Despite losing a third of its MPs in 2017, the Scottish National Party (SNP) still rules the roost in Scotland. And a warning shot sent to the Labour Party shows the SNP wants to keep it that way.
With Scottish Labour reportedly on the rise, the SNP government has stressed its own left-wing credentials by announcing its commitment to a publicly owned Scottish National Investment Bank (SNIB). In doing so, the SNP is essentially putting a Labour pledge into action before it can do so itself.
A “truly transformative” plan
On 28 February, Scottish first minister Nicola Sturgeon said the SNIB would make around £500m available in the next three years for new investment. The bank, she insisted, could be “truly transformative”.
Tesco Bank CEO Benny Higgins developed the plan, and recommended funds of at least £2bn over the course of its first ten years. The SNIB will give microloans to small businesses and up to £10m to expanding businesses, along with debt support. Part of its aim will be to move Scotland towards a greener economy.
University College London’s Prof Mariana Mazzucato has influenced the plan as an economic adviser to the Scottish government. And after the launch, she said:
around the world state investment banks are taking centre stage in providing such finance for key social and environmental challenges… [The bank] will help steer the path of innovation towards overcoming key challenges by creating and shaping new markets.
Precisely what’s needed. And Jeremy Corbyn agrees.
The New Economics Foundation’s Laurie Macfarlane has previously insisted that:
Meeting the key challenges of the 21st century – climate change, demographic change and economic inequality – requires substantial amounts of long-term and sustainable investment, but relying on expensive private financing schemes has saddled taxpayers with eye watering costs and poor quality outcomes.
And UK Labour leader Jeremy Corbyn seems to agree. In 2016, he told Scottish voters:
There has to be an investment-led economy and there has to be full employment for all. And you have to have a Scottish investment bank as part of it…
Speaking in Glasgow in January, meanwhile, he reiterated his commitment to setting up a national investment bank and a network of regional banks across the UK. This would spark “investment-led growth”, he said, “from fast-tracking infrastructure spending… to building the essential transport and digital links to realise our potential”.
Other economies are growing now across Europe and across the world and that is as a result of government intervention… That is why I have put forward proposals for a national investment bank… It is about long-term stable investment, patient investment…
“Imitation is the sincerest form of flattery”
Scottish Labour’s economy spokesperson, Jackie Baillie, responded to the SNP’s plans by saying:
While imitation is the sincerest form of flattery, the SNP appear to have only sketched this out on the back of a fag packet.
The SNP’s proposed Scottish Investment Bank is in danger of not having enough money to do the job required, to invest in business and grow our economy.
Scottish Labour is committed to delivering a Scottish Investment Bank worthy of the name, with £20 billion of funding over the next decade – ten times more than the amount proposed by the SNP, because that’s what it takes to really transform our economy.
Not radical enough?
The usual suspects – neoliberal thinktanks and billionaire-backed media outlets – say the idea of a national investment bank is ‘barmy’ and “unnecessary”. But that’s no surprise. They’re still clinging on to a failed ideology (neoliberalism), and the false idea that inequality is a force for economic good.
More up-to-date commentators, on the other hand, have claimed that “Labour’s investment bank plan could help fix our damaging financial system”, and that it could be “an opportunity to pioneer new approaches to public ownership and democratic accountability”. One financial sector worker, meanwhile, emphasised that it’s actually an uncontroversial and even mainstream proposal elsewhere. Writing at OpenDemocracy, John Marlow insisted that it’s:
easy to point to Germany’s Kreditanstalt für Wiederaufbau or any number of other promotional banks around the world. In fact, the UK’s utilities, universities and corporate sector have been receiving several billion in financing from the EU’s own Luxembourg-based investment bank every year. If we lose out on that because of Brexit, it would seem only sensible to put something in its place.
In fact, he worried that “Corbyn’s proposal might not be radical enough”.
A new consensus
a new consensus around where the Labour Party needs to sit politically… which is about extending public ownership, which is about ending austerity, which is about investing in public services and which is about seeing a shift in power from the few to the many.
He believes Scottish Labour is now winning back lost voters.
But the SNP isn’t going to take that fight lying down. And by putting one of Jeremy Corbyn’s big manifesto pledges into action before the Labour Party could get the chance, it has shown it’s up to the challenge.