Airport, residule land from previous purchases which were sold on, etc. I note two announcements at the SNP conference, one is the intention to establish a national energy company and the other is to support a community buy out. In both these cases the SNIB could help where the SIB couldn’t.

    Liked by 1 person

  2. Ludo Thierry October 10, 2017 / 8:08 pm

    Hi Willie – yes – the SIB seems to attempt to provide a co-investor/venture partner type role. Hwever, from the linked article I note that it is taking a role in community energy projects already:

    During 2016-17, SIB supported Scotland’s commitment to renewable energy through £7.9m of investment into 8 marine and community renewable energy projects, through the Renewable Energy Investment Fund (REIF) delivered on behalf of the Scottish Government. This helped to secure a further £17.2m of additional private and public sector investment to deliver these projects.

    So that is good to see. The SIB partner investments have generated income (presumably from some combination of dividends and sales) of £22.6M to be deployed in further investment.

    Particularly important to notice the ‘matched’ funding drawn from the European Structural and Investment Fund programme (2014 – 2020). Losing access to this sort of programme is yet another glorious ‘benefit’ of the britnat Brexit project.

    Ta, Ludo

    Liked by 2 people

  3. Clydebuilt October 10, 2017 / 8:43 pm

    I haven’t heard the BBC or the MSM mention the SNIB once. ( has anyone?) however tonight the BBC had no problem reporting the announcement of a Scottish Government “Power Company” . . . Will Westminster allow the SNIB to go ahead . . . . Are they going to throw a spanner in the works.? Or are they attempting to stop the SNP getting the brownie points?

    Like

    • johnrobertson834 October 10, 2017 / 10:38 pm

      Thanks for the update CB. Suppose they have to report some good news for their mythical balance

      Liked by 1 person

      • Clydebuilt October 11, 2017 / 8:41 am

        Hoping it’s due to the Mythical balance, and not quashing

        Liked by 1 person

    • Willie Hogg October 11, 2017 / 7:22 am

      I sometimes think it is best not to let Westminster Politicians understand what is actually happening, lest they interfere. So l think that it was the SNP’s intention that the SIB be established and developed out of WM’s sight. So I think it is best not to broadcast plans for an SNIB too loudly, lest they or their asset stripping masters’ suspicions are aroused.

      Liked by 1 person

      • Clydebuilt October 11, 2017 / 8:28 am

        The SNP aren’t keeping the SNIB a secret, it’s the Scottish MSM that are not covering it. Google “Sturgeon announces a Scottish Investment Bank” the Herald, Scotsman, Sun and The Record don’t turn up. The Scot Gov Web site announces it, the Telegraph, Reuters, Edinburgh reporter, and business sites cover it.

        Should point out George Kerevan covered this in the National.

        If Scots don’t know about the SNIB are they going to be bothered when Wastemonster pulls the plug. At this rate will we even be told the plug has been pulled?

        Like

  4. gavin October 11, 2017 / 8:25 am

    While no new government can ever do everything at once, this is perhaps something that should have been established in the first phase of the SNP administration. Owning and nurturing our own national assets is a precursor to self government.

    Of course the opposition would have shouted about the “Scottish” banks being there for us—that would be the same “Scottish” banks who threatened to leave.

    Liked by 1 person

    • Clydebuilt October 11, 2017 / 8:39 am

      Definately, I’ve been wondering why Salmond didn’t do it, him being an economist ( visiting economics prof at Strathclyde)

      Like

  5. Ludo Thierry October 11, 2017 / 12:00 pm

    Hi John and fellow Allstars. Its ‘Grab a coffee time’ – so am scanning the blog and am scandalised by what I’m seeing. If we’re to be Allstars who can help win Indy for Scotland we need to pick up our performance just a tad!!

    Posts are appearing which are criticising the Scottish Govt for NOT using borrowing powers which they DIDN’T have at the time.

    Please, please, PLEASE can we fact check just a bit?

    The Scottish Parlt and Govt had NIL borrowing rights initially. I believe that, following the SNP majority election win in 2011 the SNP Scottish Govt was able to negotiate a £100M facility specifically for the Forth Crossing construction.

    The SNP majority also sparked the Calman process which delivered a few crumbs of ‘borrowing’ powers which came into effect in April 2015 (and have been applied in full) (see below):

    The Scottish Government received additional borrowing powers in April 2015 following introduction of the Scotland Act 2012. The Act also allows the UK Government to extend these powers further without the need for primary legislation.103

    Revenue borrowing
    To deal with unexpected shortfalls in tax revenues the Scottish Government is able to borrow up to £200 million a year with a cumulative limit of £500 million. The Treasury will provide loans for a maximum of 4 years. The UK Government can revise the borrowing limit up or down, but may not take it below its initial £500 million level.

    The Scottish Government can also operate a cash reserve.104

    Capital borrowing
    The Scottish Government can borrow to support capital investment, subject to a cumulative 10-year cap of £2.2 billion. Annual borrowing is limited to 10% of Capital Departmental Expenditure Limit (DEL).105

    Pretty limited scope involved as you can see. The ‘Vow’ and Smith Commission resulted in the Scotland Act 2015 (not a single SNP amendment accepted remember) resulting in a small increase in the borrowing powers which came into effect in the budget year 2017/18 ie just come into effect a few months ago (WHICH MIGHT JUST HAVE SOMETHING TO DO WITH THE SNIB PROJECT DESCRIBED IN THE PROGRAMME FOR GOVT A COUPLE OF WEEKS AGO?): see below:

    The agreement reached
    Scotland’s new fiscal framework increases the Scottish Government’s capital borrowing cap to a cumulative total of £3 billion, up from £2.2 billion. It will be able to borrow £450 million annually for capital investment, subject to the cap.101
    T
    he Scottish Government will be able to borrow a cumulative total of £1.75 billion for resource purposes, up from £0.5 billion. Annually it will be able to borrow up to £600 million for the following reasons:
    • up to £500 million for in-year cash management
    • up to £300 million for forecast error
    • up to £600 million to manage economic shocks

    Borrowing for economic shocks will be available when annual growth in Scottish GDP is less than 1% and is also 1% point below UK GDP growth. This applies to either actual growth data or forecasts. The borrowing will be available in the financial year in which it was triggered and the two following years.102

    The borrowing powers will apply from 2017/18.

    Like everyone else on this thread I dearly wish we were Independent already and could bring all these great ideas into fruition. We ain’t Indy yet folks – and the SNP Scottish Govt is operating within very limited parameters (see above regulations) and is, frankly, doing a quite OUTSTANDING job of things. Their job is not made easier by well meaning critics criticising non-action when action wasn’t able to be taken.

    Rant over, Ludo

    Like

    • Clydebuilt October 11, 2017 / 1:44 pm

      Hi Ludo, glad I didn’t accuse the Scot Gov. . . . I only wondered! (Phew ….. Close cal)

      Liked by 1 person

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