Scottish National Investment Bank to take ‘new approach’ on capital investment
A Scottish National Investment Bank will be established to take a “new approach” on capital investment, the First Minister Nicola Sturgeon announced yesterday.
Tesco Bank CEO Benny Higgins has been appointed to develop the Bank’s remit.
The commitment, which is part of the Programme for Government 2017-18, has been informed in part by advice from the Council of Economic Advisers (CEA) which highlighted the important role National Investment Banks play in providing long term investment to support economic growth in many European countries.
Ms Sturgeon told MSPs: “A significant constraint faced by many businesses with growth potential is access to long term, patient capital.
“I can therefore announce today that we will begin work to establish a Scottish National Investment Bank.
“Benny Higgins, CEO of Tesco Bank has agreed to lead work on developing the Bank’s precise remit, governance, operating model and approach to managing financial risk.
“The Scottish Government has already taken steps to improve access to finance through, for example, the establishment of the Scottish Growth Scheme. However, if we are to succeed in raising our ambition, this is a challenge we must do more to address.
“We believe that the time is now right to take a new approach on capital investment.”
Mr Higgins joined Tesco Bank in 2008 when the supermarket giant bought out Royal Bank of Scotland’s 50% stake in what was a joint venture.
He said: “It is a privilege to be asked by the First Minister and the Scottish Government to lead the work on creating the Scottish National Investment Bank. It is vital that Scotland puts in place the right structure to develop long-term, sustainable growth for all aspects of the economy.”
Elsewhere in the Programme for Government, a Planning Bill will include measures for a “simpler, more effective” system of development plans so it is clearer how areas will develop in the future.
The Scottish Government said that communities would have better opportunities to influence the future of their areas as a result of the bill.
A new Land and Buildings Transaction Tax Bill will make changes to the laws around second homes and allow Additional Dwelling Supplements to be retrospectively reclaimed in some circumstances.
A new £60m Innovation Fund will also be made available to accelerate innovation in new technologies, including low carbon energy infrastructure by 2020.
On housing, the Scottish Government plans to double its funding to the Scottish Empty Homes Partnership and an upcoming Warm Homes Bill will set a new statutory fuel poverty target.
New energy efficiency standards for the private rented sector will also be introduced to improve the quality of housing and help lower fuel bills, particularly for young people, who rely on privately rented accommodation.
It will also consult on permitting the conversion of farm building to form new homes to increase rural housing stock.
Homes for Scotland and RICS Scotland both gave a “cautious welcome” to the proposals.
Homes for Scotland chief executive, Nicola Barclay, said: “With the number of new homes being built in Scotland flatlining, tackling our country’s housing crisis requires a broad approach that includes all market segments. The private sector has a huge role to play by not only helping to meet the aspiration of Scots to own their own home but also in relieving pressure on social housing.
“Key to the Scottish Government’s objectives will be its delivery of an effective planning system and the provision of the infrastructure that is needed to support development. We therefore cautiously welcome the announcement of a Scottish Investment Bank, however will need to see the detail on how it can facilitate this provision.
“By providing a policy framework that supports housing delivery, the Scottish Government can reap the benefits of the significant economic contribution and job creation opportunities home building can offer.”
Gail Hunter, RICS director in Scotland, said: “There are many welcome aspects to this programme but, as ever, the devil will be in the detail when the Bills are presented.
“On this basis, RICS cautiously welcomes proposals to establish a Scottish National Investment Bank to support economic growth, diversification of housing delivery through self-build; and modernising Compulsory Purchase Orders.
“We also support the Scottish Government’s aim to introduce some of the recommendations from the Barclay review, such as the move to three-yearly revaluations from 2022 with valuations based on market conditions on a date one year prior and the increased support town centres will gain by expanding Fresh Start Relief.
“RICS will be undertaking an assessment of the recommendations next week and will look to inform Mr Mackay which recommendations will work, need adjusting before implementation, and which measures need further consideration.
“We also look forward to the highly-anticipated Planning Bill, which we hope will recognise and enhance the quality of Scotland’s planning system.”
Hew Edgar, RICS policy manager for Scotland, added: “The proposal of an LBTT bill is, unfortunately, a missed opportunity as the Scottish Government could fully assess the impact that the current tax bands are having on market fluidity.
“The current rates and bands for LBTT help first-time buyers take that first step onto the housing ladder, and this is a good outcome. However, as owners look to move up the ladder, they are faced with ever-increasing tax liabilities that are deterring them from moving. This is creating a slowdown on interest, resulting in an ‘improve, don’t move’ mindset which is stifling activity in the middle to upper end.
“Meanwhile, we have seen that the prime and subprime markets are struggling with the regime and the effect the current bands are having. Without a proper reassessment of the bands and thresholds, the lower end of the market could see an increase in activity – but with supply outstripping demand, that will only serve to increase house prices.
“RICS urges the Scottish Government to assess the current framework, and consider a range of exemptions and use this tax to encourage activity. These exemptions could include those downsizing and those purchasing regenerated empty properties, of which there are 34,000. “We would welcome the opportunity to discuss such proposals with the Scottish Government.”